REPORT TO COUNCIL
SUBJECT
Title
Action on Authorizing the City Manager to Negotiate and Execute Amendments to Agreements with Electrical Maintenance Consultants, Brush Americas, and Mitsubishi Powers Americas, Inc. for Generator Maintenance Services
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
The generators used at Silicon Valley Power’s power plants require ongoing preventative and corrective maintenance, as well as scheduled major overhauls to ensure reliable operation. This maintenance includes annual inspections, testing and diagnostic services, and repairs using specialty tooling, equipment, and shop services.
Silicon Valley Power’s local and remote generation facilities use multiple generator technologies from various manufacturers, each with unique maintenance schedules and specific part specifications. Accordingly, multiple vendors are contracted to properly maintain the fleet of generators.
On February 22, 2022 (RTC 22-147), the City Council authorized the City Manager to negotiate and execute agreements with Brush Americas (Brush), Electrical Maintenance Consultants (EMC), and Mitsubishi Powers America, Inc. (Mitsubishi) for electric generator maintenance services with an aggregate maximum compensation of $3,000,000 over a five-year term.
DISCUSSION
Based on the results of the solicitation, EMC serves as the primary contractor for all electrical generator maintenance and repair services, while Brush and Mitsubishi are secondary providers of services for specific generators. The agreement with EMC includes fixed pricing for routine maintenance services and generator overhauls. Additional repair services are authorized and paid on a time-and-materials basis. The agreements include provision of all labor, materials, equipment, and technical expertise needed for generator maintenance and overhaul services.
Since the City Council authorized the agreements in 2022, only EMC has provided services to Silicon Valley Power (SVP). During that period, several unanticipated large projects have been required. For example, in 2022, the generator for the Donald Von Raesfeld Power Plant (DVR) Unit 2 was overhauled and a spare rotor was purchased and exchanged due to mechanical issues. That exchanged rotor was placed into service to facilitate an expedited return to service, resulting in over $1.4 million in unanticipated costs. The combined costs of ongoing routine inspection and maintenance services, minor repairs, unanticipated repairs, and an additional minor overhaul at DVR has consumed most of the available authorized funding. At this time, a major overhaul and re-wind of a generator rotor for the Gianera Power Plant is required, with an estimated cost ranging from $1,200,000 to $1,500,000. As a result, staff is requesting the City Council’s authorization for the City Manager to negotiate and execute amendments to increase the aggregate maximum compensation by $7,000,000 for a revised aggregate maximum compensation not-to-exceed $10,000,000. Approval of this recommendation will allow SVP to complete the required work while ensuring sufficient funding for future maintenance and repairs.
Staff is also requesting authorization for the City Manager to negotiate and execute amendments to extend the term of the Agreements for up to five additional years for a total term of ten years through February 27, 2032, in increments to be determined by the City Manager (modifying current City Council authorization to negotiate and execute five one-year options to extend) and make other necessary changes as further set forth in the Recommendation.
With the significant increase in growth of power demand and the value of local generation in the South Bay, SVP’s power plants continue to be critical to serving the needs of SVP’s customers and the electric grid. The proposed authorizations will reduce the administrative time required to modify long-term contracts while still appropriately managing the costs and timelines associated with maintaining critical SVP assets. Any requests for compensation increase during the term of the agreement(s) must be justified by the contractor and are subject to approval by the City and the annual appropriations of funds.
ENVIRONMENTAL REVIEW
Staff recommends that the City Council determine that the proposed actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to sections 15301 and 15302 of Title 14 of the California Code of Regulations as the proposed actions involve (1) the operation, maintenance, and repair of existing mechanical equipment; and (2) the replacement of generation equipment with negligible or no expansion of capacity.
FISCAL IMPACT
Funding for these agreements will come from the capital or operating budget based on the asset requiring products or services.
Sufficient funding for the agreements is included in the FY 2024/25 Biennial Adopted Operating Budget or Capital Budget where applicable. Funding for future years is subject to future appropriation and will be included in future budget processes.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Determine the proposed action is exempt from CEQA pursuant to sections 15301 (Class 1 - Existing Facilities) and 15302 (Class 2 - Replacement or Reconstruction) of Title 14 of the California Code of Regulations;
2. Authorize the City Manager or designee to negotiate and execute amendments to agreements with Electrical Maintenance Consultants, Brush Americas, and Mitsubishi Power Americas, Inc. for generator maintenance services to increase the aggregate maximum compensation by $7,000,000 for a revised aggregate maximum compensation not-to-exceed $10,000,000, subject to the review and approval as to form by the City Attorney; and
3. Authorize the City Manager or designee to take any actions as necessary to implement and administer the agreements as amended and negotiate and execute future amendment(s) to (1) add or delete services, (2) adjust future rates based on market conditions, (3) make de minimis revisions, (4) extend the term for up to five additional years until February 27, 2032, in such increments as determined by the City Manager, subject to the appropriation of funds and the review and approval as to form by the City Attorney.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jovan D. Grogan, City Manager