REPORT TO COUNCIL
SUBJECT
Title
Action on Addition of a New Limited-Term (5-year) Assistant Director of Electric Utility Position for Silicon Valley Power to Support Delivery of System Expansion Capital Projects
Report
COUNCIL PILLAR
Deliver and Enhance Quality Efficient Services and Infrastructure
BACKGROUND
In November 2019, the Silicon Valley Power (SVP) management team met to discuss the strategic priorities for SVP. At that time, it was identified that the SVP was going to experience significant continued growth, and SVP needed to develop a capital improvement strategy to meet the City’s potential electric load growth. Staff determined the need to develop both near-term and long-term strategies to accommodate approved growth and develop the necessary infrastructure plan options. Council has taken many actions in support of this growth as a part of the SVP System Expansion Plan. A summary of key City Council actions connected to the Plan are outlined below:
• On October 13, 2020, Council authorized the City Manager to execute master service agreements with several engineering consultant firms to support SVP in system expansion, general consulting services, and plan implementation services (RTC # 20-854).
• On April 6, 2021, staff presented a comprehensive review of upcoming load growth and capital projects to the Council as part of the SVP Quarterly Report. The presentation concluded with the next steps, which included preparing a system growth strategy and presenting it to the Council at a future meeting.
• On September 28, 2021, Council accepted SVP’s Three-Year System Growth Plan Strategy (RTC # 21-871), which identified $300 million in proposed projects for both near-term and long-term capital improvement projects needed to support anticipated system growth and to replace end-of life equipment to ensure system reliability.
• On April 5, 2022, Council adopted Resolution # 22-9069 adding new and updated connection and load development fees for the electric utility (RTC # 22-449). On April 19, 2022, Council adopted Resolution # 22-9081 adopting the City of Santa Clara 2022/23 Municipal Fee Schedule which included new and updated connection fees and load development fees for SVP, effective July 1, 2022 (RTC # 22-99). These fees were updated for fiscal year 2023/24 by adoption of Resolution 23-9221 on April 18, 2023. Such fees and their corresponding increases are intended to maintain fees at the cost recovery levels necessary to support electric load growth.
• On November 15, 2022 (RTC # 22-1172), Council accepted SVP’s System Expansion Plan for the California Independent System Operator’s (CAISO) Transmission Planning Process (TPP) FY2023/24 (SVP System Expansion Plan CAISO TPP FY2023/24).
• On July 18, 2023, staff provided an update on key near-term projects necessary for system growth to the City Council as part of the SVP quarterly update (RTC # 23-757). During the same meeting, the City Council approved amendments to several master service agreements, including increases to cumulative maximum compensation (RTC # 23-737).
The System Expansion Plan includes four major system expansion projects currently under design, the reconstruction of Scott Receiving Station (SRS), the reconstruction of Kifer Receiving Station (KRS), the expansion of Northern Receiving Station (NRS), and the construction and installation of 2.24 miles of new 115kV transmission line from NRS to KRS. These four projects alone have an estimated total cost exceeding $420 million. These are very complex capital projects and require phased construction schedules at the receiving stations as these critical facilities must be kept online during the construction period. In addition to these four major projects, the team is also working on two additional projects related to system expansion, including a new CAISO high voltage transmission line and the Kifer Battery Energy Storage Project.
For the CAISO high voltage transmission line, SVP is coordinating CAISO’s Newark-Northern Receiving Station High-Voltage Direct Current Project, which is being constructed by LS Power Grid California, LLC. This project will bring a new 230kV transmission line to interconnect with NRS to serve Santa Clara’s growing electric load. This will require the execution of an Interconnection Agreement between the City and LS Power Grid California, LLC, and significant project coordination with SVP’s NRS expansion project.
All these system expansion projects are in addition to SVP’s existing capital improvement and infrastructure program, including 45 projects (distribution substations, customer junctions, 60kV transmission lines, 12kv distribution feeders, battery energy storage systems, generation interconnections, and streetlight projects). In total, these projects have a 5-year estimated cost of over $400 million.
DISCUSSION
SVP has taken several actions to support the significant increase in workload including contracts with several engineering design firms, a program management firm, and a new principal engineer. However, the System Expansion Plan still requires a significant amount of support from the Assistant Director overseeing Customer Development and Project Management and the Chief Electric Utility Officer, which impacts overall capital project delivery and new development work.
In addition to the System Expansion Plan projects, the Assistant Director overseeing Customer Development and Project Management is also responsible for SVP’s overall Capital Project Design and Construction Projects, Development Review, New Business Development, Estimating, GIS Maps & Records, Transmission and Distribution Planning, System Modeling and System Impact Studies, and annual submissions to the CAISO Transmission Planning Process and California Energy Commission Integrated Energy Policy Report. SVP’s Engineering Division also has 6 vacancies of 22 budgeted engineering positions (27% vacancy rate).
As the four large system expansion projects move forward to final design and construction, the City Manager has determined that additional management oversight is desirable to (1) maintain SVP’s project implementation schedule, and (2) continue to deliver all the other SVP capital and development responsibilities. At a minimum, this new position will be responsible for (1) supporting SVP’s three receiving station projects, (2) a new 115kV transmission project, and (3) other system expansion projects. As mentioned previously, the receiving stations and 115kV project have an estimated cost of $420 million. Most of the large projects are currently scheduled to be completed/closeout by Fiscal Year 2028/29 and this limited-term position is proposed for a 5-year period.
There is no proposed modification of the existing Assistant Director of Electric Utility class specification, or associated salary range.
ENVIRONMENTAL REVIEW
The proposed staffing changes are not a project subject to the California Environmental Quality Act (CEQA) pursuant to section 15378(b)(5) of Title 14 of the California Code of Regulations as they are administrative activities that will not result in direct or indirect physical changes to the environment.
FISCAL IMPACT
The annual cost of an Assistant Director of Electric Utility is approximately $395,000. It is not anticipated that this position will be filled during FY 2023/24, so no current-year budget action is needed. If approved, the annual cost will be incorporated into the FY 2024/25 Adopted Operating Budget as part of the FY 2024/25 and FY 2025/26 Adopted Biennial Capital Improvement Program Budget. The cost of the five-year limited-term position will be factored into future budgets through FY 2028/29.
COORDINATION
This report has been coordinated with the Finance Department, Human Resources Department, and the 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 <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
That the City Council approve the addition of a new Limited-Term Assistant Director of Electric Utility Position for Silicon Valley Power to Support Delivery of the System Expansion Capital Projects.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jovan D. Grogan, City Manager