REPORT TO COUNCIL
SUBJECT
Title
Action on a License Agreement for Silicon Valley Power (SVP) Authorizing the City Manager to:
1. Execute Amendment No. 1 to the current License Agreement with Energy Exemplar, LLC to add third party software used to generate forecast models for timing of power purchases; and
2. Negotiate and execute additional amendments to add or delete services or licenses consistent with the scope of the agreement and allow future rate adjustments not to exceed a fifteen percent (15%) annual increase, subject to appropriation of funds.
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
This action amends an existing agreement for a software product currently used by SVP. Therefore, competitive bidding is not required.
In order to produce a 10-year resource forecast model, and support the production and forecast of the operations budget, the City of Santa Clara’s Electric Department, Silicon Valley Power (SVP) uses PLEXOS which is a licensed software distributed by Energy Exemplar, LLC. In addition to SVP’s need for assembling a production cost forecast for budgetary purposes, SVP has various needs to generate production cost simulations in order to participate in: California Independent System Operator (CAISO) stakeholder initiatives, California Public Utility Commission (CPUC) proceedings, Integrated Resource Planning and reporting to regulatory agencies, and/or internal sensitivity studies when market conditions for fuel, hydro year conditions, carbon allowance value, or other key marginal costs of SVP’s supply portfolio change significantly from previous modeled expectations. These study simulations require the use of various industry mathematical standards that may change and require Energy Exemplar to update the application.
This agreement renews annually, and the City may terminate the agreement for convenience at any time upon thirty days’ notice. PLEXOS software is widely used in the industry and replacing PLEXOS with another software would require substantial time and expense to rebuild all SVP generation resource models.
DISCUSSION
Amendment No. 1 to the License Agreement with Energy Exemplar includes modification of a list of sources that provide the mathematical standard used by the PLEXOS application to model SVP’s forecast models and run various sensitivities to support forecast, budget, and resource planning requirements. Access to these updated mathematical standards will keep the application running with the latest industry standards.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378 (b)(4) in that it is a fiscal activity that does not involve commitment to a specific project which may result in potential significant impact on the environment.
FISCAL IMPACT
The current annual operating license with the new updated and additional mathematical function sources will be $72,800 and funding is available in the Electric Department Risk Management program's operating budget for FY 2022/23. Funding for future years will be incorporated into the biennial budget.
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 <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Authorize the City Manager to:
1. Execute Amendment No. 1 to the current License Agreement with Energy Exemplar, LLC to add third party software used to generate forecast models for timing of power purchases; and
2. Negotiate and execute additional amendments to add or delete services or licenses consistent with the scope of the agreement and allow future rate adjustments not to exceed a fifteen percent (15%) annual increase, subject to appropriation of funds.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Rajeev Batra, City Manager
ATTACHMENTS
1. Original License Agreement
2. Proposed Amendment No. 1