REPORT TO COUNCIL
SUBJECT
Title
Action Authorizing the City Manager to Negotiate and Execute Agreement(s) with Vendor(s) for the Purchase of High Voltage Disconnect Switches, Station Service Voltage Transformers, Voltage Transformers and Capacitive Voltage Transformers, and Combination Revenue Metering Transformers to be Funded by the Electric Utility Capital Fund
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
In November 2019, Silicon Valley Power (SVP) management met to discuss the strategic priorities for SVP and identified that the City of Santa Clara (the City) would experience significant electric load growth requiring SVP to develop a capital improvement strategy. Staff have determined the need for developing both near-term and long-term strategies to accommodate approved growth and develop the necessary infrastructure plan options.
On October 13, 2020, the City Council authorized the City Manager to execute master service agreements with several engineering consultant firms to support SVP with 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 City Council as part of the SVP Quarterly Report. The presentation concluded with the next steps, including the preparation of a system growth strategy to be presented at a future City Council meeting.
On September 28, 2021, the City Council accepted SVP’s Three-Year System Growth Plan Strategy (RTC # 21-871). This plan 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 for system reliability.
On April 5, 2022, the City Council adopted Resolution # 22-9069 adding new and updated connection and load development fees for SVP (RTC # 22-449). Additionally, on April 19, 2022, the City 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, effective July 1, 2022 (RTC # 22-99). These fees were further updated for fiscal year 2023/24 by the adoption of Resolution 23-9221 on April 18, 2023, and for fiscal year 2024/25 by adoption of Resolution #24-9316. Such fees and their corresponding increases are intended to maintain fees at cost recovery levels necessary to support electric load growth.
On November 15, 2022 (RTC # 22-1172), the City Council accepted SVP’s System Expansion Plan for the California Independent System Operator’s Transmission Planning Process FY2023/24 (SVP System Expansion Plan CAISO TPP FY2023/24). The purpose of this process is to project SVP’s load growth over the next ten years and apply it to an electric system model to simulate load growth impacts on SVP’s electric system.
On May 9, 2023, the City Council adopted Resolution # 23-9223 regarding the City’s intent to issue tax-exempt electric system bonds for reimbursement of expenditures for certain capital improvement projects for SVP (RTC # 23-104), including load growth projects and associated equipment and material purchases.
On July 18, 2023, staff presented an update on these key near-term projects necessary for system growth to the City Council as part of the SVP Quarterly Report (RTC # 23-757). At the same meeting, the City Council approved amendments to several master service agreements including increases to cumulative maximum compensations (RTC # 23-737).
A critical element of the necessary load growth noted in these City Council actions is the need to purchase long lead items to support the system expansion projects. On October 10, 2023, the City Council authorized the purchase of up to twelve (12) high voltage transformers from HD Hyundai Electric America Corporation with a total not-to-exceed amount of $81,392,908 (RTC # 23-122). On May 7, 2024, the City Council approved the purchase of high voltage circuit breakers for an amount not to exceed $38,000,000.
This report now seeks authorization for the purchase of additional critical equipment essential for the Northern Receiving Station (NRS), Kifer Receiving Station (KRS) and Scott Receiving Station (SRS) system expansion projects, as detailed in this report. The procurement is also requesting the purchase of critical equipment for the Esperanca Substation (ESP) which is a general distribution substation to support development in north Santa Clara.
DISCUSSION
The following four procurements require expedited methods for acquiring critical equipment needed to meet the construction schedules of the expansion projects mentioned above. All procurements have adhered to or will adhere to the City’s purchasing policy, including formal notification through the City’s e-procurement system. The request to obtain City Council approval for these purchases is being made concurrently with the various steps of the procurement process.
High Voltage Disconnect Switches
Pursuant to Section 2.105.140(d) of the Santa Clara City Code (City Code), a formal Request for Bids (RFB) was conducted with the award recommendation based on the lowest responsive and responsible bidder(s).
On March 13, 2024, the City issued the RFB for High Voltage Disconnect Switches, which was published on the City’s e-procurement system. In addition, the City contacted several firms directly, informing them of the RFB and directing them to the e-procurement system if interested. A total of 45 companies viewed the RFB, and six bids were received by the April 24, 2024, deadline from the firms listed below with the manufacturer they represent appearing in parentheses:
1. Pacific Utilities (Ashlee Kulback/Cleaveland Price Inc.)
2. Geo E. Honn Co. (EMSPEC Inc.)
3. Southern Electrical Equipment Company, Inc. (SEECO)
4. Sierra Utility Sales Inc. (Royal Swithgear Manufacturing Company)
5. SPX Transformer Solutions c/o Isberg Nott (GE Grid Solutions LLC)
6. Walker-Miller Energy Services, LLC (Pascor Atlantic)
Bids are currently being evaluated by staff to verify their conformance to the RFB. Staff is seeking authorization for the City Manager to enter into an agreement with the vendor(s) submitting the lowest responsive and responsible bid(s).
Alternatively, staff seeks authorization for the City Manager to enter into purchase orders or agreements with the vendors(s) pursuant to Section 2.105.200. If all six bids are deemed non-responsive or non-responsible, the Purchasing Division Manager may reject all bids under Section 2.105.200 and direct staff to negotiate with the bidders and other suppliers in the open market. Section 2.105.200 authorizes this direct negotiation and specifically provides that “if all bids or proposals are rejected, the Purchasing Division Manager or designee may re-notice the solicitation or award without further complying with the provisions of this Chapter [Chapter 2.105 of the City Code] if readvertising is determined to be an idle act.” The Purchasing Division Manager has determined that readvertising would be an idle act, as the City received an adequate number of bids and the outcome would not be different.
The description and quantities are listed in Table 1.
Table 1: High Voltage Disconnect Switches
|
High Voltage Disconnect Switches |
Station(s) |
Qty |
|
60kV vertical break, 4000A, 80kA |
KRS, SRS, NRS, ESP |
103 |
|
60kV center break Vee type, 4000A, 80kA |
SRS, KRS |
19 |
|
115kV vertical break, 4000A, 80kA |
KRS, SRS, NRS |
105 |
|
115kV center break Vee type, 4000A, 80kA |
SRS, KRS |
13 |
|
230kV vertical break, 3000A, 63kA |
NRS |
14 |
Station Service Voltage Transformers
Pursuant to Section 2.105.140(d) of the Santa Clara City Code (City Code), a formal Request for Bids (RFB) was conducted with the award recommendation based on the lowest responsive and responsible bidder(s).
On March 22, 2024, the City issued the RFB for Station Service Voltage Transformers, which was published on the City’s e-procurement system. In addition, the City contacted several firms directly, informing them of the RFB and directing them to the e-procurement system if interested. A total of 35 companies viewed the RFB, and no bids were received by the April 19, 2024, deadline. As a result, the Purchasing Division Manager directed staff to negotiate with suppliers of station service voltage transformers in the open market pursuant to Section 2.105.220 of the City Code. Section 2.105.220 authorizes this direct negotiation and specifically provides that “If no bids or proposals are received, the Purchasing Division Manager or designee may readvertise or may otherwise acquire in the open market without further complying with the provisions of this Chapter [Chapter 2.105 of the City Code].”
The description and quantities are listed in Table 2.
Table 2: Station Service Voltage Transformers
|
Station Service Voltage Transformers |
Station(s) |
Qty |
|
34.8 kV/208V/120V, 350kV BIL, 60Hz, 100kVA, SSVT Operates @60kV L-L |
KRS, SRS |
8 |
Voltage Transformers, Capacitive Voltage Transformers
Pursuant to Section 2.105.140(d) of the Santa Clara City Code (City Code), a formal Request for Bids (RFB) was conducted with the award recommendation based on the lowest responsive and responsible bidder(s).
On April 2, 2024, the City issued the RFB for Voltage Transformers, Capacitive Voltage Transformers, which was published on the City’s e-procurement system. In addition, the City contacted several firms directly, informing them of the RFB and directing them to the e-procurement system if interested. A total of 41 companies viewed the RFB, and five bids were received by the April 30, 2024, deadline from the firms listed below with the manufacturer they represent appearing in parentheses:
1. Geo E. Honn Co. (Ritz Instruments)
2. One Source Distributors (Hitachi)
3. SPX Transformer Solutions c/o Isberg Nott (GE Grid Solutions LLC)
4. Wesco (Hitachi)
5. Wesco (Trench)
Bids are currently being evaluated by staff to verify their conformance to the RFB. Staff is seeking authorization for the City Manager to enter into an agreement with the vendor(s) submitting the lowest responsive and responsible bid(s).
Alternatively, staff seeks authorization for the City Manager to enter into purchase orders or agreements with the vendors(s) pursuant to Section 2.105.200. If all five bids are deemed non-responsive or non-responsible, the Purchasing Division Manager may reject all bids under Section 2.105.200 and direct staff to negotiate with the bidders and other suppliers in the open market. Section 2.105.200 authorizes this direct negotiation and specifically provides that “if all bids or proposals are rejected, the Purchasing Division Manager or designee may re-notice the solicitation or award without further complying with the provisions of this Chapter [Chapter 2.105 of the City Code] if readvertising is determined to be an idle act.” The Purchasing Division Manager has determined that readvertising would be an idle act, as the City received an adequate number of bids and the outcome would not be different.
The description and quantities are listed in Table 3.
Table 3: Voltage Transformers, Capacitive Voltage Transformers
|
Voltage Transformers, Capacitive Voltage TransformersStation(s)Qty |
|
|
|
60kV VT, 350kv Bil, Max Phase to Ground 41.9kv, 1ph, Two Windings, Ratio 0.3wxyz 60hz, Single Bushing |
NRS, KRS, SRS, ESP |
88 |
|
115kV CVT. 550kv Bil, Max Phase to Ground 71kv, 1ph, Two Windings, Ratio 0.3wxyz 60hz, Single Bushing |
NRS, KRS, SRS |
90 |
|
230kV CVT, 1050kv Bil, Max Phase to Ground 141.4kv, 1ph, Two Windings, Ratio 0.3wxyz 60hz, Single Bushing |
NRS |
17 |
Combination Revenue Metering Transformers
The City plans to issue the RFB for Combination Revenue Metering Transformers by the end of May 2024. Staff is seeking authorization for the City Manager to (a) enter into an agreement with the vendor(s) submitting the lowest responsive and responsible bid, pursuant to Section 2.105.140(d); or (b) negotiate and execute purchase orders or agreements with the supplier(s), pursuant to Section 2.105.200 if the bids received are non-responsive or non-responsible; or (c) negotiate and execute an agreement with the supplier(s), pursuant to Section 2.105.220 if there are no bids received.
The description and quantities are listed in Table 4.
Table 4: Combination Revenue Metering Transformers
|
Combination Revenue Metering Transformers |
Station(s) |
Qty |
|
115kV Combination Revenue Metering Transformer (CT/VT) |
KRS, NRS |
14 |
|
230kV Combination Revenue Metering Transformer (CT/VT) |
NRS |
4 |
Summary
Subject to compliance with Chapter 2.105 of the City Code, staff is seeking authorization for the City Manager to negotiate and execute agreements and/or purchase orders for all four purchases: (1) high voltage disconnect switches, (2) station service voltage transformers, (3) voltage transformers and capacitive voltage transformers, and (4) combination revenue metering transformers, up to a total maximum aggregate amount of $17,400,000 inclusive of applicable taxes. The requested authorization is subject to review and approval as to form of all agreements and/or purchase orders by the City Attorney and appropriation of funds.
The majority of the total maximum aggregate amount is designated for the high voltage disconnect switches, with the remaining funds allocated for the station service voltage transformers, voltage transformers and capacitive voltage transformers, and combination revenue metering transformers.
Delivery Timeline
Deliveries are expected to take place between July 2025 and July 2027. Payment will be based on the successful completion of key milestones, including a minimum of 10% of the contract value retained until after final acceptance of the varying equipment types.
A two-year warranty period is anticipated to cover parts and labor and will commence upon final acceptance of each unit.
Additional Quantities
As part of the expansion, SVP may need to purchase additional, high voltage disconnect switches, station service voltage transformers, voltage transformers and capacitive voltage transformers, and combination revenue metering transformers. If such purchases are necessary, they will be made pursuant to City Code Section 2.105.130, which states “at the discretion of the Purchasing Division Manager, additional quantities may be purchased after the initial award of a contract or purchase order for general services or products. If the purchase of additional quantities or services increases the maximum compensation that exceeds the City Manager’s signature authority set forth in this chapter, or an amount previously approved by the City Council, then City Council approval is required.”
ENVIRONMENTAL REVIEW
The actions being considered do not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(b)(2) of Title 14 of the California Code of Regulations as the proposed actions solely involve the equipment purchases for NRS, KRS, SRS, and ESP.
FISCAL IMPACT
The amounts to be paid to the Vendors under these Agreements are for a not-to-exceed amount of $17,400,000 for the initial quantity of units noted in Tables 1-4, and an additional $2,610,000 for a 15% contingency of the total cumulative contract value. Appropriations are available in the Electric Utility Capital Fund for Esperanca Substation and the three receiving station rebuild and replacement projects - SRS, KRS, and NRS. Debt financing is planned in the budget to fund SRS, KRS, and NRS. SVP is expected to seek Council approval for the issuance of Debt Financing in 2024. If this debt financing is not approved, an alternative funding mechanism would need to be identified for these Agreements and the projects would overall be delayed.
COORDINATION
This report has been coordinated with the Finance 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
1. Subject to compliance with Chapter 2.105 of the City Code, review and approval as to form by the City Attorney, and appropriation of funds, authorize the City Manager or designee to negotiate and execute agreement(s) or purchase order(s) with vendors for the four purchases listed below, subject to a total maximum aggregate compensation amount of $17,400,000 plus a fifteen percent (15%) contingency ($2,610,000) for a total not to exceed amount of $20,100,000, as follows:
(a) High Voltage Disconnect Switches for an approximately three-year agreement term and a two-year warranty period;
(b) Station Service Voltage Transformers for an approximately three-year agreement term and a two-year warranty period;
(c) Voltage Transformers and Capacitive Voltage Transformers for an approximately three-year agreement term and a two-year warranty period;
(d) Combination Revenue Metering Transformers for an approximately three-year agreement term and a two-year warranty period; and
2. Authorize the City Manager or designee to (a) take any actions as necessary to implement and administer the agreement(s) and/or purchase orders, and (b) negotiate and execute amendments to the agreement(s) and/or purchase order(s) for (i) design changes, (ii) any unanticipated issues, (iii) extensions of the term, or (iv) the purchase of additional High Voltage Disconnect Switches, Station Service Voltage Transformers, Voltage Transformers and Capacitive Voltage Transformers, and Combination Revenue Metering Transformer, up to the $20,100,000 amount and subject to 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