REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Execute Amendment No. 2 to the Software License and Support Agreement with Siemens Industry Inc., for the EnergyIP Meter Data Management System for a Total Not-to-Exceed Compensation of $1,543,419, and Ratify Previous Payments Exceeding City Council Authorization
Report
BACKGROUND
Role of the Meter Data Management System within the Advanced Metering Infrastructure Program
The City of Santa Clara’s electric utility, Silicon Valley Power (SVP), operates the Advanced Metering Infrastructure (AMI) program. The AMI program relies on multiple integrated systems to support automated reading of energy usage data from SVP’s customers throughout the city. A core component of AMI is the Meter Data Management System (MDMS), which functions as a central data repository and processing platform for all data collected through AMI. The MDMS receives raw data readings, validates and processes the data, and interfaces with downstream systems, including the City’s utility billing system. Without a functioning MDMS, the AMI program cannot support automated meter reading and billing.
Original Authorization of the MDMS Software Agreement
On August 18, 2009, as part of the AMI program, the City Council authorized the City Manager to enter into two separate agreements: one with Siemens Energy, Inc. (Siemens) to provide implementation services for the MDMS, and another with eMeter Corporation for software licensing, maintenance, and support services under a Software License and Maintenance Agreement (SLMA). The SLMA established the City’s rights to use the MDMS software and receive ongoing support and was authorized in an amount not to exceed $133,733, initially covering a two-year period. Under the terms of the SLMA, licensing and support services renewed automatically.
The MDMS software selected under the 2009 City Council authorization was the EnergyIP platform, which remains in use today as Energy IPv7.2 (EnergyIP MDMS). On September 17, 2012, the City Manager executed Amendment No. 1 to the SLMA to update the software and clarify the perpetual nature of the City’s software license. Subsequently, Siemens acquired eMeter Corporation and assumed all rights and obligations under the SLMA.
The data collected is encrypted during transmission across an isolated domain controlled by SVP and includes interval usage data, register read, and meter number. No PII or other sensitive data is collected by the system. In addition, Siemens must abide by the SMLA’s confidentiality provisions and is prohibited from disclosing any such information to a third party without the City’s prior approval.
DISCUSSION
This report addresses three related actions associated with the EnergyIP MDMS. First, it seeks City Council authorization to execute Amendment No. 2 to the SLMA. Second, it requests City Council ratification of prior payments made under the SLMA that exceeded the original authorization amount. Third, it seeks authorization for continued use of the EnergyIP MDMS.
(1) Amendment No. 2 to the SLMA
The EnergyIP MDMS is a critical component of the AMI ecosystem. Since its deployment, SVP has continued to rely on the SLMA for essential software maintenance and support services necessary to operate the AMI system.
Amendment No. 2 is necessary to update the SLMA to represent Siemens as the current software licensor following its acquisition of eMeter Corporation. The amendment also clarifies certain definitions related to the scope of work and support services, including support for the current software release and two prior releases of the licensed software.
The renewal terms of the SLMA remains unchanged, with automatic annual renewals unless the City provides written notice to Siemens of its intent not to renew at least 45 days prior to the applicable renewal date.
(2) Authorization for Past SLMA Payments
At the time the SLMA was executed in 2009, the City Council authorized the agreement in an amount not to exceed $133,733. Over time, as the agreement renewed annually and services continued without interruption, cumulative expenditure exceeded the originally authorized amount. Table 1 below summarizes the original City Council authorization, the total cumulative expenditures paid through June 30, 2025, and the amount subject to ratification.
Table 1 - SLMA Authorization and Ratification Summary
|
Description |
Amount |
|
Total Cumulative Expenditures from August 18, 2009, to June 30, 2025 |
$911,286 |
|
Original 2009 City Council Authorized Amount |
$133,733 |
|
Amount Subject to Ratification |
$777,553 |
These expenditures were incurred for ongoing software maintenance and support services necessary to operate a critical component of the AMI system and did not involve changes in scope or authorized services. Staff is bringing the matter forward for transparency and requesting City Council ratification of the prior payments.
In previous reports requesting ratification, staff noted that as agreements with payments exceeding the City Council authorization are identified, any necessary ratification actions will be brought forward to address the overage and ensure transparency. For many of these, the issue has been historical interpretations of expenditure authority and limits. In addition, the City does not have an automated system to track cumulative contract expenditures, which makes it more difficult to manage. To improve the City’s ability to track cumulative expenditure and reduce the risk of oversight under the current manual process, the Purchasing Division is working to implement the Procurement Contracts module within the City’s financial management system, PeopleSoft. This project, which is expected to be completed this year, will automate and centralize contract management and enhance control over all contract-related activities throughout their term.
(3) Ongoing MDMS Licensing Support and Maintenance Services
SVP has a planned upgrade of the EnergyIP MDMS to transition from the current on-premises platform to a Software-as-a-Service (SaaS) version. Upon completion of the upgrade, the existing SLMA would be replaced with a new software agreement applicable to the SaaS platform. Until the planned upgrade is complete, the SLMA must remain in place to provide continued software licensing, maintenance, and support for the existing on-premises EnergyIP MDMS.
The upgrade is currently anticipated to be completed in 2027. In the interim, to ensure uninterrupted system support, staff is seeking City Council authorization to renew the SLMA for up to an additional five years through June 30, 2030, in an amount not-to-exceed $632,133, for a total maximum compensation of $1,543,419. This authorization would provide coverage in the event the upgrade is delayed or if a decision is made to continue operating the on-premises platform for a longer period.
Table 2 below summarizes the maximum compensation under the SLMA, including the amount from Table 1. Estimated annual SLMA costs assume a 5% annual price increase and include a 10% contingency for any unanticipated services or requirements. These costs currently support approximately 63,000 meters and allow for growth of up to 88,000 meters at no additional cost.
Table 2 - Summary of Total and Projected SLMA Expenditures
|
Description |
Amount |
|
Total Cumulative Expenditures from August 18, 2009, to June 30, 2025 |
$911,286 |
|
|
|
|
Ongoing SLMA Costs |
|
|
Current SLMA Cost (July 1, 2025, to June 30, 2026) |
$104,000 |
|
Estimated SLMA Cost (July 1, 2026, to June 30, 2027) |
$109,200 |
|
Estimated SLMA Cost (July 1, 2027, to June 30, 2028) |
$114,660 |
|
Estimated SLMA Cost (July 1, 2028, to June 30, 2029) |
$120,393 |
|
Estimated SLMA Cost (July 1, 2029, to June 30, 2030) |
$126,413 |
|
10% Contingency |
$57,467 |
|
Subtotal |
$632,133 |
|
|
|
|
Total Not-to-Exceed Maximum Compensation |
$1,543,419 |
ENVIRONMENTAL REVIEW
The proposed actions involve the approval of amendments to existing software agreements; therefore, the actions being considered do not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to Section 15061(b)(3) of Title 14 of the California Code of Regulation in that it can be seen with certainty that there is no possibility that the proposed actions may have a significant effect on the environment.
FISCAL IMPACT
Sufficient funds for the SLMA are available in the FY 2025/26 Operating Budget in the Electric Utility Operating Fund and may be included in capital projects budget where appropriate. Funding for future years will be included in the regular budget process.
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. Authorize the City Manager or designee to execute Amendment No. 2 to the Software License and Support Agreement (SLMA) with Siemens Industries, Inc., for the EnergyIP Meter Data Management System, for a maximum compensation amount of $1,543,419, for the period from August 18, 2009, to June 30, 2030, subject to budget appropriations and the review and approval as to form by the City Attorney;
2. Ratify previous expenditures made under the SLMA in an amount of $777,553 for the period from August 18, 2009, through June 30, 2025; and
3. Authorize the City Manager or designee to take any actions necessary to implement and administer the SLMA, and negotiate and execute future amendment(s) to (a) add or delete services associated with the services, (b) adjust future rates consistent with market conditions, and (c) make de minimis changes, subject to budget appropriations and the review and approval as to form by the City Attorney.
Staff
Reviewed by: Nico Procos, Director of Silicon Valley Power
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. August 18, 2009, Agenda Report
2. Original Software License and Maintenance Agreement with eMeter Corporation
3. Amendment No. 1 to the Software License and Maintenance Agreement with eMeter Corporation
4. Proposed Amendment No. 2 to the Software License and Maintenance Agreement with Siemens Industries, Inc.