REPORT TO COUNCIL
SUBJECT
Title
Action on Silicon Valley Power System Expansion Plan for California Independent System Operators Transmission Planning Process FY2023/024 Agreement with Power System Professionals, Inc. Doing Business as Power Pros (Power Pros), Related Budget Amendments (Five Affirmative Votes Required), and Addition of New Positions
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services
BACKGROUND
The City of Santa Clara’s Electric Utility, Silicon Valley Power (SVP), has provided dependable electric service for over 125 years. SVP’s 2021 actual recorded peak load was 598 MW and energy delivery nearly 4,110 Gigawatt-hours (GWh) a year to SVP’s customers. Thus far for calendar year 2022, SVP has experienced significant load growth and recorded a system peak of 702 MW during the September 2022 heat wave. SVP is projecting that energy delivery in 2022 will reach 4,550 GWh a 10.5% increase from calendar year 2021. Based on SVP’s experience with how new load develops SVP is preparing for its system peak load to double over the next 10 years and an increase the number of substations from twenty-three (23) to up-to thirty-one (31) by 2032.
At the September 28, 2021, City Council meeting, Council accepted SVP’s Three-Year System Growth Strategy Plan, prepared by Electrical Consultants Inc. (ECI). The Three-Year System Growth Strategy Plan presents an analysis of SVP’s transmission system. The Three-Year System Growth Strategy Plan identified $300 million in proposed projects to install new facilities and to replace aged infrastructure with higher capacity infrastructure when needed. An amendment to the agreement with AECOM Technical Services, Inc. (AECOM) was authorized and executed, and AECOM has been onboarded to provide program management and project management support to assist with this effort. Staff recently provided an update to Council on the key projects on November 1, 2022, as part of the SVP quarterly report.
DISCUSSION
Pursuant to the California Independent System Operators (CAISO) Transmission Planning Process (TPP), and the California Energy Commission’s (CEC’s) Integrated Energy Policy Report (IEPR) processes; Load Forecasting is an annual process coordinated internally by SVP’s Transmission & Distribution Planning and Resource Divisions. 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. SVP submits calendar year 2021 existing peak load and projections in its 2022 IEPR forecast to the CEC for inclusion in the California Independent System Operators (CAISO) TPP for FY2023/24 where the load growth is included in CAISO’s electric system model to evaluate the impact of SVP’s load growth on Pacific Gas & Electric’s (PG&E) System Grid. Based on these projections, SVP anticipates a peak system load of 819 MW in 2025 and a peak system load of 1,306 MW in 2032.
The attached SVP System Expansion Plan TPP FY2023/24, prepared by Electrical Consultants Inc. (ECI), presents an analysis of SVP’s transmission system. The purpose of the study is to identify Near-Term and Long-Term system improvements for SVP to consider to maintain electric service reliability with consideration of the load growth. This report provides additional information, details and technical basis for the analysis that was completed, including proposed infrastructure projects in addition to those previously presented to Council. The Summary of Proposed Projects for SVP System Growth Strategy (Proposed Projects) attached includes the comprehensive project list from this study with conceptual cost estimates for the projects. These estimates will change in the future as designs are developed. As described in the attached Proposed Projects, there are over $200 million of proposed projects for this study period.
In summary, the identified work includes replacement of aged infrastructure and installation of new facilities which will allow higher internal SVP system capacity. These projects would add two additional internal 60kV loops totaling 13 miles of new transmission loops along with a number of reliability upgrades including 6.5 miles of reconductored transmission lines required to serve the additional projected internal load (1,306 MW by 2032). It is important to note that the first step in the process for the new internal 60Kv loops is to determine feasibility (design). Additional CAISO transmission capacity would also be required to fully take advantage of the internal capacity.
If both loops are constructed, the internal 60kV loop capacity will be increased from 1,270 MW’s by approximately an additional 50%. Funding for the design to reconductor existing transmission lines and New Transmission Loop 1 are available in the FY2022/23 Capital Budget. Additional appropriations will be required for the New Transmission Loop 2 Project which will serve customer load growth and is expected to be recovered through developer contributions. The costs and timelines will be updated as the overall program and projects are developed.
The SVP Multi-Year System Expansion Plan is intended to be a living document which will be updated for the TPP process and will be reviewed and changed annually in the future to adapt for several factors including load ramp, project feasibility, delivery capacity, shifting needs, priorities, and finances. Through the TPP and IEPR process, the CAISO will determine what, if any, projects are required outside of SVP’s electric grid to support the load growth.
Agreement with Power System Professionals, Inc. Doing Business As Power Pros
As a part of this analysis, staff and ECI evaluated the costs of testing and commissioning services associated with new and rebuilt substations, and transformer and breaker upgrade projects associated with SVP’s System Expansion Plan.
In May 2021, the City issued an SOQ for as-needed electric equipment repair, maintenance, and testing services, using the City’s e-procurement system. An agreement with Power Pros resulting from this SOQ was authorized by City Council in September 2021 for maintenance and repair services. The approved agreement included only ongoing maintenance and repair services at existing substations and did not include costs for commissioning of new substations. Now that this analysis is complete, significant additional work will be required. Staff recommends that the City Council authorize the City Manager to negotiate and execute a separate agreement with Power Pros associated with commissioning the following:
• 10 new or upgraded substations
• Three receiving stations
• 60kV breaker upgrades
• Other activities associated with SVP’s System Expansion Plan.
As defined in the agreement, all services are provided at time and materials rates with each project authorized in advance using a Purchase Order. The maximum compensation under this separate agreement is anticipated not to exceed $17.5 million and the work would occur over a 5+ year period. Staff recommends a separate agreement to best separate costs associated with maintenance and repair from costs associated with the System Expansion Plan.
New Positions
Staff also recommends adding new positions to account for the additional workload to support management, design, and implementation of the new projects with SVP’s System Expansion Plan including the additional $200 million in proposed projects.
In order to support the increase of Capital Project Engineering and Management of CIP activities, staff recommends the addition of the following staff (all funded by Electric Utility Funds): one (1) Electric Program Manager, one (1) Senior Electric Utility Engineer, one (1) Senior Electric Water System Operator, one (1) Electric Utility Network Administrator, and one (1) Service Coordinator. The Electric Program Manager and Senior Electric Utility Engineer positions will lead the design development and oversight for over $150 million overhead 60kV transmission loops and reconductoring of existing 60k transmission loops to serve increased loads. They will also be embedded on the System Expansion Program Management team overseeing the consultant design engineer and supporting the completion of developer funded projects. Staff believes this combination of new staff with the AECOM consultant team providing program and project management support provides the best approach for successfully completing the significant capital program associated with SVP’s System Expansion Plan.
The Senior Electric and Water System Operator and Service Coordinator positions will focus on Operations Coordination and Inspection of existing infrastructure slated to be upgraded along with coordination of construction activities on an energized electrical System. The Electric Network Administrator will focus on network and communication requirements for the new customer junction substations and operational technology needs associated with the System Expansion Plan.
ENVIRONMENTAL REVIEW
The actions being considered do not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to the following sections of Title 14 of the California Code of Regulations: (1) Section 15060(c)(2) in that the proposed actions are planning activities that will not result in a direct or reasonably foreseeable indirect physical change in the environment; and (2) section 15378(b)(5) in that the proposed actions are administrative fiscal activities that will not result in direct or indirect physical changes in the environment. The three-year system growth strategy is an informational document that address system growth resulting from private development that has completed CEQA and has already received City approvals. When and if the capital projects included in the growth strategy move forward appropriate CEQA will be completed as required prior to construction.
FISCAL IMPACT
The costs of these services provided by Power Pros, additional staff, and the additional projects will be funded by the Electric Utility Capital and Operating Funds with developer contributions supporting new Capital Improvement Projects (CIPs) and customer service revenue supporting ongoing operations and maintenance. There will be no impact to the City General Fund.
Projects associated with the SVP System Expansion Plan for TPP for FY2023/24 are anticipated to be funded primarily through the Load Development Fees with a smaller percentage from Customer Service Fees when projects are associated with maintenance or upgrade of the existing system. The Load Development Fee recovers the portion of the bulk electric system reinforcement work that SVP will need to do as a result of the additional load required by that customer. Staff will recommend adjustments to those fees, as needed, through subsequent action.
In FY2022/23, staff recommends adding funding of $2.0 million in the Electric Utility Capital Fund for the New Transmission Loop 2 Project to fund the design, supported by Developer Contributions as shown below. Budget adjustments are not required for the existing CIP 2459 Reconfigure Northwest and Center Loops, and the project description will be adjusted to describe the new Transmission Loop 1 Project.
Staffing
The annual cost to add one (1) Electric Program Manager, one (1) Senior Electric Utility Engineer, one (1) Senior Electric and Water System Operator, one (1) Electric Utility Network Administrator, and one (1) Service Coordinator totals $1,381,000. The recommended action for FY2022/23 funds half of the annual cost to account for the remainder of the year in the amount of $690,500.
The following FY2022/23 budget adjustments are required to appropriate funds for new positions from the Electric Utility Operating Fund and to establish the New Transmission Loop 2 project in the Electric Utility Capital Fund:
Budget Amendment
FY2022/2023
|
|
Current |
Increase/ (Decrease) |
Revised |
|
Electric Utility Operating Fund (091) |
|
|
|
|
Expenditures |
|
|
|
|
Electric Department (for Salaries and Benefits) |
$565,663,949 |
$690,500 |
$566,354,449 |
|
Unrestricted Ending Fund Balance |
$30,638,804 |
$(690,500) |
$29,948,304 |
|
Electric Utility Capital Fund (591) |
|
|
|
|
Revenues |
|
|
|
|
Developer Contributions (New Transmission Loop 2 Project) |
$0 |
$2,000,000 |
$2,000,000 |
|
Expenditures |
|
|
|
|
New Transmission Loop 2 Project |
$0 |
$2,000,000 |
$2,000,000 |
Expenses associated with the Agreement with Power Pros are included in the budget for each capital project. Appropriations needed in future years will be requested as part of the regular biannual budget process.
COORDINATION
This report has been coordinated with the Finance Department, Human Resources, 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>.
RECOMMENDATION
Recommendation
1. Accept a report on the SVP System Expansion Plan for California Independent System Operators Transmission Planning Process FY2023/24;
2. Authorize the City Manager to negotiate and execute an Agreement for Services Between the City of Santa Clara, California and Power System Professionals, Inc. doing business as Power Pros for a maximum compensation not to exceed $17,500,000, subject to appropriation of funds;
3. Authorize the City Manager to execute amendments to increase maximum compensation in the event that additional services are required, subject to the appropriation of funds and take such additional actions as needed or required in furtherance of the agreement;
4. Approve the addition of one Electric Program Manager, one Senior Electric Utility Engineer, one Senior Electric and Water System Operator, one Electric Utility Network Administrator, and one Service Coordinator positions in the Electric Utility Department; and
5. Approve the following FY2022/23 budget amendments:
a. In the Electric Utility Fund, increase the Electric Department appropriation by $690,500 and reduce the unrestricted ending fund balance by $690,500 (five affirmative Council votes required for the use of unused balances);
b. In the Electric Utility Capital Fund, increase the revenue estimate for developer contributions in the amount of $2,000,000, and establish the New Transmission Loop 2 project appropriation in the amount of $2,000,000 (five affirmative Council votes required to appropriate additional revenue).
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Rajeev Batra, City Manager
ATTACHMENT
1. Silicon Valley Power - System Expansion Plan for TPP 2023/2024
2. Summary of Proposed Projects for SVP System Growth Strategy