REPORT TO THE CITY COUNCIL July 28, 2016 FROM: THOMAS C. ESQUEDA, Director Department of Public Utilities THROUGH: MICHAEL CARBAJAL, Division Manager Department of Public Utilities - Water Division BY: GLENN A. KNAPP, Professional Engineer Department of Public Utilities - Water Division SUBJECT ..Title Actions related to the Southeast Surface Water Treatment Facility: 1. RESOLUTION - Authorizing the Purchasing Manager of the Finance Department or designee to award the Rule 16 Power Extension Service Agreement without advertised competitive bidding utilizing the sole source exception in the Fresno City Charter 2. Approve a Rule 16 Power Extension Service Agreement with PG&E in the amount of $993,448.79 in providing electrical power to the City of Fresno's Southeast Surface Water Treatment Facility. Bid File 3369 (Citywide). 3. Authorize the Director of Public Utilities or designee, to sign the Agreement on behalf of the City of Fresno. ..Body RECOMMENDATIONS Staff recommends that Council approve the Rule 16 Power Extension Service Agreement (Agreement), with PG&E in providing electrical power for operation of the City of Fresno's Southeast Surface Water Treatment Facility (Facility), and authorize the Director of Public Utilities, or designee, to sign the Agreement on behalf of the City. EXECUTIVE SUMMARY Execution of this Agreement is required to assure availability of power for remaining facility work including project start-up/commissioning in meeting projected timelines for project completion in late 2018, and future ongoing operation of the facility. Costs associated with this Agreement will be funded through a State Revolving Fund (SRF) Low Interest Loan from the State Water Resources Control Board (Board), as previously accepted by the City Council for construction and completion of the project. BACKGROUND Electrical system design for the Facility project was completed by PG&E on April 17, 2016. Construction of onsite electrical components by PG&E is anticipated to begin in October 2016, and be completed prior to the end of the year to enable the construction of the onsite electrical substation by the contractor. Upon completion of substation construction, the contractor will coordinate with PG&E for delivery of power to the site for contractor installation of remaining electrical components, component testing, and project start-up and commissioning operations in order to meet project completion timelines and power needs for future operation of the facility. Although original Rule 16 Power Extension Service Agreement costs were determined to be $1,566,113.34, credits for previously paid PG&E design costs ($230,000) were applied, reducing this cost to $1,336,113.40. In addition, the City's Department of Public Utilities (DPU) has coordinated with PG&E on payment options based on estimated project power needs over the first three (3) years of operation resulting in an additional credit of $402,664.55, reducing total Agreement costs to $933,448.79. Pending facility power usages over the three year time period, the City may realize additional credits. Furthermore, in coordination with PG&E's New Construction Savings by Design Program, the DPU submitted application for additional credits for utilization of high efficiency electrical motors, lighting and other components throughout the site. PG&E review and acceptance of installed high efficiency electrical components will result in a future additional credit of $14,504.84. On September 10, 2015, the City Council approved acceptance of a $195,489,000 SRF Low Interest Loan through the Board for the Facility. Initial Agreement service costs as noted above, will be fully funded through this loan. ENVIRONMENTAL FINDINGS An Environmental Impact Report (EIR) was adopted by the Council on June 12, 2014, for this Project. An analysis has been performed pursuant to CEQA Guidelines �15162 to determine whether subsequent environmental review is required for the Project. Based on this analysis the following findings are made to support the determination that no subsequent environmental review is required: 1. No substantial changes are proposed in the Project which will require major revisions of the previous EIR due to the involvement of new significant environmental effects, or a substantial increase in the severity of previously identified significant effects. 2. No substantial changes occur with respect to the circumstances under which the Project is undertaken which will require major revisions of the previous EIR due to the involvement of new significant environmental effects, or a substantial increase in the severity of previously identified significant effects. 3. There is no new information which was not known or could not have been known at the time of the previous MND that the Project will have significant effects not discussed in the EIR. Furthermore, since an EIR was previously adopted for this Project, the considerations set forth in CEQA Guidelines �15162(a)(3)(C) and (D), related to the adequacy and feasibility of previously adopted mitigation measures, are not applicable. Based upon these findings, it has been determined that no further environmental documentation is required for this Project. LOCAL PREFERENCE Local preference was not implemented because PG&E is the sole provider of electrical power services throughout the local area. FISCAL IMPACT There is no impact to the General Fund. This Agreement will be funded by the State Revolving Fund Low Interest Loan through the Board as part of the Facility project. Appropriations are included in Water Division's FY2017 Capital Improvement Program adopted budget within the State Low Interest Loan funds for the SESWTF (40188). The loan repayments for the low interest loan were included in the water rate model used to create the five-year utility rate plan that was adopted by the City Council on February 26, 2015. Attachment: PG&E Power Extension Agreement