201 S. Anaheim Blvd.
Suite #1101
Anaheim, CA 92805
Tel: (714) 765-5173
www.anaheim.net
CITY COUNCIL AGENDA REPORT
City of Anaheim
PUBLIC UTILITIES DEPARTMENT
DATE: JULY 16, 2024
FROM: PUBLIC UTILITIES DEPARTMENT
SUBJECT: AGREEMENT FOR ENERGY TRADING AND RISK
MANAGEMENT SYSTEM SUBSCRIPTION SERVICE AND
GENERAL CONSULTING
ATTACHMENT (Y/N): YES ITEM # 18
GOVERNMENT CODE § 84308 APPLIES: YES
RECOMMENDATION:
That the City Council, by Motion:
1) Approve an Agreement with Power Costs, Inc. to implement, subscribe to, and provide consulting services to support an Energy Trading and Risk Management System (ETRMS) software solution (Agreement) for an initial term of seven (7) years with three (3) one-year extension options, including implementation costs of $1,050,000 and an average annual subscription cost of $912,531 for the initial term, plus a 15% contingency for as-needed services;
2) Authorize the Public Utilities General Manager or designees, on behalf of the City of Anaheim (City), to execute any and all related documents as necessary and take such actions as are necessary or advisable to implement, fund, and administer the Agreement, including extension letters; and 3) Authorize de minimis changes to the Agreement (and related or associated documents) that do not substantially change the terms and conditions of the Agreement, as determined by the City Attorney’s Office.
DISCUSSION:
At its meeting on June 26, 2024, the Public Utilities Board recommended that the City Council approve the Agreement for the Energy Trading and Risk Management System subscription service and general consulting services.
Anaheim Public Utilities (APU) utilizes a 17-year old Energy Trading and Risk Management System to conduct wholesale energy transactions and related regulatory compliance functions. The current software system is limited in its functionality and is in need of upgrading to a modern technology platform to effectively manage APU’s $300 million annual power supply budget by facilitating wholesale energy trading and resource management. The system also incorporates risk mitigation features associated with transactions within the California Independent System Operator (CAISO) energy markets.
Agreement for Energy Trading and Risk Management System Subscription Service and General Consulting July 16, 2024
One of the critical functions needed in a new technology platform is referred to as renewable integration. As APU progresses on the path to meet California’s aggressive environmental compliance requirements, scheduling of renewable resources and utilizing wholesale markets to manage gaps when APU has either too much or too little generation is needed. Additionally, APU seeks to incorporate battery energy storage solutions in the near future, which requires new dispatching protocols and data systems to maximize their use and maintain grid stability. The existing software system lacks the features and capabilities necessary to integrate and optimize the operational capabilities of these types of resources in a cost-effective manner.
On May 7, 2024, the City Council approved a project management services agreement with Baringa Partners LP (Baringa) to assist in implementing the new software solution.
Baringa was selected through a competitive solicitation and will support APU with integration, testing, data migration, verifying compliance requirements, documenting workflows, establishing reporting and related activities.
On May 31, 2023, APU issued a Request for Proposals seeking a fully integrated software solution encompassing key functions of power resource management, including CAISO protocol interfacing for wholesale transactions, regional market price forecasting, contract management, settlement reporting, emissions tracking, and financial analysis. Additional services requested include energy transaction management, comprehensive reporting, and regulatory compliance functions.
Seven (7) firms submitted proposals that were evaluated based on criteria consistent with Council Policy 4.1, and the top two firms were short-listed for detailed interviews and demonstrations of their software systems. Based on the ability for the software system to meet APU’s requirements, the firms’ experience, technical expertise, record of success on similar projects, and reasonableness of fees, the firms were ranked as follows:
Firm Rank
Power Costs Inc. 1
Power Settlements Consulting
and Software, LLC 2
Power Costs Inc. (PCI) is recommended as the highest rated firm. PCI provides a software solution utilized by other utilities including Los Angeles Department of Water and Power (LADWP), Salt River Project, and Portland General Electric. They further demonstrated that their software interfaces with CAISO systems and incorporates the necessary compliance functions.
The Agreement with PCI entails an initial implementation process and a seven-year subscription service term with optional one-year extension periods of up to three years.
Implementation costs will be $1,050,000 and the average annual subscription cost is $912,531 for the initial term. The Agreement includes a contingency of 15% for as- needed services during the term as there may be future regulatory or market changes requiring technical consulting, new reports, or system modifications.
Agreement for Energy Trading and Risk Management System Subscription Service and General Consulting July 16, 2024
The Agreement supports the 2023-24 Strategic Plan, Goal D – Foster a High-Performing Organization, Strategy 7 – Assess current technology to identify gaps and needs within City operations to better serve the community.
IMPACT ON BUDGET:
Sufficient funds are included in APU’s Fiscal Year 2023/24 restricted Electric Utility Fund budget, and future years will be subject to City Council’s approval of budget appropriations.
Respectfully submitted,
Dukku Lee
Public Utilities General Manager
Attachment:
1. Agreement with Power Costs, Inc. which includes:
Exhibit A – Scope of Services
Exhibit B – Subscription Fee and Payment Terms
Exhibit C – Storage Terms