DEPARTMENT
Hetch Hetchy Water and Power
AGENDA NO.
7c
MEETING DATE
May 14, 2024
AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
Calendar: Consent
Contract/Project Manager: Margaret Hannaford
Approve Amendment No. 2 to Contract No. PRO.0070, NERC Compliance and Audit Support
Summary of
Proposed
Commission Action:
Approve Amendment No. 2 to Contract No. PRO.0070, NERC Compliance and Audit Support , with Archer Energy Solutions, LLC , increasing the contract amount by $1,500,000 and extending the contract duration by one year, for a total not -to-exceed contract amount of $9,500,000 and a total contract duration of six years, for increased contract usage and a higher than expected spending rate as a result of hiring additional part-time consultants due to loss of San Francisco Public Utilities Commission staff.
Background: Hetch Hetchy Water and Power (HHWP), a Division of the San Francisco Public Utilities Commission (SFPUC), is an owner, operator, and user of the Bulk Electric System and as such is subject to compliance with the North American Electric Reliability Corporation (NERC) Reliability Standards. The HHWP is registered with NERC for the following reliability functions:
• Generator Owner (GO);
• Generator Operator (GOP);
• Transmission Owner (TO);
• Transmission Operator (TOP); and
• Transmission Planner (TP).
There are almost 1,000 applicable requirements, including upgrades to power, communication, and security facilities, that the SFPUC must meet to maintain compliance. HHWP must strictly operate to these standards, including process/procedures/documentation to demonstrate implementation of the requirements.
Violation of these standards either discovered by the Western Electricity Coordinating Council (WECC) or self -reported by HHWP can have significant financial and reputational implications. Along with monetary penalties ranging from $1,000 to $1,250,000 per day, violations of Reliability Standards may require SFPUC expenditures on legal defense, development of costly mitigation plans, SFPUC and City Attorney staff time, and impacts on City and County of San Francisco's reputation within the industry and with the public.
Agenda Title: PRO.0070, NERC Compliance and Audit Support, to Increase Amount and Duration Commission Meeting Date: May 14, 2024
On November 10, 2020, by Resolution No. 20-0222, th is Commission awarded Contract No. PRO .0070, NERC Compliance and Audit Support (Contract), to Archer Energy Solutions, LLC, to provide as-needed support to HHWP in meeting its obligations to comply with the NERC Reliability Standards, in an amount not-to-exceed $8,000,000 and a duration of five years.
Scope of Contract: The contract work location is the HHWP Project (Sierras to Newark).
The contract provides as-needed support to HHWP in meeting its compliance obligations with the NERC Reliability Standards, including but not limited to:
staffing and maintaining HHWP’s NERC compliance program; readiness assessment;
Subject Matter Expert (SME) training;
on-site audit/spot check support;
compliance process review, documentation and controls; cyber vulnerability assessments (CVAs);
functional registration review; and
maintaining compliance with and demonstration of existing, revised and/or new NERC Reliability Standards in the future.
Amendments to the
Contract:
Amendment No. 1 : On July 14, 2021 , by the delegated authority of Resolution No. 09-0017, the General Manager executed Amendment No. 1, to update an error in the original Overhead and Profit Rate, with no change to the original contract amount or duration.
Proposed Amendment No. 2: Staff recommends this Commission approve Amendment No. 2 t o increase the c ontract by $1,500,000, and extend the contract by one year , to provide continued NERC compliance and audit support to HHWP, increasing the total not -to-exceed amount of the c ontract to $9,500,000 and extending the c ontract duration to six years . HHWP experienced a loss of four HHWP electrical engineers over an eighteen-month period, putting at risk the SFPUC’s ability to maintain compliance to NERC Standards. To compensate for this loss, HHW P hired six part-time electrical engineering consultants, resulting in a higher than anticipated contract usage and an increased spending rate. This proposed amendment will enable the use of this contract for the intended purpose.
Funding and Costs: Funding Source: Hetch Hetchy Water and Power Operating Programmatic and Capital budget.
Original Not-to-Exceed Amount: $8,000,000
Amendment No. 1 Amount: $0
Proposed Amendment No. 2: $1,500,000
Total Not-To-Exceed Contract Amount: $9,500,000
Schedule: Original Duration: five years
Agenda Title: PRO.0070, NERC Compliance and Audit Support, to Increase Amount and Duration Commission Meeting Date: May 14, 2024
Amendment No. 1: none
Proposed Amendment No. 2 Duration: one year
Total Duration: six years
Local Business
Enterprise
Utilization and Non-
Discrimination in
Contracting:
The Contract Monitoring Division (CMD) waived the Local Business Enterprise (LBE) participation for this agreement.
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.
WHEREAS, The Hetch Hetchy Water and Power (HHWP), a Division of the San Francisco Public Utilities Commission (SFPUC), is an owner, operator, and user of the Bulk Electric System and as such is subject to compliance with the North American Electric Reliability Corporation (NERC) reliability standard; and
WHEREAS, There are almost 1,000 applicable requirements, including upgrades to power, communication, and security facilities, that SFPUC must meet in order to maintain compliance with NERC requirements , and HHWP must strictly operate to these standards, including process/procedures/documentation to demonstrate compliance with the requirements; and
WHEREAS, On November 10, 2020, by Resolution No. 20- 0222, th is Commission awarded Contract No. PRO.0070, NERC Compliance and Audit Support , to Archer Energy Solutions, LLC, to provide as-needed support to HHWP in meeting its obligations to comply with the NERC Reliability Standards , in an amount not-to-exceed $8,000,000 and a duration of five years; and
WHEREAS, On July 14, 2021, by the delegated authority of Resolution No. 09- 0017, the General Manager executed Amendment No. 1, to update an error in the original Overhead and Profit Rate, with no change to the original contract amount or duration; and WHEREAS, Staff recommends Commission approval of Amendment No. 2 to increase the contract amount by $1,500,000, and increase the contract duration by one year, to provide NERC Compliance and Audit Support, increasing the total not-to-exceed contract amount to $9,500,000 and extending the contract duration to six years; and
WHEREAS, Funds for this contract are available from the Hetch Hetchy Water and Power Operating Programmatic and Capital budgets; now, therefore, be it
RESOLVED, That this Commission hereby approves Amendment No. 2 to Contract No.
PRO.0070, NERC Compliance and Audit Support, to Increase Amount and Duration, with Archer Energy Solutions, LLC, increasing the contract amount by $1,500,000 and increasing the contract duration by one year, for a total not-to-exceed contract amount of $9,500,000 and a total duration of six years.
I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting of May 14, 2024.
Secretary, Public Utilities Commission