3 7
7 7
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: April 15, 2024
Staff Report: 2312-2472
TITLE
Approval of a Blanket Purchase Order With Eaton (Cooper Power Systems, LLC) for the Purchase of Pad Mounted Electric Equipment for the Utility’s Electric Distribution System Not to Exceed $750,000 per Year, for a Total Not-To-Exceed Amount of $5,250,000 for 7 Years; CEQA Status – Exempt Under CEQA Guidelines Section 15301
RECOMMENDATION
Staff recommends that Council approve and authorize the City Manager or designee to execute a blanket purchase order with Eaton Cooper, not to Exceed $750,000 per year, for a total not- to-exceed amount of $5,250,000 for a period of 7 years.
BACKGROUND
Utilities purchases 15 kV oil insulated pad mounted switches for replacing old, failed switches and for all its on-going electric distribution projects, including Grid Modernization. The oil insulated pad mounted switches are an integral part of the electric distribution system.
Reliability of electric distribution system depends on the quality of equipment and its durability.
Utilities is responsible for maintenance and replacement of these switches as needed.
Whenever a switch needs to be replaced, due to failure or changes being made to the distribution system, it is necessary to install a switch that has a similar footprint to reduce outage time and avoid costly modification to the existing substructures. Having a single manufacturer for the switches results in less training for personnel to maintain the equipment and reduces maintenance of spare inventory stock. There have been authorized blanket purchase orders with suppliers of Eaton Cooper for oil insulated pad mounted switches over 15 years.
Solid dielectric switches are new and manufactured based on the latest technology available in the market. Though these switches are relatively expensive compared to oil insulated switches, they are more reliable and maintenance free, which will be beneficial in reducing outages and maintenance costs. Utilities staff is considering installing some of these switches at strategic locations as a pilot program. If found suitable, Utilities staff will move forward with replacing
3 7
7 7
all outdated switches with new solid dielectric switches.
Utilities staff will require switches for capital improvement projects (CIP) as well as for upcoming electric grid modernization projects. As a result, staff is requesting authorization to set the purchase limit at $750,000 per fiscal year based on historical expenditures and future projects.
ANALYSIS
The Utilities Department electric division is upgrading its existing electric distribution system to support the Electric Grid Modernization project. This purchase order authorization would allow staff to procure an additional number of Oil Insulated Pad Mounted Switches and more modern Solid Dielectric Switches for Electric Grid Modernization and for on-going CIP projects. By authorizing the blanket order to Eaton Cooper (attached as Attachment C), the Utilities will be able to purchase both types of switches directly from Eaton Cooper, the original equipment manufacturer, and will save approximately $2,710,000 (combined for oil insulated and solid dielectric switches) during the 7-year period.
Selecting and procuring switches from Eaton Cooper will ensure continued progress on Utilities’ capital improvement and electric grid modernization projects in a timely fashion. Based on the City’s consultant’s assessment, the City would need 10-15 switches per year for the next 7 years for scheduled grid modernization capital project. The grid modernization and on-going Capital Improvement projects require replacing the existing outdated switches that have exceeded their life spans and can fail without notice as well as adding additional capacity in the electric system requiring the installation of additional switches. The City will install new pad mounted switches at strategic locations as part of the electric grid modernization that will help the City optimize switching operations, reduce system outage time and improve reliability of the electric distribution system.
Procurement Process
The City Manager has approved a 10-year standardization for oil insulated pad mounted switches and solid dielectric switches under Palo Alto Municipal Code (PAMC) sections
2.30.360(e) and 2.30.900. It is the City’s practice for equipment standardization to be valid for a period of 10 years; prior to expiration, staff will review whether the standardization should be maintained or changing equipment will have added benefit.
Utilities engineering staff have reviewed drawings from different providers that supply this type of equipment. After review, the equipment from these providers either do not meet required specifications for the Palo Alto system needs or cannot be installed on the existing pads without requiring modification to the existing substructure. Matching existing materials or equipment is required for proper and efficient operation of the electric distribution system. 3 7
7 7
The City Manager has approved an exemption from competitive solicitation for the purchase of this equipment, per PAMC 2.30.360(d), as the equipment is available through a single provider.
Formal solicitations have been done in the past 10 years with Eaton Cooper being awarded the blanket orders. Utilities Engineering staff will present bi-annual cost comparisons and potential savings among different vendors to Council.
FISCAL/RESOURCE IMPACT
Funding for the first-year purchase of switches is available in the FY 2024 budget under EL- 24000 Electric Grid Modernization project. Staff compared pricing from distributor and manufacturer and found a cost savings of $802,000 and $1.91 Million over the span of 7 years, as shown in Attachments A and B. Funding for contract years two through seven are contingent upon Council appropriation and approval of funds through the annual budget process. The total value of this procurement over seven (7) years will not exceed $5,250,000.
STAKEHOLDER ENGAGEMENT
There was no need for stakeholder engagement since this is an internal process.
ENVIRONMENTAL REVIEW
Council action on this item is exempt from review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines 15301 and 15302 of the California Code of Regulations because purchasing switches for grid maintenance, repair, and modernization involves the repair and maintenance of existing facilities.
ATTACHMENTS
Attachment A: Cost Comparison of Oil Switches Between Manufacturer and Distributor Attachment B: Cost Comparison of Solid Dielectric Switches Between Manufacturer and Distributor
Attachment C: Blanket Purchase Order 4624000105
APPROVED BY:
Dean Batchelor, Director of Utilities
Staff: Mohammad Fattah, Electric Engineering Manager