Agenda Item: 8
CITY OF SANTA CLARITA
AGENDA REPORT
CONSENT CALENDAR
CITY MANAGER APPROVAL:
DATE: December 13, 2022
SUBJECT: "PIGGYBACK" AGREEMENT AND TACenergy, LLC, FOR THE
PURCHASE OF RENEWABLE GREEN DIESEL FUEL CONTRACT
DEPARTMENT: Economic Development
PRESENTER: Adrian Aguilar
RECOMMENDED ACTION
City Council:
1. Approve the “piggyback” purchase of renewable green diesel fuel from TACenergy, LLC using OMNIA Partners contract #53317 in an amount not to exceed $340,000
2. Authorize the City Manager or designee to approve the use of the TACenergy, LLC contract through OMNIA Partners for one-year, through December 31, 2023, with the option of a one-year renewal in an amount not to exceed the annual base contract amount of $340,000.
3. Authorize the City Manager or designee to execute all contracts, subject to City Attorney approval.
BACKGROUND
Santa Clarita Transit is in the process of converting its commuter bus fleet to compressed natural gas (CNG). As the remaining diesel-powered buses reach the end of their useful life, they are being replaced with CNG-powered buses. The City of Santa Clarita (City) currently has eight diesel buses remaining in the fleet. The full conversion is expected to be completed by 2027. As the remaining diesel-powered vehicles are retired, the use of diesel fuel will decline but will not be completely eliminated. The emergency generator installed at the Transit Maintenance Facility is diesel-powered and allows the City to continue critical operations during emergencies.
After research, staff determined the most efficient way to purchase renewable green diesel is through cooperative procurements or "piggybacking." On July 11, 1995, the City Council approved cooperative "piggybacking" purchasing. This process permits the City to place orders against a competitively awarded, existing public agency contract.
A recent cost analysis revealed that the OMNIA Partners (OMNIA) cooperative contract with TACenergy, LCC, for purchasing and delivering renewable green diesel fuel provides competitive pricing and the best value to the City. As noted in the attached Executive Summary, the agreement with TACenergy, LCC, was competitively procured through a nationwide bid process and is valid through December 31, 2024. A copy of the executed agreement is attached as reading file material.
The City is a registered member of OMNIA and is currently participating in OMNIA cooperative contacts with various vendors. Participation in OMNIA contracts is free, with no participation fees or minimum ordering requirements. OMNIA cooperative contracts allow the City to take advantage of pricing based on volumes more extensive than the City could generate, secure competitive rates, and avoid the costly and time-consuming procurement process.
Renewable diesel fuel pricing is based on market rates reported by the Oil Price Information Service (OPIS). As noted in the Santa Clarita Purchase Agreement 2023 attached as reading file material, the OPIS rate will be based on the renewable diesel fuel daily gross contract average in Los Angeles, California, minus $0.0275 per gallon. Staff performed a fuel use and cost analysis and determined this is the most cost-effective and efficient method for the City to procure renewable diesel based on the projected fuel use.
Also attached for reference is a fact sheet providing information on and an overview of renewable diesel fuel and its advantages.
ALTERNATIVE ACTION
Other action as determined by the City Council.
FISCAL IMPACT
Funds were appropriated during the Fiscal Year (FY) 2022-23 budget process in the Transit Operating Budget. Funding beyond FY 2022-23 will be included in the FY 2023-24 Operating Budget and presented to the City Council as part of the FY 2023-24 budget process. This action does not require the use of General Fund.
ATTACHMENTS
Executive Summary - Fort Worth & TACenergy - OMNIA Partners Fact Sheet - Neste MY Renewable (Green) Diesel
Purchase Agreement - TACenergy / City of Santa Clarita Agreement 2023 (available in the City Clerk's Reading File)
Executed Agreement - City of Fort Worth & TACenergy - OMNIA Partners (available in the City Clerk's Reading File)