City Council Agenda Report
Meeting Date: March 21, 2023
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Administrative Analyst
Subject
Change Order No. 18 to Amended and Restated Services Agreement with Siemens Energy, Inc.
Recommendation
A. Find that approval of the proposed action is exempt from California Environmental Quality Act (CEQA) review, because it is a government fiscal activity that will not result in direct or indirect physical changes in the environment, and therefore does not constitute a “project” as defined by CEQA Guidelines Section 15378; to the extent the Services Agreement with Siemens Energy provides for facility and equipment maintenance or repairs, such work is categorically exempt from CEQA review, in accordance with CEQA Guidelines Section 15301, because the project consists of the maintenance, repair or minor alteration of existing structures, facilities, or equipment, and involves negligible or no expansion of an existing use; B. Approve and authorize the City Administrator to execute Change Order No. 18 to the Amended and Restated Services Agreement with Siemens Energy, Inc. (Siemens Energy), in substantially the same form as submitted, to perform an L4 generator inspection and maintenance overhaul on the combustion turbine generators and post outage Life Expectancy Analysis Program testing; and
C. Authorize a contingency amount of $45,000 in the event of unforeseen changes in the project and grant authority to the City Administrator to issue Change Orders for an amount up to the contingency amount, if necessary.
Background
On November 16, 2021, City Council adopted Resolution No. 2021-41, approving a Purchase and Sale Agreement (PSA) with Bicent (California) Malburg LLC (Bicent) for the acquisition of the Malburg Generating Station (MGS). Under the PSA, the City is required to assume or otherwise comply with certain vendor contracts previously entered by Bicent. As such, the City was obligated to assume the existing Long Term Service Agreement (LTSA) between Bicent and Siemens Energy, Inc. (Siemens Energy). On September 20, 2022, City Council approved Change Order No. 17 to the Amended and Restated Services Agreement with Siemens Energy to revise the Escalation Factor.
As assigned, the LTSA was designed for Siemens Energy to provide program parts, non-program parts, miscellaneous hardware, inspection hardware, generator parts, generator scheduled outages, steam turbine parts, steam turbine scheduled outages, scheduled outage services, and program management services for the ongoing needs of MGS.
MGS has experienced ongoing Partial Discharge (PD) phenomena associated with its L4 generators. PD is commonly experienced in aging generators as electrical insulation breaks down and currents “track” along dirt and debris accumulated throughout the generator. If left unchecked, PD has the potential to lead to an unrepairable failure of a generator. Consequently, Vernon Public Utilities requested Siemens Energy provide Change Order No. 18 to inspect the L4 generators, perform a maintenance overhaul on the combustion turbine generators (CTGs), and post outage Life Expectancy Analysis Program (LEAP) testing. During overhaul of the generators, rotors will be inspected, and the end windings will be cleaned of accumulated dirt/grease and other airborne petrochemical residuals which will serve to reduce the risk of tracking. The L4 generator inspections are quite extensive and require removal of the generator rotors using specialty and proprietary tooling which Siemens Energy holds. The required overhaul would be completed during the 2023 Fall Outage scheduled from November 5, 2023 through November 30, 2023.
Staff recommends City Council approval of Change Order No. 18; and recommends a contingency amount of $45,000 in the event of unexpected changes in project conditions or to accommodate additional required work. Given the magnitude and complexity of the project, a contingency in the amount requested is within a typical range for the size and scope of the project.
Change Order No. 18 has been reviewed and approved as to form by the City Attorney’s Office and proprietary pricing information has been redacted.
Fiscal Impact
The fiscal impact is estimated in the range of $450,000 to $510,000. Funds for the proposed change order will be included in the Fiscal Year 2023-24 MGS budget.
Attachments
1. Change Order No. 18 - Siemens Energy Inc. - redacted