City Council Agenda Report
Meeting Date: June 20, 2023
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Administrative Analyst
Subject
Services Agreement with EN Engineering, LLC
Recommendation
Approve and authorize the City Administrator to execute a Services Agreement with EN Engineering LLC (EN Engineering), in substantially the same form as submitted, for Natural Gas Operational and Compliance Support Services for a total amount not-to-exceed $185,000, for a one-year term, with an option to extend the Services Agreement up to a three-year term.
Background
The Natural Gas Division of the City’s Public Utilities Department (VPU) was established in 2006 with a large distribution system to serve the City’s robust industrial sector. The City provides natural gas to approximately 125 commercial and industrial customers and has the infrastructure to serve about 900 customers within the City’s service area. The City's transmission system became operational in 2005. Although Vernon may be a small city with a gas utility serving approximately 120 customers, VPU is one of the largest municipal gas providers by volume in the United States.
As a small gas utility, Vernon maximizes the operational efficiency of its gas system by using fulltime employees to handle daily operating requirements while using outside expertise for other periodic or otherwise specialized requirements. This strategy maintains efficiencies, keeps internal costs competitive, and ensures that expertise and experience are available and applied when needed.
The pipeline industry is under heightened scrutiny by regulators, the media, and the public. In 2018, the Pipeline Hazardous Materials Safety Administration (PHMSA) outsourced the California Pipeline Safety Audits to the California Public Utilities Commission (CPUC). More recently, VPU was notified to expect annual audits. This represents a dramatic increase, as PHMSA audits were previously conducted every two to three years. In addition, the CPUC audits are performed by a team of technical experts, as opposed to PHMSA audits that were performed by a single inspector. VPU is scheduled for a comprehensive inspection in October 2023 to comply with Title 49, Code of Federal Regulations, Parts 191, 192, and 199. Several factors necessitate continued compliance support services, including increased audit scrutiny, the need to develop and implement feedback from CPUC inspectors in recent years, and compliance with impactful new regulations.
VPU is currently utilizing the services of G2 Integrated Solutions, LLC (G2 Integrated Solutions), an EN Engineering Company, for Natural Gas Compliance Support Services. However, the services agreement with G2 Integrated Solutions is set to expire on June 30, 2023. Therefore, to avoid a lapse in this essential service and in accordance with Vernon Municipal Code (VMC)
3.32.080, staff issued a Request for Proposals (RFP) for Natural Gas Operational and Compliance Support Services on March 20, 2023. The RFP was advertised on the City's Planet Bids platform. The RFP identified the following compliance areas: Audit Support, Regulatory Compliance Support, Programs Documents and Procedure, Subject Matter Expertise in the documentation and development of processes, Quarterly Compliance and Record Reviews, General Compliance Support, and Training Resources.
Subsequently, proposal packages were received from five firms by the April 13, 2023 deadline.
Those firms were: (1) CAMS Midstream Services, LLC (CAMS); (2) EN Engineering, LLC (EN Engineering, formally G2 Integrated Solutions); (3) Energy Experts International, Inc. (EEI); (4) EverLine Compliance, LLC (EverLine), and (5) Rod Walker & Associates Consultancy (RWA).
A qualified panel thoroughly examined each proposal utilizing criteria to measure experience, work plan, references, and cost. The top two scoring firms were interviewed, and EN Engineering demonstrated expertise and experience through a comprehensive approach to Vernon’s current and future needs and compliance with changing regulations. As a result, the proposal submitted by EN Engineering was ranked the highest across the panel and was deemed the most qualified.
Furthermore, their proposal demonstrated expertise and experience through a comprehensive approach to services requested in the scope of work. Since 2020, EN Engineering has delivered natural gas support services and has worked closely with VPU to ensure compliance with pertinent regulations. Additionally, EN Engineering will provide continued compliance support for the development and implementation of new and ongoing compliance programs, compliance management software, processes, and procedures to implement new programs and necessary mitigations to ensure compliance with pipeline safety regulations and preparation and support for a full audit of PHMSA regulations as described above.
Based on a thorough review of EN Engineering's proposal for natural gas operational and compliance support services, it is recommended that a one-year Services Agreement be approved in an amount not-to-exceed $185,000, with an option to extend the Services Agreement up to a three-year term. This recommendation is due to the Gas Division's compliance support needs, staffing limitations, and the new audit format implemented by the CPUC.
The proposed Services Agreement has been reviewed and approved as to form by the City Attorney’s Office.
Fiscal Impact
The fiscal impact is not-to-exceed $185,000. Sufficient funds are included in the Fiscal Year 2023-24 VPU Budget, Electric Fund, Administration, Professional Services – Technical Account No. 055-050-580-529225.
Attachments
1. Services Agreement – EN Engineering LLC