City Council Agenda Report
Meeting Date: April 2, 2024
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Management Analyst
Subject
Amendment No. 1 to Labor and Materials Contract with Matheson Tri-Gas, Inc.
Recommendation
Approve and authorize the City Administrator to execute Amendment No. 1 to the Labor and Materials Contract with Matheson Tri-Gas, Inc., in substantially the same form as submitted, to increase the contract by an additional $90,000.
Background
The Malburg Generating Station (MGS) is a 139-Megawatt (MW) 2x1 combined cycle generating station comprised of two Siemens SGT-800 Combustion Turbines. MGS requires various specialty gases for its daily operations. To comply with Environmental Protection Agency (EPA) rules and regulations, MGS uses a Continuous Emission Monitoring System (CEMS) to monitor and record emissions data from the power plant. Calibration gas, a type of specialty gas, is essential for the operation of the CEMS. These gases are carefully selected to meet strict guidelines and serve as a known source for the calibration of the CEMS, ensuring compliance with EPA regulations. Vernon Public Utilities (VPU) must procure the necessary calibration gases to operate within the permitted regulations.
Accordingly, following a Request for Bids (RFB) process, on September 15, 2022, the City Administrator approved a Labor and Materials Contract with Matheson Tri-Gas, Inc. (Matheson Tri-Gas) for the purchase of specialty gases in the amount of $80,000 for a term of three years.
Initial estimates on the required supply of specialty gases were based on the MGS operating plant profile at that time (a 2x1 (70MW) operation, primarily consisting of CEMS calibration gases). Since then, staff determined that a more optimal operating plant profile could be realized and scheduled the plant for 1x1 (35MW) operation, meaning only one gas turbine would be online with one steam turbine. Due to the optimization of the MGS operating profile, nitrogen usage significantly increased, as it is necessary to cover the unit with a nitrogen blanket to prevent corrosion of the boiler metals. Nitrogen was not required previously when operating in a 2x1 configuration.
Based on the projected volume through the end of the contract term, staff recommends the City Council approve the proposed Amendment No. 1 to increase the not-to-exceed amount by $90,000, bringing the total contract amount to $170,000. Pursuant to Vernon Municipal Code Section 3.32.030(B), City Council approval is required for the proposed amendment as the total value of the contract exceeds $100,000.
Amendment No. 1 has been reviewed and approved as to form by the City Attorney's Office.
Fiscal Impact
The fiscal impact is not-to-exceed $90,000 and the contract total not-to-exceed $170,000.
Sufficient funds are available in the Electric Fund, Malburg Generation Station, Repairs & Maintenance Account No. 055-050-586-529000 in the current fiscal year and will be budgeted in subsequent years.
Attachments
1. Amendment No. 1 - Matheson Tri-Gas, Inc.