City Council Agenda Report
Meeting Date: April 16, 2024
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Administrative Analyst
Subject
Letter Agreement with Southern California Edison Company Recommendation
A. Find that the proposed action is categorically exempt from California Environmental Quality Act (CEQA) review, because the work being approved by this Letter Agreement (Phase 1) consists of engineering and materials procurement 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. Upon completion of Phase 1, a separate Letter Agreement will be presented to City Council for the construction portion of this project (Phase 2); B. Approve and authorize the City Administrator to execute a Letter Agreement with Southern California Edison Company (SCE), in substantially the same form as submitted, for SCE to perform required engineering and procurement work related to Interconnection Facilities, Distribution Upgrades, and Network Upgrades, in an amount not-to-exceed $14,024,895; and C. Authorize a contingency amount of five percent (5%) or $701,245 for unforeseen changes in fees or other expenses not included in the proposal, and grant authority to the City Administrator to issue change orders for an amount up to the contingency amount, if necessary.
Background
The City is proposing to provide new electric service to several large commercial projects under development, which requires that up to 150 megawatts of new electric load be constructed at different locations in Vernon. The potential new electric loads will demand service from the City’s 66kV sub-transmission system that is interconnected with the Southern California Edison Company (SCE) Laguna Bell Substation (the Project).
In accordance with the Laguna Bell – Vernon Interconnection Service Agreement (IA), adopted on September 16, 1997 via Resolution No. 7017, Vernon Public Utilities (VPU) submitted a request to SCE for Interconnection Service and Transmission Service. Although the service request was made under the existing IA, SCE concluded that a System Impact Study and a Facilities Study were required to determine the adequacy of SCE’s electrical system including, but not limited to, the portion of SCE’s electrical system that is part of the California Independent System Operator (CAISO) Grid. Accordingly, on September 20, 2022, the City entered into the Laguna Bell-Vernon Interconnection Service Agreement Combined System Impact and Facilities Study Agreement with SCE. SCE has completed the study, and the Interconnection Facilities Study Report (Report) was published on September 7, 2023.The Report detailed the upgrades that are necessary for the SCE system which will be performed in two phases to accommodate the new electric load, and will include enhancements to facilities at the Laguna Bell Substation and two new sub-transmission source lines from SCE’s Laguna Bell Substation to the City boundaries.
In the interest of working towards the goal of increasing the City’s electric load capacity to feed potential new development projects, staff recommends that SCE commence work recommended by the Report. Phase 1 of the Project consists of the engineering and material procurement by SCE for which the City will pay for specified portions (as described in Exhibit C, Payment, and Financial Security Schedule, of the Letter Agreement). The estimated cost to complete the necessary work in Phase 1 is $14,024,895, and the City will make eighteen (18) monthly payments to SCE for Phase 1.
Upon completion of SCE’s engineering and procurement activities, the City will move into Phase 2 of the Project and will be required to enter into a separate Agreement with SCE for the construction portion of the Project which is expected to be presented to the City Council in March 2025. The cost for the construction in Phase 2 of the Project will be determined based on SCE’s engineering and design activities of Phase 1. VPU staff has addressed the Project funding for Phase 1 as part of the Fiscal Year 2024-25 budget process. Pursuant to Vernon Municipal Code Sections 3.32.110 (A)(2) and 3.32.110 (B)(1), the proposed work is exempt from competitive bidding and competitive selection, as SCE is the City’s transmission service provider and the engineering and procurement work related to Interconnection Facilities, Distribution Upgrades, and Network Upgrades can only be performed by SCE.
The SCE Letter Agreement has been reviewed and approved as to form by the City Attorney’s Office.
Fiscal Impact
The fiscal impact is not-to-exceed $14,726,140, including the five percent contingency. Sufficient funds of $2,366,804 are available in Electric Fund, Engineering Department, Capital Outlay Account No. 055-050-585-660000 for the current fiscal year (FY) and remaining project costs will be budgeted in FY 2024-25 and FY 2025-26.
Attachments
1. SCE - Letter Agreement