City Council Agenda Report
Meeting Date: June 18, 2024
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Management Analyst
Subject
Amendment No. 1 to Services Agreement with EN Engineering, LLC Recommendation
Approve and authorize the City Administrator to execute Amendment No. 1 to the Services Agreement with EN Engineering, LLC, in substantially the same form as submitted, to extend the term of the Agreement for an additional one-year period effective July 1, 2024, for a total amount not-to-exceed $150,000, with an option to further extend the Services Agreement for a third and final one-year period effective July 1, 2025.
Background
The Vernon Public Utilities (VPU) Gas Fund was established in 2006 to serve the City’s industrial sector with a large distribution system. The City currently 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. Despite being a small city, VPU is one of the largest municipal gas providers by volume in the United States. VPU maximizes the operational efficiency of its gas system by using full time employees for daily operations and maintenance, while seeking outside expertise for specialized requirements.
The pipeline industry is currently facing increased scrutiny from regulators, the media, and the public. In 2018, the Pipeline Hazardous Materials Safety Administration (PHMSA) delegated the California Pipeline Safety Audits to the California Public Utilities Commission (CPUC). More recently, VPU was informed to expect annual audits. This marks a significant change, as PHMSA audits were previously conducted every two to three years. Furthermore, the CPUC audits are conducted by a team of technical experts, whereas PHMSA audits were performed by a single inspector.
In October 2023, VPU underwent a rigorous and comprehensive inspection conducted by the CPUC to comply with Title 49, Code of Federal Regulations, Parts 191, 192, and 199. Although the findings of the audit remain pending, VPU staff believes that continued compliance support services are critical. This is due to increased audit scrutiny, to implement feedback from CPUC inspectors and audit findings, compliance with new regulations, demand for expertise in integrity management of natural gas pipeline systems, and to maintain staffing levels, safety, operational efficiency, and overall reliability to our customers.
In accordance with Vernon Municipal Code Section 3.32.080, staff issued a Request for Proposals for Natural Gas Operational and Compliance Support Services. Subsequently, on June 20, 2023, the City Council approved a Services Agreement with EN Engineering, LLC (EN Engineering) for Natural Gas Operational and Compliance Support Services in the amount of $185,000 for a term of one year, with an option to extend the Services Agreement up to a threeyear term. The Services Agreement with EN Engineering is set to expire on June 30, 2024.
Based on the satisfactory services provided by EN Engineering during the contract term and to avoid a lapse in this essential service, VPU staff recommends the City Council approve the proposed Amendment No. 1 to extend the term of the Services Agreement for an additional oneyear period effective July 1, 2024 for a total amount not-to-exceed $150,000, with an option to further extend the Services Agreement for a third and final one-year period effective July 1, 2025.
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 $150,000. Sufficient funds are included in Electric Fund, Administration Department, Professional Services – Technical Account No. 055-050-580-529225 for fiscal year 2024-25.
Attachments
1. Amendment No. 1 - EN Engineering LLC