City Council Agenda Report
Meeting Date: February 4, 2025
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Senior Management Analyst
Subject
Services Agreement with NewGen Strategies & Solutions, LLC.
Recommendation
A. Approve and authorize the City Administrator to execute a Services Agreement with NewGen Strategies & Solutions, LLC, in substantially the same form as submitted, to provide Utility Cost of Service, Rate Design, and Financial Planning Services in an amount not-to-exceed $399,400 for a three-year term; and
B. Authorize a contingency amount of ten percent (10%) or $39,940 for unforeseen expenses not included in the proposal, and grant authority to the City Administrator to approve and execute necessary amendments up to the contingency amount.
Background
To maintain competitive and stable rates, Vernon Public Utilities (VPU) requires consulting services that offer a thorough analysis of costs and rate designs for electric, water, gas, and fiber services, along with additional financial planning services for VPU. It is essential for VPU to engage a highly qualified and experienced utility consulting firm who can navigate both current and emerging trends in the California and national energy markets. This includes a focus on rate tariffs, the Energy Cost Adjustment Billing Factor, Renewable Portfolio Standard Billing Factor, Water Cost Adjustment Billing Factor, load forecasting, revenue generation, operating costs, capital investments, and renewable energy options to support growth, as well as rate design services to meet our strategy of providing competitive and stable rates for all VPU funds.
In accordance with Vernon Municipal Code (VMC) Section 3.32.080, on November 20, 2024 staff issued a Request for Proposals (RFP) for Utility Cost of Service, Rate Design, and Financial Planning Services. The RFP was advertised on the City’s Planet Bids platform. The scope of services included developing the cost of service, rate design, and financial planning consulting services pertaining to multiple utility services. The selected consultant is expected to provide advice, research, analysis, and support related to utility financial, rate, or financial planning services and review, develop, and implement an Energy Cost Adjustment Billing Factor methodology, Renewable Portfolio Standard Billing Factor methodology, and Water Cost Adjustment Billing Factor methodology for tracking and reporting purposes. Additionally, the consultant will review the existing rate tariffs and recommend changes and special rates, as needed. Proposal packages were received from two firms by the December 11, 2024 deadline.
A qualified panel thoroughly examined the proposals received based on professional qualifications (60%), cost and fees to the City (20%), references (15%) and overall quality and responsiveness to the RFP (5%).
While both responsive firms met the minimum criteria, the proposal from NewGen Strategies & Solutions, LLC (NewGen) demonstrated a combination of expertise, understanding, experience, and a comprehensive approach that was best suited to fulfill the scope of services detailed in the RFP. NewGen has a long history of working with municipal entities on a variety of critical financial and economic issues in California as well as across the country. This experience includes supporting and developing cost of service and rate recommendations for the majority of municipal electric utilities and Community Choice Aggregation in California over the last decade and integrating/understanding competitive issues in rate recommendations. They offer a combination of extensive utility financial modeling, utility cost of service, and rate design experience, including the development of innovative rate design utilizing superior modeling abilities. NewGen has previously provided utility cost of service, rate design, and financial planning services for VPU and performed such tasks to the City’s satisfaction.
Staff recommends that the City Council approve a Services Agreement with NewGen to provide Utility Cost of Service, Rate Design, and Financial Planning Services for a total amount not-toexceed $399,400 over a term of three years. Additionally, staff recommends a contingency amount of 10% or $39,940 for any unforeseen expenses not included in the proposal. Pursuant to VMC Section 3.32.030(A), City Council approval is required for the proposed agreement, as the total value of the contract exceeds $100,000.
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 $439,340. Sufficient funds are available in the Electric Fund, Administration, Professional Services-Other Account No. 055-050-580-529215 for the current fiscal year and sufficient funds will be budgeted in the subsequent years.
Attachments
1. Services Agreement with NewGen Strategies and Solutions, LLC