City Council Agenda Report
Meeting Date: March 4, 2025
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Senior Management Analyst
Subject
Amendment No. 2 to the License and Software Services Agreement with Power Settlements Consulting and Software, LLC, a wholly owned subsidiary of YES Energy LLC Recommendation
A. Pursuant to Vernon Municipal Code Sections 3.32.220 (B) and 3.32.110 (B)(3), find that it is commercially unreasonable to rebid the contract for settlement software due to the substantial financial and operational commitment required from the City, as well as the considerable learning curve associated with frequent changes in selecting licensing and software services from a new vendor;
B. Approve and Authorize the City Administrator to execute Amendment No. 2 to the License and Software Service Agreement with Power Settlements Consulting and Software, LLC, a wholly owned subsidiary of YES Energy LLC, in substantially the same form as submitted, for license and software services, for a total amount not-to-exceed $303,440, for a three-year term; and C. Authorize a contingency amount of ten percent (10%) or $30,344 for unforeseen fluctuations in the Consumer Price Index, and grant authority to the City Administrator to take such actions, as necessary.
Background
The Vernon Public Utilities (VPU) Finance Division is responsible for the settlement process between Vernon and the California Independent System Operator (CAISO). Settlements are the calculation, validation, and invoicing of charges and payments for market and transmission related activities between market participants and the CAISO. The settlement cycle follows a specific timeline with deadlines and processes for the publication of statements, payments for invoices, and dispute submittals.
On January 30, 2019, following a competitive Request for Proposals (RFP) process, City Council approved a License and Software Services Agreement (Agreement) with Power Settlements Consulting and Software, LLC, a wholly owned subsidiary of YES Energy, LLC (Power Settlements) for the use of the SettleCore System Software to manage CAISO data in the amount of $326,818 for a three-year term. As part of the Agreement, the City purchased a perpetual license for the SettleCore Software system in the amount of $95,000 and established annual support and maintenance services for a three-year term.
On February 15, 2022, Amendment No. 1 to the Agreement with Power Settlements was approved to remove automatic renewal language and extend the Agreement for three years through January 31, 2025 at a cost of $262,542.
Power Settlements initiated discussions regarding the continuation of license and software services for the City, leading to their request for a new amendment. In response, VPU staff is requesting approval for Amendment No. 2 to the License and Software Services Agreement (LP0463) to extend the contract for an additional three years, through January 31, 2028, with a total amount not-to-exceed $303,440. Additionally, staff recommends a contingency amount of ten percent (10%) or $30,344, for unforeseen fluctuations in the Consumer Price Index. Pursuant to Section 5.3 of the Agreement, during the renewal term of Amendment No. 2, the annual fee of $91,670 for 2024 will increase on the anniversary of the term by the Consumer Price Index (CPI).
Based on a CPI forecast of 5% annually, the estimated cost for the next three-year period is summarized below:
Year Amount
2025 $ 96,253.50
2026 $101,066.18
2027 $106,119.48
Total: $303,439.16
Pursuant to Sections 3.32.220(B) and 3.32.110(B)(3) of the VMC, staff recommends the City Council find that it is commercially unreasonable to rebid a contract for settlement software every three years due to the substantial financial and operational commitment required from the City, as well as the considerable learning curve associated with frequent changes in selecting licensing and software services from a new vendor. The resources allocated to automating, processing, validating, and creating custom reports for VPU’s compliance with CAISO and SCPPA requirements, along with the necessary updates to adapt to evolving rules and policies, represent a significant investment in time, personnel, equipment, and vendor commitment to provide these essential services to Vernon. Given this considerable financial and workload investment, VPU anticipates continuing to utilize the SettleCore System Software for managing CAISO data, State, SCPPA, and internal reporting requirements for the foreseeable future.
Furthermore, the proposed amendment for continued service and maintenance is exempt from competitive bidding and competitive selection pursuant to VMC 3.32.110(A)(2) and
3.32.110(B)(1), respectively, as the SettleCore system software, including its software license, and support and maintenance services for the settlement software is only available through Power Settlements. Power Settlements is the original software manufacturer and, as such, the unique proprietary software design and licensing agent. Extending the annual support and maintenance services will ensure that the software’s functionality remains aligned with the CAISO’s and VPU’s settlement process, future CAISO system updates, and custom reports that were developed exclusively for VPU. Furthermore, this extension will maintain the continuity of service, ensure that the settlement process, including invoicing, will be completed timely to avoid CAISO penalties, meet SCPPA invoicing deadlines, and guarantee that the maintenance and software support continues without interruption. Pursuant to VMC Section 3.32.030(A), City Council approval is required as the total value of the proposed amendment requested exceeds $100,000.
The proposed Amendment No. 2 has been reviewed and approved as to form by the City Attorney’s Office.
Fiscal Impact
The fiscal impact of Amendment No. 2 is not-to-exceed $333,784. Sufficient funds are available in the Electric Fund, Resource Management, Professional Services-Other Account No. 055-050- 590-529215 for the current fiscal year and sufficient funds will be budgeted in the subsequent years.
Attachments
1. Amendment No. 2 with Power Settlements Consulting and Software, LLC, a wholly owned subsidiary of YES Energy, LLC