City Council Agenda Report
Meeting Date: May 6, 2025
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Efren Peregrina Renteria, Procurement Specialist Subject
Purchases Related to the Fall 2025 Malburg Generating Station (MGS) Planned Outage Recommendation
A. Find that the proposed action is categorically exempt from the California Environmental Quality Act (CEQA) review, in accordance with CEQA Guidelines Section 15301, because the project consists of the maintenance, repair or minor alteration of an existing facility and involves negligible or no expansion of an existing use;
B. Approve and authorize the issuance of a purchase order (PO) with Siemens Energy, Inc., for the purchase of steam turbine generator parts for a total amount not-to-exceed $535,861.68; C. Authorize a contingency amount of fifteen percent (15%) or $80,379.25 in the event of unforeseen expenses and grant authority to the City Administrator to approve the issuance of change orders to the PO for steam turbine generator parts, up to the contingency amount, if necessary;
D. Approve and authorize the issuance of a PO with Siemens Energy, Inc., for the purchase of replacement valve seats for a total amount not-to-exceed $387,249.63; E. Authorize a contingency amount of fifteen percent (15%) or $58,087.44 in the event of unforeseen expenses and grant authority to the City Administrator to approve the issuance of change orders to the PO for replacement valve seats, up to the contingency amount, if necessary; F. Approve and authorize the issuance of a PO with Siemens Energy, Inc., for the installation of new high-pressure (HP) and low-pressure (LP) steam strainers and the redesign of the Emergency Stop Valve for a total amount not-to-exceed $325,545; G. Authorize a contingency amount of twenty percent (20%) or $65,109 in the event of unforeseen expenses and grant authority to the City Administrator to approve the issuance of change orders to the PO for HP & LP steam strainer installations and redesign of the Emergency Stop Valve, up to the contingency amount, if necessary; H. Approve and authorize the issuance of a PO with First Global Gear Services LLC, for the purchase of gearbox bearings for a total amount not-to-exceed $116,708.42; and I. Authorize a contingency amount of fifteen percent (15%) or $17,506.26 in the event of unforeseen expenses and grant authority to the City Administrator to approve issuance of change orders to the PO for gearbox bearings, up to the contingency amount, if necessary.
Background
This report outlines the proposed purchase orders (POs) related to the planned Malburg Generating Station (MGS) Outage in December 2025, with a total cost not-to-exceed $1,586,446.68.
On November 16, 2021, City Council adopted Resolution No. 2021-41, approving a Purchase and Sale Agreement (PSA) with Bicent (California) Malburg LLC (Bicent) for the acquisition of the MGS. MGS undergoes a scheduled major planned outage every 30,000 equivalent operating hours, or roughly 3 to 4 years, and mostly in the fall and spring when the electricity demand is lower. On August 20, 2024, City Council approved Change Order No. 20 to the Amended and Restated Services Agreement with Siemens Energy, Inc., (Siemens Energy) to revise the Projected Schedule Outage Plan, Payment Schedule, Cancellation Schedule, Upgrade Schedule, Dehumidifier Upgrade, Burner 26 Upgrade, Gearset Upgrade, Starter Motor Upgrade, amend the termination date of the agreement, and add a blanket Purchase Contracts schedule.
These major outages necessitate collaboration with various vendors to carry out a range of tasks, including essential maintenance work on MGS. The power plant is required to maintain full resource adequacy for the California Independent System Operator (CAISO) on a daily basis.
MGS operates as a 139 Megawatt (MW) 2x1 combined cycle generating facility, featuring two Siemens SGT-800 Combustion Turbines. The Steam Turbine Generator (STG) features two critical valves for each steam line: the Emergency Stop Valve (ESV) and the Control Valve (CV).
These valves are essential for regulating and stopping steam flow to the STG, making them vital components before steam reaches the turbine's rotating blades.
MGS is set to undergo its Fall maintenance outage in December 2025. To maintain compliance with CAISO regulations and ensure the ongoing functionality of the MGS power plant, it is crucial to perform the required maintenance during this scheduled downtime. The upcoming outage will feature a "Limited Overhaul" of the STG, as outlined in Change Order No. 20. This limited overhaul will primarily focus on essential inspections and refurbishments of critical valves, including the removal and on-site rebuilding of both the high-pressure (HP) and low-pressure (LP) admission valves. Furthermore, the reduction gearbox and various other essential components and bearings will be examined and replaced if their condition is found to be unsatisfactory. The required STG parts for this standard limited overhaul will consist of components previously identified by Siemens Energy for replacement, along with spare items that must be on hand in case any inspected parts are determined to be unfit for continued use.
Additionally, efforts will be made to enhance the existing design of the ESV to minimize the risk of oil leakage, which could pose a fire hazard.
The proposed POs are exempt from competitive bidding and competitive selection pursuant to Sections 3.32.110 (A)(2) and 3.32.110 (B)(l) of the Vernon Municipal Code (VMC). This exemption arises from the specialized requirements for the parts needed for the STG, which are exclusively produced by Siemens Energy, the original equipment manufacturer (OEM), and the only supplier. Furthermore, there are no other authorized vendors for the required parts since the designs and raw material specifications are proprietary. Additionally, First Global Gear Services LLC (FGGS) serves as the OEM and sole-source provider for the shaft-driven speed-reduction gearbox utilized in the Steam Turbine and Gas Turbines at MGS.
Due to the long lead times associated with this equipment, staff recommends approval of several POs and related contingencies to ensure timely delivery ahead of the outage. Contingencies of 15% or 20% are to cover additional costs that may be incurred due to any unforeseen or fluctuating expenses including tariffs, currency exchange rates, taxes, freight, custom clearance fees, insurance, and duties that may apply. The proposed POs and corresponding contingencies are as follows:
• PO with Siemens Energy for $535,861.68 to purchase STG parts; and 15% contingency or $80,379.25;
• PO with Siemens Energy for $387,249.63 to purchase replacement valve seats; and 15% contingency or $58,087.44;
• PO with Siemens Energy for $325,545 for the installation of new HP and LP steam strainers and for the redesign of the Emergency Stop Valve; and 20% contingency or $65,109; and
• PO with FGGS for $116,708.42 for gearbox bearings; and 15% contingency or $17,506.26.
City Council approval of the proposed POs with Siemens Energy and the proposed PO with FGGS is required pursuant to VMC Section 3.32.030(A)(B), as the total value of each of the POs requested exceeds $100,000. Additionally, within the past 12 months, the City has paid or awarded Siemens Energy a total of approximately $3,149,024.44.
The quotes and proposal for Siemens Energy and FGGS have been reviewed and approved as to form by the City Attorney’s Office. Quotes 20382817, 20428105, and Proposal 24319324 from Siemens Energy contain confidential and proprietary information and will be provided to the City Council under separate cover; these items will not be included in the public Agenda Packet.
Fiscal Impact
The fiscal impact is not-to-exceed $1,586,446.68. Sufficient funds are included in the Electric Fund, Malburg Generating Station, Steam Turbine, Account No. 055-050-586-529006 proposed budget for fiscal year 2025-26.
Attachments
1. First Global Gear Services LLC – Quote