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Council Meetmg February 16, 1999 Santa MOnica, California
TO Mayor and City Council
FROM City Staff
SUBJECT Recommendation to Authorize the City Manager to Negotiate and
Execute a Contract with Commonwealth Energy Corporation for the
Purchase of Renewable Energy for City FacIlities and Approve a
Change Order to the City's ProfessIonal Services Contract With
Henwood Energy Services for Contract Negotiation and
Implementation Assistance
INTRODUCTION
ThiS report recommends that the City Council authOrize the City Manager to
negotiate and execute an agreement for the purchase of renewable electriCity for
City faCIlities WIth Commonwealth Energy Corporation The report requests that
Council approve a change order In an amount not to exceed S40,OOO With
Henwood Energy Services for assistance In contract negotiation and
Implementation
BACKGROUND
On October 13,1998, City Council approved the Issuance of a Request for
Proposal for the purchase of renewable energy for all City faCIlities as the first
step In the development and Implementation of a comprehensive energy
management plan for the City and community With thiS procurement deCISion.
Santa MOnica would become the first mUnicipalIty In the United States to obtain
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all ItS electnclty from renewable sources and would significantly contnbute to the
promotion of the renewable power market In California The conversion to 100%
renewable electricIty IS one of the most Important environmental policy actions
which can be taken by the City In terms of reduced air pollution, reduced
greenhouse gas emissions and public health benefits
DISCUSSION
On November 9, 1998, the City Issued a Request for Qualifications/Proposals for
competitive energy services California Public Utility Commission-certified
Energy Service Providers (ESPs) were asked to submit proposals and
qualifications to serve the residential, commercial, industrial and municipal
sectors of Santa MOnica with either renewable or a mix of renewable and non-
renewable resources sufficient to meet Santa MOnica's electriCity demand Bids
for City facilities were required, proposals for the broader communIty were
optional The objective of thiS process was to both Identify the best Immediate
proposal for purchase of renewable electriCity In City facIlities as well as qualify
renewable energy providers should the City Council ultimately adopt an energy
management plan In which renewable energy would be offered to the community
Henwood Energy Services, an energy consultant under contract to the City,
coordmated review and selection on behalf of the City, providing comprehensive
data on the City's and community's electriCIty usage to thirty Interested energy
suppliers Fourteen proposals were received Staff from the Environmental and
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Public Works Management Department, the City Manager's Office, and Henwood
Energy SelVlces evaluated the proposals uSing criteria that Included price, the
experience and reliability of the energy provider, the energy management and
other energy selVlces to be provided, the strength of the proposed team, the
fleXibility of the proposal's terms and options, and the proposed electriCity
resource Itself The type and amount of renewable energy to be proVided to the
City and whether the electriCity would be generated by new or eXisting facilities
were also cntena that were ranked Solar. wmd, and geothermal energy were
the preferred renewable sources as they are more environmentally benign than
the alternatives New generation projects were preferred over eXlstmg
generation facilities as a means to Increase the amount of renewable energy In
California's electriCity supply mix Local or California-based generation was
preferred over out-of-State sources Four finalists were selected
FollOWing interviews With the four finalists and reference checks, Commonwealth
Energy Corporation was selected as the most qualified supplier of renewable
electnclty for City faCIlities, and as the prOVider most able to deliver the
comprehensive energy services requested by the City It should be noted that
other finalist's proposals were competitive and, In the event that negotiations With
Commonwealth Energy falter, staff Will recommend entenng mto negotIations
With the next best alternative proVider
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Commonwealth Energy has established contracts with Calplne Corporation to
supply up to 20 megawatts of geothermal power from Calpme's Northern
California geothermal plants and IS negotiating for additional supply
Commonwealth's bid would provide the City with 100 percent renewable energy
from a designated source (Calpme's geothermal) Starting sometime m the year
2000, the source of the 100% renewable electnclty would become new
geothermal generation faCilities bemg developed In Southern California at the
Salton Sea
In addition to the provIsion of renewable energy for City facIlities,
Commonwealth's bid mcludes the Installation costs for approved Interval
electnclty meters at up to 30 eXIsting municipal sites (and any new meters which
may be required dunng the term of the agreement), meter reading, ESP
consolidated billing services, and any additional savings denved from the
mstallatlon of new energy management measures at City facIlities The
estimated maximum cost Impact from the proposed package of energy
management services totals approximately 5200,000 per year above the City's
current electnclty costs, or about an 8 7% Increase over the City's present total
electnclty bill of approximately $23 million It IS anticipated, however, that
ongoing negotiations with Commonwealth will result In a Significantly lower cost
Impact to ~he City
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Commonwealth will provide the City with a performance bond valued at $100,000
to guarantee a reimbursement to the City for Its costs should Commonwealth
default on their obligations under the proposed contract As part of their bid,
Commonwealth Energy will also pass-through the California Energy CommissIon
Renewable Energy Trust Fund credit, estimated at approximately $120,000 per
year, to the City as long as these credits continue to be available Staff
recommends that the term of the agreement with Commonwealth be for a one
year period with an annual option by the City to renew the same contract terms
for up to four additional years It IS expected that the effective date for
commencement of the renewable electricity purchases under this proposed
agreement would be April 1. 1999
Staff also believes that Commonwealth Energy Corporation presented strong
qualifications and a strong conceptual proposal for providing renewable electricity
and other energy services to the reSidential and bUSiness communities should
this be recommended as part of the comprehensive energy management plan It
IS anticipated that the Strategic Energy Plan draft Will be presented to Council In
approximately three months
Due to the complexity of flnallzmg and verifYing the terms of the proposed
contract for servmg municIpal faCIlities, particularly m the development of ongoing
tracking and verification processes, It IS recommended that the City negotiate
and execute a change order to Henwood Energy Services' eXisting contract for
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additional services In an amount not to exceed $40,000 Henwood will provide
cntlcal assistance to City staff In the drafting of agreement language and
establishing a contract Implementation and auditing framework
BUDGET/FISCAL IMPACT
The proposed agreement will have a maximum fiscal Impact of an 87% Increase
In the electnclty rate for all City faCilities or approXImately $200,000 per year
Since the effective date of the contract will be Apnl1, 1999 at the earliest, the
fiscal Impacts In FY 98-99 Will not be significant for anyone fund and any
necessary budget adjustments Will be requested as a part of the Year End
Budget Report Expected Impacts In FY 99-00 Will be mcluded In the proposed
FY 99-00 budgets for all affected departments/funds EXisting funds for the
$40,000 change order to Henwood Energy Services' contract are available In
EPD Account # 31-500-662-00000-2254-00000
RECOMMENDATION
Staff recommends that the City Council authOrize the City Manager to negotiate
and execute an agreement With Commonwealth Energy Corporation for the
purchase of renewable energy for City faCIlities according to the terms outlined In
thiS staff report Staff also recommends that CounCil approve a change order In
an amount not to exceed $40,000 With Henwood Energy Services for assistance
In contract negotiation and Implementation
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Prepared by
Craig Perkins, Director of Environmental and Public Works
Management
Susan Munves, Conservation Coordinator
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513 P01
FEB 11'99 14:40
\3B
Making Change,.. FEB 231999
- --- - - -----a ;:-ommu-t\llV nEP,llSpape-r empi)v.-e1'lngth~PQ~r-.wd ~Itl.h()used ~~fth an 111cO)m:~ and a ViJl'('~'
POBox 31122, Santa Monica CA 90408,0 J 0 1289-7446
F ebrum.' 10 1998
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FOR IMMEDIATE RELEASE
Ma..,a. Stew&'t
CAtv (l<<k
CltVofSanUlMomca
1685 Main Street
Santa MOlUca, CA 9040'
Making Cb~1ge .. the homeless newspaper and Side by Side a c.ommumtvparrnershlp would lIke to schedule an ttem for tbe
next ageJlda
In OUr item we would like to announce to the City that M:aking Change will be dUEnhlJting ten shopprng carts to the City s
need1esthomeles5 pe~lc The Cathollc W orke:r ot Lo') \ngele5 has d1SU''1buted Qver 300 carts tQPoor and homeless. people, lD
;;ooperatlon with the Lity of Los i'Jlgeles Tbrough a pn vate donation ten shoppmg Cart5 will be made av=uJ.al>1 e to lwmeless
per;ons ill Sa.1ta "1oruca TIllS program wIshes to el1.lIunatt;. tbe on~g011lg crtmmal prosecution of bome1e~ people who bave to
take commercial carts to use as mucn needed storage and transport tor personal belongmgs.
Each cart costs 5100.00, winch is a cOllS1derable amount of money for any ~en.cy to spend on a project. We have ten carts
and bave bad over fifty calls to l:te on the WlUl1Dg bst The need 1S greater than what we have to gwe. so we encourage {be
p\lbhc 1I.!ln cur h1J'l'UlPS~e~ to support rm.::i program fUl'ther ratberthan proSf'ClJte people wbo do not ~'et have cam
OJltbepn.\-'atc cart will be Ii contact number. 1f MY cart lS found abandon.ed any agent of the Clty should call \15 so that we
may pld. it up If a homeleso:; person no longer l1as use for theu- cart the can will t:le Issued to anotb.er pet"i)Qn m need \1nhl
evervpcr~,;'l who 1::; e';lJlllJmlcallY""1Jwerable has Ii '-'1ablt> alternaI1 ve to sleeptng outslde The!e carts are for the e,;:dlJ~ -'!" lJ"tf'
of homeless people :tad hou'5ed persotL.'i 1.n pO'$Se'iSlon of trus cart are ~blect to pumshment by law
We bope tbat tbts prOJeCt wtll atl.1evate a certa1n degree of suffenng that homele'ls peapl e face w Me b...-mg 1.ll San~ JvloD1ta
We extmtd an lDVl.tallon to the City of Santa Momca to 1Vork together wtth llS in producmg a climate that encol.ltagt'S the
recog:lI!t!OnQfthe LTruversal DecJal'all0n ofHumanRlght5. !?'ipeClally..\rtJ.cie 25 for every rest dent 01 ~antaMofl1c~
\Ve reque'lt of the Santa MOO1ca CounCll to duect a memo to we Santa Momca Pohce Department that descnbes this new
program <;0 that officer's on the street will be up to date Oil thiS new change and thetr respon51blhtles tn deahng wtth peopje
who own tbetr own cartN
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FEB 2 3 1999