CITY COUNCIL AGENDA ITEM
Memo Date: February 3, 2020
Agenda Date: February 26, 2020
Prepared By: Katherine Ennis, P.E., Utilities Deputy Director
Through: John A. Walsh, P.E., Utilities Director
Requested Action:
title
Approve a Sole Source Resolution and Execute a Multi-Year Premier Power Services Contract between the City of Cocoa and Duke Energy Florida, LLC (Duke)..End
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BACKGROUND:
Currently there are two (2) 1750-KW generators located at the Dyal Water Treatment Facility that provide back-up power to the plant in the event the normal power supply is interrupted. These generators serve a critical role in ensuring potable water is available to the Cocoa service area. Not only are the generators necessary for potential natural and manmade disasters, but utilized on a daily basis if needed to provide continuous power. During summer months this is especially critical as numerous lightning storms have impacts on continuous and conditioned power supply.
The current generators are at the end of their useful lives and the department has been researching different options to replace this critical infrastructure. Staff compared two different options to replace the current generators: the first option is to purchase two (2) new generators and to operate and maintain with City staff and vendors, and the second option is to contract with Duke Energy Florida, LLC (Duke) to provide back-up generator services for a monthly fee of $36,140 over a contract period of 10 years. The Duke option would have generator power located at the plant but owned, operated, maintained, and monitored 24/7 by Duke. The monthly fee would not start until the generators are installed and operational which is currently estimated to be fall of 2020 (FY20) or possibly next fiscal year depending on the construction, testing and start up time.
In order to pay for the expenses associated with the Duke contract, the existing service contracts for preventative maintenance and repairs can be discontinued, and the funding reassigned to Duke for FY2020. If construction, testing & startup is completed in FY20, there is adequate budget in place to cover costs for 1-3 months. All funding for future services will be budgeted annually within the appropriate operating account at the Dyal Plant and subject to future annual appropriation approvals from Council.
Staff performed a cost benefit analysis and determined that the Duke option was a more cost-effective option and didn’t require any upfront capital investment. The upfront capital investment to replace the existing generators would be approximately $3,000,000 and annual maintenance costs. The Duke option would also allow the plant to reallocate staff time to more water production focused tasks. A sole source procurement method is recommended for this purchase because Duke Energy is the only company that can provide the preventative maintenance services along with having direct control of the power grid & thus has the ability to monitor energy flows and to react quickly in the event of a power loss to the Dyal plant.
Staff recommends that City Council authorize the execution of the Multi-Year Premier Power Services Contract for a time period of 10 years between the City of Cocoa and Duke Energy Florida, LLC, by way of Sole Source.
STRATEGIC PLAN CONNECTION:
N/A
BUDGETARY IMPACT:
Budgeted Yes
If not budgeted, is amendment/transfer attached? N/A
All funding for future services will be budgeted within the appropriate operating account at the Dyal Plant and subject to future annual appropriation approvals from Council, offset by a reduction in other preventative maintenance costs for the generators.
PREVIOUS ACTION:
N/A
RECOMMENDED MOTION:
Recommendation
Approve a Sole Source Resolution and Execute a Multi-Year Premier Power Services Contract between the City of Cocoa and Duke Energy Florida, LLC (Duke)..