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Pasadena Water and Power Authorization to Enter Into a Contract with GE Packaged Power, Inc. to Design, Furnish and Deliver the Power Island Equipment.

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Presentation on theme: "Pasadena Water and Power Authorization to Enter Into a Contract with GE Packaged Power, Inc. to Design, Furnish and Deliver the Power Island Equipment."— Presentation transcript:

1 Pasadena Water and Power Authorization to Enter Into a Contract with GE Packaged Power, Inc. to Design, Furnish and Deliver the Power Island Equipment for the Glenarm Repowering Project, and an Amendment to the FY2014 Adopted CIP Budget City Council July 29, 2013

2 Pasadena Water and Power Background Energy IRP recommended replacement of existing Broadway 3 with equivalent size combined cycle unit by 2015 o Need dependable local generation to back up/supplement single line of import o B3 cant be depended on for too long …47 years old, spare parts problems

3 Pasadena Water and Power Glenarm Repowering Project - GT5 Two key contracts Power Island Equipment (PIE) 15 major power generating equipment including design, furnishing & delivery (gas turbine, steam generator, steam turbine, transformers, gas compressors, etc.) Balance of Plant (BOP) Design and construction (expected to awarded in 1Qtr/2014) 3

4 Pasadena Water and Power Power Island Equipment RFP issued on June 28, 2012 Six proposals received (GE and Rolls Royce GTs) GE scored highest by Staff & Consultant (POWER Engineers) Evaluation criteria included: Evaluated cost = net present value of capital cost, and 30-year lifetime plant consumable resource costs: natural gas, water and ammonia Demonstrated expertise and experience in performing similar work Bidder conformance with Citys contract terms 4

5 Pasadena Water and Power Bidders Evaluation 5 BIDDERS EVALUATED SCORE GAS TURBINE MFGR. GE Packaged Power, Inc., Houston, TX82.75GE Abeinsa, Inc., Chesterfield, MO80.25Rolls-Royce Abeinsa, Inc., Chesterfield, MO79.25GE Quanta, Inc., Greenwood Village, CO79GE Lauren, Inc., Abilene, TX78Rolls-Royce ESI, Farmington, CT68Rolls-Royce

6 Pasadena Water and Power Fiscal Impact 6 It is anticipated that $40.37MM of the total cost will be spent during fiscal year 2014, and that the remaining costs will be spent over the next two fiscal years. Total Expenditure in FY2014FY 2014 FY 2015 & FY 2016 Total Expenditure Base Contract Amount$40,370,000$20,472,000$60,842,000 Contingency (2.2% of the firm bid)$1,328,000 Total$40,370,000$21,800,000$62,170,000

7 Pasadena Water and Power Repowering Project Budget 7 Initial budget = $ million (2009) Revised budget = $ million Estimated debt service/year = $7.5 to 8 million Estimated rate impact on average customer (500 and1000 KWH/month usage) = $3 to $7/month

8 Pasadena Water and Power Reasons for Budget Change 8 Scope of Work Previous Estimate Current Estimate Difference ($) Explanation Power Island Equipment Equipment Subtotal $ 39,482,381 $ 48,303,504 $ 8,821,123Increased Scope, noise control, flexibility, emissions compliance Delivery $ 2,104,000 $ 2,525,388 $ 421,388Commensurate with equipment scope Taxes $ 3,553,414 $ 4,347,315 $ 793,901Commensurate with equipment scope Maintenance Contract, Spare Parts, Options $ - $ 5,206,655 Newer design, efficiency enhancements, lessons learned 10% Contingency $ - $ 5,358,248 Material escalation, scope, foreign exchange, overseas shipment Power Island Equipment $ 45,139,795 $ 65,741,110 $ 20,601,315 Balance of the Plant Equipment - Engineering and construction Design, Construction, Permitting $ 51,000,000 $ -Various increases and decreases, but no net change Contingency (14% / 20%) $ 7,020,000 $ 9,424,958 $ 2,404,958Increased uncertainty & risk - Glenarm site, escalation, delays Project and Construction Management $ - $ 3,325,800 Added project controls measures to assure cost/schedule/budget Engineering & Construction $ 58,020,000 $ 63,750,758 $ 5,730,758 Air Permit Fee Proposed AQMD Fee $ - $ 1,500,000 AQMD revised PR on 7/25/13 to make it effective for permits issued after 9/6/2013- proposed date for rule adoption by their Board Glenarm Building - control room and offices Control room and other offices $ 12,000,000 $ - $ (12,000,000)Removed from project due to expense Modular Building for control room/offices $ - $ 830,183 Alternative to Glenarm Building Glenarm Building - control room and offices $ 12,000,000 $ 830,183 $ (11,169,817) Total Repowering Project $ 115,159,795 $ 131,822,051 $ 16,662,256

9 Pasadena Water and Power Energy Cost Comparison- Fossil fuel 9 Major Assumptions: A.Variable costs for market and owned/contracted plants assumed to escalate at 5% annually B.Natural gas price in FY 2014 $4.39/mmBtu and annually C.Major assumptions for GT5 cost: 1.Debt service = $8 million/year 2.Capacity factor = 20% 3.Depreciation = 30 years Resource Name/Type Projected Energy Price by Calendar Year ($/MWh) Market Forecast (brown power) IPP (coal) Magnolia Power Project (MPP) GT5 (estimated) Not in operation

10 Pasadena Water and Power Recommended Actions 1.Find that the proposed contract to design, furnish and deliver the Power Island Equipment (PIE), as part of the Glenarm Repowering Project, was subject to adequate environmental review as part of the Glenarm Repowering Project Final Environmental Impact Report Findings adopted by City Council on April 8, 2013; 2.Find that the proposed contract with GE Packaged Power, Inc. (GE) is exempt from competitive bidding pursuant to City Charter Section 1002 (f), contracts for professional or unique services, and that there are no changed circumstances or new information that would trigger further environmental review; 3.Authorize the City Manager to enter into a contract with GE to design, furnish and deliver the Power Island Equipment for the Glenarm Repowering Project in an amount not to exceed $62,170,000, conditional upon receipt of South Coast Air Quality Management District (SCAQMD) permit to construct; and 4.Amend the Fiscal Year 2014 Adopted Capital Improvement Budget by appropriating $25.0 million from the unappropriated Power Fund balance to the Power Fund Capital Improvement Budget Number 3194-Local Generation Repowering Project Phase II. 10

11 Pasadena Water and Power Back Up Slides 11

12 Pasadena Water and Power Appendix – Price Comparison 12 Resource Name/Type Contract Execution Contract Energy Price 1 by Calendar Year ($/MWh) Proposed Alpine II2013--$81.50 $85.22$91.81 Silverado Solar2012-$77.34$78.50$79.68$83.32$89.76 WM Biomethane2011$ Sequent Biomethane2011$ EDF Biomethane2011$ Milford Wind2009$70.94$72.19$73.45$74.74$78.73$85.86 Ormat Geothermal Phase 22008$82.01$83.24$84.49$85.76$89.67$96.60 Chiquita Canyon LFG2006$65.25 Ormat Geothermal Phase 12005$64.77$65.74$66.73$67.73$70.83$76.30 Iberdrola Renewables2003$ Renewable Energy Contracts Price Comparison [1] Contract prices exclude costs of transmission, losses, and integration fees

13 Pasadena Water and Power Fiscal Impact – Cont. 13 Fiscal Impact: The cost of the Power Island Equipment Contract will be $ million. Following approval of the recommendation to authorize an additional $25.0 million in appropriations, there will be sufficient appropriations in the Power Capital Project Fund 411, Capital Improvement Program #3194 – Local Generation Repowering Project – Phase II. Funding for this action will be addressed by the use revenue bonds which will be issued later this year. Pending the issuance of the revenue bonds, funds from the unreserved Power Fund account will be used to pay for project costs based on the reimbursement resolution that was approved by the City Council for this project in January The Power Fund will be made whole upon the issuance of the revenue bonds.


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