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HomeMy WebLinkAbout1998-05-11 City CouncilCity City of Palo Alto Manager’s Report TO: FROM: HONORABLE CITY COUNCIL CITY MANAGER DEPARTMENT: UTILITIES DATE: ¯MAY 11, 1998 CMR:200:98 SUBJECT:AMENDMENT NO. 2 TO CONTRACT C7094779 WITH RESOURCE MANAGEMENT INTERNATIONAL, INC. FOR CONSULTING ON GAS AND ELECTRIC INDUSTRY RESTRUCTURING ISSUES, INCREASING THE CONTRACT AMOUNT BY $60,000, BRINGING THE TOTAL AMOUNT TO $660,000 OVER TWO FISCAL YEARS REPORT IN BRIEF This report requests that Council approve a contract amendment in the amount of $60,000 for contract C7094779 with Resource Management International, Inc. The additional funding is required to complete preparation for gas and electric industry restructuring and will be funded from the existing FY 1997-98 operating budget. CMR:200:98 Page 1 of 3 RECOMMENDATION Staff recommends that Council authorize the amendment of contract C7094779 with Resource Management International, Inc. (RMI). The amendment increases the total contract amount by an additional $60,000 during FY 97-98. The.total contract price over two fiscal years and three consultants (RMI, EES, and Pacific Consulting) is $660,000. BACKGROUND In 1997-98, RMI was hired by the City of Palo Alto Utilities (CPAU) for specialized consulting services, with a major focus on preparing for electric industry restructuring (CMR:102~97). RMI was to assist the CPAU in developing plans and procedures for operating in a competitive environment, as well as assist with other activity (See Exhibit "A"). In December 1996, the f’mal report by Theodore Barry, an organizational review of the Utilities.Department, was presented to Council. The first major recommendation of the study was to develop business plans and a planning process for each commodity provided by the CPAU. ~ Staff recognized the importance of business planning in the preparation for utilities deregulation and opted to use RMI because of its familiarity with the CPAU and the deregulation of the energy industry. Although this work was within the scope of services of its existing agreement, the major level of effort required to complete the task was not anticipated. In addition, the Gas Accord proceedings at the California Public Utility Commission (CPUC), which restructured the gas market within Northern California, became protracted during 1997 and also required additional consultant involvement. The time required by the consultant to perform these additional tasks, as well as others, has depleted the funds approved for the RMI contract. DISCUSSION An increase in the authorized amount for the contract with RMI (C7094779) in the mount of $60,000 is requested to fund additional services, as needed for the remainder of the fiscal year, and as were broadly-defmed in the original scope of work, Exhibit "A" of Contract C7094779. Exhibit "A" is attached to this report. Staff believes that Palo Alto is in a critical period for gas and electric restruc .tufing. If the funding is not approved, it is unlikely that staff will be able to complete all the goals related to gas and electric restructuring, as well as complete the market analysis needed to properly position CPAU for participating in the competitive market. Specific projects to be addressed include: Finalizing standards of conduct, representing Palo Alto before the CPUC on gas restructuring, assisting Palo Alto to develop a gas direct access program, assisting Palo Alto in the development of an outside energy sales program and other matters. CMR:200:98 Page 2 of 3 Reports regarding gas restructuring and extra-territorial energy sales will be coming to Council in the near future. Staff believes that future consultant contracts for these services ~ be substantially lower, after the restructuring of the utility industry has passed through the initial phase. ALTERNATIVE TO STAFF RECOMMENDATION (OPTIONAL) The alternative is to prepare an RFP for each task related to electric and gas restructuring. This would be very time intensive and would slow the preparation process, causing some goals to not be completed in a timely manner. Since the nature of the services that are to be performed are within the scope of services of the existing contract, amending the contract is the most expeditious approach. RESOURCE IMPACT Funds exist in the current FY 1997-98 gas and electric operating budgets that can be used for this amendment. POLICY IMPLICATIONS This report does not represent a change to existing City policies. TIME LINE The projects related to electric direct access and positioning in the electric market place are currently in progress. A plan for gas direct access is anticipated to be presented to Council prior to October 1998. ENVIRONMENTAL REVIEW This is not a project under the California Environmental Quality Act. PREPARED BY:W. Blake Heitzrnan, Manager of Competitive Assessment nDW j. M EK Director of Utilities DEPARTMENT HEAD REVIEW: CITY MANAGER APPROVAL: E~LY ~SON Assistant City Manager CMR:200:98 Page 3 of 3 AMENDMENT NO. TWO TO CONTRACT NO. C7094779 BETWEEN THE CITY OF PALO ALTO AND RESOURCE MANAGEMENT INTERNATIONAL, INC. This Amendment No.Two to Contract No. C7094779 ("Contract") is entered into , 1998 by and between the CITY OF PALO ALTO, a chartered city and a municipal corporation of the State of California ("CITY"), and RESOURCE MANAGEMENT INTERNATIONAL, INC., a California corporation located at 3100 Zinfandel Drive, Suite 600, Sacramento, CA 94570 ("CONTRACTOR"). RECITALS: WHEREAS, the Contract was entered into between the parties for the provision of consulting services in January 1997, and the Contract was amended in July 1997; and WHEREAS, the parties wish to again amend the Contract; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION i. The following exhibit to the Contract is hereby amended to read as set forth in the attachment to this Amendment No. Two, which is incorporated in full by this reference: a. Exhibit "B" entitled "FEE SCHEDULE". SECTION 2. Except as herein modified, all other provisions of the Contract and attached exhibits, and subsequent amendments thereto, shall remain in full force and effect. 980430 syn 0071408 1 IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment No. Two on the date first above written. ATTEST:CITY OF PALO ALTO City Clerk Mayor APPROVED AS TO FORM: Senior Asst. City Attorney APPROVED: RESOURCE MANAGEMENT INTERNATIONAL, INC. // ,~,~ (/By:-) ","[,,.. ,, 2,., Its: m,.- ~.2" Taxpayer I.D. No. ’ City Manager Director of Utilities Director of Administrative Services Risk Manager Attachments: EXHIBIT "A": EXHIBIT "B": SCOPE OF SERVICES AND TIME SCHEDULE FEE SCHEDULE 980421 syn 0071408 2 CERTIFICATE OF ACKNOWLEDGMENT (Civil Code § 1189) STATE OF COUNTY OF ) ) ) A .On ~¢~ ~%, ~@~ , before me, the undersigned, a notary public in and for said County, personally appeared personally known to me ,-~cr ) to be the person~) whose name~ is/~-~-~ subscribed to the within instrument, and acknowledged to me that he~-~ey executed the s~e in ,~ ...., ......authorized capacity~, and that by his/her/their signature~ on the instrument the person~, or the entity upon behalf of which the person~ acted, executed the instr~ent. WITNESS my hand and official seal.PAT HOLBROOK COMM. #1114114 Notary Public-California SACRAMENTO COUNTY "" 980421 syn 0071408 Exhibit "A":Scope of Services ,and Time Schedule The Scope of Setices for this contract is provided below, The consultant will be asked to perform see’ices in one or more of the following areas. A. Electric Utility - Technical Consulting. Legislative and Regulatory Services Within the Electric Utility, there are three main focus areas: -Western Area Power Administration (WAPA) -Electric industry restructuring and related issues -Miscellaneous consulting services A1.WAPA - Monitoring, analyzing, and reporting on key Western Area Power Administration (WAPA} activities that may affect the CITY’S electric utility, These services include but are not limited to: Identify and analyze WAPA issues and activities that may impact the rates that the CITY pays for power or impact the amount of power the CITY receives from WAPA. Analyze Federal and State legislative activities that may impact CITYoIPALO ALTO: RFPI2/96)SECTION 00001-7 PART II - SCOPE of WORK or SERVICES City of Palo ARa availability or cost of the WAPA resource. Provide assistance in developing appropriate response strategies to relevant WAPA issues. Monitor key environmental proceedings such as the Bay/Delta proceedings, State Water Resource Control Board, water quality proceedings and others. A2.Electric Industry Restructuring and Related Isstjes Assist the CITY to respond to the challenges related to electric industry restructuring, including, but not limited to: *Identification of possible market opportunities and threats; *Response to the challenges that the CITY may face from increased competition; *Analysis relating to stranded costs and customer contracts *Assistance with n)onitoring and/or influencing any of the Western Power Exchange (WEPEX) activities; *Financial and technical analysis related to the Independent System Operator (ISO) and Power Exchange (PX); *Assistance with transmission and other FERC related issues. *Assistance with State Legislative monitoring and intervention. *Assistance with interventions at selected proceedings, including technical assistance, draft tes’timony, and/or analysis of related litigation. A3.Miscellaneous Consulting Services *Assistance in Planning and Economic Analysis of transmission services and supply resources CITY of PALOALTO: RFP{2/96)SECTION 00001-8 ,- PART II - SCOPE of WORK or SERVICES Cib/of Palo Alto Assistance in analyzing and developing energy price risk management tools, products and services and in developing new energy, pricing strategies. Monitor, analyze, and report on key USBR, State of California, CALFED, and San Francisco Bay, Sacramento and San Joaquin Delta Oversight Committee Activities that may affect the CITY’S electric utility. Management Consulting Contract Negotiations Interconnection Agreement evaluation and negotiation identification and analysis of partnering opportunities B. Natural Gas Industry - Technical Cons~dting, Legislative and Regulatory Services Consultant shall provide natural gas consulting services and legislative and regulatory support to the City. The services and support are in the following task categories: B1.Work with the City to establish regulatory goals, objectives, and priorities. B2. B3. Monitor, analyze and testify in CPUC and FERC proceedings to represent the City’s interests. Maintain routine and sufficient access to key policy makers and staff at the CPUC to facilitate, upon City authorization, effective and efficient representation of the City’s viewpoints and concerns on gas regulatory issues. B4. B5. B6. Assist the city in attaining its gas acquisition and transportation objectives. Monitor and intervene in the legislative process as required. Provide the City with miscellaneous natural gas consulting services including development and use of optimization models, financial analysis and contract negotiations. CITY of PALOALTO; RFP(2/96)SECTION 00001-9 PART II - SCOPE of WORK or SERVICES Cib/of Palo Alto C. Utility Market Assessment Services Consultant shall provide the following market assessment services as desired. C1. Forecasting Services The Consultant may be requested to assist with forecasting annual usage for electricity, natural gas, and water. Advanced probabilistic and stochastic models may be required. Shor{term electricity forecasts for dispatching and forecasting for specific customer classes may be required. Forecasting skills may include but are not limited to: Development of dynamic regression models using Forecast Pro. Development of probabalistic forecasts using EXCEL add-ins. Development of stochastic forecasting models using a Monte Carlo. model. Development of ’appropriate and defensible methods and data sets. Development of analysis of sensitive variables and correlations. Statistical analysis of results, written and oral reporting of results with conclusions and appropriate recommendations in a concise, understandable, and convincing manner. ’ C~...Customer Surveying Services Resource Management is responsible for investigating, analyzing and reporting to upper management important market information about Utilities customers, individually, by segmentation, or in aggregate. Possible Consultant services in this area would include: Development of scientifically useful and appropriate survey instruments Scientific and appropriate selection of customers for surveying CITY of PALO ALTO: RFP (2/96)SECTION 00001-10 PART II - SCOPE of WORK or SERVICES Cib/of Pa[o Alto Appropriate professional and defensible polling of customers through: focus groups, phone survey, written instrument surveys,etc. Analysis of survey results, written and oi’al reporting of results with conclusions and recommendatior~s in a concise, understandable, and convincing manner. Providers who offer services in customer surveying should demonstrate a breadth of experience and expertise in all aspects of those services listed here, as well as other relevant expertise and experience, as the proposer deems appropriate. C3. Market Analysis Resource Management is responsible for and may request consultant assistance in: investigating, analyzing and reporting information aboutthe market environment, including market forces, legislative issues and resul~ing laws, regulatory issues and resulting regulation, competitor behavior, etc. Also, Resource Management is responsible for assimilating, reporting and recommending related actions to upper management in a timely and effective manner. Services in this area include: Investigation and evaluation of competitor activities Regulatory and legislative monitoring, analysis, and intervention. Benchmarking of gas, water, waste-water, or electric utility activities and services in terms of economics, availability, quality, etc. Customer risk analysis including scenario, simulation, decision analysis, etc., addressing the economic.impact of customer losses, individually or in aggregate, under various potential market situations. C~. DSM Program Activities Resource Management is responsible for and may request customer assistance in: investigating new DSM technologies, setting DSM program goals and guidelines, developing and maintaining customer participation data, and evaluating programs. Services in this area include: ’Investigation of DSM and other customer end-use.technologies and CITY of PALOALTO: RFP(2196)SECTION 00001-11 PART II - SCO#E of WORK or SERVICES Ci~ ol Palo Alto methods, estimating technical and market potential of these technologies, and recommending realistic goals for customer programs Develop DSM program goals and guidelines using: 1) City DSM goals related to specific technologies, customer segments, and end-use loads; 2) knowledge of DSM and other customer program methods and technologies; 3) and customer information (from formal and informal surveys) Develop DSM and other customer programs to satisfy Utilities goals for specific technologies, customer segments, or end-use loads Evaluate and report DSM and other customer programs’ success related .to goals and guidelines C5..Data Management Activities Resource Management is responsible for and may request consultant assistance in developing, managing, analyzing, routing, maintaining confidentiality and providing other services related to sensitive data. Specifically these services may include : *Development, maintenance, accessing and programing of the Marketing Information System *Development, maintenance, telemetry and programing of customer and city load data system *Development, maintenance, programming of. an intranet information network *Development, operation, and maintenance of ah information - clearinghouse for utility related data *Development and dissemination of confidentiality policies and procedures TASK ASSIGNMENT PROCEDURE Selection of Consultant does notinsure that the Consultant will be assigned work, but only makes the Consultant ava’ilableto provide services to the CITY. At times, CITY of PALO ALTO: RFP(2/961 SECTION 00001-12 PART II - SCOPE ~3t WORK or SERVICES however, one or more Consultants may be assigned work by the CITY’s Project Manager. All work assignments ,,viii be made at the discretion of the CITY’s Project Manager based on the Project Manager’s opinion of Consultant’s qualifications, availability, and past performance. An activity work ptan shall be developed for each assignment requested by the Project Manager that includes scope, schedule, deliverables, budget and other information. Said work plan must be approved by the City’s Project Manager prior to its implementation. The Project Manager may give telephone authorization to Consultant to perform certain tasks at his/her sole discretion. The term of this contract is for 12 months from date ofe×ecudon. This cont~’act may be renewed, upon mutual a~reement, for two additional one-year periods. EXHIBIT FEE SCHEDULE The maximum compensation due and payable to CONTRACTOR, whose hourly rates also are set forth in this Exhibit "B", is subject to CITY’s budget of $360,000 per year established for the award of one or more contracts pursuant to CITY’s Request for Proposals No. 91104 and CITY’s appropriations for these service contracts. No representation or warranty is made by CITY that CONTRACTOR shall be entitled to a minimum amount of compensation under this Contract. The following persons have been selected under RFP No. 91104, and their combined total compensation is subject to the $360,000 annual budget: EES Consulting, Inc.; Pacific Consulting Services, Inc.; and Resource Management International, Inc. 980421 sy~ 007140~ 4 RESOURCE MANAGEMENT INTERNATIONAL, INC. 1998 Professional and support services, except for testimony.j shall be billed at the following rates: Managing Director Managing Executive Consultant Principal Executive Consultant Executive Consultant Principal Consultant Supervising Consultant Senior Consultant Associate Professional Analyst Research Assistant Technician Office Services $195 per hour $173 per hour $156 per hour $148 per hour $136 per hour $121 per hour $110 per hour $96 per hour $84 per hour $63 per hour $55Per hour $51 per hour The above rates shall be adjusted each year, commencing January 1,1999, to reflect the change in rates officially established by RMI. Testimony shall be billed at not less than eight (8) hours per day. Reproduction, printing, communications, computer services, and other miscellaneous support services shall be billed at rates for such services as determined from time to time and officially established by RMI. All travel, food, lodging, .and miscellaneous expenses, except automobile mileage, associated with the provision of services hereunder shall billed at cost plus ten (10) percent. Automobile mileage will be billed at the rate approved by the Internal Revenue Service. Client shall reimburse RMI for any applicable sales tax imposed on services rendered by RMI to Client.