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Home My WebLink About06.d.1)b) Minutes-Engineering & Operations Committee 05-10-16 Alf"'i6, d, l)b) Central Contra Costa Sanitary District Protecting public health and the environment 5019-Imhoff Place, Martinez, CA945�� REGULAR MEETING OF THE BOARD OF DIRECTORS: CENTRAL CONTRA COSTA TAD J.PILECKI SANITARY DISTRICT President ENGINEERING & OPERATIONS PAUL H.CAUTent President Pro Tem COMMITTEE MICHAEL R_MCCILL JAMES A.NEJEDLY DAVID R.WILLIAMS M I N U T E S PHONE: (925)228-9500 FAX: (925)676-7211 Tuesday, May 10, 2016 www.centralsan.org 10:30 a.m. 2"d Floor Conference Room 5019 Imhoff Place Martinez, California Committee: Chair Paul Causey Member Tad Pilecki Staff.• General Manager Roger S. Bailey Deputy General Manager Ann Sasaki (left after Item 8.) Director of Engineering and Technical Services Jean-Marc Petit District Counsel Kent Alm Capital Projects Division Manager Edgar Lopez Planning and Development Division Manager Danea Gemmell (left after Item 5.) Plant Maintenance Division Manager Neil Meyer (left after Item 3.) Senior Engineer Craig Mizutani Senior Engineer Clint Shima (left after Item 3.) Associate Engineer Jason DeGroot (left after Item 9.) Senior Administrative Technician Cindy Granzella 1. Call Meeting to Order Chair Causey called the meeting to order at 10:30 a.m. 2. Public Comments None. 3.* Review draft Position Paper authorizing the General Manager to pre-purchase natural gas through a service agreement with Shell Energy North America, LP, Engineering & Operations Committee Minutes May 10, 2016 Page 2 for the period January 1, 2018 thru December 31, 2018, at a price not to exceed $5.00 per decatherm Ms. Sasaki distributed a revised draft Position Paper, which showed the price not to exceed$4.50 per decatherm, not including the cost of transportation (attached). Chair Causey asked how the current Board could authorize an action that would potentially affect a future Board in 2018. Mr. Alm explained that the action being requested would establish the price ceiling, and would set the parameters for staff to make purchases in the future. He also explained that any price over $4.50 per decatherm would require new Board approval. COMMITTEE ACTION: Reviewed and recommended Board approval. 4. Review draft Position Paper approving a supplemental authorization of$423,867 from the Sewer Construction Fund to the Fiscal Year 2015-16 Collection Program Contingency Account for the Development Sewerage Project, District Project 8420 Chair Causey suggested that movement of funds could be simplified by transferring money from the Sewer Construction Fund directly to the District Project. Member Pilecki agreed. COMMITTEE ACTION: Reviewed and recommended Board approval with changes. 5. Receive memo from District Counsel regarding design-build projects and if there is a legal impediment in the Government or District Code Mr. Alm reviewed the memo included with the agenda materials, which explained this design-build approach that allows for selecting the design-build entity based on a best value determination, instead of a low bid. Member Pilecki asked if any Treatment Plant projects lend themselves to this process. In response to his question, Mr. Petit explained that the Comprehensive Wastewater Master Plan (CWMP) will possibly identify projects. One project currently being considered for design-build is the Diablo Country Club (DCC) Satellite Water Recycling Facility(SWRF) project. Chair Causey stated that an energy solar project could also be considered being implemented using design-build. Member Pilecki asked how long it would take to develop the required documents, and what the approximate cost would be. He also requested a follow-up discussion and for staff to return to the Committee with an Engineering &Operations Committee Minutes May 10, 2016 Page 3 evaluation reviewing the pros and cons of implementing something like this, as well as identifying some potential projects. COMMITTEE ACTION: Received the information, and requested that staff return with an evaluation and possible identification of projects. 6.* Review draft Position Paper to adopt a resolution amending the Capital Improvement Program authorization limits starting Fiscal Year 2016-17 A revised Attachment 1 (attached), which showed the proposed changes to the Capital Improvement Program authorization limits, was explained by Mr. Lopez. Member Pilecki referred to the third line item on the table regarding limits of authority for transferring funds to individual project budgets, and asked if there should be an amount the General Manager could authorize to avoid requiring Board approval for smaller amounts. Chair Causey preferred that the Board authorize any amount over the original budgeted amount. Mr. Bailey suggested a $50,000 limit, which was consistent with the General Manager's current signing limit. Chair Causey and Member Pilecki agreed. Chair Causey questioned the line item "Transfer funds for project budget overruns after award of construction"which authorizes the General Manager to transfer 15% of the project budget up to a maximum of$1 million per project, whichever is less. Mr. Bailey suggested deleting that line item because of the previous discussion, which led to a recommended$50,000 maximum General Manager authority for such transfers. Member Pilecki asked if the Board has been receiving announcements for construction project acceptance as specified in the second to last line item, and suggested that the announcements be made in future quarterly reports. COMMITTEE ACTION: Reviewed and recommended Board approval with changes based on discussion. 7. Review draft Fiscal Year 2016-17 Capital Improvement Budget (CIB) Project descriptions, associated budgets and schedules, and draft 2016 10-year Capital Improvement Plan (CIP) Mr. Lopez reviewed the documents included with the agenda materials, and responded to questions. COMMITTEE ACTION: Reviewed and provided input to staff. Engineering &Operations Committee Minutes May 10, 2016 Page 4 8.* Review draft Position Paper awarding Substation 16 Switchgear Replacement, District Project 7324 Mr. Lopez distributed an updated draft Summary of Bids (attached). He explained that staff is in the process of completing reference checks for the apparent low bidder. Based on a positive review of the references, and the ability of the low bidder to purchase a bond for the project, staff recommends that the project be awarded to the lowest responsible bidder, National High Voltage Services Inc. COMMITTEE ACTION: Reviewed and recommended Board approval. 9. Receive update on status of Seismic Upgrades for the Pump and Blower Building, District Project 7291 This item was taken out of order, immediately following Item 6. Mr. Lopez stated that no bids were received for this project, mostly due to contractors being too busy and this being a complicated and risky job. At this point, staff would like to identify potential contractors with whom to negotiate. Mr. Petit stated that the next step would be to present a Position Paper at the next Board meeting to review a selection of contractors for the job based on a negotiated bid format. Mr. Alm indicated that his firm was reviewing case law but that, in general, the Board has the authority to award a contract using this negotiated bid approach as long as the scope of the project remains unchanged. COMMITTEE ACTION: Received the update and provided input to staff. 10. Receive Change Order Log, Quarterly Reports, and Bid Schedules to compare budgeted versus actual costs COMMITTEE ACTION: Received the reports. 11. Announcements a. Future scheduled meetings: Tuesday, June 7, 2016 at 10:30 a.m. Tuesday, July 19, 2016 at 10:30 a.m. Tuesday, August 9, 2016 at 10:30 a.m. Engineering &Operations Committee Minutes May 10, 2016 Page 5 b. Receive list of Scheduled/Parking Lot items Chair Causey noted that a design-build evaluation will be added to this list. COMMITTEE ACTION: Received the announcements. 12. Suggestions for future agenda items Member Pilecki requested an analysis of the Primary Treatment Renovations project change orders. He also requested that project status as well as project close-outs be reported on a quarterly basis to the Committee and the Board. 13. Adjournment— at 1:00 p.m. * Attachment Item 3. Central Contra Costa Sanitary District (Revised) ' BOARD OF DIRECTORS [Djbo dj�-L POSITION PAPER Board Meeting Date: May 19, 2016 Subject: AUTHORIZE THE GENERAL MANAGER TO PRE-PURCHASE NATURAL GAS THROUGH A SERVICE AGREEMENT WITH SHELL ENERGY NORTH AMERICA, LP, FOR THE PERIOD OF JANUARY 1, 2018, THROUGH DECEMBER 31, 2018, AT A PRICE NOT TO EXCEED $4.50 PER DECATHERM Submitted By: Initiating Dept./Diu: Clint T. Shima, P.E. Operations Department/ Plant Senior Engineer Maintenance / Reliability Engineering REVIEWED AND RECOMMENDED FOR BOARD ACTION: A. Sasaki, Deputy General Manager N. Meyer, Plant Maintenance Division Manager Roger S.Bailey General Manager ISSUE: Board authorization is requested for the General Manager to pre-purchase natural gas (NG). BACKGROUND: This recommended action aligns with the District's Strategic Plan, specifically Goal No. 4 to be a Leader in the wastewater industry; Strategy 1 to use sustainable practices that minimize waste, maximize resources, protect the ratepayer, improve the community, and embrace innovation. The District uses approximately 430,000 decatherms (dth) of NG annually (or roughly 1,200 dth per day) for the Treatment Plant's Cogeneration System and as backup fuel to landfill gas in the multiple-hearth furnaces and auxiliary steam boilers. The Cogeneration System uses approximately 80 percent of the District's NG purchased. The Cogeneration System is operated to stay below the 25,000 metric tons CO2 equivalent greenhouse gas limit and avoid mandatory offsets. This is accomplished by monitoring fuel use and adjusting the input of Pacific Gas and Electric's imported electrical power. When NG prices stay below $10.00/dth, then continuing to generate power for the Treatment Plant is a cost benefit to the District. Generally, the District pre-purchases approximately 1,000 dth per day of NG. Each pre-purchase transaction typically is for one-third of the total amount, or 333 dth per day. For 2016, staff has purchased 1,000 dth per day at an average Citygate price of $3.86/dth. The remaining 200 dth per day will be purchased at the end of the month at market price. In April 2015, the Board authorized the General Manager to pre-purchase NG through December 31, 2017, at a price not to exceed $6.00/dth. In the last year, forward NG strip prices for 2017 have fallen and remain in the $3.00 to $4.00/dth range. Market Page 1 of 3 POSITION PAPER Board Meeting Date: May 19, 2016 subject: AUTHORIZE THE GENERAL MANAGER TO PRE-PURCHASE NATURAL GAS THROUGH A SERVICE AGREEMENT WITH SHELL ENERGY NORTH AMERICA, LP, FOR THE PERIOD OF JANUARY 1, 2018, THROUGH DECEMBER 31, 2018, AT A PRICE NOT TO EXCEED $4.50 PER DECATHERM prices are favorable for purchasing due to abundant NG supplies resulting from historically high production and mild winter weather on the west coast. The five-year average of two-year forward pricing was $4.44/dth; therefore, a not-to-exceed price of $4.50/dth is appropriate. The recent low prices are not expected to last for a prolonged period. If the spot market price of NG remains at or near $3.00/dth, the District's average burner tip price for NG for Fiscal Year (FY) 2015-16 will be approximately $4.08/dth for a total expenditure, including the added cost of transportation ($0.50/dth) of $1,969,400. The FY 2015-16 budget for NG is $2,365,000. Forward NG prices include a premium and are not as greatly affected by short-term price changes. Current pricing for one-year strips of NG for 2017 is approximately $3.55/dth. For calendar year 2017, the District has pre-purchased two thirds of the normal pre-purchase amount at an average Citygate price of $3.55/dth. NG prices tend to be lower during the shoulder seasons of spring and fall. Staff will continue to monitor the NG markets to make a purchase for the remaining portion of 2017. Pre-purchasing allows staff the flexibility to respond to market changes. Locking in a fixed price for NG can insure the District against an upside cost; there is a market risk if prices go down, but staff believes the down side benefit is less than the upside risk. Accordingly, staff recommends Board authorization to allow the General Manager to pre-purchase NG for the period of January 1 , 2018, through December 31, 2018. By authorizing gas purchases through 2018, the District will be able to take advantage of future favorable pricing changes, thus stabilizing the energy cost for the next three years. The General Manager will keep the Board apprised of NG purchases. ALTERNATIVES/CONSIDERATIONS: The District could purchase all NG at market price each month or other frequency, or the District could pre-purchase just one year in advance. FINANCIAL IMPACTS: Purchasing NG each month at market price presents a risk of market price volatility and excessive District expenditures. Based on past experience, pre-purchasing NG can result in significant cost savings. The budget for FY 2015-16 is $2,365,000. COMMITTEE RECOMMENDATION: The Engineering and Operations Committee reviewed this position paper on May 10, 2016, and recommends the approval of the position paper. C:\Users\CGranzella\AppData\Local\Microsoft\WindowslTemporary Internet Files\Content.0uticoMYTOD7IEQ\Natural Gas Prepurchase 05-19-16.doc Page 2 of 3 POSITION PAPER Board Meeting Date: May 19, 2016 subject: AUTHORIZE THE GENERAL MANAGER TO PRE-PURCHASE NATURAL GAS THROUGH A SERVICE AGREEMENT WITH SHELL ENERGY NORTH AMERICA, LP, FOR THE PERIOD OF JANUARY 1, 2018, THROUGH DECEMBER 31 , 2018, AT A PRICE NOT TO EXCEED $4.50 PER DECATHERM RECOMMENDED BOARD ACTION: Authorize the General Manager to pre-purchase NG through a service agreement with Shell Energy North America, LP, for the period of January 1, 2018, through December 31, 2018, at a price not to exceed $4.50/dth, C:\Users\CGranzella\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.0utlook\YT0D71EQ\Natural Gas Prepurchase 05-19-16.doc Page 3 of 3 Item 6. ATTACHMENT 1 (Committee Handout) Table 4; Improvement Program Authorization Limits Action General Manager Board of Directors Approve Capital Plan None No limit Authorize Capital Program budgets None No limit Transfer funds to individual project budgetsAllecate-fuads to None Teta/-$regr-arn No IimitNe Beard individual-project-budgets aw!ha,;zati@R requi%d E Professional Consulting Services $100,000 or less Greater than$100,000 Authorize Consultant Technical Consulting Services. $100,000 or less Greater than$100,000 Contracts Professional Eng.Services. $100,000 or less Greater than$100,000 TransferNIOGate funds from CIB program-contingency $100,000 or less per Greater than$100,000 accounts to projects not included in the CIB project2 Individual equipment items and equipment contingency in Up to amount specified in Above amount specified in the Equipment Budget Equipment Budget Equipment Budget m +n9 serrting� Individual equipment items not in the Equipment Budget $50,000 or less Greater than$50,000 Authorize supplemental funds to program budgets Not applicable Sewer Construction Fund and contingency account/-GGR44geer�sy asceEints balance 15%of final project Transfer Akcate funds for project budget overruns after budgetl,2�or up to a Greater than 15%of final award of construction contract' maximum of$1,000,000 project budget or above per project,whichever is $1,000,000 per project less Award construction contracts43 $100,000 or less Greater than$100,000 Authorize Additive $100,000 or less Greater than$100,000 construction change orders Deductive No limit No Board authorization required Subcontractor substitutions All substitutions unless Subsfitufions protested by protested by subcontractor subcontractor Informational Construction project acceptance All projects announcement to the Board Close out project All projects Memo provided to the Board at end of FY Limited by the remaining balances of the applicable program and contingency account 2 Limited by the remaining balance of the applicable pFogram contingency account 3 PiRal pf9jeGt budget i6 e6tabl shed at time of award Of GOn6tFUGtien Gontr-aGt as Bid protests and rejection of all bids must go to Board regardless of dollar amount 2015 Ira GIB 1ntFedUGt +RtFO 1 EXHIBIT A Capital Improvement Program Authorization Limits Action General Manager Board of Directors Approve Capital Plan None No limit Authorize Capital Program budgets None No limit Transfer funds to individual project budgets None No Limit Professional Consulting Services $100,000 or less Greater than$100,000 Authorize Consultant Technical Consulting Services. $100,000 or less Greater than$100,000 Contracts Professional Eng.Services. $100,000 or less Greater than$100,000 Transfer funds from CIB contingency account to projects not $100,000 or less per Greater than$100,000 included in the CIB project2 Individual equipment items and equipment contingency in Up to amount specified in Above amount specified in the Equipment Budget Equipment Budget Equipment Budget Individual equipment items not in the Equipment Budget $50,000 or less Greater than$50,000 Authorize supplemental funds to program budgets Not applicable Sewer Construction Fund and contingency account balance 15%of project budget'.2 Greater than 15%of Transfer funds for project budget overruns after award or up to a maximum of project budget or above of construction contract $1,000,000 per project, $1,000,000 per project whichever is less Award construction contracts3 $100,000 or less Greater than$100,000 Authorize Additive $100,000 or less Greater than$100,000 construction change orders Deductive No limit No Board authorization required Subcontractor substitutions All substitutions unless Substitutions protested by protested by subcontractor subcontractor Informational Construction project acceptance All projects announcement to the Boa rd Close out project All projects Memo provided to theBoard at end of FY I Limited by the remaining balances of the applicable program and contingency account 2 Limited by the remaining balance of the applicable contingency account 3 Bid protests and rejection of all bids must go to Board regardless of dollar amount Item_ 8. (Committee Handout) Central Contra Costa Sanitary District DRAFT SUMMARY OF BIDS File:7324 8.3 PROJECT NO.: 7324 NO. OF ADDENDA: 2 DATE/TIME: MAY 6,2016/2:00 PM PROJECT NAME: SUBSTATION 1.6 SWITCHGEAR REPLACEMENT PROJECT MANAGER: BRAD LEIDECKER PROJECT LOCATION: 5019 IMHOFF PLACE, MARTINEZ, CALIFORNIA ENGINEER'S ESTIMATE: $1_,300,000 NO. BIDDER BID PRICE National High Voltage Chris Lagesrtrom 1 4530 Winter Oak Way $563,500 Antelope, CA 95843 916.531.5561 Koch & Koch, Inc. Ric Eli 2 P.O_ Box 909 $1,007,400 Penn Valley, CA 95946 530.432.4000 Blocka Construction, Inc. Lori Magruder 3 4455 Enterprise Way $1,048,000 Fremont, CA 94538 510.657.3686 Cal Electro, Inc. E. Robert Meissner 4 3710 Electro Way $1,189,000 Redding, CA 96002 530.223.5937 BIDS OPENED BY Donna M. Anderson DATE: 5/6/2016 SHEET NO. 1 OF 1