HomeMy WebLinkAbout06. Transfer up to $500,000 and execute agreement with Carollo Engineers for Plant Energy Optimization Project, DP 7320Central Contra Costa Sanitary District
BOARD OF DIRECTORS
POSITION PAPER
Board Meeting Date: November 3, 2016
Subject:
6.
AUTHORIZE THE GENERAL MANAGER TO TRANSFER FUNDS AND
EXECUTE A PROFESSIONAL AGREEMENT WITH CAROLLO
ENGINEERS FOR DESIGN SERVICES FOR THE PLANT OPTIMIZATION
PROJECT, DISTRICT PROJECT 7320
Submitted By:
Initiating Dept./Div.:
C. Shima, Senior Engineer Operations/ Plant Maintenance
REVIEWED AND RECOMMENDED FOR BOARD ACTION:
E. Lopez Capital Projects Division Manager
JM. Petit — Director of Engineering and Technical Services
Roger 5. Bailey
General Manager
ISSUE: Board authorization is required to transfer funds within the Capital
Improvement Budget (CIB) in amounts greater than $500,000. Authorization is also
required for the General Manager to execute a professional engineering agreement in
the amount above $100,000.
BACKGROUND: The project aligns with the District's Strategic Plan Goal 6,
Strategy 4, to optimize energy efficiency and meets the recently adopted Energy Policy.
The cogeneration gas turbine engine and gearbox was overhauled in December 2015
under the maintenance agreement with Solar Turbines. The engine is currently
operating at a reduced load due to site specific Title V pollutant mass limits. The
Title V limits for nitrogen oxides (NO) are 118 pounds per day and for carbon monoxide
(00) 157 pounds per day respectively. Prior to the overhaul, the engine was operating
at on average about 90 percent load. To meet these mass limits, staff had to reduce
fuel throughput by approximately six percent less than normal, which increases the
amount of electricity imported and results in less energy savings from operating the
cogeneration system.
In August, the District submitted a warranty claim to Solar Turbines related to the
performance of the engine. Solar Turbines responded by sending technicians to retune
the engine on several occasions to improve the emissions performance. The results
using a third -party air quality service verified that the engine meets the Solar Turbines
Centaur 40 engine technical specification concentration limits of 42 parts per million
(ppm) of NOcorrected to 15 percent oxygen, and 50 ppm of CO, which matches
industry standard for this engine type. These types of engines can operate at full load
within the Title V concentration and mass permit limits, but not consistently. Due to
limitations in air testing repeatability of plus/minus seven percent, the only means to
Page 1 of 3
POSITION PAPER
Board Meeting Date:
Subject:
November 3, 2016
AUTHORIZE THE GENERAL MANAGER TO TRANSFER FUNDS AND
EXECUTE A PROFESSIONAL AGREEMENT WITH CAROLLO
ENGINEERS FOR DESIGN SERVICES FOR THE PLANT OPTIMIZATION
PROJECT, DISTRICT PROJECT 7320
ensure full regulatory compliance while maximizing the output of the cogeneration
system is through improved emissions control technology.
Staff researched various alternatives to modify the cogeneration system. Oxidation
catalyst (CO catalyst) technology can reduce CO by approximately 50 to 75 percent,
which when combined with injection water will provide Title V Permit compliance at full
load. Evaporative cooling technology was also investigated and appears promising
from a fuel efficiency standpoint. Carollo Engineers was hired to provide a technical
memorandum evaluating installation costs and payback duration. Carollo Engineers
was selected for their past experience in designing the original 1995 installation of the
cogeneration system, the repairs in 2012, as well as the control modifications in 2014.
The purpose of the Plant Energy Optimization Project, District Project 7320, is to
increase energy efficiency and decrease greenhouse gas emissions at the treatment
plant. District staff has identified a project that will add evaporative cooling equipment
to the inlet of the cogeneration system and a CO catalyst to the exhaust ducting. These
modifications will increase operational flexibility and electricity generation by allowing
operation at full load, while decreasing emissions. Continued operation at the current
reduced load will cost the District approximately $150,000 to $200,000 per year in
additional electrical import costs. The evaporative cooler and CO catalyst alternative
has a payback period of approximately three years as detailed in Attachment 1 and 2,
Project Business Case Analyses. This project has been coordinated with the
Comprehensive Wastewater Master Plan team to insure that the potential future
replacement of the cogeneration system does not negatively impact the benefit of these
improvements. The replacement of our Centaur 40 engine is in the ten-year timeframe
of the Comprehensive Wastewater Master Plan.
Staff is recommending that the agreement with Carollo Engineers be revised to include
design of this project with a cost ceiling not to exceed $120,000. Carollo Engineers has
the unique knowledge and understanding of the cogeneration system, and it is in the
best interest of the District to retain their professional engineering service. The
agreement revision will include detailed field investigation, project specifications and
drawings for bid and other related professional services to design the project.
CEQA: Staff has concluded that this project is exempt from the California
Environmental Quality Act (CEQA) under District CEQA Guidelines Section 15301(b)
since it involves a minor alteration to an existing, publicly -owned facility. Approval of
this project will establish the Board of Directors' independent finding that this project is
exempt from CEQA.
Page 2 of 3
POSITION PAPER
Board Meeting Date: November 3, 2016
Subject:
AUTHORIZE THE GENERAL MANAGER TO TRANSFER FUNDS AND
EXECUTE A PROFESSIONAL AGREEMENT WITH CAROLLO
ENGINEERS FOR DESIGN SERVICES FOR THE PLANT OPTIMIZATION
PROJECT, DISTRICT PROJECT 7320
ALTERNATIVES/CONSIDERATIONS: Continue operating the cogeneration system as
is and import electricity from Pacific Gas and Electric. Other options reviewed as part of
the Business Case Analysis include Selective Catalytic Reduction (SCR), SoloNOx, and
a chiller unit. These other options are more costly and are not recommended.
FINANCIAL IMPACTS: The total project cost is anticipated to be $600,000, which
includes planning, design, bid price, and construction management. This project is
listed in the Fiscal Year (FY) 2016-17 District Budget on page 133. The estimated
budget for this project in FY 2016-17 is $50,000. Additional funds of $550,000 will need
to be transferred from other treatment plant projects and from the CIB contingency
account to complete this project within this fiscal year.
COMMITTEE RECOMMENDATION: The Engineering and Operations Committee
reviewed this subject at the October 21, 2016, meeting and recommended
RECOMMENDED BOARD ACTION:
1. Find that this project is exempt from CEQA;
2. Authorize the General Manager to transfer up to $550,000 to the Plant Energy
Optimization Project, District Project 7320; and
3. Authorize the General Manager to execute a professional services agreement
revision with Carollo Engineers to increase the cost ceiling to $120,000 for
design services under the Plant Energy Optimization, District Project 7320.
Attached Supportina Document(s):
1. Business Case Analysis No, 1
2. Business Case Analysis No. 2
Page 3 of 3
Business Case Analysis No. 1
IM 11=1
Date:
Project:
Prepared By:
Capitol Costs For lst Year:
I8/1N2916_,.__
=Cogen. Exhaust Upgrades
Clint Shima 1Checked By:
Typical
Before Overhaul
Sarwan Wason
BUSINESS CASE ANALYSIS
r
Atte. 1
Do Nothing
ATTACHMENT 1
•
Alternative 2 Alternative 3 Alternative 4
CO Catalyst
SCR
SoloNOx C40
Planning/Design Costs
Direct Equipment Costs
Construction Costs
;CM Costs
$0
$0
$95,000
$220,000
$410,000
$0
$0
$150,000
$350,000
$650,000
$0
$0
$245,000
$560,000
$1,030,000
$60,000
$130,000
250,000
O&M Costs For lst Year:
District Staff Time Cost
Solar Turbine PM Contract Additional Cost*
Chemical Costs
PG&E Costs
Natural Gas Costs
$25,000
25,000
$30,000
$45,000
$25,000
$47,280
$11,000
$390,000
$600,000
$390,000
$390,000
$ 290,000
$1,920,000
$1,880,000
$1,920,000
$1,920,000
$1,920,000
o&M Costs for Year 1l $2,335,000
Capital Costs for Year 11 $D►
Net Present Value for 10 years! N/A
:Assumptions:
Discount Rate,
O&M Cost Inflation Rate, %
Capital Costs Inflation Rate, %
.PG&E Cost Inflation Rate,
Natural Gas Cost Inflation Rate,
Lifecycle period, years
$2,505,0001
$0-
$24,108,000
lmeggreinum
Recommended
$2,340,000
$550,000
22,988,000
Recommended
.
52,366,000
$1,260,000
$24,002,000
$2,282,000
$2,340,000
$24,032,000
Recommended
Recom mended
4.00%
2.60%
2.50%
4.72%
0.00%
10 years
Based upon CWMP Basis of Cost TM 3
Based on 2011-2015 Average CPI
Based on 2011-2015 Average ENR CCI
Based on 2012-2016 normalized PG&E Average Total Rate j
(-0.42%) inflation from 2002-2016
Business Case Analysis No. 2
Date:
Project:
Prepared By:
Capital Costs For 1st Year:
Planning/Design Costs
Direct Equipment Costs
Construction Costs
CM Costs
8/16/2016
Cogen Improvements
Chathu Abeyrathna Checked By:
Alternative 1
1Sarwan Wason
BUSINESS CASE ANALYSIS
Alternative 2
Do Nothing
Evaporative Cooler
ATTACHMENT 2
$15,0001
so
$43,000
$o
$37,000
so
$13,000
.
O&M Costs For 1st Year:
District Staff Time Cost
Chemical Costs
PG&E Costs
!Natural Gas Costs
•
$25,000
$10,000
$o.
$3,000
$600,000
$524,000
$1,880,000
$1,912,000
O&M Costs for Year 1 $2,505,000
Capital Costs for Year 1 $0
Net Present Value for 10 years $22,284,000
Assumptions:
Discount Rate,
O&M Cost Inflation Rate, %
!Capital Costs Inflation Rate, %
PG&E Cost Inflation Rate,
Natural Gas Cost Inflation Rate, %
Lifecycle period, years
Not Recommended
$2,449,000
$108,000
$21,765 000
Recommended
4.00%
2.60%
2.50%
4,72%
0.00%
10 years
Based upon CWMP Basis of Cost TM 3
Based on 2011-2015 Average CPI
Based on 2011-2015 Average ENR CCI
Based on 2012-2016 normalized PG&E Aver
(-0.42%) inflation from 2002-2016