I. RECOMMENDATION:
Staff is recommending that the City Council approve an amendment to the existing contract with IGS Services to allow for subcontracting and approve a task order to undertake gas system modeling.
II. BACKGROUND:
As the Council may be aware, PG&E has reached a critical point in delivering additional power to larger industrial customers such as cannabis cultivators. Capacity from previous developments have absorbed most of the power available to deliver on these new projects. Staff has been approached by (2) cannabis operators who have approved projects where the lack of power availability by PG&E has delayed their construction timelines as power is not expected to be available for at least two (2) more years when they are scheduled to complete the Jayne/Merced substation upgrades. The locations primarily affected are in the Industrial Park and West Elm south of Polk Street. As a possible solution, these operators have requested that staff allow them to use natural gas generators to provide temporary power to these facilities until permanent power is available. This is a solution that staff is considering for these operators.
III. DISCUSSION:
The city operates and maintains its own natural gas distribution network however, the demand communicated to staff related to these cannabis cultivators who need natural gas to operate their generators is substantial. Preliminary numbers suggest that these two operators could consume as much as two (2) times the natural gas consumed by the entire City in a year. Therefore, in consultation with Dan Bergmann of IGS, the City’s gas consultant, has suggested due to the high demand usage, the City would need to undertake some type of gas modeling in order to ensure that the increased usage would not have a negative impact on the City’s overall performance and reliability. This is critical infrastructure and heavily regulated, therefore, staff feels that the City has to fully understand the impacts to adding that much demand to an existing system and see how it will perform when demand increases at this level.
The scope of the project described by this proposal includes all work necessary to complete the various tasks associated with the project, as understood at the writing of the proposal, including:
- Development of a computer model of the System;
- Calibration or verification of the resulting model;
- Review the impact of various planned development projects;
- Preparation of the documentation describing the model development, calibration process, and planning review.
In order to undertake this modeling, IGS would need to subcontract the work as the modeling requires additional expertise. Currently, IGS’s contract does not allow for subcontracting, however, this is a reasonable request to amend the contract to allow subcontracting as this is a very specialized field and it is critical that IGS be intimately involved in the analysis and oversight of the modeling. Therefore, staff is requesting and subsequently has made the necessary amendments to the existing contract to allow for subcontracting with approval of the City Manager. A redlined version has been attached to this report to see the changes made by staff.
Once the model in complete, the City will be able to fully understand increased demand impacts to the system.
IV. ALTERNATIVES:
- Do not proceed with the natural gas modeling and amendment to the IGS contract.
- Proceed with modeling and determine a level of monetary contribution by the cannabis companies who have requested this energy alternative. Staff would need further direction if Council chooses this alternative.
V. FISCAL IMPACT:
If the council chooses to move forward with this request the Council may choose to proceed with paying the $12,000 from the gas fund as this modeling will have a benefit to the Citywide system as well as possible tax revenue from companies opening sooner than waiting for PG&E to complete their upgrades. If approved it would be a not to exceed $12,000 task order from the professional services account in the Gas Fund. | | |