AGENDA MEMORANDUM

 

 

Meeting Date:           November 28, 2011

 

From:                          Paul Kalv, Electric Utility Director

 

Subject:                      Resolutions authorizing execution of two Agreements with General Electric Corporation for Advanced Metering Infrastructure and Grid IQ Related Technologies Implementation Services and Software as a Service (SaaS)

 

 

Staff Recommendation:

Staff recommends execution of both Agreements with General Electric Corporation supporting the City’s Advanced Metering Infrastructure (AMI) and Related Technologies project.

 

Analysis:

The purpose of this solicitation was to select a single vendor to provide Advanced Metering Infrastructure and Related Technologies to the City of Leesburg for the implementation of their ‘Smart Meter’ initiative.

 

The City requested firms to provide proposals that would have the City owning all hardware and software licenses.  The City would also provide IT hardware infrastructure to run the associated hardware and software for the AMI system.

 

Attached to this memorandum are several documents with supporting information, which should be considered as if included herein.  Attachments include a memo to Jay Evans, City Manager, providing extensive background information and recommending General Electric Corporation as the vendor of choice for the AMI system,

 

The City has negotiated two agreements for this project.  The first agreement is an Implementation Services agreement for the setup, configuration and training related to the AMI system.  The second agreement is for hosting services and will become effective after the Implementation Services agreement is completed.  Details of each agreement follow:

 

AMI Implementation Services Agreement - $12,878,119

The City will purchase the following items as a capital expenditure for the deployment and implementation of the project.

 

GE Responsibilities

·         Project Management Oversight

·         AMI enabled Meters-Residential and Commercial

·         Meter installation and field validation

·         AMI infrastructure hardware

·         AMI network design and integration

·         DRMS integration engineering and device provisioning

·         MDS implementation

·         Business process management and operational transition services

·         In home Devices

·         Pre-pay environment implementation and set up fees

·         Customer web portal design and deployment

·         GE Grid IQ hosted solution implementation and set up fees

·         Integration to existing utility software systems

 

City Responsibilities

·         AMI Network Installation (Directed by GE Project Manager)

·         Establishment of VPN front haul

·         WAN backhaul from AP’s to front haul

·         Installation of in home devices for demand response

·         Rate structures, consumer engagement, DR program development

 

Grid IQ Solution as a Services Agreement - $13,404,600 (over 10 years)

Upon completion of the deployment phase, the city will make periodic payments to GE for the delivery of the data services provided by the smart grid software applications defined in the contract.

 

GE responsibilities

·         Make available to the city all of the data and functions of the described applications via a utility web portal.

·         Establish and populate web portal for Leesburg consumers

·         Maintain and update licenses and software

·         Maintain and update IT infrastructure to ensure reliable and secure operation

 

City Responsibilities

·         Maintain VPN and WAN

·         Replacement of failed meters and AMI hardware

·         Execution of DR programs

·         Customer Billing

·         Consumer complaint resolution

·         Utility operation

 

Procurement Analysis:

On August 18, 2010 the City issued Request for Proposal (RFP) 100372 requesting qualified and interested firms to submit responses to our Request for Qualifications (RFQ) for AMI and Related Technologies.  On November 24, 2010 13 responses from 12 firms were received.  Those firms are listed here.

 

 

After an initial review of the responses, two proposals (firms) were disqualified as being non-responsive for submitting an unacceptable instrument as a bid guarantee which reduced the number of responsive proposals to 11.

 

Attached to this memorandum are two documents, ‘Notice of Short Listed Firms’ and ‘Notification of Final Ranking’.  These documents detail the short listing and evaluation process.   The Evaluation Committee agreed on the final ranking of the shortlisted firms as shown here.

 

Rank   Firm Name

1st           GE Digital Energy – Atlanta, GA

2nd         HD Supply Utilities LTD – Orlando, FL

3rd          Enspiria Solutions, Inc. – Greenwood Village, CO

4th          SAIC Company – Seattle, WA

 

The initial contract talks with General Electric (GE) involved the creation of ‘Scope of Work’ documents that detailed what work was to be performed and the responsibilities of each party, the City or GE.  These documents were required in order for GE to determine the final pricing.

 

As part of the City’s due diligence, the Finance Director retained HDR Engineering, Inc. to prepare a simple cash flow model of the AMI project.  The GE contract pricing was provided to HDR along with other applicable information.

 

The simple cash flow model prepared by HDR showed the project would not provide positive cumulative cash flow until year twelve  of the project.  Additionally,  the net present value break-even point was in year 15.  It was evident the proposed delivery model with the City owning and hosting the AMI System and Related Technologies was not financially feasible.

 

Procurement staff reengaged General Electric to pursue a project delivery model that would be financially favorable for the Electric Utility.  GE prepared an alternate proposal where GE would host the necessary IT infrastructure (they buy it and operate it).  The City will have upfront capital costs for implementation, setup, configuration, and training and will purchase all meters and AMI network hardware.

 

This delivery model is referred to as a ‘hosted’ solution.  GE will ‘host’ all the IT infrastructure needs for the project.  GE is responsible for setting up all the hardware, installing all software and providing staff to operate the systems.  Following the initial implementation and setup, the City will pay GE an annual amount for the Software as a Service (SaaS) model.  GE will provide the necessary billable meter reads for billing purposes.

 

Approving execution of both Agreements is required as each Agreement is dependent upon the other being in place.

 

Options:

1.  Adopt both resolutions authorizing execution of each agreement with General Electric

    Corporation; or

2.  Such alternative action as the Commission may deem appropriate

 

Fiscal Impact

 

The AMI project is comprised of two agreements with GE, implementation of the AMI system and their hosting solution, Grid IQ.  Contract costs associated with the implementation of the AMI system total $12,878,119 of which $6,439,059 will be reimbursed through the Department of Energy Grant.  Additional reimbursement is available through the State EECBG Grant totaling $1,240,000 as a match for meter purchases and installation.  The amount estimated to be financed by the City is $6,279,000.

 

Contract costs associated with the second agreement, the Grid IQ solution as a service, are considered ongoing operational costs which will be spread over a ten year period totaling $13,404,600.  

 

Estimated annual operating costs gradually increase from $1,070,000 in year one to $2,376,000 at the end of year five.  In years six through twenty, costs are projected to increase at an average annual rate of 2.3%.  The cash flow analysis reflects a positive Net Present Value (NPV) of $14,809,000 over the 20 year life of the project. 

 

 

Submission Date and Time:    11/23/2011 5:20 PM____

 

Department: _Electric Utility__________

Prepared by:  _Mike Thornton________                     

Attachments:         Yes_X__   No ______

Advertised:   Yes__Not Required ______                     

Dates:   _August 15, 2011_____________                     

Attorney Review :       Yes___  No ____

                                                

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head ________

 

Finance  Dept. ______JB__________                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. _041-10xx-531-xxxx__

 

Project No. ___SMARTG_______

 

WF No. ______________________

 

Budget  ______________________

 

Available _____________________