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HomeMy WebLinkAbout21-05 RESOLUTION• RESOLUTION NO. 21- 0 5 _ A RESOLUTION APPROVING AMENDMENT NO. 12 TO THE CONTRACT WITH OPERATIONS MANAGEMENT INTERNATIONAL (OMI); AND APPROVING A BUDGET ADJUSTMENT TRANSFERRING $887,000.00 FROM USE OF FUND BALANCE TO THE WASTEWATER TREATMENT PLANT GENERATOR CAPITAL PROJECT BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby approves Amendment No. 12 to the contract with Operations Management International (OMI). A copy of Amendment No. 12, marked Exhibit "A" is attached hereto, and made a part hereof. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby approves a budget adjustment transferring $887,000.00 from Use of Fund Balance to the Wastewater Treatment Plant Generator Capital Project. PASSED and APPROVED this 8th day of February 2005. ````,\111111114Uff 4e.0 ,\YT0•95G&•'s _ ) •• :-P S • • FAYETTEVILLE 5 14-1 ;rin:QKANSP*J2 " ATTEST: By: SO DRA SMITH, City Clerk APPROVED: By: DfA''� CO • DY, Mayor • • AMENDMENT NO. 12 TO AGREEMENT FOR OPERATIONS, MAINTENANCE AND MANAGEMENT SERVICES FOR THE CITY OF FAYETTEVILLE, ARKANSAS WASTEWATER TREATMENT PLANT THIS AMENDMENT NO. 12 to the Agreement for Operations, Maintenance and Management Services for the City of Fayetteville, Arkansas Wastewater Treatment Plant dated September 1, 1994 (the "Agreement"), made effective on the 9th day of February, 2005, by and between the City of Fayetteville, Arkansas, whose address for any formal notice is 113 W. Mountain St, Fayetteville, Arkansas 72701 (hereinafter the "City") and Operations Management International, Inc., with offices at 9193 S. Jamaica Street, Suite 400, Englewood, Colorado 80112 (hereinafter "OMI") is made and entered into for purposes of amending certain provisions of the Agreement, to prevent the facilities covered by the Agreement from being deemed to be used in the trade or business of OMI pursuant to Section 141 (b) of the Internal Revenue Code of 1986, as amended. NOW THEREFORE, the City and OMI agree to amend the Agreement as follows: Article 4.1 is hereby deleted in its entirety and replaced with the following Article 4.1: 4.1 For services rendered during calendar year 2005 the City of Fayetteville shall pay to OMI the actual cost of services performed plus an annualized management fee of Eighty One Thousand Six Hundred Ninety Seven Dollars and Eighty Six Cents ($81,697.86). Said fee and estimated cost (base fee) shall be paid in twelve (12) equal monthly installments. The management fee for subsequent years will be determined proportional to the increase in estimated cost. 2. Article 4.3 is hereby deleted in its entirety and replaced with the following Article 4.3: 4.3 OMI estimates the cost for services for calendar year 2005 shall be Five Million Three Hundred Twenty Seven Thousand Two Hundred Fifty Two Dollars and Eighty -Nine Cents ($5,327,252.89). Details of said cost are shown in Appendix J. The base fee shall be negotiated each year in September for the upcoming calendar year. Should the City and OMI fail to agree, the base fee will be determined by the application of the base fee adjustment formula shown in Appendix F. Should the actual expenditures exceed estimated expenditures by more than Twenty Thousand Dollars ($20,000) in any year of this Agreement, specific approval will be obtained from the City prior to OMI incurring additional costs. 3. A new Appendix L is added in the form attached hereto. This Amendment No. 12 together with the Agreement constitutes the entire agreement between the Parties and supersedes all prior oral and written understandings with respect to the subject matter set forth herein. Unless specifically stated all other terms and conditions of the Agreement shall remain in full force and effect. Neither this Amendment nor the Agreement may be modified except in writing signed by an authorized representative of the Parties. Page 1 of 4 The Parties, intending to be legally bound, indicate their approval of the Amendment by their signatures below. OPERATIONS MANAGEMENT INTERNATIONAL, INC. Roger B. Quayle Senior Vice Presi ent HI Date: 6 2/0 12 --oto S CITY OF FAYETTEVILLE APPROVED AS TO FORM: ItrWilliams City Attorney Date: 7//1-I (di Page 2 of 4 Appendix J COST DETAIL The annualized estimated costs for calendar year 2005 are as follows: Description Direct Labor & Benefits Labor Markup Electricity Electrical Markup Other Direct Costs Other Direct Costs Markup Subtotal Fixed Fee Lift Station Odor Control Capital Item Amortization Power Generator Project Equipment Costs Construction Management $ Total Est. 0 & M Budget Total Est Annualized Budget Estimated Increase Existing 2005 Estimated Costs 1,671,071.00 501,321.00 642,720.00 1,288,073.00 128,807.00 4,231,992.00 82,349.00 69, 362.00 100,622.00 $ $ $ $ $ 4,484,325.00 $ $ 4,484,325.00 $ The following are some of the major reasons for cost circumstances: Amended 2005 Estimated Costs 1,671,071.00 501,321.00 588,480.00 1,306,961.16 130,696.12 4,198,529.28 81,697.86 69,362.00 100,622.00 762,645.00 114,396.75 5,327,252.89 5,327,252.89 842,927.89 1. Continued increase in the efficient use of technological automation and job -sharing within the OMI network. 2. Continued upward pressure on the cost of fuel and vehicle expenses. 3. Ever increasing cost to maintain community -expected high level of performance with many pieces of equipment nearing the end of their life cycle and destined to be replaced or upgraded as part of the ongoing Wastewater Improvement Project. 4. Continued population growth causing a related increase in sludge production and ultimate sludge disposal costs. 5. Additional costs for maintenance of 4-5 new sewage lift stations during the next year. 6. Potentially less expensive sludge disposal alternatives continue to be evaluated, which may or may not become feasible within the next 12 months. 7. Addition of the Power Generator Project as described in Appendix L hereto. Page 3 of 4 • • Appendix L POWER GENERATOR PROJECT - SCOPE OF WORK Due to significantly increased emphasis on preventing all possible wastewater overflows and/or interruptions in wastewater treatment capability by the Arkansas Department of Environmental Quality and the United States Environmental Protection Agency, as well as currently available favorable electrical rate structures it has become necessary for the City to install full -backup 2 megawatt power generation equipment at the Paul R. Noland wastewater treatment plant (WWTP). The City has reviewed available options and has determined that it desires to install a power generation system manufactured by PowerSecure, Inc. The cost of the power generation equipment (the "Equipment") to effect the implementation of the power generation system at the Noland WWTP, including applicable sales taxes and a four-year extended warranty, is estimated to be $762,645.00 OMI hereby agrees to procure and manage the construction of the Equipment on behalf of the City during calendar year 2005. The costs for managing the construction of the Equipment will be $114,396.75 and the City hereby agrees that it will repay the purchase price of and construction management costs for the Equipment to OMI over the remainder of the calendar year 2005 in equal monthly installments in accordance with Article 5.1 of the Agreement. Copies of purchase orders, bills of sale or invoices evidencing OMI's purchase will be furnished to the City upon request. Title to and risk of loss for the Equipment will reside with the City at all times. Notwithstanding the foregoing, if for any reason the Agreement is terminated by either party prior to the end of calendar year 2005; the City will pay to OMI the remaining balance due for the Equipment and the construction management fee, in full, within thirty (30) days following termination. Costs for diesel fuel will be provided directly by the City of Fayetteville as described in Article 3.8 of the Agreement. Costs for natural gas, applicable taxes, insurance, maintenance, and monitoring fees will be included in the actual cost of services as shown in Appendix J. Page 4of4 City of Fayetteville, Arkansas • Budget Adjustment Form Budget Year 2005 Department: Operations Division: Fleet Operations Program: Capital Expenditures Date Requested 2/15/2005 Adjustment Number Project or Item Requested: $887,000 is need in the Wastewater Treatment Plant Generator capital project. Project or Item Deleted: None. $887,000 from the Use of Fund Balance account. Justification of this Increase: The funding is needed for the purchase of a generator system for the wastewater treatment plant. Justification of this Decrease: There are sufficient funds available in the Water & Sewer Fund for this request. Increase Budget (Decrease Revenue) Account Name Account Number Amount Project Number Fixed assets 5400 5800 5801 00 887,000 05026 1 Decrease Budget (Increase Revenue) Account Name Account Number Amount Project Number Use of fund balance 5400 0940 4999 99 887,000 Approval Signatures Requested B Date z -7-o S Budget Manager Date Department Director Date Finance & Intern Mayor Services Dire Date Budget Office Use Only Type: A B C "C„,±3 E Date of Approval Posted to General Ledger Posted to Project Accounting Entered in Category Log Initial Date Initial Date Initial Date Initial Date • OMI pts - 870 -5 E5 P7a5 01/ -0-5 CMZA»undnovt/4 MEMO RAND UMantnei-4r TO: Billy Ammons FROM: Heidi Gilbert DATE: February 10, 2005 SUBJECT: Amendment No. 12 PROJECT(s): Fayetteville — AR 01 Billy — Attached are two duplicate originals of Amendment No. 12. Please have the Client execute each original and return one fully executed original to my attention. If you have questions please let me know. Regards, Heidi D:\Data\My Documents \Correspondence\2005\Fayetteville Amd 12 Memo.doc FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENTAL CORRESPONDENCE TO: Mayor Dan Coody City Council COPY: David Jurgens, Steve Davis FROM: Matt Taylor DATE: February 2, 2005 RE- Noland Treatment Plant Generator - Potential Savings Calculations Attached is a spreadsheet that contains information about the potential cost savings from the use of a 2 megawatt generator at the Noland Treatment Plant. The spreadsheet was developed by Power Secure and is well detailed. It is based on the 12 month period from February 2003 — January 2004 and shows a gross potential savings of approximately $206,000 per year. A second spreadsheet was developed based on information obtained directly from Ozarks Electric (from Keith Kaderly, our customer service representative) that used the 12 month period from November 2003 — October 2004. It was slightly less detailed than the attached spreadsheet, but it indicated a gross potential savings of approximately $145,000 per year. Both values were in relative agreement, but we reduced our estimate of the potential savings to $150,000 per year to account for lower predicted flows at the plant and the cost of diesel fuel to operate the generator. Based on the information available, the savings estimate of $150,000 per year is very conservative. If you have any questions please feel free to call me at 575-8318, or 1 can address questions at the meeting on Tuesday. zm R a 0 0 6 0 0 0 0 0 0 0 co 0 to n 0 0 0 a 0 c N c CO 0 0 E W O0000 gar 0 ' w w mm U CO > e 14 g3 E 09c0E., 3 00gY ,00LLS J N 2 W a 0 b 4 - a, a 4400 m n a G m 6 it C p MW - W -0 v J 0 a N a4 -a0 t for Consumption Under the Large Power Over 350 kVa Rate Schedu • 0 O N n 1` T O O N m T w,- %0 ,- bg b 0 0 0 m T 0 '91Xo Mlno lay.«piano omrvnnrveduioria _ww`$ww$ww»wwww tt 4. T9 ~m ebN 24 Y1m a r czw 8 8 m 04pww0N _aNh0 b2202NN47.21.11UU Un4 0 20m:x81473nI82 nS0f� tVT070f0O; 0 T °«w ai ow olnn w w w w w w 1Vm00004SNn< y 1V 0 0 C1 N m 0 1� SraiSS o0B»»ww4w� 44441.4, 0n2e»04401p 8 7 O g m n n N 0 Oy O t•tp• m T m LLU 9.2J mnyo 10OenObbm W NNUUU^«"Vw;t;w 4822848888828 r 0 3- 8 'n T a e n$ -06a 0wb 22 m nn� wow` 434.4. 4.4.44oi44444ii 434.434,4.0wNN»»w > Teeveeeeveem m' v.Y 3 C o o o o o o o o G G O N 2 y U U• 0 0 0 U U U Col 0.I 01 WO mNp000000000 UUUUNUUUU CV m E 20 OO 200222222222 000' '0 0000 0000000000 aaa»»»»»»»»a Ew888888888888 m m 2 2 2 210 2 b 2 b 0 2 0 0 0 » N » » » » w » » » w w 8F E• 88$0$8088$$$ m8o8a1Tsis2fino,$e 22(0222020000 1V 01NrvrvN Nl'104 f222p7oWITC 4000 Mli2Q�-5 0C VInUZO J as - t ry 0 T $241.444.80 Billing demand of 2,160 kW, established during the summer of 2003, is used for all months covered by this analysis. L P2-• ° - U L e) U2 a Igo C OywaEE' 3 m 0 O 2 $mm� m'0 asm J Z O W 3 05 15 Y JC '0 0 Annual Generator Run Hours: Primo Generator Capacity: Fuel Cost per Kilowatt-hour: Cost for Consumption Under the Large Power Off -Peak Rate Schedule with Generator Operation p 0 0 0 0 ' 0 0 nm m o(p( 10 O -d N1fm' • x00_nnn0 0 0n NNNp0NNNNNNN nn0nmo0onaoo b O O- N N n T o 04- ?80n1^`4o,0401 nu T 000000000000 w m O n m b 1'1 0 m b N 0 j c y a ri S 4 IA 0 N N 0 N 303 I V U~� ww wiww a44 0`5-) m 0fl O80 '- EiieiTmry e DU]wr<-630, yi1e551S9 VwNN-NNN E n O n O m n o N a gw14w»»4w»4w»w 000090000000 4 4 4 8r 4n0 0 0 0 4 4 o•mN 0Y)oNb mm 0Omm wo0neJrv000mmov0 4,4.4.4.4.4.444.4,4.444. c 888888888888 a C ( 00000 0000 O m °°«;;47);««a»1-9;71 U N g T N 0.‚4 Oa a a 01 - a N N N N N N N N N N 22222202222 oOTm000 mo o O00000000 wwww . wwwww 0.000000000 •Como m mo mm 0)0)0 00w««««««««««« 0 0 0 0 2 CO 0 0 0 0 O 8888 V 9 3 T S N w L'03 - 54 ca mE000000002200 CLoc4c4c4e4c4c4e4c4c4oicipi 00 00000000 p 0009 O O N O n N,0000 b 4^^$ 0 000000000000 come, O m 0 4 415222”29092°1 O2 2m �Z�QSS��Q1nUZ0 LL $6,402.39 S25,609.57 -51,551.92 . $22.460.05 8 2 O 0 IA 14.086.800 216,000 • • RESOLUTION NO. A RESOLUTION APPROVING AMENDMENT NO. 12 TO THE CONTRACT WITH OPERATIONS MANAGEMENT INTERNATIONAL (OMI); AND APPROVING A BUDGET ADJUSTMENT TRANSFERRING $887,000.00 FROM USE OF FUND BALANCE TO THE WASTEWATER TREATMENT PLANT GENERATOR CAPITAL PROJECT. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby approves Amendment No. 12 to the contract with Operations Management International (OMI). A copy of Amendment No. 12, marked Exhibit "A" is attached hereto, and made a part hereof. Section 2. That the City Council of the City of Fayetteville, Arka'C hereby approves a budget adjustment transferring $887,000.00 from Li;,e�o and Balance to the Wastewater Treatment Plant Generator CapitaLPj PASSED and APPROVED this 8th day of Febru ATTEST: By: S $DRA SMITH, City Clerk OODY, Mayor • r AMENDMENT NO. 12 TO AGREEMENT FOR OPERATIONS, MAINTENANCE AND MANAGEMENT SERVICES FOR THE CITY OF FAYETTEVILLE, ARKANSAS WASTEWATER TREATMENT PLANT THIS AMENDMENT NO. 12 to the Agreement for Operations, Maintenance and Management Services for the City of Fayetteville, Arkansas Wastewater Treatment Plant dated September 1, 1994 (the "Agreement"), made effective on the 1`r day of January, 2005, by and between the City of Fayetteville, Arkansas, whose address for any formal notice is 113 W. Mountain St, Fayetteville, Arkansas 72701 (hereinafter the "City") and Operations Management International, Inc., with offices at 9193 S. Jamaica Street, Suite 400, Englewood, Colorado 80112 (hereinafter "OMP') is made and entered into for purposes of amending certain provisions of the Agreement, to prevent the facilities covered by the Agreement from being deemed to be used in the trade or business of OMI pursuant to Section 141 (b) of the Internal Revenue Code of 1986, as amended. NOW THEREFORE, the City and OMI agree to amend the Agreement as follows: 1. Article 4.1 is hereby deleted in its entirety and replaced with the following Article 4.1: 4.1 For services rendered during calendar year 2005 the City of Fayetteville shall pay to OMI the actual cost of services performed plus an annualized management fee of Eighty One Thousand Six Hundred Ninety Seven Dollars and Eighty Six Cents. ($81,697 86) Said fee and estimated cost (base fee) shall be paid in twelve (12) equal monthly installments. The management fee for subsequent years will be determined proportional to the increase in estimated cost 2. Article 4.3 is hereby deleted in its entirety and replaced with the following Article 4.3: 4.3 OMI estimates the cost for services for calendar year 2005 shall be Five Million Three Hundred Twenty Seven Thousand Two Hundred Fifty Two Dollars and Eighty -Nine Cents ($5,327,252.89). Details of said cost are shown in Appendix J. The base fee shall be negotiated each year in September for the upcoming calendar year. Should the City and OMI fail to agree, the base fee will be determined by the application of the base fee adjustment formula shown in Appendix F. Should the actual expenditures exceed estimated expenditures by more than Twenty Thousand Dollars ($20,000), in any year of this Agreement, specific approval will be obtained from the City prior to OMI incurring additional costs. 3. A new Appendix L is added in the form attached hereto This Amendment No. 12 together with the Agreement, constitutes the entire agreement between the Parties and supersedes all prior oral and written understandings with respect to the subject matter set forth herein Unless specifically stated all other terms and conditions of the Agreement shall remain in full force and effect. Neither this Amendment nor the Agreement may be modified except in writing signed by an authorized representative of the Parties. Page 1 of 4 • r The Parties, intending to be legally bound, indicate their approval of the Amendment by their signatures below. OPERATIONS MANAGEMENT CITY OF FAYETTEVILLE INTERNATIONAL, INC. Roger B. Quayle Dan Goody Senior Vice President Mayor Date: Date: APPROVED AS TO FORM: Kit Williams City Attorney Date: Page 2 of 4 r Appendix J COST DETAIL The annualized estimated costs for calendar year 2005 are as follows: Description Direct Labor & Benefits Labor Markup Electricity Electrical Markup Other Direct Costs Other Direct Costs Markup Subtotal Fixed Fee Lift Station Odor Control Capital Item Amortization Power Generator Project Equipment Costs Construction Management Total Est. 0 & M Budget Total Est. Annualized Budget Estimated Increase Existing 2005 Estimated Costs $ 1,671,071.00 $ 501,321.00 $ 642,720.00 $ 1,288,073.00 $ 128,807.00 $ 4,231,992.00 $ 82,349.00 $ 69,362.00 $ 100,622.00 $ 4,484,325.00 $ 4,484,325.00 • Amended 2005 Estimated Costs 1,671,071.00 501,321.00 588,480.00 1,306,961.16 130,696.12 4,198,529.28 81,697.86 69,362.00 100,622.00 762,645.00 114,396.75 5,327,252.89 5,327,252.89 842,927.89 The following are some of the major reasons for cost circumstances: 1. Continued increase in the efficient use of technological automation and job -sharing within the OMI network. 2. Continued upward pressure on the cost of fuel and vehicle expenses. 3. Ever increasing cost to maintain community -expected high level of performance with many pieces of equipment nearing the end of their life cycle and destined to be replaced or upgraded as part of the ongoing Wastewater Improvement Project. 4. Continued population growth causing a related increase in sludge production and ultimate sludge disposal costs. Additional costs for maintenance of 4-5 new sewage lift stations during the next year. 6. Potentially less expensive sludge disposal altematives continue to be evaluated, which may or may not become feasible within the next 12 months. 7. Addition of the Power Generator Project as described in Appendix L hereto. Page 3 of 4 Appendix L POWER GENERATOR PROJECT - SCOPE OF WORK Due to significantly increased emphasis on preventing all possible wastewater overflows and/or interruptions in wastewater treatment capability by the Arkansas Department of Environmental Quality and the United States Environmental Protection Agency, as well as currently available favorable electrical rate structures it has become necessary for the City to install full -backup 2 megawatt power generation equipment at the Paul R. Noland wastewater treatment plant (WWTP). The City has reviewed available options and has determined that it desires to install a power generation system manufactured by PowerSecure, Inc. The cost of the power generation equipment (the "Equipment") to effect the implementation of the power generation system at the Noland WWTP, including applicable sales taxes and a four-year extended warranty, is estimated to be $762,645.00 OMI hereby agrees to procure and manage the construction of the Equipment on behalf of the City during calendar year 2005. The costs for managing the construction of the Equipment will be $114,396.75 and the City hereby agrees that it will repay the purchase price of and construction management costs for the Equipment to OMI over the remainder of the calendar year 2005 in equal monthly installments in accordance with Article 5.1 of the Agreement. Copies of purchase orders, bills of sale or invoices evidencing OMI's purchase will be furnished to the City upon request. Title to and risk of loss for the Equipment will reside with the City at all times. Notwithstanding the foregoing, if for any reason the Agreement is terminated by either party prior to the end of calendar year 2005; the City will pay to OMI the remaining balance due for the Equipment and the construction management fee, in full, within thirty (30) days following termination. Costs for diesel fuel will be provided directly by the City of Fayetteville as described in Article 3.8 of the Agreement. Costs for natural gas, applicable taxes, insurance, maintenance, and monitoring fees will be included in the actual cost of services as shown in Appendix J. Page 4 of 4 • • Noland Wastewater Treatment Plant Improvements Standby Generator Options The Noland Plant improvements project presents an opportunity for the City to invest in a standby electrical generator that is larger than the minimum required for emergency operation purposes, but which will result in significant annual savings through a reduction in the rate paid for electricity throughout the year Option 1. The least expensive option in terms of capital cost is to install a 750kW generator at the facility to operate only critical equipment. It will not be large enough to operate all treatment equipment. The generator will operate screening equipment and other critical items and wastewater will be pumped to storage for later treatment when electric power is restored. This approach is acceptable to the regulatory agencies, but is labor intensive and could result in a discharge of inadequately treated wastewater during extended power outages. The capital cost of this option is approximately $450,000. The labor costs will vary from year to year depending on the frequency and duration of power outages to the treatment facility. Option 2. A second option is to purchase a generator large enough ( 2000kW ) to power significantly more of the treatment processes during outages and reduce reduce the electric power demands of the treatment facility during peak periods. This minimizes the chance of a discharge of partially treated waste, but more importantly it decreases both the rate paid for electrical power the plant and the total power purchased. If a 2000kW generator is installed and operated strategically, it will lower the annual electrical bill at the facility by approximately $150,000 per year OMI has been in contact with a company that buys generators on a volume basis, manufactures the switch gear necessary to place a generator in service, and provides the majority of the installation and start-up services necessary. The cost for all equipment, installation, start-up, and project management/coordination by OMI would be $877,042. This is approximately $430,000 more than the cost of the minimum generator required, but the annual power cost savings would recover this additional capital cost in roughly 3 years. The generator should have a useful life of at least 15 years, so the total savings recognized could be as high as $1.8M over 15 years. If electric costs increase over the years, the savings would be even greater. If this new generator can be installed and in service by June 1, 2005 the City will be on the new, reduced rate structure on January 1, 2006 and will begin to realize monthly power cost savings at that time. If the generator is not on-line by June I s` the reduced rates will not take effect until one year later (January 1, 2007) and one full year of potential savings ($150,000) will be lost. They have indicated that a signed, formal approval no later than February 15th should allow the work to be completed in advance ofJune 1, 2005. Option 2A. A variation of Option 2 above is for the City to pay to have a system designed, solicit bids for a generator, and contract with an electrical contractor for the installation and start-up of the system. Although this approach could work,.there are several reasons it is not economical at this time. First, whether the City buys one or several generators, it will not receive the same price as a Targe vendor that purchases dozens or hundreds of generators per year. Second, the switch -gear and controls to utilize this generator for peak -shaving use ( to reduce electric rates paid at the plant) are specialized and not widely manufactured. The purchase price for to the City or a local electrical contractor would be significantly higher than for a vendor that either manufactures this equipment or buys it in bulk. Third, the City is likely to pay more to both the installer and OMI if equipment is purchased from various sources and they are expected to integrate those materials and put them into service. If multiple suppliers and product representatives are involved, there is also an increased risk of disputes and delays. Finally, and possibly most importantly, is timing. If the generator is not on-line by June 1 s', one full year of potential savings ($150,000) will be lost. SCOPE OF POWERSECURE SERVICES In general, PowerSecure (PS) will provide the following services to serve The Paul R. Noland Wastewater Treatment Facilities in Fayetteville, Arkansas. 2000 kW Standby; 1825 kW Prime; 480Y/277V; CAT Bi -Fuel Generator Sound Attenuated to 75db at 10 meters PS will provide all work necessary for the complete installation of the system, including but not limited to: 1. Site Preparation 2. Excavation 3. Concrete Pads 4. Primary Electrical Interconnection 5. Medium Voltage Recloser 6. Power Transformer 7. NexGear® Advanced Paralleling Switchgear 8. CAT Engine Generator 9. Weatherproof Enclosure 10. Engine Generation System Auxiliary Systems 11. Power Feeders 12. Control Wiring 13. In -Service Training 14. Operations Manuals PS will provide all engineering and design services necessary to complete construction documents for this project in accordance with the State of Arkansas, including construction documents signed and sealed by a Registered Professional Engineer of Record in Arkansas. The Generation System will include: Engine Generator Set including: a. Permanent Magnet Generator b. Electronic Engine Governor c. Charging Alternator 24V d. Lead Acid Batteries, Rack and Battery Charger e. Engine Cooling System f. Exhaust System with Silencer g. Double Wall (UL142), 3000 Gallon Sub -base Tank with Level Sensors. h. Weather Resistant Enclosure i. Lubricating Oil and Antifreeze — Initial fill IV. Bi -Fuel System • • Each CAT 3516B Engine Generator will be equipped with a Series IV -B PowerSecure Standard Bi -Fuel Conversion System. Each Bi -Fuel System shall include a gas train kit and control system accessory kit. PS will provide a NexGear® Advanced Paralleling Switchgear (APS) for each generation system to provide the following Modes of Operation: 1. Load Management Mode: Long-term Synchronized/Parallel Operation with Ozark Electric Cooperative 2. Islanding Mode: Short-term Synchronized Operation with Ozark Electric Cooperative followed by a Make -Before -Break Separation from Ozark Electric Cooperative. 3. Standby Mode: During Ozark Electric Cooperative outages, each system will provide the following Automatic, Dead Bus, Block Load Transfer of a maximum of 2000kW 4. Test Mode: Synchronized/Paralleled Operation at Full Load, without Interruption of facility's Normal Electrical Service. Each APS will utilize a Woodward Controller, Cutler Hammer System Circuit Breaker(s), Beckwith Utility Grade Multifunction Intertie Relay(s), and all U.L. listed components. Each APS will include all necessary functions to prevent connection or parallel operation of the IDG® System with Ozark Electric Cooperative unless the service voltage and frequency are of normal magnitude, and will meet Ozark Electric Cooperative published interconnection requirements. PS will utilize their in-house licensed Electrical Construction Group to provide a fully coordinated installation. The PS Project Manager will serve as the single point interface with Ozark Electric Cooperative during construction/start-up and will be present on-site for all critical activities and key construction milestones. The entire system comes standard with a one year warranty, and the City has elected to purchase an additional four year extended warranty. PS will provide onsite in-service training on the operation and maintenance of the system. OMI MEMORANDUM TO: David Jurgens Matt Taylor FROM: Billy Ammons DATE: January 31, 2005 SUBJECT: Purchase of Power Secure Generator The subject of backup power generation for the existing and proposed wastewater treatment facilities has been discussed on numerous occasions over the past year or so with all interested parties, including Greg Boettcher, OMI employees, and consultants from Bums & McDonnell(BM)-Black & Veatch (BV)-McGoodwin, Williams & Yates (MWY), and various other sub -consultants. At least one vendor presentation on this subject was also held during 2004 at the offices of MWY. Due to the extreme complexities involved with this subject, however, no resolution had been reached as of October 2004. A meeting was scheduled at the Noland WWTP to allow a company called Power Secure to present their concept of backup power generation and the use of the `Off -Peak' rate structure available in Arkansas to help offset the cost of the generators. Representatives of BM, BV, MWY, OMI, and the City were present on 28 October. The presentation was well received and the general consensus of the group was that this was the best alternative yet proposed and the direction that should be pursued. The cost estimates available from electrical sub -consultants ranged from $850,000 - $1,000,000 for a similar system, and the Power Secure system final cost of $877,042 after complete configuration was thought to be extremely competitive, especially for a completely integrated turnkey system. After much discussion, it was determined that due to the somewhat fragmented procurement schedule for the separate Wastewater System Improvement Project (WSIP) contracts, procuring the equipment from Power Secure or any specific single vendor would be very difficult. The suggestion was made that the generators be procured in a manner similar to the highly successful belt -filter -press negotiated purchase, which resulted in an expedited purchase and great savings for the City. Greg Boettcher indicated that the BFP procurement model could not be followed exactly, since there was not an existing generator to show the need for standardization. Mr. Boettcher did suggest that OMI could purchase the generators on behalf of the City and that the City would then pay back the costs for the generators over a five year period, thus extending OMI's contract for an additional five years while at the same time allowing the City to pay for the generators from the savings acquired by going to the `Off -Peak' rate structure in a positive cash-flow scenario. MEMORANDUM Page 2 • • OMI agreed to examine this arrangement and investigate additional alternatives if available, then present a solution to the City. Everyone at the meeting recognized the need for quick action, as the deadlines for moving forward on each of the major construction contracts was drawing near. Over the next few weeks, OMI contacted NexGen, a company who has provided similar services to those proposed by Power Secure at OMI projects in the Northeastern U.S., in an attempt to secure competitive pricing for the Fayetteville generator project. After reviewing the application and the specific requirements of the Fayetteville facilities, however, NexGen declined to provide a competitive price or even to indicate that they would be willing to participate in any way. Since no other viable alternative was readily apparent and the City and their consultants had previously agreed that the Power Secure option appeared to be the most practical, OMI subsequently niet with Power Secure officials and investigated various contract options between OMI, Power Secure, and the City that might accomplish the desired result while still providing all parties adequate protection. After several discussions with City officials, it has been decided to purchase only one generator at this time, install the generator at the Noland facility, and move to the `Off -Peak' rate structure as soon as possible. The purchase of this generator and accompanying switchgear as a turnkey system from Power Secure has been determined to be the only viable altemative. To this end, a proposed contract amendment between OMI and the City that directs OMI to affect this purchase and installation has been drafted and will be presented to the City Council for approval on Tuesday February ls'.