title
ADOPT RESOLUTION TO AWARD CONTRACT FOR COMMUNITY CHOICE AGGREGATION FEASIBILITY STUDY
recommended action
RECOMMENDATION
It is recommended that the City Council approve a resolution to:
1. Authorize the City Manager to award a contract to MRW & Associates, LLC, in the amount of $92,750.00 to complete a community choice aggregation (CCA) feasibility study.
2. Approve findings pursuant to Stockton Municipal Code Section 3.68.070(A)(3) in support of an exception to the competitive bidding process.
It is also recommended that the resolution authorize the City Manager to take appropriate and necessary actions to carry out the purpose and intent of the resolution.
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Summary
Adoption of the proposed resolution will enable the execution of a contract with MRW & Associates, LLC (“Contractor”), to provide the City of Stockton (“City”) with a community choice aggregation (CCA) feasibility study. CCA, also known as municipal aggregation, are programs that allow local governments to procure power on behalf of residents, businesses, and municipal accounts from alternative suppliers while still receiving transmission and distribution service from the existing utility provider. A feasibility study will explore the extent to which the City can achieve the benefits of a CCA program, including lower electric rates, the potential for local control to accelerate the transition to greener power sources, and the opportunity to create local jobs in sustainable energy development.
Council previously approved Resolution 2019-08-20-1104 directing staff to conduct a request for proposals (RFP) to seek qualified Contractors to conduct a CCA feasibility study using funds appropriated from the Air Quality Mitigation Public Facility Fee ($100,000) and grant funding from the Sonoma Clean Power Authority ($50,000). The City received three (3) responsive proposals, and ultimately found the Contractor’s proposal was the most responsive to the needs articulated in the request for proposals.
Staff recommends adopting a resolution to authorize the City Manager to award a contract (Attachment A) to the Contractor to complete a CCA feasibility study for the City of Stockton.
DISCUSSION
Background
Under state law, customers are authorized to aggregate electrical loads (i.e. consumption of electricity) with community choice aggregators. Community Choice Aggregation (CCA) programs allow local governments to procure power on behalf of residents, businesses, and municipal accounts from alternative suppliers while still receiving transmission and distribution service from the existing utility provider (i.e. PG&E). Rather than default to receiving energy from the incumbent utility, CCA programs can consciously choose where to source electricity from using existing infrastructure. In doing so, communities gain leverage to negotiate rates with suppliers and choose power sources. Electricity customers are automatically enrolled in the electricity service selected by the CCA, although customers may opt out if they do not want to participate in the CCA. According to Cal-CCA, the trade association for CCAs, there are over 170 towns, cities, and counties with community choice energy providers serving over 10 million customers in California.
Three major attractions of participating in a CCA include lower electric rates, the potential for local control to accelerate the transition to sustainable power sources, and the opportunity to create local jobs in sustainable energy development. Recent decisions by the California Public Utilities Commission (CPUC), however, affected the electricity rates offered by CCAs and decreased the likelihood that savings for rate payers can be achieved. Additionally, there are challenges associated with the formation of a CCA, such as the navigation of enabling state legislation and regulations, determination of the best governance structure, and development of an implementation plan. Given the complexities surrounding CCA, the City needs to understand how CCA should be approached in context of local conditions .
On March 19, 2019 Council approved Motion 2019-03-19-1404 directing staff to complete an application for grant funds available from Sonoma Clean Power Authority (SCPA) to support a feasibility study. Subsequently, Council approved Resolution 2019-08-20-1104 which accepted $50,000 of grant funds from SCPA and committed $100,000 of Air Quality Mitigation Public Facility Fee funding to satisfy the matching requirement of the grant and bolster the feasibility study.
Following acceptance of grant funding and commitment of City funds, Staff developed a request for proposals (RFP) to solicit proposals for a CCA feasibility study. A CCA feasibility study is a comprehensive investigation into whether the benefits associated with CCA can be achieved by a particular community (e.g. lower utility rates for residents and businesses). This is done by analyzing and forecasting the variables that affect the success of CCA programs, including the impact on utility rates, the supply of renewable energy, economic impacts, market volatility, costs and revenues of a CCA program, financial and legal risks, and various governance models. The Contractor will use customer data provided by PG&E to conduct this analysis. Additionally, City staff will work with the Contractor to facilitate community engagement events to educate residents and businesses and capture their perspectives in the study.
The RFP for a CCA feasibility study was issued on May 28, 2020 and closed on July 9, 2020. The City received three (3) responsive proposals. The review panel for this RFP was comprised of staff from the City Manager’s Office, Public Works, Administrative Services, and Municipal Utilities. Additionally, the City Manager’s Office retained a technical consultant with substantial experience related to the formation of CCAs in California to assist with evaluation of proposals. Proposals were evaluated based on the quality and clarity of the proposed scope of work, past experience with a similar scope of work, ability to perform the project based on staff resources assigned, project schedule, and ability of attaining the required and proposed outcomes of the RFP. The evaluation of proposals resulted in a unanimous recommendation: MRW & Associates.
Present Situation
City staff has conducted an RFP process resulting in the recommendation of MRW & Associates, LLC, as the selected vendor. The proposed contract between the City and MRW will result in a feasibility study for Council’s review by January 2021. Staff will work with MRW to review drafts of the feasibility study and provide critical feedback when appropriate. Additionally, Staff will work with MRW to host virtual community engagement events to ensure the perspective of residents is captured in the study - high participation rates among residents and businesses are critical to the success of a future CCA program.
MRW brings a deep understanding of all the necessary components of a successful CCA feasibility study: wholesale power markets in California, ratemaking, financial and pro forma analysis, economic impact assessment, and the detailed steps needed for CCA formation. The MRW team is experienced in successfully communicating the complex issues and tradeoffs that decision makers and local stakeholders must grasp so that they are able to make the best decisions for their community. MRW has conducted many CCA feasibility studies for a variety of municipalities, including Sonoma County Water Agency, Alameda County, Contra Costa County, and the City of Long Beach. Additionally, MRW has provided professional peer reviews and advice to cities and counties considering CCA formation, including San Mateo, Santa Cruz, Santa Clara, San Luis Obispo, Santa Barbara, Ventura, the City of Irvine, and the City of San Diego. MRW senior staff is also well-versed in developments at the CPUC.
Staff is confident, based on their experience, proposal, and budget, that MRW & Associates can fulfill the scope of work required to complete an informative and accurate feasibility study. Staff recommends adoption of the proposed resolution to award a contract.
Findings
Pursuant to the Stockton Municipal Code Section 3.68.070(A)(3) relating to exceptions to the competitive bidding process, the following proposed findings support the use of an RFP process to select a Contractor to conduct a CCA feasibility study:
1. A CCA feasibility study will provide the City with a clear understanding of whether it is in its best interests to pursue the formation of a CCA program, which could result in significant benefits.
2. The City of Stockton does not have staff with the expertise required to conduct a high-quality CCA feasibility study,
3. In determining the most qualified Contractor, the most important considerations are a Contractor’s ability to meet the full scope of work, past experience with similar scopes of work, and the ability to perform the study with the staff resources assigned.
4. The use of the RFP process is appropriate in this case because it allowed staff to evaluate proponents based upon experience and quality of the scope of work rather than solely by cost.
5. The RFP process, which included proposal evaluation with a technical consultant and a review of financial terms and performance, allowed the City to select the Contractor best suited to conduct a CCA feasibility study for Stockton.
Staff recommends that City Council approve these findings as an exception to the competitive bidding process and adopt the proposed resolution to award a contract.
FINANCIAL SUMMARY
Approval of the resolution will result in a contract not to exceed $92,750.00. This contract will be funded first through the $50,000.00 grant received from Sonoma Clean Power Authority and second through the $100,000.00 from the Air Quality Mitigation Public Facilities Fee (PFF) Fund, which was appropriated for the purpose of supporting a feasibility study by resolution 2019-08-20-1104. Grant funding of $50,000 is budgeted in the Special Purpose Grant Fund, account no. 020-1811-510 and Air Quality PFF funds are budgeted in account no. 990-1811-510.
Attachment A - CCA Feasibility Study Standard Agreement