Bank A-4 and Bank A-5 will also provide start-up power for the Magnolia Power Project (MPP) during those times when it is off line and therefore needs an external source of power to start it up.

Bank A-4 and Bank A-5 has become too small and too outmoded to reliably provide power during hot weather and other high-load conditions. Bank A-4 and Bank A-5 each have 56 MVA of capacity, for a total of 112 MVA. When they were first installed in 1959, and for many years afterward, the load was under 56 MVA, small enough for one of the banks to handle, even during the summer. Having two banks provided very high reliability. Today, the banks often handle load levels between 70 MVA, which is more than one bank can handle, and 110 MVA, which is close to the total bank capacity. With the ongoing development of the Burbank Village and South San Fernando, the summer loading could become more than both banks can handle.

BWP�s Lake 1 power plant can also provide power to the five stations served by Banks A-4 and A-5, thereby reducing the load on the transformer banks. But if Lake 1 is not available, or if one of the banks fails, the remaining bank(s) can handle only modest overloads for brief periods.  BWP could not provide all the power needed by the customers depending on these banks. Some or even all of these customers could face lengthy power outages or rolling blackouts.

Staff has uncovered other weaknesses connected with Bank A-4 and Bank A-5:

• There have been occasions when one of the banks tripped off line unnecessarily; most recently on January 7, 2005 and January 25, 2005. The relay protection scheme for these banks is prone to causing these �false trips.� Modern relay methods can best eliminate this problem when used with modern transformers; updating the relay scheme with old transformers is uncertain.

• Once off line, the banks have to be manually synchronized to the rest of the electric system before they can go back on line, as was the case on January 25, 2005. This took about fifteen minutes, whereas an automatic system would take a fraction of a second. But there is no room for an automatic system on the banks� existing, crowded control panels.

Upgrading the relays and synchronizing controls is much more feasible when done as part of changing out of the transformer banks.

Replacing Bank A-4 and Bank A-5 is part of a wider effort to upgrade BWP�s backbone electrical system�its 69,000-volt and 34,500-volt networks.  Recent efforts have included:

• More than doubling the transformer capacity at Receiving Station �E,� where electrical power enters Burbank from the outside world.

• Increasing the 69,000-volt interconnections with Receiving Station �E� from three to six.

• Strengthening the two 69,000-volt ties to the Glendale electrical system.

• Adding the Alan E. Capon Switching Station to better serve the bourgeoning load of the Media District.

• Adding several 34,500-volt lines, and rearranging others, to enable interconnection with the Alan E. Capon Switching Station.

The next phase is to build a new Burbank Station, which interconnects the 34,500-volt network serving eastern Burbank. The most immediate step is to replace the transformers that serve the Burbank Station network, Bank A-4 and Bank A-5. No other course of action, including limited load transfers to other Switching Stations, can sufficiently reduce the reliability risk that these banks represent.

To reduce the risks to system reliability, the prudent course of action is to change out Bank A-4 and Bank A-5 as soon as possible. BWP would change out at least one of the Banks in the winter or spring of 2006 when loads are normally at their lowest. At 135 MVA, the new Bank would be large enough to comfortably handle 110 MW of load all by itself (should the remaining old Bank fail), making the change-out of the second Bank a low reliability risk during the winter of 2007.

Initially, the new banks would continue to feed the 34,500-volt section of the existing Burbank Station. BWP would replace the cable linking the banks to Burbank Station, boosting cable capacity from 112 MVA (56 MVA each) to 174 MVA (87 MVA each). The immediate improvement to reliability would be substantial�62 MW more of available capacity, far less chance of nuisance trips, and the ability to do automatic synchronization.

ANALYSIS

A design-build contract offers a particularly timely way to handle major station projects like replacing large transformer banks. For capital improvement projects that require considerable coordination among engineering, procurement, and construction activities, the design-build approach had proven to the power industry that it can reduce construction time as well as cost.

BWP�s experience has provided direct confirmation of the effectiveness of using design-build. The design-builder completed all three of BWP�s design-build projects within budget and on a tight time schedule: the Alan E. Capon Switching Station, the SR 134 off-ramp/new Hollywood Way Distributing Station, and the addition to the Olive Switching Station for the Magnolia Power Project.

To replace a transformer bank before the summer of 2006, BWP must select a design-build contractor by July 2005. BWP staff bases this conclusion on the following timeline:

• June 1, 2005: BWP finalizes the preliminary design, specification, and scope of work to replace power transformers A-4 and A-5 at Olive Switching Station.

• By June 30, 2005: The City Council approves the budget for FY 2005-06 and authorizes funds for replacing Bank A-4 and Bank A-5.

• Before July 19, 2005: The City completes the 21-day posting of its Notice of Environmental Decision (NOED) in CDD-Planning Division (categorically exempt).

• Before July 19, 2005: BWP meets and confers with employee bargaining groups as necessary before seeking City Council approval of a design-build contract.

• July 19, 2005: The Council considers approval of the design-build contract.

• August 15, 2005: Issue Purchase Order, assuming compliance with bonding and insurance requirements.

• August 19, 2005: Order both transformer banks.

• Before March 1, 2006: Design-builder removes old bank, completes new transformer pad, including secondary containment, as well as conduit work.

• March 2006: First new bank arrives, assuming typical delivery times.

• April 30, 2006: Connect first new bank to system.

• May 31, 2006: Finish testing new bank and its associated control and relay systems, then energize.

The attached tentative project schedule provides further detail.

During the summer and early fall of 2006, when loads are high, both the new bank and the remaining old bank would be in service. By November 2006, the remaining old bank would be removed, enabling the second new bank to be energized in time for the summer of 2007.

Selecting a design-builder by first issuing an RFP would take too long to meet this schedule. This approach would take at least four to six months longer than proceeding directly to negotiations with a particular design-builder. After completing the preliminary design and specification:

1. The City would have to solicit proposals.

2. A Selection Committee would have to evaluate the proposals, hear presentations, and make a final recommendation.

3. The City would have to address any bidder disputes and questions.

If BWP follows this process it would not be possible to achieve the goal of having one of the new transformer banks in service by summer of 2006.

BWP proposes to dispense with the RFP process and instead negotiate the price, terms, and conditions on a sole-source basis.  For projects complicated enough to make design-build an advantage, staff believes that negotiating with one or more selected firms can yield a competitive price without sacrificing schedule or quality. This is especially true if:

• The firm has a proven track record with BWP.

• There is a competitively bid price on a project similar enough to serve as a benchmark.

ABB has a proven track record with BWP. ABB has completed three of BWP�s design-build projects on time and under budget and with no change orders initiated by ABB. (Caltrans issued change orders relating to a freeway on-ramp, and BWP initiated a few change orders.) The quality of work was excellent as was the cooperation with BWP field crews and engineering staff.

There is a competitively bid price on a project similar enough to serve as a benchmark. The design-builder for the Alan E. Capon Switching Station was selected out of an RFP process. Part of the work involved the design, procurement, and installation of transformer banks very similar to those that would be replacing Banks A-4 and A-5. Although the construction would take place near energized parts and there would be limited crane access, the similarities are still quite strong. The adjustments to the 2001 pricing would mainly be due to known factors like the rising cost of copper and other metals

Recent ABB competitive bidding can provide BWP with further guidance. Glendale selected ABB to build a new GIS station for a price of $17,186,000; Glendale passed over a strong competitor (Siemens) which had offered a lower price of $16,890,292. The reverse happened at Anaheim; Siemens won the bid for Anaheim�s Park Substation Project with a price of $19,493,127 even though ABB had offered a bid of $16,985,937. Of course, factors other than price influence bidder selection, particularly in the case of design-build projects.

There are additional safeguards for assuring that a negotiated price is also a competitive price. BWP can require ABB to share the cost data it would otherwise not have to share under the usual RFP process. ABB could only be entitled to a profit that is well-defined (such as a fixed percent of the cost) and subject to a cap based on the overall project cost.

The contractor�s costs could also be subject to certain caps. For example, the cost of equipment could be capped at the average price of the last three similar items sold by the contractor or its supplier within the last three years. (Allowances should be made for price of metals, etc.)

City staff would bring considerable experience to any negotiation with a design-builder. BWP Staff gained much experience from negotiating three previous design-build projects. BWP staff will lead the negotiations, with assistance from Purchasing Division and the City Attorney�s Office. Purchasing can offer valuable guidance in assessing cost-of-metal adjustments, CPI adjustments for labor, and other proposed adjustments that may arise.

ABB is motivated to continue their business relationship with BWP. ABB has a new marketing manger and general manager for design�build projects (but with the same execution team). They are very motivated to increase their design-build presence among Southern California utilities. Also, ABB has a design�build major station project (Kellogg) for Glendale Water and Power through June 2006. The ABB project manager in Glendale would be in a position to also manage transformer bank replacements in Burbank.

Council approval is needed for design-build projects and to waive competitive bidding. Under Section 9-101(g) of the Burbank Municipal Code, only the City Council can approve alternative project delivery methods other than the traditional design-bid-build approach, such as design-build. If BWP can reach agreement with ABB, the Council can waive competitive bidding and award the design-build contract pursuant to the authority provided to it in Section 54 of the Charter of the City of Burbank.

Authorizing the funds for a design-build contract will be a separate Council action and part of the FY 2005-06 BWP Budget approval process.

BWP intends to select a design-builder through competitive bidding when it builds a new Burbank Station. The new Burbank Station will be within the BWP Yard near the corner of Lake Street and Olive Avenue. The new transformer banks (located at the Olive Switching Station) will have been designed beforehand to interconnect with the Gas-Insulated Switchgear of the new Burbank Station.

A new Burbank Station would allow BWP to make full use of the 270 MVA capacity of the new transformer banks, as well as to further improve the 34,500-volt network serving eastern Burbank. Building a new Burbank Station can occur after the transformer replacements. This large and complex project would also be design-build, but competitively bid and with considerable exploration of design alternatives.

FISCAL IMPACT STATEMENT

Waiving competitive bidding would not have a negative fiscal impact. BWP and Purchasing both believe that a well-negotiated design-build contract would assure that BWP would not be in the position of accepting a higher price than might have resulted from a full RFP process.

If by June 24, 2005, BWP is not close to an agreement with ABB that it can recommend for approval to the City Council, it will consider other options at its disposal.

RECOMMENDATION

Staff recommends that the City Council waive competitive bidding and authorize the BWP General Manager to negotiate the price, terms, and conditions of a design-build contract with ABB for the replacement of power transformers serving the Burbank Station.

If the Council concurs, the appropriate action would be a motion to adopt the resolution entitled �A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK AUTHORIZING THE GENERAL MANAGER OF BURBANK WATER AND POWER TO NEGOTIATE PRICE, TERMS AND CONDITIONS OF A DESIGN-BUILD CONTRACT WITH ABB, INC., FOR REPLACING POWER TRANSFORMERS AT SERVING THE BURBANK STATION.�

As provided in Charter section 54, the waiver of competitive bidding requires four affirmative votes.

Attachments:     GIS map showing the area served by power transformers A-4 and A-5

Tentative Project schedule

GLS:DDB:jo

L:\City Council\Staff Reports\2005\Replace Transformers Serving the Burbank Station

c:  Rick Morillo

     Paul Herman

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