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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 04/03/2018 - RESOLUTION 2018-033 APPROVING AN EXCEPTION TO THEAgenda Item 12 Item # 12 Page 1 AGENDA ITEM SUMMARY April 3, 2018 City Council STAFF Gerry Paul, Director of Purchasing & Risk Management John Phelan, Energy Services Manager Ryan Malarky, Legal SUBJECT Resolution 2018-033 Approving an Exception to the Use of a Competitive Process for an Agreement with Itron Distributed Energy Management, Inc. for Demand Response Services. EXECUTIVE SUMMARY The purpose of this item is to request an exception to the use of a competitive bid or proposal process to pursue an agreement with Itron (formerly Comverge) to continue to provide operations, software support and field services in support of the Peak Partners demand response program. Exception to Competitive Bid or Proposal Rationale: 8-161(d)(1)b. Although there exists more than one responsible source a competitive process cannot reasonably be used or, if used will result in a substantially higher cost to the City, will otherwise injure the City’s financial interest, or will substantially impede the City’s administrative functions or the delivery of services to the public. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION The Peak Partners portfolio manages electric water heaters, residential air conditioning thermostats and commercial operations as distributed energy resources to control peak demand and to perform load shifting operations. Itron provides a near turn-key solution including software hosting, software maintenance, call center, marketing, creative services and customer communications, plus field services for hardware installation and maintenance. This program also allows pairing of Zigbee devices (in-home-displays) for real time feedback on energy usage and overall energy use monitoring. Limited electric vehicle fleet charging stations controls were added to the system in 2017. In December 2013, the City selected Comverge through a competitive purchasing process. Comverge has continued to provide services under that agreement. In 2017, Itron acquired Comverge and assumed responsibility for providing said services. That agreement is set to expire in December 2018. This exception will allow Fort Collins Utilities to negotiate a scope of work with Itron for 2019 and 2020 without undertaking a competitive purchasing process, which aligns with a core budget offer. Moving ahead with a contract with Itron beyond 2018 will be dependent upon budget approval. In support of this exception, impacts of switching vendors include: Agenda Item 12 Item # 12 Page 2 • The equipment deployed in the field (thermostats and water heater controllers) cannot be managed by any other vendor. • Approximately 4,000 assets would be stranded in the field -with about 10 years of remaining lifetime. • Loss of a perpetual license to the IntelliSOURCE platform including all paid customization work completed over the last four years to align with specific needs. • Approximately 2,000 customers with thermostats will lose their online portal (aka “app”) functionality. Approximately 100,000 portal sessions per year have been observed with existing customers. • Replacement of the whole system would cost in excess of $4 million, with an added disadvantage of having to manage multiple platforms and contracts because Itron is the only known vendor that can manage thermostats, water heaters and commercial customers in a demand response program. CITY FINANCIAL IMPACTS The annual cost for 2018 under the current agreement is approximately $594,655 and the funds are appropriated and available. To reduce ongoing program costs, efficiency improvements have been implemented in 2018, including: 1. Reduced Itron field service personnel from 2 to 1 (savings of $50,000/year) 2. Reduced service level at the Itron call center (savings of $20,000/year) 3. With the advent of Time of Day rates in October (TOD), discontinuing the $4 per month incentive to water heater participants in favor of automated load shifting. As noted above, future agreements with Itron including the level of services and annual cost are dependent upon the outcome of the 2019 / 2020 BFO process. -1- RESOLUTION 2018-033 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROVING AN EXCEPTION TO THE USE OF A COMPETITIVE PROCESS FOR AN AGREEMENT WITH ITRON DISTRIBUTED ENERGY MANAGEMENT, INC. FOR DEMAND RESPONSE SERVICES WHEREAS, Section 8-161(d)(1)(b) of the City Code authorizes the Purchasing Agent to negotiate the purchase of supplies and services without utilizing a competitive bidding or proposal process where the Purchasing Agent determines that although there is more than one source, the competitive process cannot reasonably be used, or if used will result in a substantially higher cost to the City, will otherwise injure the City’s financial interests or will substantially impede the City’s administrative functions or the delivery of services to the public; and WHEREAS, in 2013, the City utilized a competitive process to select Comverge, Inc. (“Comverge”) to provide demand response services for the City’s Peak Partners energy conservation program (the “Services”); and WHEREAS, Comverge provided the Services until 2017, when it was acquired by Itron Distributed Energy Management, Inc. (“Itron”); and WHEREAS, in 2017, Itron assumed Comverge’s rights and obligations under the City’s agreement with Comverge, and continues to provide the Services to the City; and WHEREAS, the City desires to continue to utilize the Services provided by Itron, which is in the City’s best interest and will save significant time and cost; and WHEREAS, the City’s current agreement with Itron is set to expire in December 2018, and City staff desire to negotiate with Itron for a scope of work for 2019 and 2020, and subject to appropriation, enter into an agreement with Itron without undertaking a competitive purchasing process; and WHEREAS, the annual cost for the Services in 2018 is approximately $594,655, and said funds are appropriated and available; and WHEREAS, funding for any agreement with Itron for 2019 and 2020 is expected to exceed $200,000 and will be requested through the Budgeting for Outcomes (“BFO”) process; and WHEREAS, the City’s Purchasing Agent has determined that although there is more than one source for demand response services, the competitive process, if used, would result in a substantially higher cost to the City, would otherwise injure the City’s financial interests, and would substantially impede the City’s administrative functions or the delivery of services to the public; and WHEREAS, the City Purchasing Agent and other City staff recommend the adoption of this Resolution; and -2- WHEREAS, Section 8-161(d)(3) of the City Code requires prior approval of this purchasing method by the City Council for all procurements which exceed $200,000. NOW THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That the City Council hereby approves the negotiation and execution of an agreement with Itron for 2019 and 2020, as an exception to the City’s competitive purchasing process requirements, for the reasons set forth herein. Any agreement shall be subject to the BFO process and appropriation by City Council. Section 3. That the Purchasing Agent may use this approval, as authorized in City Code Section 8-161(d)(4), as the basis for negotiating the additional purchase of services from Itron for up to five one-year terms extending through December 2023. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 3rd day of April, A.D. 2018. _________________________________ Mayor ATTEST: _____________________________ City Clerk