M E M O R A N D U M
To: City Council
From: David J. Deutsch, City Manager
Date: February 5, 2009
Subject: Waive bidding for electrical Demand Response Services
Demand Response is a means to encourage large energy users to reduce or shift their electric demand when wholesale electricity prices are extremely high, often during periods of peak demand. PJM is the operator of the high voltage electric transmission grid in the Mid Atlantic. PJM offers several programs that pay incentives to large electricity users when they shift or curtail electric demand. PJM relies on Curtailment Service Providers to enroll customers in their Demand Response programs. These companies provide large electric users with technical support and operating expertise and pay large electric users for their participation based on the PJM established rates per megawatt.
The Commonwealth of Virginia is a large electricity user. In 2007, they publicly advertised a request for proposals to Curtailment Service Providers to provide Demand Response Services. After reviewing all proposals submitted, including the individual presentations of each provider, the Commonwealth of Virginia awarded a contract to provide these services to Energyconnect, Incorporated of Richmond, Virginia.
The Public Works Department has been working with Energyconnect, Incorporated to receive the same services at the same prices they provided to the Commonwealth of Virginia. The City of Bowie has several large electric generators that were installed to provide backup power to City facilities. Some of the locations with backup generators include the Water Plant, water wells on Brierdale Lane, City Hall, the Ice Arena, the Senior Center and the new Parks and Grounds building. The threshold for participation in the PJM program is a potential load reduction of 100 kilowatts.
During a period of peak demand or peak wholesale electricity pricing, the City would be notified and asked to curtail power. At that time, we would switch power to each facility to the associated backup generator. There are three different programs offered by PJM. Each program has different requirements for City response time, frequency of events and duration of events.
In some locations, such as the Senior Center, Ice Arena and City Hall, remote start equipment may be required to be installed on the existing generators. In all cases, electric interval meters would have to be installed to confirm that the City did indeed take their facilities off line. These meters record electricity usage in one-hour intervals.
However, in the Commonwealth of Virginia contract, all such equipment is to be provided and installed by the Curtailment Service Provider. All associated costs for this equipment will be deducted from the revenue to be provided. There is a guarantee that the City will not have to pay any out-of-pocket expenses for any of the above equipment.
The amount of revenue the City could derive from this contract has not been firmly established yet. It will depend on the amount of load reduction that PJM approves based on the technical submittal by the Energyconnect, Incorporated. We anticipate that it could range in the neighborhood of $50,000 to $70,000 or more depending on the amount of load reduction that is approved by PJM.
At this time, we are under a deadline of February 13, 2009 to have Energyconnect, Incorporated submit an application for Bowie to PJM.
In accordance with City Charter Section 62, we are requesting that Council waive bidding requirements and authorize the City Manager to execute an agreement with Energyconnect, Incorporated to provide Demand Response Services in accordance with the contract that they currently have with the Commonwealth of Virginia. As noted above, there is no actual out-of-pocket expense to the City of Bowie for these services
I concur with the above recommendations and request your approval of R-09-09.
R-09-09
R E S O L U T I O N
OF THE COUNCIL OF THE CITY OF BOWIE, MARYLAND
AUTHORIZING THE WAIVING OF BIDDING REQUIREMENTS
TO AUTHORIZE THE CITY MANAGER TO EXECUTE AN AGREEMENT
FOR ELECTRIC DEMAND RESPONSE SERVICES THROUGH A COMMONWEALTH OF VIRGINA CONTRACT
WHEREAS, Demand Response is a means to allow large electric users to be reimbursed monetarily for curtailing electric use during periods of peak demand and pricing; and
WHEREAS, by participating in a Demand Response program, the City of Bowie would receive revenue for curtailing electric service; and
WHEREAS, by participating in a Demand Response program, the City of Bowie will reduce the demand on the electric grid during periods of peak energy demand, thus reducing the need for expensive infrastructure improvements to the electrical grid; and
WHEREAS, the Commonwealth of Virginia issued a publicly advertised Request for Proposals for Demand Response Services and awarded a contract to Energyconnect, Inc. for said services; and
WHEREAS, Energyconnect, Inc. has offered to extend to the City of Bowie the same terms, prices and conditions afforded in the Commonwealth of Virginia contract; and
WHEREAS, it is in the best interest of the public to enter into an agreement with Energyconnect, Inc. for Demand Response Services.
NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of Bowie, Maryland, that the Council, by a two-thirds vote in accordance with City Charter Section 62, hereby waives bidding for good cause; and
NOW FURTHER, BE IT RESOLVED, by the Council of the City of Bowie, Maryland, that the Council authorizes the City Manager to execute an agreement with Energyconnect, Inc. to provide Demand Response Services in conformance with the terms and prices in the Commonwealth of Virginia contract.
INTRODUCED AND PASSED by the Council of the City of Bowie, Maryland, at a Regular Meeting on February 9, 2009. ________________________________
G. Frederick Robinson, Mayor
Attest:
_________________________
Pamela A. Fleming, City Clerk
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