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ITEM #4 CITY OF COLTON AGENDA REPORT FOR COUNCIL MEETING OF OCTOBER 20, 2009 TO: HONORABLE MAYOR AND CITY COUNCIL FROM: Jeannette Olko, Electric Utility General Manager SUBJECT: Approval of Additional Annual Purchase Quantities for Medium Voltage Underground Distribution Cable for the Electric Department from Wesco Distribution DATE: October 13, 2009 BACKGROUND: The Electric Utility department received formal, sealed bids for the annual purchase of medium voltage underground cable on December 6, 2007. The bid included anticipated minimum and maximum quantities of 1/0, 4/0 and 750 MCM cable as part of the department's Capital Improvement Plan. City Council awarded the bid for a twelve month period, with the option to renew for three additional one-year periods, to Wesco Distribution, for the minimum and maximum quantities, at the City Council Meeting of December 18, 2007. The bid award also include a price escalation/de-escalation based on the COMEX closing price for aluminum and copper on the date of shipment. Since the initial bid date, the City has realized de-escalation in the price of wire for the two most recent orders. The wire purchased under this agreement was planned to be used primarily for the department's underground cable replacement program, but will also be used for capital improvement projects. During the summer of 2008, the Electric Department had performed tests on the underground cable in the electric system and found a higher rate of failing cable than anticipated, leading City Council to approve an increase in annual maximum quantities of 750 MCM and 4/0 cables to 35,200 feet and 27,500 feet, respectively. DISCUSSION/ANALYSIS: The Electric Department has replaced over 21,000 feet of existing 750 MCM cable in the Mohave Circuit since January 2009, and intends to replace more in the near future. The North Substation and Agua Mansa Commerce Center projects are moving forward and staff will need to begin installing cable within the next two to six months. These two projects will require approximately 37,200 feet of cable to be installed. At present, we have approximately 29,000 feet of this cable in stock at the Electric Yards. In order to ensure that we have sufficient quantity of 750 MCM cable on hand for these projects and for any necessary repairs should existing cable in the system fail, staff is requesting City Council increase the maximum annual purchase quantity of 750 MCM cable from 35,200 feet to 50,500 feet. If the new maximum quantities are purchased, the additional cost will be $98,335.01 plus/minus applicable escalation/de-escalation from the bid price of December 6, 2007. FINANCIAL IMPACT: Cable is purchased into Electric Stores inventory account number 520-1500-154 and is charged to the appropriate budget account when put in service. The Electric Department has included money in Fiscal Year 2009/2010 for projects approved in its Capital Improvement Plan.