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PROPOSAL:

Execute Contract to Evaluate Low NOx Combustion Systems for Natural Gas-Fired Large Water Heaters and Small Boilers

SYNOPSIS:

Large water heaters and small boilers are estimated to emit over 14 tons of NOx per day in the Basin. Rule 1146.2 establishes NOx limits for these units that will reduce their contribution by about 9 tons per day. Based on results of a competitive solicitation, Energy and Environmental Research Corporation has been selected to conduct the implementation study proposed in conjunction with Rule 1146.2 to evaluate the technical performance and costs of low NOx combustion systems for large water heaters and small boilers. The AQMD cost to fund this project shall not exceed $85,000.

COMMITTEE:

Technology, April 24, 1998, Recommended for Approval

RECOMMENDED ACTION:

Authorize the Chairman to execute a contract with Energy and Environmental Research Corporation to evaluate low NOx combustion systems for natural gas-fired large water heaters and small boilers in an amount not to exceed $85,000.

Barry R. Wallerstein, D.Env.
Acting Executive Officer

Background

On February 20, 1998, the AQMD released RFP #9798-25 to evaluate low NOx combustion systems for natural gas-fired large water heaters and small boilers. In conjunction with Rule 1146.2, an Implementation Study was proposed to address industry concerns regarding the status and costs of retrofittable low NOx technologies applicable to large water heaters and small boilers rated between 75,000 and 2,000,000 Btu/hr heat input. This RFP solicited bids for a contract to conduct this Implementation Study and report back to the Governing Board. The study will be conducted in coordination with industry, the public, and trade associations through the formation of an Implementation Steering Committee.

The resulting contract is to evaluate low NOx technologies for the following sets of large water heaters and small boilers:

New units	75,000	-	400,000 Btu/hr
Retrofit	1,000,000	-	2,000,000 Btu/hr
Retrofit	400,000	-	1,000,000 Btu/hr

The scope of the technology evaluation for each set of units will include, but not necessarily be limited to, the following:

1. Review of available and potential low NOx boilers and burners, including assessments of applicability to new or retrofit units; emissions performance; installation, operation, and maintenance requirements; and costs.
2. Assessment of cost differential between standard units and low NOx units.
3. Determination of potential fuel savings from low NOx units.
4. Documentation of performance, safety certifications, impact on equipment warranties, and related codes and standards, especially related to retrofit technologies.
5. Determination of emissions for a typical unit, including source testing of selected units as needed.
6. Determination of an appropriate fuel use exemption level.
7. Assessment of the availability, specifically the timing, of low NOx technologies to meet the proposed retrofit requirements.
8. Determination of the cost effectiveness and cost impacts on selected industries and small businesses.

The proposed project is included in the September 1997 Update of the Technology Advancement Plan for the Clean Fuels Program under Proposed Project 97S1-2, "Development and Demonstration of Advanced Stationary Combustion Technologies." The primary benefits expected to result from the contract are to: (1) support the implementation of low NOx combustion systems for large water heaters and small boilers and the expected emission reductions of about 9 tons per day; and (2) address industry group concerns with availability, performance, and costs of low NOx technologies for these sources regulated under Rule 1146.2.

Outreach

In accordance with the AQMD’s consulting and contracting policies, a public notice advertising the RFP and inviting bids was published in the following publications:

1.	Antelope Valley Press	10	La Opinion	19.	Precinct Reporter
2.	Black Voice News	11.	La Voz	20.	Rafu Shimpo
3.	Chinese Daily News	12:	Los Angeles Daily News	21.	Riverside Press Enterprise
4.	Eastern Group Publications	13.	Los Angeles Sentinel	22.	San Bernardino Sun
5.	El Chicano	14.	Los Angeles Times	23.	Santa Clarita Signal, and
6.	Excelsior, The	15.	M/W/DVBE Source	24.	State of California Contracts
7.	Inland Empire Hispanic News	16.	Orange County Register		Register
8.	Inland Valley Daily Bulletin	17.	Palm Springs Desert Sun
9.	Korea Central Daily	18.	Philippine News

Additionally, potential bidders were identified using the Los Angeles County MTA, and Cal Trans Directories of Certified Minority, Women, Disadvantaged and Disabled Veterans Business Enterprises; the Inland Area Opportunity Pages Ethnic/Women Business & Professional Directory; AQMD’s own electronic listing of certified minority vendors; AQMD Purchasing’s mailing list; and AQMD’s Technology Advancement expertise-sorted mailing list. Copies of the RFPs were mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations; and placed on the Internet at AQMD’s Web site [http://www.aqmd.gov] and AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

Over 200 copies of the RFP were mailed out and 12 vendors attended the mandatory bidders conference held on March 11, 1998.

Panel Composition

The proposal evaluation panel consisted of the following:

AQMD, Technology Advancement Manager

AQMD, Stationary Source Compliance Manager

Southern California Gas Company, Market Consultant

Gas Appliance Manufacturers Association, Director of Technical Services

Of these 4 panelists, 1 is a woman and 3 are men. All four panelists are White, not of Hispanic origin.

Bid Evaluation

Five bids were received in response to the RFP when final bidding closed at 5:00 p.m. on March 31, 1998. Of the five bids, one bid included a disabled veteran-owned business enterprise as a subcontractor and one bid was from a women-owned business enterprise. The attachment summarizes the evaluation of the proposals and the respective ratings/costs of the submitted bids.

The Evaluation Panel unanimously judged two of the bids as not meeting the minimum technical criteria specified in the RFP. While each had some experience and capabilities in general NO_x control technologies and economic assessments of technologies, their proposals failed to demonstrate a complete understanding of the issues related to Rule 1146.2 and the objectives of the rule’s Implementation Study for large water heaters and small boilers.

The three other bids, by Energy and Environmental Research Corporation (EERC), Fossil Energy Research Corporation, and the ADEPT Group, were judged by the panel as meeting the minimum technical criteria of the Step 1 evaluation and capable of successfully completing the Rule 1146.2 Implementation Study. The Step 1 technical scores for these three bids were relatively close, with a variance between the highest and lowest being only 10 points. Each of these proposals demonstrated a good understanding of the issues and insight into their respective approaches to complete the study.

The AQMD Step 2 evaluation of the proposals that met the minimum technical criteria primarily considers cost, along with preferences for local businesses and DVBEs. The Step 2 final score also includes a credit of 50 percent of the points over 70 points received in the Step 1 technical evaluation process. The objective of this two-step evaluation process is to select the most cost-effective, technically sound bid. Based on this evaluation process, EERC received the highest final score, followed by Fossil Energy Research and the ADEPT Group.

Proposal

As a result of the AQMD two-step evaluation process, the proposal by EERC is recommended for award. To accomplish the scope of the technology evaluation described above, EERC, in their proposal, emphasized the development of relational databases consisting of emissions, cost, control technology, load profiles and capacity factors, and demographic data that integrate available AQMD data, inventory and source test data to be developed by the Southern California Gas Company to support the Implementation Study, and EERC’s own database from previous related projects. EERC, through contact with research organizations such as the Gas Research Institute, Institute of Gas Technology, and American Gas Association, also proposed identifying emerging technologies currently nearing completion of development and demonstration that might be available within the time frame of Rule 1146.2 implementation.

EERC included in their proposal an option for an additional outreach task outside the scope of the RFP in their proposal. The objective of the proposed option, estimated at $14,347, is to provide the AQMD with the results of the study in forms more readily disseminated to end users. This effort would include submittals in electronic form, Internet-ready documents, and, potentially, Rule 1146.2 implementation web page development. This option is not being recommended at this time but may be considered at a later date.

EERC is an Irvine, CA-based company that has focused on the control of combustion generated pollutants since its formation in 1970. A major focus of EERC activities has been in the area of NO_x emission control through the development of low NO_x burners, combustion modifications, and by post-combustion selective non-catalytic techniques. EERC’s experience ranges from fundamental research on NO_x formation and destruction to practical applications and evaluations of low NO_x technologies. EERC has demonstrated experience necessary for the completion of this study, including regulatory support, data collection, database development, data quality control and source testing.

Resource Impacts

The total amount of AQMD funding for this contract will not exceed $85,000. Sufficient funds are available in the FY 1997-98 Budget from revenues received from the state-mandated Clean Fuels Program. The Clean Fuels Program, under Health and Safety Code 40448.5 and 40512 and Vehicle Code 9250.11, establishes mechanisms to collect revenues from mobile and stationary sources to support projects to increase the utilization of clean fuels in both sectors, including the development of the necessary advanced enabling technologies. Emission fee surcharges under this Clean Fuels Program are imposed on the largest stationary source facilities within the AQMD and are restricted to support related stationary source clean fuel technology developments.

Attachments

A. Evaluation of Respondents to RFP #9798-25

The following bids were judged by the Evaluation Panel as not meeting the minimum Technical Criteria specified in RFP #9798-25:

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