BOARD MEETING DATE: April 4, 2003
AGENDA NO. 7

Authorize Executive Officer to Expand Contract List for Installation of Microturbines with Firm Previously Selected through an Open Bidding Process and Have Microturbine Manufacturer Reset Warranties and Upgrade Units for UL Listings

SYNOPSIS: 

The Board has previously approved the purchase and installation of microturbines with portions of the AES Settlement Fund, the LADWP Settlement Fund, and the Rule 1309.1 Mitigation Fee Fund at various locations within AQMD. The original contractor for the AES Fund projects will not be able to complete two installations. Also, remaining projects involving all three funds would benefit by having microturbines upgraded to a UL listing, and the warranties reset. Staff recommends that the Board authorize the Executive Officer to: a) contract with other pre-qualified contractors for the AES Fund installations, or provide reimbursement to host sites who do self installation; and b) have the microturbine manufacturer reset warranties and upgrade units to a UL listing. This will not result in increased funding.

COMMITTEE: 

Administrative, March 14, 2003, Recommended for Approval

RECOMMENDED ACTIONS:

1. Authorize the Executive Officer to expand the contractor list for previously Board-authorized funds from the AES Settlement Fund for microturbine installations within the counties of Orange, Riverside, and San Bernardino to:

1. Contract with other pre-qualified contractors, besides C-4, Inc. for the installation and start up of Capstone microturbines at the remaining locations on a competitive bid basis; and
   
   
2. Enter into agreements to provide reimbursement to host sites who do cost competitive self-installation and start up of Capstone microturbines at any of the remaining locations.

2. Authorize the Executive Officer to use the previously Board-authorized funds from the AES Settlement Fund, the LADWP Settlement Fund and the Rule 1309.1 Mitigation Fees to have Capstone Turbine Corporation reset warranties and upgrade the microturbines to a UL listing

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In 2001, the Board authorized the use of portions of the AES Settlement Fund, the LADWP Settlement Fund, and Rule 1309.1 Mitigation Fees to install about 200 low-emission, high-efficiency microturbines for distributed power generation throughout AQMD, in order to assist with the energy crisis and help prevent the need to use emergency diesel engines.

AES Settlement Fund Projects

At its March 16, 2001 meeting, the Board approved the installation of low-emission, high-efficiency microturbines for distributed power generation, using $1.8 million from the AES Settlement Fund, at various locations within Orange, Riverside and San Bernardino counties. At its subsequent meetings on April 20, 2001, May 11, 2001 and August 17, 2001, the Board increased the overall funding to $2.16 million and authorized the Executive Officer to contract with the Capstone installer, C-4, Inc., in an amount up to $482,000 to install the microturbines.

C-4, Inc. has completed six projects in this program for AQMD. It has since been determined that the contractor can no longer undertake the two remaining installations.

Using funds from the LADWP Settlement Fund and the Rule 1309.1 Mitigation Fee Funds, the Board authorized the Executive Officer to contract with other installers in addition to C-4, Inc. to install additional microturbines in all four counties of AQMD. These other contractors, who include Montgomery Watson Harza and LFG&E were selected during a previous open bidding open bidding process, have successfully completed microturbine installations for AQMD.

One of the host sites for the microturbines has indicated its desire to hire its own contractor to install the microturbines provided by AQMD instead of having an AQMD contractor do the installation. However, the host site wishes to be reimbursed by AQMD for its costs.

Warranties and UL Listings

For those microturbines not yet installed due to permitting issues or construction delays, the factory warranties have expired. The manufacturer, Capstone Turbine Corporation, has agreed to, at significantly reduced cost, return the units to the factory to thoroughly test them, update them to current specifications, and reset the warranties. For those units that were manufactured without a UL listing, they can also upgrade them to UL-approved. This would benefit the host sites and make it easier to get permits for local authorities. There are funds already authorized by the Board for the microturbine installation which are sufficient to pay for these upgrades and new warranties.

Proposal

Staff requests that the Board authorize the Executive Officer to:

1. Use the previously Board-authorized funds from the AES Settlement Fund for microturbine installations within the counties of Orange, Riverside, and San Bernardino to:

1. Contract with other Board pre-qualified contractors besides C-4, Inc. for the installation and start up of Capstone microturbines at the remaining locations on a competitive bid basis; and
   
   
2. Provide reimbursement, at a competitive price, to host sites who do self-installation and start up of Capstone microturbines at any of the remaining locations.

2. Use the previously Board-authorized funds from the AES Settlement Fund, the LADWP Settlement Fund and the Rule 1309.1 Mitigation Fees to have Capstone Turbine Corporation reset warranties and upgrade the microturbines to a UL listing.

Resource Impacts

The proposed actions have no impact on the funding for microturbines from the AES Settlement Fund, LADWP Settlement Fund or the Rule 1309.1 Mitigation Fees.

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