Title
Water Services Department 23rd Avenue Wastewater Treatment Plant Microgrid (Ordinance S-45905)
Description
Request to authorize the City Manager, or his designee, to enter into a 20-year agreement with Arizona Public Service (APS) to provide standby power services to the Water Services Department (WSD) 23rd Avenue Wastewater Treatment Plant (WWTP). Further request to authorize the City Controller to disburse all funds related to this item. The total value of this agreement will not exceed $4.5 million.
Report
Summary
APS will provide standby power to the 23rd Avenue WWTP through a 6.25 megawatt microgrid. Microgrids are local energy grids with control capabilities that can disconnect from a traditional energy grid and operate autonomously. The microgrid is capable of supporting emergency power requirements to the entire WWTP site. The City is responsible for a cost share of the capital costs and any fuel usage over the life of the agreement. APS is responsible for permitting, design, construction, and operation and maintenance of the microgrid.
The 23rd Avenue WWTP provides wastewater treatment services to the central Phoenix area. The facility has been in operation since 1932 and has a treatment capacity of 63 million gallons per day. Currently, there are six standby power generators located throughout the WWTP providing emergency power generation to key facilities. WSD recently evaluated the 23rd Avenue WWTP standby power needs for full standby capability to all facilities and evaluated the condition of the existing standby generators. The evaluation indicated a need for replacement or modifications to existing on-site generators at an estimated cost of over $7 million.
The estimated capital cost to the City for the microgrid facility will be approximately $3.4 million, which is $3.6 million less than the estimated cost of replacing the standalone generators at the site as identified in the study. Additionally, APS will be responsible for all operations and maintenance costs associated with the microgrid facility, thus providing additional cost savings to WSD for the lifetime of the agreement.
WSD will have first rights for use of the microgrid. APS will use the system as needed when not in use by the WWTP. The microgrid facility will be located at 23rd Avenue WWTP, on City property, and access to the facility will be granted to APS for the purposes described in the agreement. The microgrid will include Tier 4 generators which are more energy efficient and emit less air pollutants than the Tier 2 generators now in service at the WWTP.
Financial Impact
The initial impact of the contract, beginning in Fiscal Year 2019-20, is estimated at $3.4 million in capital costs. In addition to capital costs, it is anticipated there will be an additional $1.1 million in fuel costs to the City over the life of the contract. The aggregate value of the contract will not exceed $4.5 million.
Concurrence/Previous Council Action
The Water, Wastewater, Infrastructure and Sustainability Subcommittee heard this item for information only at its June 5, 2019 meeting.
Location
23rd Avenue Wastewater Treatment Plant
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager Karen Peters and the Water Services Department.