TITLE
Recommendation to adopt resolution authorizing City Manager, or designee, to execute a contract, and any necessary documents including any necessary amendments, with Utility Cost Management, LLC, of Fresno, CA, to perform an electric utility billing audit, in an amount equal to 33 percent of the identified refunds or credits realized by the City of Long Beach (City), and 33 percent of any future savings that accrue during a two year period following implementation of each correction, for a period of two years, with the option to renew for one additional one-year period to complete a second round cost saving review, at the discretion of the City Manager. (Citywide)
DISCUSSION
City Council approval is requested to enter into a contract with Utility Cost Management, LLC (UCM), for electric utility billing audit services. Through this process, UCM reviews the City’s electric utility accounts to identify billing errors, obtain refunds, find ongoing savings opportunities on the City’s electric accounts, and make recommendations to the City. UCM’s analysis includes, but is not limited to, the investigation of billing calculations, inapplicable rate schedules, proper metering of services, optional rates, applicability of taxes and surcharges, and the applicability of all rules and regulations. UCM’s compensation is based only on actual refunds and/or cost savings as a direct result of their work and the newly assigned rates identified by UCM and implemented by the utility company. UCM’s fee is calculated at 33 percent of the identified refunds or credits realized by the City, and 33 percent of any future savings that accrue during a two-year period following implementation of each correction; therefore, the City only incurs a fee if cost savings are realized.
On October 10, 2017, the City Council adopted a Request for Proposals (RFP) FM17-009 for performing an electric utility billing audit, and awarded a contract to UCM for a period of two years, with the option to renew for two additional one-year periods. As part of UCM’s original selection, City staff evaluated four proposals on the criteria set forth in the RFP. The selection committee determined that UCM was the vendor that best met the City’s needs for this service based on: demonstrated competence in the industry; comprehensive experience with Southern California Edison, and the California Public Utilities Commission; and expertise and availability of key personnel.
UCM conducted a first round of review at the start of the original contract term. A second round of review was anticipated to look for additional savings resulting from rapid changes in the energy sector and the California regulatory environment. This work was put on hold during the COVID-19 pandemic and the awarded contract was permitted to terminate. When the second phase of the work was restarted, savings estimates from UCM indicated that fees were unlikely to exceed $100,000. Based on these estimates, a purchase order was expected to be sufficient to finish this contemplated work, and UCM conducted a second round of review. Due to a highly technical finding associated with electricity discharge from battery storage, UCM’s second review identified more potential savings than originally anticipated. A contractual agreement is necessary to reflect the higher level of savings that may be achievable through implementation of the identified billing corrections, and the resulting fees that would be owed to UCM, since the amount will be higher than policy allows without a City Council authorized contract.
City Charter Section 1801 requires that contracts for City purchases be awarded to the lowest responsible bidder after a competitive bid process, but allows for awards without a competitive bid process when authorized by a Resolution adopted by the City Council.
UCM was selected as a result of a competitive procurement process in 2017 and continues to offer its services to City at the competitively procured price. UCM has already completed a first round savings review and requires a contract to complete a second-round review that is underway. This project is near completion and therefore it would not be a responsible use of City time or resources to re-procure these services for the second round review. This request is the most cost-effective and efficient solution to allow for the continuation of the second round of saving review. Any future savings review beyond this second round review will be subject to a new RFP process.
This matter was reviewed by Deputy City Attorney Erin Weesner-McKinley and Business Services Bureau Manager Tara Mortensen on March 31, 2023, and by Revenue Management Officer Geraldine Alejo on March 30, 2023.
LEVINE ACT
This item is subject to the Levine Act. The Mayor, Councilmembers, and Commissioners who have received a contribution of more than $250 within 12 months prior from a party, participant, or their representatives involved in this proceeding may do either of the following: (1) disclose the contribution on the record and recuse themselves from this proceeding; OR (2) return the portion of the contribution that exceeds $250 within 30 days from the time the elected official knew or should have known about the contribution and participate in the proceeding.
All parties, participants, and their representatives must disclose on the record of this proceeding any contribution of more than $250 made to the Mayor or any Councilmembers within 12 months prior to the date of the proceeding. The Mayor, Councilmembers, and Commissioners are prohibited from accepting, soliciting, or directing a contribution of more than $250 from a party, participant, or their representatives during a proceeding and for 12 months following the date a final decision is rendered.
TIMING CONSIDERATIONS
City Council action is requested on April 18, 2023, to ensure there is no interruption to services.
FISCAL IMPACT
The City will compensate UCM for services only if the City receives a refund or credit identified in the “Findings Letter” from UCM, and/or if the City realizes future savings as a result of the same findings. UCM’s fee is calculated at 33 percent of the identified refunds or credits realized by the City, and 33 percent of any future savings that accrue during a two-year period. Any service costs associated with the recommended actions will be incurred by the applicable fund group and department. If needed, impacted departments will return to the City Council with a request for appropriation, fully offset by the refund, credit, and savings realized as a direct result of UCM’s efforts. This recommendation has no staffing impact beyond the normal budgeted scope of duties and is consistent with existing City Council priorities. There is no local job impact associated with this recommendation.
SUGGESTED ACTION
Approve recommendation.
BODY
[Enter Body Here]
Respectfully Submitted,
KEVIN RIPER
DIRECTOR OF FINANCIAL MANAGEMENT
APPROVED:
THOMAS B. MODICA
CITY MANAGER