STATEMENT OF ISSUE
The Hopkins Power Plant has six generating units, totaling 513 MW. Each of the generating units utilizes compressed air for instruments, controls and service air applications. The facility has a total of nine air compressors made by three different manufacturers. This results in an increased burden (spare parts, training, etc.) on plant staff to maintain the various types and manufacturers of air compressors. Three of the existing compressors have reached a point where continued maintenance is not cost effective and a replacement is a more cost effective option. Staff is recommending that the City begin to standardize on a single compressor manufacturer and type to minimize the spare parts and training required for continued maintenance. As a part of the Hopkins Unit 2 Repowering project, compressors were competitively procured through the BE&K construction contract. Kaiser DSD-125 compressors were selected on both cost and technical compliance. As a result, staff is recommending that a single Kaiser compressor be purchased to replace the three compressors that need to be replaced. This agenda item is seeking the approval of the single source purchase of the replacement Kaiser air compressor.

RECOMMENDED ACTION
Option 1: Approve the standardization on the Kaiser compressor system for Hopkins and approve the single source purchase of the compressed air system to Hudson Pump in an amount not to exceed $68,665.

FISCAL IMPACT
Option 1: $68,665.
Funding is available in project 09009 (Hopkins Master – Major/Minor Capital), and project available balance as of 12/10/08 is $900,000.

Kevin G. Wailes, General Manager – Electric Utility

Anita Favors Thompson, City Manager

For information, please contact: Rob McGarrah, Manager Power Production, x 5534

SUPPLEMENTAL MATERIAL/ISSUE ANALYSIS
HISTORY/FACTS & ISSUES

1. The Hopkins site has six operating units with a combined output of 513 MW’s. Each of the generating units utilizes compressed air for instruments, controls and service air applications. The facility has a total of nine air compressors made by three different manufacturers. The table below denotes the current compressors in service at Hopkins.

2. The variety of different manufacturers and types of air compressors results in an increased burden (spare parts, training, etc.) on plant staff. This burden can be reduced if the plant begins the process to standardize the manufacturer and type of compressor that is purchased as compressors reach the end of their operational life.

3. In addition to the compressor standardization, staff has initiated a project to interconnect the various air compressor systems on each unit to have a plant wide compressed air system. Over time, this interconnection, coupled with the standardization on the larger compressors, will result in a reduction in the number of compressors needed on site and overall increased reliability.

4. At the current time, the three Kobelco compressors on Unit 1 and Unit 2 are in need of replacement. Due to their age, the continued cost of overhaul and maintenance is exceeding the replacement cost. Staff has estimated that the refurbishment cost for these three compressors is in the neighborhood of $135,000.

5. The four newest air compressors on the site are the two Kobelco compressors purchased as a part of the Peaking Resource Addition project in 2004/2005 and the two Kaiser air compressors purchased as a part of the HP2 Repowering project earlier this year. Staff is recommending that the Kasier compressor be the standard due to the lower maintenance cost and energy usage associated with the Kaiser compressors.

6. With the future plans to integrate the plant compressed air system, staff is recommending that a single Kaiser compressor, identical to the ones purchased for the Unit 2 Repowering, be purchased to replace the three compressors on Unit 1 and Unit 2. In addition to the benefits associated with standardization, using one compressor to replace three will result in lower energy usage (station service) at the plant.

7. Hudson Pump is the Kaiser representative for this area and has provided a quote of $68,665 for this replacement air compressor. This pricing is slightly less than that paid for the compressors as a part of the Unit 2 Repowering project.

8. The remaining four air compressors will be removed from service as they reach the end of their serviceable life or can no longer be economically maintained. At the time these remaining compressors are removed from service, a technical evaluation will be made whether replacement is warranted or if the integrated air compressor system can support the requirements. If there is a need to replace these remaining compressors, staff will recommend utilizing the Kaiser compressors as replacements and would seek City Commission approval.

9. Procurement Services and Budget and Policy have reviewed this agenda item and concur that it meets purchasing and budget guidelines.

CHARITABLE CONTRIBUTIONS
This purchase has been approved by Procurement Services as a Single Source purchase. The firm has not claimed any charitable contributions. Award not based on Charitable Contribution Preference.

OPTIONS

Option 1: Approve the standardization on the Kaiser compressor system for Hopkins and approve the single source purchase of the compressed air system to Hudson Pump in an amount not to exceed $68,665.00.

Option 2: Direct staff to competively bid out the Hopkins air compressor modernization.

FISCAL IMPACT

Option 1: $68,665.
Funding is available in project #09009 (Hopkins Master – Major/Minor Capital), and project available balance as of 12/10/08 is $900,000.

Option 2: Unquantifiable at this time.
This option is not recommended. The Kaiser compressors were competitively procured based on pricing and compliance with technical specifications as a part of the HP2 Repowering project, and a separate bid is not anticipated to reduce initial costs. The pricing offered by Hudson for the additional compressor is less than that paid for the HP2 Repowering compressors. Procurement of a different manufacturer compressor will result in the loss of the ability to standardize.

ATTACHMENTS/REFERENCES
None.