29A - UTILITY COST REDUCTION SRVS

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Payment Authorization To Procure America For Electrical Utility Cost Reduction Services December 20, 2016 Page 2 Council to increase the A-2014-227 NTE amount from $50,000 to $70,108.69, was approved in the amount of $20,762.12 for Invoice #10-1052a on August 2, 2016. For the third payment, Procure America submitted Invoice #6-1603b for $15,078.99 to be split between Schedule 1 for $1,501.87 and Schedule 2 for $13,577.12 as detailed in Exhibit 1 and tabulated as follows. The recommended action to authorize payment of this third invoice requires Council to authorize in effect a second increase in Procure America's NTE amount to a new NTE amount of $85,187.68 which is a $35,187.68 or 68.6% increase over the original NTE amount of $50,000. PROCURE AMERICA TOTAL COMPENSATION SCHEDULE 1 Initial Payments calculated as 1 % of City's Gross Annual Spend on Gas and Electric Utility Bills of $7,161,056 First Initial Payment on April 20, 2016 $49,346.57 Second Initial Payment on August 2, 2016 20,762.12 Third and Final Initial Payable: Invoice #6-1603b 1,501.87 Total $71,610.56 SCHEDULE2 Subsequent Payments calculated as 40% Share of Electric Utility Cost Savings for a 3 -year Period First Subsequent Payable: Invoice #6-1603b $13,577.12 Total $13,577.12 Grand Total $85,187.68 As indicated in the above table, this third payment would be the final payment on the amount owed Procure America under Schedule 1 Compensation. However, Procure America will continue to submit Schedule 2 Compensation invoices to the City for payment on a quarterly cycle for the duration of the contract. Staff will also continue to request Council to approve the necessary increases in Procure America's contract NTE amount in order to authorize subsequent payments to Procure America. All payments to Procure America are funded by the City's electric utility cost savings generated under this energy -efficiency initiative. For example, the funds to pay for the recommended action comes from $35,444.66 in savings generated from January 7 through May 6, 2016 by electric service account # 3-005-2303-50 at Centennial Park Dan Young Soccer Fields located at 3000 W. Edinger Avenue. As shown in Exhibit 1, and per the agreement, 100% of initial savings are used to pay Procure America Schedule 1 compensation of $1,501.87 leaving a balance of $35,444.66 less $1,501.87 or $33,942.79. Schedule 2 compensation is calculated as 40% of $33,942.79 or $13,577.12. Procure America generates these cost savings by identifying electric service accounts eligible for a rate review and requesting Southern California Edison (SCE) to 29A-2