Loading...
Exhibit 1 - Agenda Information Sheet City of Denton _____________________________________________________________________________________ AGENDA INFORMATION SHEET DEPARTMENT: Procurement INTERIM ACM: Cassey Ogden DATE: February 7, 2023 SUBJECT Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation, ratifying the expenditure of funds by the City Manager for the emergency purchase of rebuilt electric utility transformers for Denton Municipal Electric; and providing an effective date (File 8182 – awarded to Midwest Electric Transformer Services, Inc., in the not-to-exceed amount of $535,018.00). The Public Utilities Board recommends approval (5 - 0). INFORMATION/BACKGROUND This declaration is for rebuilt electric utility transformers needed to provide restoration of and service to customers. The current supply chain issues being experienced across the electric utility industry and Denton Municipal Electric (DME) necessitated the purchase. Section 252.022 of the Texas Local Government Code provides exemptions associated with purchasing requirements which include (1) a procurement made because of a public calamity that requires the immediate appropriation of money to relieve the necessity of the municipality’s residents..., and (2) a procurement necessary to preserve or protect the public health or safety of the municipality’s residents. Denton’s current inventory of transformers is at levels reserved for normal, daily electric service operational responsibilities and emergency response. For new construction, DME prioritizes transformers on a project first come, first ready basis for customers and developers that have inspections and permits complete. DME has forty-five projects designed and released to construction or ready to be released for construction. DME has another 128 projects currently in the design phase. DME has notified customers and developers that the utility may not be able to provide immediate service due to the low inventory of transformers and the current supply chain issues. Supply chain issues for distribution transformers continue to worsen. Major shortages are being experienced nationwide of critical electric utility equipment such as electric distribution transformers, underground cables, substation equipment, and other equipment necessary to maintain and provide electric service in Denton. The need for this Declaration of an Emergency stems from lead times on transformers approaching 76 weeks in some instances. Vendors cannot provide reliable estimates of lead times for equipment. DME has seen an increase of 250% or more in the average cost of transformers supplied by its contracted vendor. Table 1 provides a list of orders for transformers needed under this Declaration of an Emergency to help mitigate some of the supply chain issues and help support DME’s stock levels of transformers. Failure to declare an emergency could cause inventory levels to drop further below minimum acceptable levels. City Hall 215 E. McKinney Street Denton, Texas www.cityofdenton.com Table 1 Transformer Size Transformer Cost Quantity Total Cost 25kVA 240/120 PM $7,035.00 5 $35,175.00 50kVA 240/120 PM $8,950.00 35 $313,250.00 75kVA 240/120 PM $10,125.00 8 $81,000.00 167kVA 240/120 PM $18,985.00 3 $56,955.00 Shipping 10 percent of total 1 $48,638 Purchase Order Total Cost $535,018 Approval of a Declaration of an Emergency, with a one-time spend authority of $535,018, allows DME to better position its transformer inventory for service and minimize the growing backlog of transformer orders. PRIOR ACTION/REVIEW (Council, Boards, Commissions) On January 23, 2023, the Public Utilities Board (PUB) recommended this item to the City Council for consideration. RECOMMENDATION Approve the emergency purchase of rebuilt electric utility transformers for Denton Municipal Electric, in a not-to-exceed amount of $535,018. PRINCIPAL PLACE OF BUSINESS Midwest Electric Transformer Services, Inc. Newton, KS FISCAL INFORMATION The transformers are funded out of the DME’s Capital Budget account 605227500. EXHIBITS Exhibit 1: Agenda Information Sheet Exhibit 2: Declaration of Emergency Exhibit 3: Ordinance Respectfully submitted: Lori Hewell, 940-349-7100 Purchasing Manager For information concerning this acquisition, contact: Randy Key, 940-349-7665. Legal point of contact: Marcella Lunn at 940-349-8333.