Bid rec Kinzie Transformer SUA-13-02 - Stillwater

TO THE HONORABLE CHAIRMAN AND TRUSTEES
REPORT TO:
STILLWATER UTILITIES AUTHORITY No. SUA-13-02
ISSUED BY THE CITY MANAGER - STILLWATER, OKLAHOMA
Date of Meeting: January 7, 2013
Subject: Bid Recommendation: Kinzie Substation Power Transformer - SUA Bid #15-12/13
Purpose of Report: To request Trustee action on a bid for purchase of a 45/60/75/84 MVA, 138 kV–
69 kV power transformer for Kinzie Substation.
Background: Oil samples are collected annually from all substation transformers. The results of the
analysis of the oil samples are a key indicator of the health of the transformers. The most recent
analysis of the oil sample from Kinzie substation indicated severe overheating of the oil due to
internal arcing. To prevent catastrophic failure, the transformer was removed from service. The
existing transformer has to be either replaced or rebuilt and because the transformer had previously
been rebuilt it was determined that replacement would be the best option for the system for multiple
reasons. In addition to a longer operating life and a higher probability of reliability, replacement also
allows for the transformer to be increased in size to better handle the City's growing load and provide
extra capacity to our transmission system during emergencies. The existing transformer had a
maximum rating of 56 Megavolt-amperes (MVA). The new transformer will have a maximum rating of
84 MVA.
Specifications and contract documents were prepared by SEU staff and reviewed by Guernsey. A
solicitation for bids was advertised and bid specifications were sent to 17 perspective bidders on
November 7, 2012.
Discussion: Seven bids were received and opened on December 3, 2012. The bid amounts ranged
from $623,650 submitted by Transformers and Rectifiers (India) Ltd to $850,975 submitted by ABB.
The bids were evaluated in accordance with the procedures established by the City of Stillwater
Purchasing Manual.
Power transformers convert some electrical energy to waste heat in the electric power transformation
process. The waste heat, called loss, is used to evaluate the operational efficiency of the transformer
and is a large part of the cost of ownership to the utility. Well designed and manufactured
transformers are highly efficient and the losses are relatively small in comparison to the transformer
power rating. However, the electric energy cost to supply these losses equate to a considerable sum
of money when subjected to a present worth analysis over the expected life of the transformer.
All bidders were required, as part of their bid, to include the transformer losses expressed in
kilowatts. For evaluation purposes, all bid prices were subjected to a “cost of loss” adder to the bid
price. The actual losses of the transformers are measured at the factory acceptance test. If actual
losses are greater than the losses stated in the bid, the bidder must reduce their bid price based on a
formula similar to that used to determine the adder. This process allows staff to determine the lowest
responsible bidder by assuring that important differences in value as well as price of the product have
been considered.
The following table summarizes the cost related information provided in the bids. Base Price is the
initial purchase amount. It is the sum of the cost of the transformer, related expenses to ship and set
it on the concrete pad and purchase the spare parts the manufacturer recommends to keep in
inventory. Losses are the value of the energy converted to waste heat over the life of the
transformer. The loss calculation considers the present price of power, an assumed escalation over
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the projected 30 year transformer life and transformer loading. Evaluated Cost is the sum of the
Base Price and Losses.
Summary of Evaluation
Manufacturer
Base
Evaluated
Price ($) Losses ($) Cost ($)
Transformers and Rectifiers (India) Ltd. 623,650 257,620 881,270
CG Power Systems 671,400 357,116 1,028,516
Virginia Transformer 695,275 354,891 1,050,116
Weg 734,383 373,944 1,108,327
Delta Star 849,578 336,819 1,186,397
ABB 850,975 351,115 1,202,090
Howard Industries
Incomplete bid packet
The bid specification requires the Bidder to manufacture the transformer in the continental United
States. Transformers and Rectifiers (India) Ltd. manufactures transformers at their facility in
Ahmedabad, India so their bid does not meet the requirements in the bid specifications. CG Power
Systems would manufacture the transformer at their facility in Washington, MO. However, this plant
has only manufactured smaller, distribution-type transformers and has not manufactured a
transformer with the capacity required in the bid specifications. Consequently, CG Power Systems
does not meet the minimum qualifications for Bidder’s experience as required in the bid
specifications. Based the evaluation of the bids submitted, Virginia Transformer was determined to
be the lowest responsible bidder.
Budget Impact: Funding for the project will come from the electric rate stabilization fund and a
budget of $1.1 million has been established for this project. The remaining budgeted funds after the
purchase of the new transformer will be used for the installation of the new transformer, upgrading
control and protection systems, and the additional equipment required in the substation to handle the
added capacity.
Recommendation: It is recommended that the Trustees award the bid for the Kinzie substation
transformer to Virginia Transformer in the amount of $695,275 and authorize expenditures for the
purchase of the transformer in the same amount.
Prepared by:
Kyle Muret, Electrical Engineer Intern
Reviewed by Operations Director: Lee Jackson, Engineering Manager
Reviewed by Administrative Director: Dan Blankenship, SUA Director
Date of Preparation: January 3, 2013
Submitted by:
___________________________
Dan Galloway
City Manager