REPORT TO THE CITY COUNCIL
August 24, 2017
FROM: THOMAS C. ESQUEDA, Director
Department of Public Utilities
THROUGH: BRIAN S. SPINDOR, PE, Assistant Director
Department of Public Utilities - Water/Wastewater Management Divisions
BY: RAY ARTHUR - Project Manager - Air Resources
Department of Public Utilities - Wastewater Management Division
SUBJECT
Title
Actions pertaining to the purchase of Emission Offsets for the Regional Wastewater Reclamation Facility (RWRF), required by the San Joaquin Valley Air Pollution Control District (Citywide)
1. ***RESOLUTION - 11th amendment to the Annual Appropriation Resolution (AAR) No. 2017-165 appropriating $665,900 for purchase of Emission Offsets for the Regional Wastewater Reclamation Facility (RWRF) (Requires 5 affirmative votes) (Subject to Mayor’s veto)
2. Approve the purchase of Emission Offsets for the Regional Wastewater Reclamation Facility, required by the San Joaquin Valley Air Pollution Control District (Air District), in the amount of $665,941 from Olduvai Gorge, LLC. (Citywide)
Body
RECOMMENDATION
Staff recommends that the City Council adopt the 11th amendment to AAR No. 2017-165 appropriating $665,900 for the purchase of Emission Offsets in the amount of $665,941 for the RWRF, and approve the purchase of these offsets from Olduvai Gorge, LLC, required by the Air District, for the ongoing operation of the RWRF.
EXECUTIVE SUMMARY
The Department of Public Utilities (DPU), Wastewater Management Division, was notified by the Air District that it is required to purchase emission offsets based on the current digester gas consumption levels required at the RWRF. The RWRF contacted two Consultants and based on responses hired Evolution Markets of San Juan Capistrano, California to represent the RWRF in this purchase.
BACKGROUND
The RWRF is a 24 hours per day, 365 days per year operation reclaiming wastewater for beneficial use for the City of Fresno and the surrounding areas. In the treatment of wastewater, the organic solid handling that occurs during the digestion process results in the production of biogas. This biogas has historically been used in the RWRF Power Generation Facility (PGF) to produce heat that is required as part of the solids process and for the production of electricity to offset a portion of the electrical demand at the RWRF. Any gas not utilized through the PGF was utilized by an on-site boiler, or wasted through a waste gas flare. Failures associated with the 38 years old gas turbines have resulted in the RWRF being unable to safely dispose of the gas being produced.
The Air District assigns specific emission limits for each of twelve engines within the RWRF, including the turbines, the flare, the boiler, and others. Without the ability to run the turbines, the biogas production and subsequent disposal has exceeded RWRF capacity resulting in the need to temporarily operate both the permanent waste gas flare and the temporary waste gas flare simultaneously. This requires a higher emissions limit which in turn requires the purchase of emission offsets. Staff recommends purchasing 21.2 tons of NOx Emission Offsets at $24,000 per ton and 8.4 tons of Sox Emissions Offsets from Olduvai Gorge, LLC, which equals $643,116. Additionally, the City’s consultant Evolution Markets will earn a 3.5 percent commission of $22,509, plus an Air District registration fee of $316 for a total of $665,941. These offsets are a onetime purchase that remains with the facility.
Prior to the gas turbine failures, and fully understanding the age of the equipment and potential lifespan concerns, the DPU management team began proactively planning to secure replacement and redundant equipment. Currently the RWRF has obtained both a higher capacity temporary flare and a redundant temporary steam boiler. This equipment will help the facility to eliminate or minimize periods of exceeding emission thresholds while allowing the facility to repair current equipment to be utilized as redundant units. Further, the DPU engineering group is preparing an Air District Authority to Construct (ATC) application for a new larger capacity permanent flare to replace the temporary flare. In addition, a consulting firm, CDM Smith, is under contract to evaluate the RWRF power generation and gas utilization options in order for the facility to continue to optimize digester gas as a beneficial by-product of wastewater treatment.
ENVIRONMENTAL FINDINGS
This purchase does not meet the definition of a project as defined by the California Environmental Quality Act.
LOCAL PREFERENCE
Local preference did not impact the award of this contract because only one consultant responded.
FISCAL IMPACT
Approving this contract has no impact on the General Fund. Funds in the amount of $50,000 for miscellaneous expenses were appropriated in the adopted FY2018 budget. An AAR is necessary to allocate the $665,900 for the purchase of the Emission Offsets for the RWRF as required by the Air District. Funds are available in the Sewer Enterprise Fund 40501.
Attachment:
11th AAR No. 2017-165