Title
Resolution to Approve a Professional Services Agreement with NewGen Strategies and Solutions, LLC, to Complete an Electric Grid Asset Valuation and Municipalization Study ($1,728,000.00)
Memorandum
On January 18, 2022, Ann Arbor City Council requested that the City Administrator, via R-22-017, create a Request for Proposals (“RFP”) to formally study the technical, legal, and financial viability of multiple potential pathways the City could take to meet its A2ZERO energy-related emissions reduction, clean energy, and equity goals. The City released this RFP in 2022 and, after reviewing bids, selected a team led by 5 Lakes Energy, LLC to conduct this analysis. In addition to 5 Lakes Energy, LLC, this team included NewGen Strategies and Solutions, LLC, Sunstore, and Potomac Law Group.
In September of 2023, the 5 Lakes Energy, LLC team shared their findings in a report, which included the following recommendations:
• Fulfill 100% renewable electricity by “topping off” with national renewable energy credits (“RECs”).
• Pursue Sustainable Energy Utility to accelerate solar development and resilience within the City of Ann Arbor.
• Competitively procure high-quality RECs through virtual power purchase agreements, which can include DTE Voluntary Green Pricing programs.
• Decouple consideration of municipalization from pursuit of 100% renewable electricity, but if interested in pursuing municipalization, acquire renewables that are convertible to municipal utility use.
The report was agnostic on the future of a traditional municipalization effort (i.e., the condemnation and taking of DTE’s electrical assets), finding that some taking scenarios could lead to cost savings and some could lead to cost increases for ratepayers. The 5 Lakes Energy, LLC report noted that, should the City be interested in continuing to understand the viability of a traditional municipalization/taking process, a Phase II valuation study would be needed.
In response to this report, City Council requested that funding for a Phase II Valuation Study be included in the FY25 budget and that an RFP be released to commission this second study. As such, in his proposed FY25 budget, Administrator Dohoney included $1,000,000.00 to support the hiring of a firm to complete a Phase II Electric Grid Asset Valuation study. Once this budget was adopted, staff began working on the scope of services associated with this RFP and, in August of 2024, RFP 24-48: Electric Grid Asset Valuation and Municipalization Study was released, with the following timeline:
Written Question Deadline September 24, 2024, 10:00am
Addenda Published Week of September 30, 2024
Proposed Due Date October 11, 2024, 3:00pm
Interviews Week of November 4, 2024
Selection and Negotiations November 2024
Expected City Council Presentations December 2024
Due to the decision to place the Sustainable Energy Utility (“SEU”) on the ballot during the November 2024 election and the existing commitments from the review committee, the timeline above slipped by a few weeks. However, staff were able to conduct interviews and negotiations in early December.
One firm bid on proposal 24-48: NewGen Strategies and Solutions, LLC. While staff would have preferred multiple bids and did send the RFP to every firm that could be identified as having conducted a phase II/valuation study in the last decade, the NewGen Strategies and Solutions, LLC proposal was strong. After interviews and some negotiations, the staff review committee felt that the NewGen Strategies and Solutions, LLC team had the skills, expertise, and experience to deliver the outcomes desired in the scope of work and are bringing this recommendation to City Council for consideration.
Budget/Fiscal Impact: City Council allocated $1,000,000.00 in the FY25 Budget to support this study and appropriated another $1,000,000.00 during the December 16, 2024 City Council meeting to further support this study (R-24-449). As such, funding has been allocated for this work.
Staff
Prepared by: Missy Stults, Sustainability and Innovations Director
Reviewed by: Valerie Jackson, Assistant City Attorney
Reviewed by: Kim Buselmeier, Interim Chief Financial Officer
Approved by: Milton Dohoney Jr., City Administrator
Body
Whereas, At its June 1, 2020, meeting, City Council approved the Living A2ZERO Ann Arbor Carbon Neutrality Plan (R-20-193), incorporating the goal of a just transition to community-wide carbon neutrality by the year 2030;
Whereas, The generation of electricity accounts for roughly 40 percent of Ann Arbor’s 1.8 million metric tons of annual greenhouse gas emissions;
Whereas, The vast majority of this electricity is purchased from DTE Electric Company, which holds the franchise to serve Ann Arbor, and which powers its grid primarily through the burning of fossil fuels;
Whereas, A 2023 report prepared by a team led by 5 Lakes Energy, LLC recommended the City continue moving forward with creation of a Sustainable Energy Utility;
Whereas, On November 5, 2024, Ann Arbor voters authorized the creation of the Sustainable Energy Utility and city staff have been working to undertake many of the initial steps required to move the Sustainable Energy Utility forward;
Whereas, The 2023 report prepared by the 5 Lakes Energy, LLC team also included a recommendation that, should the City be interested in continuing to understand the feasibility of a traditional municipalization effort that includes the taking of DTE’s electrical assets and becoming the sole electric provider for the City, a Phase II Asset Valuation study be completed;
Whereas, In spring of 2024, City Council requested that funds be included for this Phase II study in the FY25 budget;
Whereas, City Council allocated $1,000,000.00 in the FY25 Budget to support this Phase II study;
Whereas, City Council appropriated another $1,000,000.00 during the December 16, 2024 City Council meeting to further support this study (R-24-449);
Whereas, In summer of 2024, City staff issued Request for Proposals 24-48: Electric Grid Asset Valuation and Municipalization Study;
Whereas, NewGen Strategies and Solutions, LLC was the sole respondent to this RFP and submitted a strong proposal;
Whereas, Upon review of the proposal along with interviews and follow-up conversations, an internal staff committee unanimously recommended moving forward with offering a professional services agreement to NewGen Strategies and Solutions, LLC for the conducting of an Electric Grid Asset Valuation and Municipalization Study; and
Whereas, NewGen Strategies and Solutions, LLC is compliant with the City’s living wage, conflict of interest, and non-discrimination policies;
RESOLVED, That City Council approve a professional services agreement with NewGen Strategies and Solutions, LLC, in the amount of $1,728,000.00, without regard to fiscal year, for an Electric Grid Asset Valuation and Municipalization Study (RFP 24-48);
RESOLVED, That City Council approve a 10% contingency in the amount of $172,800.00 to be allocated at the City Administrator’s discretion should additional work be necessary;
RESOLVED, That the Mayor and City Clerk be authorized and directed to execute said professional services agreement after approval as to substance by the City Administrator and approval as to form by the City Attorney; and
RESOLVED, That the City Administrator be authorized to take the necessary administrative actions to implement this resolution.