Template revised September 22, 2016.
COMMISSION
AGENDA MEMORANDUM
Item No.
4h
ACTION ITEM
Date of Meeting
December 12, 2017
DATE: November 29, 2017
TO: Dave Soike, Interim Executive Director
FROM: Wayne Grotheer, Director Aviation Project Management
Jeffrey Brown, Director Aviation Facilities and Capital Programs
SUBJECT: Alternate Utility Facility – Utility Services (CIP #C800538)
Amount of this request:
$0
Total estimated project cost:
$37,200,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to amend and increase the Not-
to-Exceed amount of the Puget Sound Energy (PSE) Engineering Services and Construction
Agreement (ESCA) required for the Alternative Utility Facility (AUF) from $250,000 to $850,000.
EXECUTIVE SUMMARY
The funding associated with this agreement is within the current authorized project budget.
There is no new funding associated with this request.
To support the AUF project PSE must relocate the existing power delivery point of service along
with associated metering and protective relaying. In addition, PSE must perform modeling and
engineering analysis to incorporate any potential impact the new AUF will have on the PSE
transmission system. The initial ESCA with PSE was for $250,000 and was utilized to perform
initial engineering analysis and develop the associated design. This amendment to the ESCA will
permit PSE to perform the installation and construction work.
The project will provide an enclosed, dual fuel, standby power facility that is functionally
complete, fully integrated, and capable of supplying 30 megawatts (MW) of power to the
airport and supporting facilities. This wattage will meet 100 percent of the Airport’s peak
electrical demand over the existing power distribution system. Upon the unexpected loss of
normal utility power, the standby power facility will provide stable emergency power to the
Airport. The standby power facility will have sufficient fuel storage capacity to operate the
Airport continuously for up to 24 hours with ability to use aviation fuel as a backup source
should diesel fuel become unavailable.
COMMISSION AGENDA – Action Item No. _4h___ Page 2 of 4
Meeting Date: December 12, 2017
Template revised September 22, 2016; format updates October 19, 2016.
JUSTIFICATION
During a utility power outage, the Airport is unable to operate. An extended loss of utility
power at the Airport halts the Port’s, airlines’ and tenants’ ability to utilize the Airport. Loss of
electrical power shuts down airline and concession electronic communications, jet bridge
operations, flight information displays, ticket printers, security checkpoints, electric ground
support equipment (eGSE) chargers, baggage conveyors, lighting for legal occupancy within the
terminal, heating/cooling systems, and other functions. The continued reliable operation of
Sea-Tac Airport is vital to meeting the needs of the region and the airlines.
The Alternate Utility Facility (AUF) is providing a separate power source to the airport’s south
connection point to the utility transmission grid. The design and construction of the AUF has
required PSE to modify their interconnection equipment and to study the effects on their
transmission network. This work is cost reimbursable to PSE and is governed by a project
specific utility agreement. After initial work PSE has estimated that their efforts will cost more
than is allowed in the current Not-To-Exceed agreement.
DETAILS
Scope of Work for the Amendment
(1) Relocate PSE Point of Service #1 and #2 and associated ancillary equipment.
(2) Study impact of AUF on PSE transmission system.
Schedule
Activity
Construction start
2017 Quarter 1
In-use date
2018 Quarter 2
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Do not increase the Not-To-Exceed amount of the ESCA
Cost Implications: $30,000,000 Expensed (Asset will be delivered, but will be unusable)
Pros:
(1) None.
Cons:
(1) PSE crews will be unable to complete their work installing, testing, and commissioning
necessary PSE facilities and assets.
(2) AUF project will not be able to interface with PSE facilities rendering the AUF facility
unusable.
This is not the recommended alternative.
COMMISSION AGENDA – Action Item No. _4h___ Page 3 of 4
Meeting Date: December 12, 2017
Template revised September 22, 2016; format updates October 19, 2016.
Alternative 2 – Increase the Not-To-Exceed amount of the ESCA
Cost Implications: No Additional Costs
Pros:
(1) AUF Project will complete and come online in Q2 2018.
Cons:
(1) None
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Cost Estimate/Authorization Summary
Capital
Expense
Total
COST ESTIMATE
Original estimate
$36,400,000
$800,000
$37,200,000
Revised estimate
$36,235,000
$965,000
$37,200,000
AUTHORIZATION
Previous authorizations
$36,235,000
$965,000
$37,200,000
Current request for authorization
0
0
0
Total authorizations, including this request
$36,235,000
$965,000
$37,200,000
Remaining amount to be authorized
$0
$0
$0
Budget Status and Source of Funds
This project, C800538, was included in the 2018-2022 capital budget and plan of finance. The
funding sources will include the Airport Development Fund, 2015 and 2017 revenue bonds.
This project will be incorporated into the Airport’s electrical utility, so both capital and
operating costs will be recovered through an internal utility charge allocated to the terminal.
The costs therefore show up as operating costs.
Financial Analysis and Summary
CIP Category
Renewal/Replacement
Project Type
Infrastructure Upgrade
Risk adjusted discount rate
N/A
Key risk factors
N/A
Project cost for analysis
$37,200,000
Business Unit (BU)
Electric Utility (allocate to Terminal Building)
Effect on business performance
NOI after depreciation will increase
IRR/NPV
N/A
CPE Impact
0.08 in 2018
COMMISSION AGENDA – Action Item No. _4h___ Page 4 of 4
Meeting Date: December 12, 2017
Template revised September 22, 2016; format updates October 19, 2016.
Lifecycle Cost and Savings
The design life of the project is 30 years or more. Operations and Maintenance (O&M) costs of
the recommended alternative will be approximately $125,000/year to include: periodic
maintenance, testing, air permitting requirements, fuel, and training. It is anticipated that the
system will need to be run once a week or 50 hours a year for maintenance and testing
purposes.
ATTACHMENTS TO THIS REQUEST
None
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
• August 4, 2015 – The Commission authorized procurement and construction for
$37,200,000 (item 6b).
• December 9, 2014 – The Commission was briefed (item 7c).
