5.5 EMRUSR 08-13-2024��i
Elk River ,
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Mike Tietz —Technical Services Superintendent
MEETING DATE:
AGENDA ITEM NUMBER:
August 13, 2024
5.5
SUBJECT:
East Substation Power Transformer Bid
ACTION REQUESTED:
Accept WEG Transformers USA, LLC bid for transformer and award contract contingent upon
final review by legal counsel.
BACKGROUND:
Approved with the 2024 budget was the addition of a new electric substation. This new
substation named East substation will be located on Lot 1, Block 1 within Natures Edge Business
Center Third Addition. The official address is 16740 Gateway Road. Staff worked with DGR
Engineering to assemble the transformer specifications for the project. Notice for formal bids
were sent out to bidders on June 26, 2024, with bids opened on August 1,2024.
DISCUSSION:
One of the larger components of the substation addition is the transformer. This transformer
steps down the 69kV transmission system to ERMU's distribution voltage of 12.47kV. The cost
of this transformer exceeds the statutory threshold amount and is subject to competitive
bidding law. The quotes and equipment specifications were reviewed by our substation
engineering contractor, DGR Engineering. Specifications in the bid solicitation included a
minimum requirement of delivery date by September 1, 2026, with possible preference given to
units manufactured and assembled in the United States. In the bid specifications, ERMU
reserved the right to consider the minimum requirements, give preference to units
manufactured and assembled in the United States, and to award the bid as deemed to be in
ERMU's best interest.
Two bids were received:
1
Niagara Power Transformer Corporation
$1,369,945
2
WEG Transformers USA, LLC
$1,535,200
Despite having a lower bid, Bidder 1 could not meet the delivery date requirement. Bidder 2
could meet the delivery date requirement, possibly with a unit manufactured and assembled
outside of the United States.
Page 1 of 2
93
Upon bid opening, DGR conducted due diligence with both Bidders. Such due diligence
confirmed the delivery date for Bidder 1 later than September 1, 2026. Therefore, Bidder 1 was
rejected for failure to meet the minimum bid requirements. DGR's due diligence affirmed that
Bidder 2 could deliver a unit manufactured and assembled in the United States, before the
required delivery date, and at the price in the bid.
Because of this difference in delivery time and the indirect costs and system load
considerations associated with extending the construction schedule, based on the bid
requirements as solicited, it is in the best interest of ERMU and the project to award the bid to
WEG Transformers USA, LLC for $1,535,200. The recommendation letter from DGR Engineering
is attached.
FINANCIAL IMPACT:
Previous project estimates included $1,500,000 for the transformer. Staff are working with DGR
and WEG to agree to payment terms that would be within the 2024 budget, with the
remainder of the transformer costs paid in 2026 and will be reflected in the 2026 budget.
ATTACHMENT:
• DGR Recommendation of Award of Contract - WEG
Page 2 of 2