Ames staff recommend Wartsila for municipal energy‑center engines; council to consider $2.3M transformer and $75M engine contracts July 28

Utility staff briefed the Ames City Council on the Ames Municipal Energy Center project on July 21 and previewed two near‑term procurement actions the council will consider at its July 28 meeting: a purchase order for a generator step‑up transformer and a contract award for three reciprocating internal combustion engines (RICE).

Staff said the overall project budget is approximately $192 million. The immediate procurement items discussed represent roughly 40% of that amount: the transformer (a General Electric 69 kV to 13.8 kV unit) and the RICE equipment and associated vendor scope. Staff said long lead times (about 30+ months) require ordering equipment to preserve manufacturing slots and delivery windows.

Staff described a competitive RFP process conducted in March that produced two responsive proposals from Wartsila (Finland) and Everlance/Everlance (Germany). A multi‑criteria evaluation prepared with Sargent & Lundy and staff produced a higher score for Wartsila (staff reported 260 points for Wartsila vs. 203 for Everlance); staff recommended Wartsila based on the scoring, North American track record and other evaluation factors.

Curtis (electric‑utility engineering lead) reported the vendors’ contract prices and scope: Wartsila’s equipment and scope came in at about $69.23 million; Everlance’s price was about $79.28 million. Including additional contract elements, taxes and tariffs staff placed the total RICE equipment package near $75.8 million. Staff also highlighted notable differences in proposed long‑term service agreement (LTSA) pricing: Wartsila’s five‑year service offering was reported near $5.5 million while Everlance’s equivalent proposal was reported near $13.2 million.

Staff emphasized some commercial and schedule risks. The recommended Wartsila payment schedule includes a 25% down payment due on contract signing and another 25% within eight months; staff reported the vendor’s pricing validity window expires in late July, so council action is time‑sensitive. Staff said Wartsila offers a surety‑bond option to reduce vendor insolvency risk; that bond was quoted in staff discussion at roughly $1.5 million but staff said their financial review indicates Wartsila’s historical track record and corporate finances are solid. Staff said Dorsey & Whitney (bond counsel) is reviewing legal and contracting risk language.

On financing, staff reported PFM modelling that shows a conservative funding plan for the full project via a $190 million bond could be accommodated with a planned utility rate strategy (PFM’s conservative scenario used a 2.5% annual rate increase for roughly 18 years followed by 1.5% for 12 years) combined with savings from discontinuing waste‑to‑energy fuel costs. Staff said additional capital projects and the utility’s existing CIP were included in the model assumptions.

Council members asked for additional clarifications on maintenance‑contract assumptions, LTSA comparability across vendors, the small pool of eligible large‑bore dual‑fuel engine manufacturers, the proposed payment schedule and surety bond terms, and the vendor exchange‑rate exposure (vendors priced much of the scope in euros and staff said signing would lock the vendor’s quoted exchange rate and the vendor hedges that risk). Staff said they would return with contract documents and additional legal and financial details at the July 28 meeting; staff reiterated they will ask council next week to approve the transformer purchase (reported vendor price ~$2.3M) and to award the engine contract (staff recommendation: Wartsila) to preserve delivery schedules.

The workshop concluded with council appreciation for staff work. No contract awards were made at the workshop; formal council action was scheduled for the July 28 regular meeting.