1_Appendix_A_-_Scope_-_MEU_Feasibility_Study.docx

Appendix A - Scope of Services Municipal Electric Utility (MEU) Feasibility Study City of St. Petersburg, Florida Project No. 26133-130

1. INTENT

The City of St. Petersburg, Florida (“City”) is seeking the services of qualified experienced consulting firms (“Consultant”) to determine if it is in the City’s best interests to establish a City-owned Municipal Electric Utility (“MEU”) to replace Duke Energy Florida (“Duke Energy”).

· Phase 1 (base award) will include all work necessary to evaluate the financial, technical, operational, regulatory, and legal implications of transitioning to an MEU.

· Phase 2 (optional) will produce a comprehensive feasibility study assessing (a) the technical, financial, regulatory, and operational viability of the City’s MEU generating its own 100% renewable energy, and (b) a comparison of that model with citywide participation in Duke Energy Florida’s Clean Energy Connection (“CEC”) program. The resulting report will guide the City’s strategic energy planning and decision-making. Phase 2 findings may require updates to the Phase 1 reports.

· Phase 3 (optional) will include an evaluation of alternative municipalization options, development of a draft transition plan, and supporting the City in preparing clear, unbiased information for public education and engagement.

Phases 2 and 3 may be authorized at the City’s discretion.

2. BACKGROUND

Duke Energy is an investor-owned, regulated public utility that generates, transmits, and distributes electricity to customers in Florida. Duke Energy is headquartered in St. Petersburg and is the only provider of electricity within City limits. In recent years, electric utility customers in St. Petersburg have expressed concerns about the utility’s affordability, reliability, and transparency and have petitioned the City to perform a feasibility study to examine the viability of forming an MEU. Duke Energy’s 30-year Franchise Agreement with the City expires in August 2026 but does not include a purchase option granting the City the right to acquire and operate Duke Energy’s local distribution system.

3. SCOPE

· Desired Benefits

The Consultant will assess whether an MEU will provide the following benefits:

· Community Ownership

· Local Control: Establish local control over energy policy decisions to align with the community’s needs and values.

· Clean Energy Investment: Position the City to achieve its 100% renewable energy goals and attract businesses and investors focused on sustainability.

· Local Investment: Revenues are reinvested in the local community, create local jobs, support the local economy, support utility reserves or returned to the customer in the form of lower rates.

· Accountability: Public accountability and community involvement are prioritized through hearings, workshops, and surveys to ensure transparency and public involvement.

· Affordability

· Affordable and Stable Rates: Energy rates that remain affordable and stable for all customers, especially vulnerable and low-income populations.

· Energy-For-All Rate Structures: Rate structures that distribute costs fairly across different consumer groups while ensuring affordability for low-income households.

· Energy Efficiency Assistance: Financial incentives and assistance programs to reduce energy consumption and lower costs, especially for vulnerable and low-income populations.

· Net Metering: Encourage rooftop solar through net metering rates that appropriately balance the benefits and costs to both the customer and the utility.

· Resilience

· Decarbonization and Grid Modernization: Invest in infrastructure to ensure the energy grid is resilient and adaptable through the integration of distributed energy resources, microgrids, appropriate undergrounding, and smart grid technology.

· Energy Storage: Explore the integration of energy storage solutions for enhanced reliability and operational flexibility.

· Sustainability

· Emissions Reduction: Reduce greenhouse gas emissions by transitioning to 100% renewable energy sources.

· Renewable Energy Portfolio: Increase the percentage of renewable energy in the City’s energy portfolio, aligning with the Integrated Sustainability Action Plan (ISAP) climate action goals.

· Energy Efficiency: Promote energy efficiency programs to reduce energy consumption and lower costs while supporting environmental sustainability.

· Tasks

PHASE 1 MEU FEASIBILITY STUDY (BASE AWARD)

1. Task 1 — Project Management and Stakeholder Engagement

1.1. Project Management:

· Kick-off meeting with City staff.

· Prepare a detailed project work plan, schedule, and communication protocol.

· Provide regular progress updates and participate in standing meetings with City staff.

· Identify risks, dependencies, and constraints throughout the project lifecycle.

1.2. Stakeholder Engagement:

· Identify key internal and external stakeholders, including City departments, community groups, and regulatory agencies.

· Conduct structured interviews and facilitate workshops as needed to inform the feasibility study and transition planning.

2. Task 2 — Data Collection and Baseline Assessment

2.1. Assets and Operations Review:

· Assess existing Duke Energy electric distribution and sub-transmission assets within City boundaries.

· Identify asset conditions, useful life, upgrade needs, gaps, and interconnections.

· Show all key assumptions with tie-backs to relevant data.

2.2. Load, Customer, and System Characteristics:

· Review system load profiles, customer classes, reliability metrics, and growth projections.

· Evaluate historical outage and system performance data.

· Forecast energy demand growth over a 10-, 20-, and 30-year horizon, accounting for electrification trends, energy efficiency, and city development plans.

· Determine the city’s load profile (daily, monthly, seasonal peaks) and critical load requirements (e.g., essential services during outages).

· Show all key assumptions with tie-backs to relevant data.

2.3. Forms, Reports, Contracts, Franchise Agreements, and Regulatory Framework:

· Us all appropriate available data from Duke Energy for asset assessment and valuation, including FERC Form 1, Capex Plan, Storm Protection Plan, and capital asset accounting records.

· Review relevant franchise agreements, memorandums of understanding, territorial boundaries, service obligations, Florida Public Service Commission, and Florida Statutes requirements.

· Analyze legal pathways for municipal acquisition of Duke Energy assets.

· Show all key assumptions with tie-backs to relevant data.

3. Task 3 — Feasibility Study and Financial Analysis

3.1. Valuation and Acquisition Analysis:

· Estimate the fair market value of electric utility assets serving the City, including value of assets, separation and reintegration costs, potential severance costs including stranded costs and going concern costs, and transaction costs.

· Identify likely acquisition mechanisms and legal processes (negotiated purchase, condemnation, etc.).

· Show all key assumptions with tie-backs to relevant data.

3.2. Financial Feasibility Modeling:

· Develop multi-scenario financial models comparing continued service from Duke Energy versus municipal ownership.

· Forecast MEU startup and ongoing capital (including system upgrades and expansion), operational, staffing, equipment, maintenance, contractual services (ongoing as well as emergency contractual services), Payments in Lieu of Taxes (PILOT), and Payments in Lieu of Franchise (PILOF).

· Assess current and future power supply cost impacts of federal and state power supply policies, incentives, and restrictions. Include the expected future power cost increases driven by AI and data centers.

· Forecast power supply costs under municipal ownership.

· Evaluate revenue requirements, rate impacts, bonding capacity, and funding options.

· Conduct sensitivity analyses for fuel prices, wholesale power costs, capital investment needs, and interest rates.

· Evaluate the minimum cash reserves required.

· Evaluate the minimum cost of insurance and liability coverages.

· Show all key assumptions with tie-backs to relevant data.

3.3. Risk and Benefit Analysis:

· Assess economic, operational, and regulatory risks associated with municipalization.

· Identify potential benefits such as rate stability, reliability, local control, renewable integration, and economic development.

· Show all key assumptions with tie-backs to relevant data.

4. Task 4 – Deliverables

· Draft Feasibility Report: Technical, financial, legal, and risk assessments for MEU.

· Final Feasibility Report: Revised based on City feedback.

· Executive Summary: Clear, non-technical summary for elected officials and public.

· Presentation to City Leadership: Up to two sessions (virtual or in-person) to present findings and recommendations.

· Data Appendix: Detailed modeling data, assumptions, maps, calculations, sensitivity analyses.

PHASE 2 100% RENEWABLE POWERED MEU COMPARISON (OPTIONAL AWARD AT CITY’S DISCRETION)

Objectives

· Evaluate the feasibility of the City’s MEU generating all its electricity demand with renewable energy sources and storage.

· Quantify system design: type, quantity, size, and siting of renewable energy facilities, storage capacity, configuration, and redundancy.

· Analyze resilience and reliability, including hurricane protection, redundant systems, and emergency backup.

· Estimate capital, operational, and lifecycle costs.

· Compare the business case, risks, and benefits of a city-owned renewable energy generation system versus subscribing to or partnering via Duke Energy Florida’s CEC program.

· Provide strategic recommendations and implementation plan.

5. Task 5 – Renewable Energy Scenarios

5.1. Regulatory & Legal Analysis

· Review applicable federal, state (Florida), and local laws, rules, and policies related to distributed generation, energy storage, interconnection, and microgrids.

· Examine zoning, land use, permitting, and environmental regulations (including hurricane-specific requirements).

· Analyze utility interconnection standards, grid code compliance, and agreements required for a city-owned system.

· Investigate regulatory requirements for the City to participate in Duke Energy’s CEC program on behalf of all power customers within the City, including contract structure, rights, limitations, financial obligations, and exit options.

· Identify incentives, grants, tax credits, Renewable Energy Certificates (RECs), or other support mechanisms.

· Assess legal risk and liability (e.g., ownership, maintenance, insurance, disaster recovery).

5.2. Renewable Resources and Site Analysis

· Conduct preliminary measurements and analysis of the City's potential for specific resources like solar irradiance, wind speed, or geothermal activity.

· Identify potential deployment sites, including rooftops (city-owned and private), municipal land, parking structures, and open land.

· Evaluate site constraints: shading, structural capacity, environmental and physical constraints, permitting, and property ownership.

· Develop conceptual site layouts showing how much capacity can be installed at each type of site.

5.3. System Design & Technical Sizing

5.3.1. Power Generation Design

· Calculate the total wattage/megawatt capacity needed to meet the City’s projected annual and peak demand.

· Develop conceptual designs, including site layout, equipment selection, and system specifications.

· Investigate the options for connecting the potential energy system to the local grid, including technical and cost considerations.

5.3.2. Battery Storage System Design

· Model the sizing (in MWh) required for battery storage to support:

· Nighttime loads

· Daily peak shifting

· Emergency backup / islanded operation

· Reserve capacity

· Recommend conceptual battery technology (lithium-ion, flow, others) and configuration (distributed vs centralized).

· Provide estimates for number of units, footprint, thermal management, safety, and maintenance.

5.3.3. Redundancy and Resiliency

· Design for system redundancy (e.g., multiple microgrids, parallel inverters, diverse feed paths).

· Evaluate hurricane resilience: wind loading, flood risk, anchoring, elevation, design for extreme weather.

· Assess critical facility microgrids (emergency services, water, hospitals) for islanding capability.

· Recommend backup generation if necessary (e.g., diesel, renewable hybrid) to ensure reliability in prolonged outages.

5.4. Financial & Economic Analysis

· Develop a detailed capital cost estimate (generation, storage, interconnection, site prep, permitting).

· Estimate O&M costs, replacement costs, insurance, and other lifecycle expenses.

· Calculate revenue and financial projections: Create financial models and projections based on estimated energy production and market prices.

· Risk-adjusted financial modeling (including sensitivity analysis on costs, demand, return on investment, potential risks, incentives).

5.5. Analysis of Duke Energy Florida Clean Energy Connection (CEC) Program

· Review the structure, costs, benefits, and obligations under the CEC program.

· Quantify projected costs to the MEU under CEC over the same time horizon used for the city-owned system.

· Model expected energy “credits” or offsets, if relevant, and compare these to the production from a city-owned system.

· Analyze risks and limitations (contractual, regulatory, price escalation, credit risk, program changes).

· Compare financial returns, payback, and value for the City between owning vs participating in CEC.

· Evaluate co-existence or hybrid scenarios: e.g., partial city-owned generation paired with CEC participation.

5.6. Risk Assessment & Mitigation

· Identify technical, financial, regulatory, environmental, operational, and disaster-related risks.

· Evaluate risk exposure under both the city-owned and CEC models.

· Provide risk mitigation strategies (insurance, contracts, system redundancy, maintenance plans).

5.7. Implementation Strategy & Roadmap

· Develop a phased implementation plan: short-term (1–3 years), mid-term (3–10 years), and long-term (10+ years).

· Recommend priority projects (e.g., sites with highest return, municipal buildings, critical infrastructure).

· Propose a governance structure (who owns, operates, maintains).

· Stakeholder engagement plan (residents, utilities, regulators).

· Permitting, regulatory approvals, and interconnection strategy.

· Funding strategy: recommending funding sources, partnerships, grants, and financing mechanisms.

5.8. Deliverables

· Draft Feasibility Report: Technical, financial, legal, and risk assessments for both city-owned and CEC scenarios.

· Final Feasibility Report: Revised based on City feedback.

· Executive Summary: Clear, non-technical summary for elected officials and public.

· Presentation to City Leadership: Up to two sessions (virtual or in-person) to present findings and recommendations.

· Data Appendix: Detailed modeling data, assumptions, maps, calculations, sensitivity analyses.

PHASE 3 ALTERNATIVE MUNICIPALIZATION OPTIONS, DRAFT TRANSITION PLAN, PUBLIC EDUCATION AND ENGAGEMENT (OPTIONAL AWARD AT CITY’S DISCRETION)

6. Task 6 — Evaluation of Alternative Municipalization Models

6.1. Governance and Organizational Structures:

· Assess governance options including city-operated utility, independent municipal utility, utility authority, public-private partnership, or hybrid models.

· Recommend a preferred governance option based on feasibility, risk, independence, and scalability.

6.2. Operational Models:

· Evaluate alternatives for operations: fully in-house, contracted operations, shared-services models, or phased implementation.

· Analyze implications for staffing, training, asset management, and customer service.

6.3. Power Supply Options:

· Evaluate short-term and long-term power supply strategies including existing market opportunities, bilateral contracts, renewable procurement, and build-own-transfer strategies.

7. Task 7 — Initial Transition Plan Development

7.1. Transition Roadmap:

· Develop a high-level transition plan outlining major milestones from acquisition through full operational control.

· Identify required regulatory filings, key decision points, workforce transition steps, and procurement needs.

7.2. Operational Readiness Plan:

· Outline requirements for system operations, control center establishment, emergency response, meter reading, billing, cybersecurity, customer service, and reliability compliance.

· Recommend organizational structure, staffing levels, workforce transition strategies, and training plans.

7.3. Financial and Implementation Planning:

· Provide preliminary cost estimates for startup and transition activities.

· Identify potential funding and financing options for capital and operational needs during transition.

8. Task 8 — Public Education and Communications Support

8.1. Public Education Campaign Framework:

· Develop a strategy to support public understanding of the municipalization decision, timelines, and implications.

· Prepare clear, non-advocacy educational materials easily understood by the general public.

8.2. Outreach Tools:

· Provide content for FAQs, fact sheets, digital communications, presentations, and community workshops.

· Prepare materials suitable for use prior to any public referendum or decision-making process.

8.3. Public Meetings:

· Participate in public information sessions, commission meetings, or community forums to present findings and answer questions.

9. Task 9 – Additional Services as Deemed Necessary - Allowance

4. CRIMINAL BACKGROUND CHECKS

Parks & Recreation - A Level 2 background check is required for individuals accessing a Parks & Recreation location with childcare facilities.

The A/E shall conduct a security background investigation that meets the standards set forth in Florida Statute Section 435.04 (“Level 2 Background Screening”) for each A/E employee and subconsultant/subcontractor employee performing Work at the work site in accordance with the screening requirements set forth in Florida Statute Section 402.302 and Florida Administrative Code Chapters 65C-20, 65C-22 and 65C-25.

Prior to allowing an A/E employee or subconsultant/subcontractor employee to perform Work at the work site, the A/E shall submit to the City's Design Manager an affidavit certifying that each such employee possesses, and shall continue to possess for the duration of the Project, a valid letter determining that a Level 2 Background Screening was performed and did not identify criminal convictions or other criminal history factors that would disqualify that employee from accessing the work site (“Clearance Letter”). In the event A/E becomes aware that any A/E, subconsultant/subcontractor employee has been arrested or convicted for a disqualifying offense, A/E shall immediately remove that employee from the work site.

An updated list of all A/E, subconsultant/subcontractor employees with access to the work site shall accompany the affidavit and be provided to the City's Design Manager along with the cell phone number of the A/E's representative responsible for those employees. At any time, the City may request to view the Clearance Letters of any or all A/E, subconsultant/subcontractor employees working at the work site. The requested information shall be made available for viewing as soon as possible, but no later than twenty-four (24) hours after the request. If the A/E fails to provide the requested documentation, the employee(s) in question will not be allowed to continue work until the appropriate documentation has been received. The A/E shall not be allowed an extension of the Contract Time due to any delay in the performance of the Work attributable to a A/E, subconsultant/subcontractor employee's inability to perform Work due to a Clearance Letter being unavailable for inspection. The failure of the A/E to submit an appropriate affidavit or the submission of an affidavit containing false information shall be considered a substantial violation of the terms and conditions of the Contract Documents and shall provide a basis for termination of the Contract.

Police Department - A Level 2 background check is required for A/E staff including subconsultant/subcontractor employees to enter a police facility.

The St. Petersburg Police Department (SPPD) shall conduct a Level 2 background investigation for all A/E, subconsultant/subcontractor employees scheduled to work in a police facility. Should a A/E, subconsultant/subcontractor employee's be unable to pass the SPPD background check process, the individual will not be granted clearance to the SPPD facilities.

The A/E shall not be allowed an extension of the Contract Time due to any delay in the performance of the Work attributable to an employee’s inability to perform Work due to a Background Check being unavailable for inspection. The failure of the A/E to submit an appropriate affidavit or the submission of an affidavit containing false information shall be considered a substantial violation of the terms and conditions of the Contract Documents and shall provide a basis for termination of the Contract.

Port - A Federal Transportation Worker Identification Card (TWIC)is required to access port facilities.

Any A/E, subconsultant/subcontractor employee performing Work at the Work site shall (i) comply with the Maritime Transportation Security Act of 2002, 46 U.S.C. § 70101, et seq. (including any amendments thereto and any regulations or rules promulgated thereunder), (ii) comply with Florida Statute § 311.12, and (iii) possess a valid federal Transportation Worker Identification Credential (TWIC). The A/E shall not be allowed an extension of the Contract Time due to any delay in the performance of the Work attributable to an A/E, subconsultant/subcontractor employee’s inability to obtain a TWIC.

Water Resources Department - Criminal background checks in accordance with state statute are required for persons having regular access to the Water Department's buildings, facilities and structures.

The A/E shall conduct a criminal history check (“Background Check”) for each A/E, subconsultant/subcontractor employee that will have regular access to the work site in accordance with the background check requirements set forth in Florida Statute Section 373.6055.

Prior to allowing an A/E, subconsultant/subcontractor employee regular access to the work site, the A/E shall submit to the City's Design Manager an affidavit certifying that each such employee is qualified to regularly access the work site in accordance with Florida Statute Sections 373.6055(2), (3)(b) and (3)(c). If any A/E, subconsultant/subcontractor employee’s Background Check identifies criminal convictions or other criminal history factors that disqualify that employee from regular access to the work site, A/E shall not allow that employee to have regular access to the work site, and an appeal process is not available. In the event A/E becomes aware that any A/E, subconsultant/subcontractor employee has been arrested or convicted for disqualifying offense, A/E shall immediately remove that employee from the work site.

An updated list of all A/E, subconsultant/subcontractor employees with regular access to the work site shall accompany the affidavit and be provided to the City's Design Manager along with the cell phone number of the A/E's representative responsible for those employees. At any time, the City may request to view the Background Checks of A/E, subconsultant/subcontractor employees working at the work site. A/E shall make the Background Checks available for viewing as soon as possible, but no later than twenty-four (24) hours after the request. If the A/E fails to provide the requested documentation, the employee(s) in question will not be allowed to continue work until the appropriate documentation has been received. The A/E shall not be allowed an extension of the Contract Time due to any delay in the performance of the Work attributable to an employee’s inability to perform Work due to a Background Check being unavailable for inspection. The failure of the A/E to submit an appropriate affidavit or the submission of an affidavit containing false information shall be considered a substantial violation of the terms and conditions of the Contract Documents and shall provide a basis for termination of the Contract.

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