Department of Financial Management 411 West Ocean Boulevard, 6th Floor

Long Beach, CA 90802

(562) 570-6200

January 30, 2023

NOTICE TO PROPOSERS

ADDENDUM NO. 3: Q & A

RFP No. ER-22-173 Renewable Natural Gas Supplier

This addendum changes and supersedes the language in the original RFP. Please acknowledge receipt of this addendum by signing and submitting with your proposals.

Any proposer who fails to submit this addendum may be disqualified.

The City would like to remind Proposers that pursuant to Section 5.2.25 of the RFP, the City will not be responsible for or bound by any oral communication or any other information or contact that occurs outside the official communication process specified herein, unless confirmed in writing by the City Contact.

The questions and answers are as follows:

1. Q: Is this RFP seeking physical RNG molecules to be directly supplied into the SCG pipeline system for LB’s transportation use? Or is an acceptable solution for SCG to continue supplying physical traditional NG molecules, of which this RFP winner then couples the environmental attributes of RNG that was physical injected into the pipeline system elsewhere (via a “book and claim” approach).

The RFP excerpts that speak to this are:

o “As a wholesale end-use customer of the Southern California Gas Company (SoCalGas), the supplier is responsible for delivering natural gas into the SoCalGas pipeline system for final consumption within the City’s service territory.” –

RFP

o “Method for delivering RNG into the Southern California Gas Company’s pipeline system for ultimate consumption by Long Beach customers.” – Section 4.3 Narrative

A: It is acceptable to supply traditional NG molecules to the SCG system. The City of Long Beach is looking for the lowest cost supply while receiving financial benefits from the RIN and LCFS programs regardless of delivery points.

2. Q: Section 2.2.2. - Please clarify what sort of amendment supplier will need to draft:

"Supplier shall draft any amendment required for the City to collect revenue from RIN and LCFS credits on behalf of customers that consume natural gas as a vehicle fuel" Is this "amendment" part of the contract documents governed by the North American Energy Standards Board (NAESB) Base Contract?

Addendum # 3 RFP ER-22-173

A: Two CNG customers (Long Beach Transit and Fleet Services) operate and own their own natural gas dispensing equipment. An amendment may be required to allow the City of Long Beach to collect RIN and LCFS credit on behalf of these customers.

3. Q: Section 2.2.2 - Can the City please clarify what's included in the "cost of purchasing RNG" that will be included on monthly statements?

A: The City of Long Beach purchases natural gas from an RNG supplier and is billed for this supply based on the volume at a first-of-month (Bidweek Average) index.

The current practice of receiving monthly invoices is preferred, but the City of Long Beach is open to any cost-saving approaches.

4. Q: Section 1.1 - Please clarify the definition of RNG proposed by California Senate

Bill 1383.

A: RNG is considered to be a renewable natural gas made from Organic Waste as a transportation fuel, electricity, and heating applications to the degree that it is appropriate and available for the City and to help meet the Annual Recovered Organic Waste Product Procurement Target, which requires compliance with criteria specified in 14 CCR Section 18993.1.

5. Q: Section 2.2.2 - Provide an example of the documentation requested for the exemption of RNG from reporting under the California Cap and Trade Program and meeting the definition of RNG under proposed SB 1383.

A: Refer to sections 95852.1 – 95852.2 of the Cap and Trade Regulation to meet specific eligibility requirements and appropriate sections under SB 1383.

6. Q: Section 2.2.1 - Can RNG be priced on other industry standard indices (other than

Natural Gas Intelligence) such as Argus?

A: No, the City of Long Beach requires the use of indices posted in Natural Gas Intelligence.

7. Q: Section 4.2 requires bidders to provide documentation to support financial stability. This is a public bid (subject to FOIA), we're a private company, our financial statements are confidential, can bidders provider this sensitive information (a.) after final bidder(s) are selected, and (b.) sent only to the individuals at the City that need to review these confidential statements?

A: The RFP specifies that proposals will become public record after the conclusion of the negotiation process and before final approval by the awarding body unless the proposal or specific parts of the proposal can be shown to be exempt by law. Each Proposer may clearly label all or part of a proposal as “CONFIDENTIAL” provided that the Proposer thereby agrees to indemnify and defend the City for honoring such a designation. The failure to so label any information that is released by the City shall constitute a complete waiver of any and all claims for damages caused by any release of the information.

8. Q: Does the City acknowledge that for bidders to deliver RNG (physical gas delivery to CNG stations), the City will need to execute additional contract documents: North American Energy Standards Board (NAESB), Special Provisions, Biogas Addendum, and Transaction Confirmation?

A: Yes, the City acknowledges this.

9. Q: In Section 2.1 (Scope of Work), Description of Services the City is requesting CA

SB 1383 compliant RNG. If this RNG type is not available are bidders allowed to offer alternative RNG feedstocks to the City in response to this RFP?

A: Yes. SB 1383-compliant RNG would be the preference, but the City is aware of its scarcity and lack of availability. If this is not available, the City is open to proposals of alternative RNG feedstocks.

10. Q: Section 4.2 of the Cost Proposal requires bidders to provide the City with a percentage of the RIN and LCFS credits to be shared with the City. The amount of LCFS credits available to the City is determined by the carbon intensity of the feedstock used; for example 10% of -150 carbon intensity is worth more to the City than 20% of +45 carbon intensity. To ensure the City received apples to apples price bids; can the City require bidders to provide the City pricing based on number of LCFS credits available to the City per Therm?

A: Long Beach Utilities seeks to purchase CNG at the lowest possible net expense to the City. Long Beach is trying to ensure the lowest possible net expense by factoring LCFS/RIN credits paid by the vendor which reduces the gross cost of fuel.

If the bidder has expertise in the CI of fuels to maximize offsetting credits, that should be noted in the response.

11. Q: The definition of RNG in this RFP should be that which ties to the Low Carbon

Fuel Standard (LCFS), as that is the regulatory program for how to generate and monetize LCFS credits. We request the RFP strike reference to 1383.

A: Bidders should provide offers for LCFS RNG if SB 1383 compliance is unattainable. SB 1383-compliant RNG would be the preference, but the City is aware of its scarcity and lack of availability. If this is not available, the City is open to proposals of alternatives.

12. Q: On page 4 of the RFP, it asks for supplier to draft amendments to allow ER to collect RIN and LCFS credits on behalf of customers. This is contrary to how typical RNG agreements are structured. Will the City please expand on this requirement and identify the steps it currently takes which allows ER to do that with its current RNG supplier?

A: Two CNG customers (Long Beach Transit and Fleet Services) operate and own their own natural gas dispensing equipment. An amendment may be required to allow the City of Long Beach to collect RIN and LCFS credits on behalf of these customers.

13. Q: Please clarify what type of RIN is desired by the City – D3 or D5.

factoring LCFS/RIN credits paid by the vendor which reduces the gross cost of fuel.

If the bidder has expertise in CI of fuels to maximize offsetting credits, that should be noted on the response.

14. Q: The cost evaluation section of the RFP does not establish an LCFS or RIN price, nor does it specify a carbon intensity (CI) target desired for the RNG delivered to the City. At the minimum, we would recommend the City provide all prospective bidders an LCFS and RIN price to model their pricing offer to the City. Without this, the City would be unable to have an apples-to-apples bid comparison.

A: Long Beach Utilities seeks to purchase CNG at the lowest possible net expense to the City. Long Beach is trying to ensure the lowest possible net expense by factoring LCFS/RIN credits paid by the vendor that reduces the gross cost of fuel. If the bidder has expertise in the CI of fuels to maximize offsetting credits, that should be noted on the response. Gross costs less credits will be the deciding factor when choosing the vendor.

15. Q: What is the current RNG pricing structure the City of Long Beach is receiving today and what is the carbon intensity (CI) of the RNG?

factoring LCFS/RIN credits paid by the vendor which reduces the gross cost of fuel.

If the bidder has expertise in the CI of fuels to maximize offsetting credits, that should be noted on the response. Gross costs less credits will be the deciding factor when choosing the vendor.

16. Q: What CI is City of Long Beach receiving under its current RNG supply contract?

A: Please see our response to question 15.

17. Q: There is currently little to no excess 1383 gas in the market available for RNG customers, and the outlook for development of digester infrastructure is not promising. The RFP allows the City flexibility as it relates to this RFP and contracting with another supplier outside this RFP. Can the City please expand on what term of this RFP would be available if the RNG delivered was not 1383 gas?

Unfortunately, if 1383 gas is a firm requirement of this RFP we will not be able to bid.

A: Bidders should provide offers for LCFS RNG if SB 1383 compliance is unattainable. SB 1383 compliant RNG would be the preference, but the City is aware of its scarcity and lack of availability. If this is not available, the City is open to proposals of alternatives. Long Beach is trying to ensure the lowest possible net expense by factoring LCFS/RIN credits paid by the vendor that reduces the gross cost of fuel.

18. Q: Do you require a physical supply of RNG at the city gate or can the supplier deliver the gas via the pipeline infrastructure and handle the environmental attribute management?

to the City.

19. Q: Will you consider fixed-price contracts?

A: Yes, Long Beach Utilities seeks to purchase CNG at the lowest possible net expense to the City and are open to fixed-price contracts.

PREPARED BY: Elisa Landeros, Buyer II

ACKNOWLEDGED BY: ________________________________________________

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