FROM: James D. Herberg, General Manager
Originator: Riaz Moinuddin, Director of Operations & Maintenance
SUBJECT:
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LIQUID FERRIC CHLORIDE SPECIFICATION NO. C-2019-1037BD CONTINGENCY INCREASE
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GENERAL MANAGER'S RECOMMENDATION
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RECOMMENDATION:
A. Approve a unit price contingency of $175 per dry ton (26%) to the liquid Ferric Chloride Agreement with Pencco, Inc., Specification No.C-2019-1037BD, for the period beginning July 1, 2022 through June 30, 2023. New unit cost not to exceed $849 per dry ton, for a total estimated annual amount of $3,947,024;
B. Approve a unit price contingency of $277 per dry ton (40%) to the liquid Ferric Chloride Agreement with Kemira, Inc., Specification No.C-2019-1037BD, for the period beginning July 1, 2022 through June 30, 2023. New dry ton unit cost not to exceed $965 per dry ton, for a total estimated annual amount of $1,936,062; and
C. Approve a fuel surcharge of 2.5% on Ferric Chloride deliveries from Kemira, Inc. with quarterly Consumer Price Index (CPI) adjustments.
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BACKGROUND
Ferric Chloride is used at both treatment plants to enhance primary solids coagulation and maintain hydrogen sulfide levels below Air Quality Management District (AQMD) permit levels. Ferric Chloride also reduces plant odors and corrosion.
When staff initiated the agreement renewal process for July 1, 2022 through June 30, 2023, both Pencco and Kemira notified staff that there will be an increase in the unit price. The unit price increase is related to higher demand, escalating raw material pricing, supply chain issues, and increases in transportation costs. Particularly, the price increases in hydrochloric acid and iron have resulted in an increase in the price of ferric chloride.
Staff recommends not to rebid these contracts at this time because of the volatile market conditions and the probability of being locked into higher pricing, based on an understanding of market conditions. The...
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