CU faces unexpected $2.3 million expense

By LARRY C. BOWERS
Posted 10/27/17

Cleveland Utilities is facing a large  expenditure due to a recent, unexpected equipment failure.The city's public utility recently lost the service of one of three transformers at the East …

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CU faces unexpected $2.3 million expense

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Cleveland Utilities is facing a large  expenditure due to a recent, unexpected equipment failure.

The city's public utility recently lost the service of one of three transformers at the East Cleveland Substation.

Upon evaluation and consultation, it was determined the aged transformer could not be repaired, and a new one would have to be purchased. 

Upon further review, Cleveland Utilities staff and consultant Fisher Arnold Engineering decided all three transformers at the East Cleveland facility should be replaced.

They were purchased in 1956 and have been utilized continually for 61 years.

The utility's board, at October's meeting Thursday in the Tom Wheeler Training Center, voted unanimously to approve the staff recommendation of a purchase order with Virginia Transformer Corp. in the amount of $2,281,480 for the purchase of three single-phase power transformers for the East Cleveland Primary Substation.

Voting for the purchase was Board Chairman Aubrey Ector, and members Eddie Cartwright, Joe Cate, Chari Buckner and Cleveland Mayor Tom Rowland.

Responding to a question from Cartwright, CFO/Vice President Marshall Stinnett and CEO/President Tim Henderson said funding for the purchase is available, although there may be some shuffling of other proposed projects, especially in the Electric Division.

Henderson agreed this is a very large expenditure, which was unexpected and not included in the budget.

Electric Division Vice President Bart Borden emphasized the age of all three units, saying that with the failure of one, the utility could be be facing failure with the others.

Henderson added that the utility had received a very good bid from Virginia Transformer, which was more than $160,000 less, per unit, than other bids.

"It will be a labor saver and reduce the risk of additional failures," Henderson and Borden informed the board.

Borden said that due to this purchase, he and his staff will be reappraising planned projects and possibly do some rearranging.

Insurance will be reimbursing the utility for all costs incurred from the failed unit, including labor and testing prior to it being deemed a failure.

There is the full replacement cost of $763,037, less the deductible, transportation, setup, testing and disposal of the old unit.

Approval of the purchase is contingent on a satisfactory evaluation of the factory by CU staff and representatives of its consultant. In addition, the utility's engineering personnel will be contacting other utilities in the Tennessee Valley to obtain feedback on other transformers that have been purchased from Virginia Transformer.

Fisher Arnold  provided the board with a recommendation letter, as well as tabulation of all four bids received.

In other utility business:

• The board also approved a purchase order with K Berry Construction in the amount of $55,900 for the rehabilitation of the North ICEAS basin's exterior walls located at the Wastewater Treatment Plant. 

This projected is budgeted for the 2018 fiscal year.

• Henderson announced CU offices will be closed on Friday, Nov. 10, for Veterans' Day. The Nov. 11 holiday will be on Saturday this year.

Offices will also be closed on Thursday and Friday, Nov. 23-24, for Thanksgiving.

• The board's next two meetings are scheduled for Thursday, Dec. 7, and Thursday, Jan. 4. The December meeting will be at 11:30 a.m. and the January meeting at 3 p.m. Both will be in the Wheeler Center.


Inset Text:

"Approval of the purchase is contingent on a satisfactory evaluation of the factory by CU staff and representatives of its consultant. In addition, the utility's engineering personnel will be contacting other utilities in the Tennessee Valley to obtain feedback on other transformers that have been purchased from Virginia Transformer."

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