SR-510-001-01 (2)
CP:SM:EPWM\EPD\WPDOC\STAFFRPT\EnergyPlan.doc
Council Meeting: October 12, 1999 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Recommendation to Review and Adopt a Santa Monica Strategic Energy
Plan
INTRODUCTION
This report recommends that the City Council adopt a proposed Santa Monica Strategic
Energy Plan as described below. The proposed plan is an important component of the
Santa Monica Sustainable City Program.
BACKGROUND
Santa Monica Seeks a Sustainable Energy Future
The potential environmental, community economic development, and public health
benefits of achieving more efficient energy utilization and using energy generated from
cleaner sources are significant to Santa Monica as well as to other communities and
regions. Energy consumption is now known to play a critical role in global climate
change, and, in the United States alone, conventional electricity generation (particularly
from coal-burning power plants) is responsible for about one-half of all air pollution as
well as other negative environmental consequences.
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Chronology of the City?s Efforts to Implement Sustainable Energy Policies and
Programs Prior to Restructuring of the Electric Industry
1992
?
Preliminary discussions between the City and its serving utilities (Southern California
Edison and The Gas Company) are held regarding potential partnerships to promote
energy efficiency and conversion to alternative-fueled vehicles. The California
Energy Coalition, a nonprofit organization committed to promoting municipal energy
efficiency, assists the City in maintaining contact with the utilities and in the
development of a long-term energy efficiency strategy for the City.
?
Based on a preliminary analysis of energy usage by public agencies, businesses
and industry in Santa Monica, the City Council adopts a 16 percent energy demand
reduction goal for the year 2000 as a key indicator in the Santa Monica Sustainable
City Program.
1994
?
Santa Monica joins the cities of Irvine, Nacka and Gothenberg, Sweden, and enters
into the Aspen Accord. The Accord provides officials from the two nations with a
forum to share experiences and identify strategies for attaining regional energy
efficiency and a securing an enhanced level of energy services from energy utilities.
1995
?
The City enters into a $1.7 million agreement with Southern California Edison?s
ENVEST program to retrofit City facilities with energy efficient lighting systems and
upgraded heating and cooling systems.
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1996
?
The City Council approves the following Energy Resource Guiding Principles in the
1996 Sustainable City Program Progress Report:
1. Optimize cost-effective energy efficiency investments in all sectors of the
community.
2. Reduce the environmental and public health impacts created by energy
generation and consumption both locally and globally.
3. Increase the use of renewable resources.
4. Ensure equitable distribution of the costs and benefits created by the
restructuring of the electric utility industry.
5. Use innovative approaches to gain greater control of the City?s energy future and
retain more financial investment within the community.
6. Ensure energy supply reliability and price stability.
?
The City becomes a member of the International Council of Local Government
Initiatives? (ICLEI) Climate Protection Campaign and commits to reducing
greenhouse gas emissions through the establishment of a comprehensive plan with
numeric targets.
?
The City Council adopts a reduced emission fuels policy to replace 75 percent of the
City vehicle fleet with compressed natural gas and electric vehicles. This program
includes the installation of various public electric vehicle charging spaces and a
solar-powered charging facility at City Hall.
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?
Preparation of a set of Green Building Design and Construction Guidelines for new
commercial and multi-family construction is initiated. The proposed Guidelines
identify measures to reduce resource consumption, waste generation and pollution,
and hazardous materials to protect the local environment and public health and
include proposed mandatory measures to increase energy efficiency performance
beyond 1998 Title 24 standards.
Electric Industry Restructuring and Santa Monica?s Response
Profound changes in the electric industry led the State Legislature to adopt AB 1890 in
1996. This legislation blueprints the restructuring of the investor-owned electric utilities
in California (Southern California Edison, Pacific Gas & Electric, and San Diego Gas &
Electric), ?unbundles? the three traditional utility functions (generation, transmission and
distribution), and creates competitive markets for electricity generation. The
restructuring of California?s electric industry has created significant changes in how
energy and energy services are provided to the City, its residents and businesses, and
will continue to cause still-unknown changes after the ?transition? period ends in 2002.
Deregulation has presented consumers with choices for energy supply and related
energy services and has reduced electricity costs for large, energy-intensive
consumers. Deregulation has also increased the risk that costs will be shifted onto
smaller consumers with weaker purchasing power, that investment in energy efficiency
and renewable resources will be reduced, and that utilities will invest in coal and other
polluting fuel generation plants located in other States and countries using capital
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recovered from stranded assets. Under deregulation, the City has an unprecedented
opportunity to influence and manage the energy future of the community, reducing the
risk from these potential negative impacts.
In 1998, the City engaged Henwood Energy Services to analyze the options available to
the City in a restructured electricity marketplace. Henwood prepared an analysis of
energy consumption in Santa Monica using current energy consumption data and
profiled energy use patterns for the residential, institutional, commercial and industrial
sectors of the community. Their report also analyzed the energy procurement options
available to the City including aggregation, direct access, power exchange purchase,
load management, and the availability of other energy sources, including self-generation
and power distribution. Henwood concluded that the cost savings derived from
purchasing wholesale conventional electricity to meet the needs of City facilities were
minimal and that, at an acceptable cost increment, the City could support the renewable
energy market and simultaneously advance the Guiding Principles by purchasing green
energy for all its own facilities. On October 13, 1998, the City Council received
Henwood?s report and authorized issuance of a Request for Proposals to purchase
renewable electricity for City facilities. On February 16, 1999, the City Council approved
a contract with Commonwealth Energy Corporation for the purchase of 100 percent
renewable energy (geothermal) for all City facilities at an incremental first year cost to
the City of approximately $120,000. The City began receiving clean electricity on June
1, 1999.
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DISCUSSION
The development of the proposed Strategic Energy Management Plan has occurred in
phases as a result of the changing electric industry marketplace, the evolution of the
City?s participation in energy procurement and energy efficiency opportunities, and the
increasing availability of new technologies and energy services. It is appropriate at this
time for the City to proactively address its energy future by adopting a comprehensive
action plan. Five strategies comprise the Proposed Strategic Energy Plan and are of
equal importance in achieving Santa Monica?s energy goals.
Strategy 1: Source Reduction/Energy Efficiency
An important element of AB 1890 is to change the way Public Goods Charge funds are
expended and energy efficiency services are delivered during the transition period
between 1998 and 2001. Public Goods Charges are a surcharge placed on all
customers? bills that are used to fund programs for the low-income, energy efficiency
efforts, and renewable energy programs. The fee accounts for approximately 4 percent
of a typical California $.10 per kilowatt-hour electricity rate, or about $1 billion annually
Statewide. Santa Monica residents and businesses paid approximately $3.0 million in
Public Goods Charges in 1998, however, very little flows back to the community through
current funding mechanisms.
City staff, in cooperation with other cities and the California Energy Commission, has
encouraged the Public Utilities Commission to provide a more equitable distribution of
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Public Goods Charge funds. After much effort in this regard, the cities of Santa Monica
and Irvine, with the assistance of the California Energy Coalition, have reached an
agreement in principle with the PUC and Southern California Edison to redirect a portion
of these funds for a multi-year energy efficiency demonstration project in the two
communities. The demonstration project, known as the Regional Energy Efficiency
Initiative, could result in $5 million or more of energy efficiency projects for Santa
Monica and Irvine residential and small business customers over the next three years.
Staff is currently working with Edison staff and the Coalition to plan and design the
specific programs to be implemented in each of the communities. The following
programs will be presented to the California Public Utilities Commission in November for
approval and should comprise the demonstration projects? first year efforts. Additional
and more far-reaching proposals for the second and third year of the project are
currently in development.
Proposed First Year Regional Energy Efficiency Demonstration Projects
1. Assist SMMUSD in becoming more energy efficient. It is proposed that Southern
California Edison subsidize the ?LivingWise? resource efficiency education program
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for 800 SMMUSD 7 graders. ?LivingWise? is a comprehensive environmental
education program developed by the National Science Foundation. Students survey
their own homes for energy efficiency opportunities and learn about sustainable and
efficient energy use. It is also proposed that Edison subsidize the Alliance to Save
Energy?s ?Green Schools? program for SMMUSD over a two year period. ?Green
Schools? is a comprehensive program designed for K-12 schools that helps schools
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use energy more efficiently through building retrofits, changes in operational and
maintenance routines, and changes in the behavior of building users. Schools
participating in the ?Green Schools? program agree to return a portion of the savings
from the no-cost behavior and operations changes back to the schools that earned
them.
2. Assist in the implementation of the City?s Proposed Performance-based Energy
Efficiency Standards. Edison will facilitate workshops on the City?s proposed
performance-based energy efficiency standards which are more stringent than the
State?s Title 24 requirements for commercial and multi-family construction in Santa
Monica. The workshops will be targeted at the builders and contractors working in
Santa Monica and will be tied to implementation of the City?s proposed Green
Building Design and Construction Guidelines.
3. Facilitate an Outdoor Security Lighting Program for residences in the Pico
Neighborhood. It is also proposed that job skills training for local at-risk youth be
made a part of the proposed lighting program.
4. Identify a City-subsidized affordable housing project to ?green.? It is proposed that
Edison provide design and financial assistance for energy efficiency measures in
selected City-subsidized affordable housing projects.
In addition to the Public Goods Charge funded proposal, staff is also seeking to identify
outside funding options to implement the following City-sponsored energy efficiency
projects:
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1. LED Traffic Signals ? Using light-emitting diode technology to replace incandescent
lamps in traffic signals promises energy savings of 60 percent or more for each red
signal or arrow. LED units use only 9 to 25 watts instead of the 67 to 150 watts used
by each incandescent lamp. Simple payback for the cost of replacing red signals
and arrows with LED units is approximately two years based on a total project cost
of $300,000.
2. Light-Colored Roof Surfaces and Tree Planting ? The City can address the ?heat
island effect? by increasing the amount of vegetation providing shade canopy and by
using light-colored roof surfaces. The most cost-effective applications for cool roofs
are generally in small buildings where the ratio of roof surface to floor area is high.
Staff will identify appropriate City and other facilities for possible demonstration
projects.
3. Portable Interactive Solar Classroom ? A portable laboratory designed to provide
solar education for school programs, the interactive classroom will provide hands-on
access to the concepts and hardware of photovoltaics, solar water heating, and solar
cooking. The portable lab will also serve as a focal point at City events for public
education on energy efficiency and renewable energy.
Strategy 2: Renewable Energy Procurement
Current restructuring laws require individuals to submit forms and wait months to opt out
of receiving service from their current electricity provider placing renewable energy
marketers at a disadvantage in motivating consumers to switch to green energy. Less
than 0.4 percent of California residential consumers are estimated to have switched to
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green products that contain from 50 to 100 percent renewables. Green energy
providers must spend significant amounts on marketing to acquire new green
customers. To date, few commercial and industrial customers have switched to green
energy (Patagonia and Toyota Motors among the exceptions) as they are hesitant to
place themselves at a competitive disadvantage by paying slightly more for their power
purchases.
Green energy providers? marketing is often unclear about what renewable energy
sources comprise their products, where they are generated, and how they price their
products. Under AB 1890, the California Energy Commission offers purchasers of
green energy a cash rebate from the Renewable Resource Trust Fund through the year
2001. The funds are distributed on a per kilowatt-hour basis to registered renewable
providers that deliver power from California renewable supplies. While the rebate is
intended to help customers offset the higher cost of green energy as a credit on their
electricity bill, most renewable energy providers collect the credit on behalf of customers
and incorporate it into their advertised rates.
The environmental community is concerned that the renewable energy market will
flounder in the competitive marketplace and that new renewable generation projects will
not be financed. The City of Santa Monica can be used as a model to motivate other
large consumers to switch to green energy. For example, the City of Oakland has
issued Request for Proposals for renewable energy for City facilities and numerous
other cities have requested information. It is unlikely, however, that renewable energy
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will achieve a significant share of the electricity market until consumer awareness has
increased and switching to green energy providers is made more convenient.
In February 1999, GLS Research completed a community assessment of 400 Santa
Monica residents and 300 Santa Monica businesses that pay an electricity bill about
their awareness of electricity deregulation and their interest in switching to a renewable
energy provider. A high level of residents (76 percent) and businesses (70 percent)
expressed interest in switching to a renewable energy provider if the price were within 5
percent of their current utility bill. The issues of concern to all were cost and the
reliability of electricity service from an unknown provider. Although a high percentage of
respondents were uninformed about the environmental benefits of renewable energy
and the potential impacts of deregulation, nearly all the residents (93 percent) and
businesses (90 percent) said that preserving the environment for future generations was
an important consideration in deciding whether to switch.
Potential Renewable Energy Procurement Measures for Santa Monica
Unless State law is changed, the City?s existing and potential roles related to renewable
energy procurement are limited to: 1.) serve as a reliable information source to
residents, businesses, and other entities; 2.) facilitate the availability of renewable
energy to residents, businesses, and institutions; and 3.) leverage funding from State
and Federal sources to provide additional renewable energy opportunities to the
community. It is staff?s conclusion that the City can most effectively serve as an
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advocate for renewable energy by facilitating access to green energy providers through
a broad range of educational efforts and public outreach events.
Over the next several months, the City will prepare and distribute consumer information
on the benefits and opportunities for switching to green energy, including specific
outreach to the School District, Santa Monica College, and other large institutional and
commercial customers. The City will coordinate educational outreach efforts with local
environmental organizations such as Global Green which have received State funding
for regional educational outreach efforts. Some of these outreach efforts will include
facilitating access to green energy providers at the Santa Monica Festival and other
major local events.
Strategy 3: Distributed Power Generation
Distributed power generation provides an alternative to the traditional central generation
plant. Distributed technologies include photovoltaics, fuel cells, and micro-turbines
installed at a specific site. Photovoltaic electricity would be primarily used to augment
the power distributed through the grid or to provide backup during power outages. Fuel
cells and micro-turbines provide cost-effective electricity for certain site-specific
applications. These technologies will drive change in the electric industry as their costs
come down and their market applications become clear.
The high up front cost of photovoltaic systems is the greatest obstacle facing
widespread acceptance of solar electricity. AB 1890 provides funds to buy down the
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cost of photovoltaic (PV) systems. Buydown Funds have been used to offset the cost of
the PV system powering the Santa Monica Pier Ferris Wheel and the PV carport in the
Civic parking lot through a partnership with Southern California Edison and Solar Utility
Corporation. The City has also reserved Buydown Funds to partially fund installation of
a PV array on the roof of the Santa Monica Place parking structure.
For the City to play a role in the implementation of a rooftop photovoltaic program for
Santa Monica residents and businesses, the issue of price must be addressed. The
cost of a photovoltaic system can be partially offset by reduced energy purchases. The
most promising cost-effective application is in using photovoltaic cells to replace
building materials themselves as in windows, roofing materials, or wall facades. City
staff is currently evaluating various options for reducing the cost of rooftop photovoltaic
systems for installation on Santa Monica residences, businesses and institutions and
will continue to work with photovoltaic system manufacturers to identify funding for
potential projects in Santa Monica. Staff is also evaluating other distributed power
generation projects which may be feasible at selected City sites such as fuel cells and
natural gas micro-turbines. Distributed generation projects will continue to be proposed
and constructed on a case by case basis where they can be demonstrated to be cost-
effective and consistent with the overall strategic goals of the Plan.
Strategy 4: Community Energy System
An important opportunity under deregulation is the ability to develop a Community
Energy System (CES). Simply stated, a CES would distribute chilled and/or hot water
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from a central plant to individual buildings in a defined area through a network of pipes.
The network would provide space heating, air conditioning, and domestic hot water and
could also cogenerate electricity. By connecting individual buildings through a district
heating and cooling system, the community energy system approach greatly expands
the opportunities for using a variety of renewable resources. In addition, a CES
approach could incorporate the purchase and provision of more cost-effective electricity
to a consortium of users through investment in City-owned electricity transmission and
distribution facilities which would provide access to cheaper and cleaner electricity.
In order to understand the CES concept it is helpful to envision its possible application
to the City?s Civic Center. A central plant facility could be constructed within the Civic
Center to provide more efficient and cost-effective heating and cooling to public and
private buildings in the area. The provision of transmission voltage electrical service to
the Civic Center could increase the cost effectiveness of service and provide the City
with more flexibility in terms of the planning and installation of the electricity distribution
infrastructure. If a Community Energy System concept is shown to be cost?effective and
an environmentally and technologically viable option for the Civic Center, its
implementation would be coordinated with the public and private construction in the
area. A feasibility study of the Community Energy System concept has been proposed
to be part of the first year programs for the Regional Energy Efficiency Initiative and will
be presented to the California Public Utilities Commission in November for approval.
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Strategy 5:A Role Beyond the City Boundaries
Santa Monica is uniquely positioned to play a role in defining state and national energy
policies that impact our broad community. City staff will stay abreast of legislative and
policy developments and request City Council advocacy when appropriate. New
alliances and partnerships with like-minded local governments and nonprofits will be
recommended for Council consideration as they present themselves to the City.
BUDGET/FISCAL IMPACT
There are no direct budget/fiscal impacts associated with Council adoption of the
Strategic Energy Plan. Specific Programs advancing the key strategies may require the
City Council to dedicate new resources in the future. Any such proposed programs will
be presented to the City Council for review and approval as appropriate.
RECOMMENDATIONS
It is recommended that Council review and adopt a Santa Monica Strategic Energy
Plan.
Prepared by: Craig Perkins, Director of Environmental and Public Works
Management Department
Susan Munves, Resource Efficiency Coordinator
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