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SR-510-005-04 (2) GS:SES:NB'KS ~ City Council Meeting January 26, 1982 san.Monica California 5/0- 005-~ 11-6' .JAN 2 G 1932 TO: Clty Council FROM: City Staff SUBJECT: Residential Energy Conservation Services Status Report and Recommendations for Approval Introduction This report presents the status of the City's proposal to perform Residential Conservation Services (RCS) in Santa Monica. It recommends that the City Council approve a draft contract between the City, the Southern California Gas Company, and the Southern California Edison Company for the performance of these services. It also recommends that the City Manager be authorized to negotiate with the utilities before returning the contract to the City Co un c i 1 for fin a 1 a p pro val . Background On November 3, 1981, the City Council adopted a resolution endors1ng the concept of energy audits where conservation devices are provided and installed for all City residents who desire themt and authorized the City Manager to investigate and negotiate with the Southern California Gas Company and the Southern California Edison Company for the performance of these services in Santa Monica under those utilities. RCS programs. 1 '1- e- .l.A.N 2 6 1982 GS:SES:NB:KS ~ City Council Meeting January 26, 1982 san~onica. California The City staff. wi th the assistance of local energy professionals, has developed a proposal which is designed to serve Santa Monica residents in a more comprehensive and cost-effective manner than the RCS programs presently planned or operated by the Southern California Gas Company and the Southern California Edison Company. The City proposes RCS services that will serve Santa Monica in the following ways: 1. Santa Monica will offer RCS to all City renters and property owners. Renters in buildings with four units or more are not eligible for the current utility company RCS audit. An estimated 82% of , multi-family residences, or 64% of total dwelling units 1n Santa Mon1ca, are currently 1neligible. This is particularly significant because the utility RCS program is funded through residential customer ut11ity rates. Based on average annual natural gas consumption, and the amount already requested by the Southern California Gas Company to pay for the program, Santa Monica residential gas customers are projected to pay $70,275 for the Gas Company's RCS in just the flrst year of a four-year program. Santa Monica residents are also paying for the RCS program operated by the Edison Company. The Santa Monica RCS plan would completely replace the regular utility company RCS program in this 2 GS:SES:NB:KS ~ City Council Meet1ng January 26, 1982 san~onica, California City. It would be funded by the utilities through their existing ReS budgets. 2. Santa Monica will directly install cost-effective energy conservat10n devices for home and apartment dwellers. Oirect installation services will be particularly useful to some elderly residents who may be unable to install conservation measurest and to renters who may be unwilling to invest in energy saving measures because they do not know how long they will reside in an apartment. Direct installation of measures also ensures that energy savings will result from the audit. The present utility company audit provides energy conservation recommendations only that do not ensure actual energy savings for the individual and the community. 3. Santa Monica will conduct its RCS at a lower-per-audit cost to the utility ratepayer than the present utility ReS program. Through assured energy savings and Tower cost per audit, the Santa Monica ReS will reduce the need for the utility companies to purchase more expensive fuel and will help reduce the rate of increase in utility rates in the future. 3 GS:SES:NB:K3 ~ City Council Meeting January 26. 1982 san~onica, California City staff submitted an ReS proposal to both the Soutnern California Gas Company and to the Southern California Edison Company for the entire City (45,000 residences X 60% penetration). In addition to providing energy savings advice and 1 n form at ion to each resident, cost-effective energy saving measures such as a low-flow showerhead, and weatherstripping and caulking materials would be directly installed at no extra charge to the resident. The utility companies would reimburse the C1ty for each audit conducted. The Southern California Edison Company responded with a counter proposal to contract with the City on a pilot basis for a small program of 5,000 audits in multi-family dwellings with electric water or space heating, or electric air-condition1ng. The Southern California Gas Company responded with a brief letter stating that they are unable to consider the City's proposal until the California Public Utilities Commission rules on their current apolication for RCS funding. It now appears that both the Public Utilities Commission and the California Energy Commission may soon direct the utilities to fund the Santa Monica proposal as a pilot project. The City must now negotiate a contract with the utilities to be relmbursed for providing the RCS services. The contract must 4 GS:SES:NB:KS ~ City Council Meeting January 26, 1982 san~onica, California also be approved by the California Energy Commission and the Public Utilities Commission. A draft contract is attached to this report. The draft contract provides for subcontracting the actual performance of the services if the City determines that is necessary. Subcontracting may be preferred to performing the serVlces in house because this is a large program which may reauire 10-20 employees over a two and one-half year period. Staff plans to request proposals from qualified firms with expertise in local energy conservation services to provide the services, and plans to recommend the selection of subcontractors upon the successful execution of a contract with the utility companies. Subcontractors would be required to use an RCS audit methodology approved by the California Energy Commission. Recommendation It is recommended that the City Council approve the draft contract with the Southern California Gas Company and the Southern California Edison Company, and authorize the City Manager to negotiate with the utillty companies before returning the con t r act tot he City Co un c i 1 for fin a 1 a p pro val . Prepared by: Stan Scholl Nina Byrne Attachments: Draft RCS Contract 5 GS:SES:NB:KS .~ City Council Meeting January 26, 1982 san~onica, California 1. 2. 3. 4. PRINCIPLES FOR A RESIDENTIAL CONSERVATION SERVICES CONTRACT BETWEEN THE SOUTHERN CALIFORNIA EDISON COMPANY, THE SOUTHERN CALIFORNIA GAS COMPANY, " AND THE CITY OF SANTA MONICA Audit and auditors shall be ReS-certified so that tax credits c&ryditioned on ReS audits are not jeopardized. \ lL~ "", \ \ "- The City and/o'r, its subco~l t-'ors shall identify their auditors as City\and/orF ~V&t1n ractor representatives and shall not identify 'th~elve as Gas Company or Edison representatives. _ \, \. ( "\ " ", /F I ,\". F The City shall\,~''i:~Pt ,{l liability responsibility for their auditors and their auditor's actions. During their audits, City auditors shall consider the appropriateness of all ReS measures and all measures which the City, Gas Company, or Edison may finance as well. However, although City auditors shall distribute informational materials on the utilities financing programs, all further contacts with the customer regarding them shall be made by utility personnel, including verification of appropriateness of thp audit recommendations for financing purposes. 5. City audits shall be offered to all City renters and resident property owners. 6. The City shall report back to the Gas Company and Edison on the number of audits completed, and the measures recommended or installed during each. . 7. The City shall be compensated by Edison for this audit service on a per audit basis for each audit co~pleted for a customer with electric water heating, electric space heating, and/or electric air conditioning. 8. The City may suhcontract the performance of any portion of the program. 6 GS:SES:NB:KS .tIt City Co u n c il Me e tin 9 J an u a r y 26, 1982 santltMonica, California 9. The City shall provide information on City, Gas Company, and the Edison Company financing programs and other energy conservation services including local recycling and public transportation services. 10. The Gas Company and the Edison Company will fund this program through their regular ReS budget authorization. 11. The City shall be compensated by the Gas Company on a per audit basis for each audit completed for a customer with natural gas water heating, gas space heating and/or gas air conditioning. 12. The C1ty shall be compensated at the rate of $91.00 per audit for the first 5,600 audits completed. The compensation rate for each subsequent audit shall be $73.50. This rate shall be adjusted annually according to the change in the Consumer Price Index. 7 GS:SES:NB:KS City Council Meeting January 26, 1982 . . Santa Monica, California PRINCIPLES FOR A RESIDENTIAL CONSERVATION SERVICES CONTRACT BETWEEN THE SOUTHERN CALIFORNIA EDISON COMPANY, THE SOUTHERN CALIFORNIA GAS COMPANY, AND THE CITY OF SANTA MONICA 1. Audit content and auditors shall be ReS-certified so that tax credits conditioned on ReS audits are not jeopardized. 2. The City and/or its subcontractors shall identify their auditors as City and/or subcontractor representatives and shall not identify themselves as Gas Company or Edison representatives. 3. The City shall indemnify companies from any and activities of auditors. and hold harmless the Utility all liability arising from 4. Auditors shall consider the appropriateness of all ReS measures and all measures which the City, Gas Company, or Edison may finance. However, although auditors shall distribute informational materials on the utilities financing programs, all further contacts with the customer regarding them shall be made by utility personnel, including verification of appropriateness of the audit' recommendations for financing purposes. 5. Audits shall be offered to all City renters and resident property own ers. 6. Periodic reporting procedures shall be established to provide to Utilities information on the numbers of audits completed, energy-saving devices installed, and energy-saving meaSUres recommended. 7. The City may subcontract the performance of any portion of the program without the approval of Utilities. 8. Auditors shall provide information on City. Gas Company, and the Edison Company financing programs and other energy conservation services including local recycling and public transportation services. 6 .... '. . Santa Monica, California GS:SES:NB:KS City Council Meeting January 26. 1982 9. The Gas Company and the Edison Company will fund this program through their regular RCS budget authorization. Compensation will be based on the following: a. The City shall be compensated by the Gas Company on a per audit basis for each audit completed for a customer with natural gas water heating. gas space heating and/or gas air conditioning. b. The Ci ty shall be compensated service on a per audit basis for a customer with electric space heating. and/or electric by Edison for this audit for each audit completed water heating. electric air conditioning. 10. The City shall be compensated at the rate of S91.00 per audit for the first 5.600 audits completed. The compensation rate for each subsequent audit shall be $73.50. This rate shall be adjusted annually according to the change in the Consumer Price Index. 11. The contract shall specify a minimum of 27.325 audits for which the Utility shall be obligated to fund. Although the City will be guaranteed a minimum number of audits, City will seek right to terminate contract at any time upon reasonable notice. 7