SR-071696-SS1
5S-J..
EPWM CP Santa Monica, California JUl f 6 1996
CIty Council Meeting July 16, 1996
To Mayor and CIty CouncIl
From City Staff
Subject Update on Review and Selection of a Total Energy Services Company for the
Proposed Pubhc Safety Factlity
Introduction
This report provIdes City CouncIl WIth mformatlOn on the process whIch has occurred over the
past year to explore the concept of Total Energy Services (TES) for the proposed PublIc Safety
FacIlIty and CIvic Center projects and IdentIfy a qualified TES suppher It IS expected that a
recommendatIon for CouncIl authonzauon to negotiate and execute a First Phase agreement With
the best quahfied TES supplIer WIll be presented to Council on July 23, 1996
Back~round
Over the past few years, the CIty of Santa MOllica has embarked upon varIOUS efforts to increase
the energy effiCIency of CIty facilities and reduce Citywide energy demand As a part of these
efforts, m 1993 Santa Momca became a member of the CalIfornia Energy CoalttIon (CEC) and
began examirung the best avenues to achIeve overall energy efficiency WIth the SIgning of the
Aspen Accord In 1994, Santa Moruca commltted Itself, together with the CIty ofIrvme and the
cItIes ofNacka and Gothenberg, Sweden, to evaluate the potentIal for partnerships to achIeve
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JUL I 5 1996
energy efficIency on a regIonal scale Also m 1994, CouncIl adopted the Santa Monica
Sustamable CIty Program which sets a year 2000 target ofa 16% reduction m total energy
demand Wlt1un the city
One of the fundamental strategIes for regIOnal energy efficiency IS the concept of Total Energy
SefV1ces Total Energy Services embodies a long-term and comprehensIve approach to providing
energy solutIons to the users of new and eXIsting buildmgs It is an approach which incorporates
both the supply side (electnclty and gas purchases) and the demand sIde (deSIgn, mstallatlOn and
operation ofHV AC, hghting and power systems) m order to optmuze value to the end users TES
also alms to utlhze envIronmentally responSIble methods for both the purchase of energy as well
as the deSIgn and Installation of energy systems V\'lthm buildings
WIth the adoption of the CIVIC Center Specific Plan, Santa Monica has been presented WIth the
challenge of deslgmng a major new publIc bmldmg (the PublIc Safety Faclhty) and embarking on a
sigruficant pubhclpnvate partnershIp to redevelop the entIre CIVIC Center area One of the major
opportumtIes that presents Itself as a part of the CiVIC Center project IS the possibility ofa
comprehensive distrIct-wide approach to provIde for the energy needs of the CIVIC Center
development Not only could such a comprehensIve approach become an Important demonstratIOn
project for conservation, efficiency and envIronmental effectiveness, but It could also deliver
maXImum value for the commumtles' tax dollars and Increase commuruty control over Its energy
future The Public Safety Fac]hty was therefore the logIcal startmg point for the evaluation of the
feaSibIlIty of a TES approach smce it IS the first new buildmg proposed to be built as a part of the
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CIVIC Center Plan However, in order to mclude the rest of the Civic Center development, other
property owners in the area would have to agree to participate m the concept
Followmg completion of a TES master plan study for the Civic Center by the Cahfornia Energy
CoahtIon m September, 1995 a letter was sent to selected energy compames (including both The
Gas Company and Southern Cahfomla Edison) m December, 1995 to Identify those firms who
were mterested m pursumg a TES concept with the City Prehmmary interviews took place in
January, 1996 and final mtemews with three firms, mcluding The Gas Company, were held in
June A review committee compnsed of City and CEC staff determined from these mterviews that
ENOV A Energy, rnc (ENOV A) should be selected as the best qualified TES company
Discussion
The Total Energy ServIces Concept
Simply put, a Total Energy Services approach would allow the City to enter mto a long-term
contract With a smgle energy company for all of the required energy sefVlces withm the Public
Safety Faclhty deSIgn, construction, mstaUatlOn, operation, maintenance, and energy
procurement The TES concept could then be extended to the entire Civic Center as further buIld-
out occurs The City would pay a Single b1l1 for these services to the PublIc Safety FaCIlIty based
on the outputs receIved (heat, cool, lIght and power), and the TES company would guarantee
performance, rehabllity, and a stable price for these outputs The TES agreement would be
structured so that there would be financial IncentIves for both parties to maximize energy
efficiency, procure electricity and natural gas at the best pOSSIble pnce on the open market, and
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operate and mamtam the mechanical systems to achIeve optImum performance, reliability and
efficIency
Under the TES construct, the mechanical systems mcluded in the agreement (HV AC, lighting,
power) would be lease-purchased by the CIty under a 20 year agreement wIth the ITS company
Tins could potentially reduce the amount of up-front capItal costs for the Pubhc Safety Facihty by
as much as $5 nulhon as the costs of the mechamcal systems would be paId back mstead as an
annual operatmg expense During the agreement term, any system upgrades or replacements
which are needed would also be the responslblhty of the TES company
The TES approach would also position the CIty. frem the first phase of the CIvic Center project,
to deSign a dlstnct-wide coohng system which could be Implemented through the eventual
construction of a central coolIng plant on the Civic Center site to serve the pubhc and pnvate
bUlldmgs WIthIn the CIVIC Center UtilIzatIon of a central cooling plant for the CIvic Center would
proVIde tremendous future opportunities for mcreased effiCIency and cost savings, and would
enable the City and pnvate developers III the CIVIC Center to take full advantage of future electric
utthty deregulatIon to achIeve sigmficant energy procurement savmgs
Advantages of Total Energy ServIces over the Tradmonal Approach
The potential benefits to the CIty of Santa MOnica from follov.rmg a ITS approach are numerous
. Maxinuzes energy effiCiency because state-of-the-art energy features are incorporated Into
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the entire project dunng the design phase and all systems are optimally designed to work
together
. By relying on a firm of energy experts for project construction and on-gomg 0 & M, the
City will achieve greater accountabilIty from the one supplIer responsible for all facets of
the project, and Will sustain greater project benefits over time through contmuous
assessment and implementation of technological advances and necessary upgrades
. Energy supply and demand needshssues are assessed concurrently by the TES company as
an mtegrated approach to obtam optImum benefit so that the Pubhc Safety Facility's
deSIgn and energy effiCiency WIll endure the test of time
. Remforces the City's VISIon of energy independence through lower costs, higher quahty
energy service, Improved fleXibilIty, fuel neutrality, and the potential to obtam better
energy pnces through bulk purchases and/or mumcIpahzatlOn at a future date CIVIC
Center energy purchase could be reduced 15% to 20% by takmg maximum advantage of
deregulated energy markets and the proven expertise of the lES partner
. Up-front capital expenditures can be reduced by financmg of equipment, construction and
mstallation costs through the TES company
. Development, operation and mamtenance costs can be combined into one line item
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expense in the City's annual operating budget mstead ofreceivmg numerous bills for
multiple services
. The City will be charged for the outputs/services it uses (heatmg, coohng, hghting) rather
than the energy needed to produce those servIces, an approach wluch provIdes incentives
for the TES company to manage and operate the project more efficiently
COOrdll1atlOn of TES WIth the Publ1c Safety FacIlJty DeSIgn Process
CEC staff and ENOV A staff have already been partlclpatmg m the schematic design process for
the Pubhc Safety FaCility m order to help refine the design for the mecharucal systems and assist
the architect and the City ill Idenbfymg the most energy efficient design for the bUildmg whIch IS
pOSSible given the cost-effectiveness thresholds which have been set by the City The design
process to date has also mcluded peer review of the mecharucal systems design by additional
outSide experts under the gUidance of the City'S contracted project manager for the project
The mtensive deSign review process which has been undertaken for the mechanical systems withm
the Pubhc Safety FacIhty ensures that, 1) the buildmg can be constructed so that It significantly
exceeds the standard energy effiCiency reqUirements contained in Title 24 of the BUildmg Code,
and 2) there can be a seamless transition into a TES approach when the City deCides to proceed
with the final deSign and construction phases of the project The proposed rES agreement will m
no way disrupt or delay the PublIc Safety Facility project but rather Will proVide a velucle for
addmg Significant value to the project as it goes forward
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QualificatIOns of ENOVA Energy, Inc
ENOV A Energy is wholly owned by ENOV A CorporatIOn, which also owns San DIego Gas and
Electnc, the third largest pubhc utility in Cahfomia ENOV A Energy receives no income from the
ratepayers of SDGE and is not subject to PublIc UtilIties Cmrumssion regulatIOn The primary
busmess missIOn ofENOV A Energy IS to seek out and mvest III promismg new opportunities m
the energy field As part of a fanuly of compames WIth decades of expenence in the energy
mdustry, ENOV A has access to all the necessary resources to perform for the CIty as well as the
stabilIty and rehability which will be demanded as part of any long-term agreement As a relatively
new and mnovat1Ve firm, however, ENOV A Energy is also very committed to the demonstration
of the TES concept as they believe It represents the dIrection in which other electne utilitIes will
ineVitably head as they stnve to proVIde for theIf customers' energy needs For these reasons, CIty
staffheheves that ENOV A IS the best quahfied TES company
Summary
The Total Energy Sen1ces Approach will result m a more cost-effective project, both from a
short-term and long-term perspective TES wIll assist the City III constructmg a more resource
effiCIent and environmentally responsIble project TES WIll Improve the performance and
rehabIlIty of the mecharucal and energy systems wlthm the Public Safety Facility Fmally, by
adoptmg the TES concept the City will be able to more rehably and accurately plan the significant
on-going budget needs for operatmg and mamtaining a hIghly complex and heavIly used public
facihty through a reasoned and dehberatlve process
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Total Energy Services is mnovatlve It IS a process whIch encompasses design through operation
and maintenance, and mcludes continuous improvements over tIme For the Public Safety FacilIty
and the Civic Center, the TES concept could proVIde the CIty with numerous cost-effective
effiCiency gains which will also make a substantial contnbutlOn toward the City's sustamabIhty
goals These facilities could serve as a demonstratlOn that the concept of sustamablllty makes both
good polley and good economic sense
Prepared by Crmg Perkms, Dlrector ofEnvlfonmental and Public Works Management
Susan 1\1unves, ConservatIon Coordmator
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