SR-6-L (52)
EPWM:EPD:SM:sm:srenvest
Council Meeting: December 13, 1994
(6~ :C')-
Santa Monica, California
DEe 1 3 1994
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Recommendation to Authorize the city Manager to Negotiate
and Execute an Agreement with the Southern California
Edison Company (ENVEST) to Implement an Energy Efficiency
Demonstration Project for City Facilities and continue to
Negotiate with Edison and the Gas Company for Development
and Implementation of a Comprehensive City-wide Energy
Efficiency Plan
INTRODUCTION
This report requests that city Council authorize the City Manager
to negotiate and execute an agreement with Southern California
Edison (ENVEST) for the implementation of an energy efficiency
demonstration project for city facilities. It is also requested
that City Council authorize the City Manager to continue
negotiations with Southern California Edison and the Gas Company
for development and implementation of a comprehenslve city-wide
energy efficiency plan set forth by the recently adopted Santa
Monica sustainable City Program. The California Energy Coalition
(Coalition), a non-profit organization dedicated to developing
energy efficiency alternatives,
will advise the city in
implementation and evaluation of the demonstration project and
assist in developing the comprehensive city-wide energy efficiency
plan.
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DEe 1 3 1994
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BACKGROUND
Since 1992, City staff, the Task Force on the Environment, and the
California Energy Coalition have been collaborating on the
development of a comprehensive long-term energy efficiency strategy
for Santa Monica. This strategy has two phases: first, the City
is exercising a leadership role by developing an energy efficiency
demonstration project for City facilities; and second, a long-term
energy efficiency plan for the commercial/industrial,
institutional, and residential sectors of Santa Monica is being
created and implemented to achieve significant reductions in
overall City energy consumption.
In April 1994, the California Energy Coalition facilitated an
agreement signed by key decision-makers from Edison; the Gas
company; the California Public utilities commission (CPUC); and the
cities of Santa Monica, Irvine, Nacka, and Goteburg, Sweden which
commits these parties to forming partnerships dedicated to
implementing energy efficient measures. Subsequently, several
meetings were held between the city of Santa Monica, the Coalition,
Edison / and the Gas Company to explore potential methods of
structuring a partnership for a city facilities energy efficiency
demonstration project. Based on these discussions, City staff, in
consultation with Coalition staff, requested a specific proposal
from ENVEST for the City facilities demonstration project. ENVEST
is a regulated division of Southern California Edison which was
created to provide energy efficiency solutions to Edison customers,
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such as the city. Through the ENVEST division, customers are able
to receive energy efficiency retrofits with no up-front costs and
pay for the ENVEST investment through savings in their regular
utility bill.
In addition to providing financing for the total cost of the
project, ENVEST will be responsible for the purchase and
installation of equipment and supervision of all sub-contractors
involved in the project. The city will negotiate what is in
essence a lease-purchase agreement with ENVEST/SCE which will
stipulate the project schedule, the scope of the project, the
City's payback schedule and payback amounts, liability insurance
requirements, equipment warranties, and other pertinent elements of
the proposed project. The City will participate with ENVEST/SCE
following agreement execution to work out the specific design of
the various facility retrofits.
The Coalition's role will be to represent and advise the City with
respect to technical, operational, and economic aspects of the
project. After installation of the energy efficiency measures, the
Coalition will help to monitor savings and assist the City in the
implementation of various operational changes necessary to maximize
energy efficiency.
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DISCUSSION
The City facilities which are included in the initial pilot project
are City Hall/Police Building, Civic AUditorium, Main Library,
Fairview and Ocean Park branch libraries, all downtown parking
structures, and the municipal pool at Santa Monica college.
Participation in a City facilities demonstration project will
provide many benefits. Saving energy will reduce the City's
ongoing utility costs, reduce building operation and maintenance
expenses, potentially enhance productivity through improved
lighting and air quality, and lower carbon dioxide and other fossil
fuel emissions harmful to the environment. ENVEST will provide the
full capital investment necessary for the energy efficiency
measures, thus avoiding up-front City costs for equipment and
services. ENVEST staff will also ensure that the equipment which
is procured for the project will be at the lowest and best cost
available to them. The proposed energy efficiency measures which
are a part of the demonstration project include lighting retrofits
(all new lighting equipment will be hazardous chemical-free),
upgrades or replacement of existing HVAC systems (all new HVAC
equipment will be CFC-free) I building construction improvements
such as insulation and energy-efficient windows, automated control
systems, and changes in building operations such as modifying
equipment operation schedules. All of the equipment to be
installed will have a useful life far beyond the length of the
anticipated project payback period.
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ENVEST will warranty the specified performance of the installed
energy efficiency measures (hardware), but also important to even
greater long-term energy savings will be modifications of various
City operational and maintenance practices. To ensure that these
savings are also realized, city staff will work to enact the
necessary changes to policies and procedures; ensure that the most
energy efficient products are purchased; initiate training so that
site managers are aware of their energy consumption patterns; and
ensure that wasteful practices such as failing to turn off
computers, lights, and other equipment during non-work hours are
minimized.
This proposed agreement is the first phase of a two-phase energy
efficiency plan for Santa Monica. The second phase will consist of
energy efficiency projects in the private commercial, residential,
and institutional sectors of the city which will be facilitated
through an agreement between the city, Edison, the Gas Company, and
other relevant parties. city staff, the Coalition, and Task Force
on the Environment have continued to hold discussions with both
Edison and the Gas Company on the development and implementation of
the comprehensive city-wide energy efficiency plan. Both this
proposed agreement and the goals of the citywide energy plan are
consistent with the Santa Mon~ca Sustainable City Program.
Similar Ed~son and ENVEST projects have been completed or are
underway at several City of Irvine public facilities, the Veteran's
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Administration Hospital in West Los Angeles, a federal General
Services Administration facility in Laguna Niguel, and at the Fort
Irwin military facility. Some of the advantages that the ENVEST
option provides as opposed to a private energy service company will
be:
o access to services from a company (Edison) with
considerable breadth and depth of experience with energy
efficiency projects;
o knowledge of the latest technological options and
familiarity with complex specifications for specialized
equipment;
o quick project design, procurement, and installation
services, and experienced project management staff;
o a deeper level of energy savings from a broader mix of
energy efficiency retrofits;
o a longer term payback, and long term, technical reliable
technical support;
o a guarantee that Edison will ensure the proper
functioning and warranty all installed measures;
o the ability to payback the lease-purchase amount on the
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City's monthly Edison bills;
o the use of ENVEST I S established network of equipment
providers with associated lower equipment costs; and
o the ability to make use of $35,000 from Edison's
ratepayers to directly offset a portion of the total
project costs.
BUDGET/FISCAL IMPACT
After completion of the $1. 3 million in demonstration project
retrofits, it is anticipated that the city will realize an annual
utility (electric and natural gas) cost savings of $234,000. The
bulk of these savings will be used to pay back the initial capital
investment by the ENVEST program ($187,000 per year). The
remaining portion of the savings ($47,000 per year) will be
retained by the various applicable City operations. The full
payback term to ENVEST is expected to be no more than 12 years.
After the end of the payback period, all future savings will accrue
directly to the city. It is therefore not expected that there will
be any additional costs to the City from the proposed demonstration
project. The payback of ENVEST's project costs will be reconciled
through the City I S regular monthly Southern California Edison
bills. The proposed financing and payback arrangements will allow
the City to achieve a very significant level of energy efficiency;
much greater than would be possible through what is offered through
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private energy service company contracts which the City has
evaluated.
RECOMMENDATIONS
It is recommended that the City Council authorize the City Manager
to negotiate and execute an agreement with Southern California
Edison (ENVEST) to implement an energy efficiency demonstration
project for City facilities.
It is also recommended that City
Council authorize the city Manager to negotiate with Edison and the
Gas Company for development and implementation of a comprehensive
city-wide energy efficiency plan.
Prepared by:
Craig Perkins, Environmental and Public Works
Management Director
Susan Munves, Conservation Coordinator
srenvest
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