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EPWM: EPD CP:SM Santa Monica, California
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Council Meetmg. February 25, 1997
FEB 2 5 f1J7
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) for Implementation of Phase Two of an Energy EffIcIency
Demonstration Project for City FacIlities
INTRODUCTION
This report requests that CIty Council authorize the City Manager to negotiate and
execute an agreement with Southern California Edison (ENVEST) for Implementation
of Phase Two of an energy efficiency demonstration project for City faCilIties.
BACKGROUND
In April 1995, the City and ENVEST entered Into an agreement for the energy
effiCiency upgrade and Infrastructure Improvement of City faCilities whIch would Yield
Significant energy savings and reduce overall energy costs The City faCIlities
Included in Phase One of the ENVEST project were the City Hall/Police bUilding, CIVIC
AudItorium, Marn Library, Falrvlew and Ocean Park branch IIbranes, all downtown
parking structures, and the muniCipal pool at Santa Monica College It was envIsioned
at the tIme that the remaining City faCilities that could benefit from energy retrofits
would be covered by a second phase project
Under the California PubliC Utility Commission-approved ENVEST structure, Edison
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shareholders provided $1 6 million in energy efficiency services for the project through
a lease-purchase agreement with the City The City IS uSing most of the project's cost
savings to pay back thiS capital Investment by Edison over the term of the agreement
After the payback penod IS complete, the CIty wIll accrue all savings for Its own use.
Energy consumption data from the Phase One retrofitted sites has been collected over
the last SIX months and the reduced use of electnClty at those sites has saved the CIty
$84,308. With the addition of the estimated savings from the Main Library retrofits,
annual energy savings from Phase 1 will total $193,463 The anginal ENVEST
proposal estimated annual savings of $234,000 per year The annual savings are
now projected to be lower as a result of the CIty's request to delete a CIty Hall central
HV AC (heating/ventilating/air condition In g) system and additional HV AC upgrades
made at the Civic AuditOrium which are designed to Improve system performance, but
not deliver energy savings. After the annual lease payment of $183,961 IS made to
ENVEST, the CIty Will retam $9,502 each year.
DISCUSSION
When Phase Two of the ENVEST project IS complete, staff estimates that the City Will
have reduced Its electriCity consumption by about 2 5 million kilowatt hours annually
This Will result in a total energy reduction of over 40 million kilowatt hours dunng the
effective life of the Installed energy effiCiency measures (16 years) The reduction In
emIssions avoided through the year 2005 (10 years) are as follows 23,500 tons of
carbon diOXide, 21.5 tons of nitrous OXide (NOx), 145 tons of sulfur diOXide (SOx), and
over 2300 pounds of partIculates A 1996 National Resource Defense CounCil
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analysIs of major urban areas estimates that particulate pollution IS causing more than
64,000 people to die one to two years prematurely from cardiopulmonary diseases.
Excessive concentratIons of particulates have also been linked to a 44 percent
Increase in asthma diagnoses between 1982 and 1990 The South Coast Air Quality
Management Dlstnct estimates that for every ton of NOx and/or SOx not em Itted Into
the Los Angeles basin, $7,000 in costs IS aVOIded for healthcare, welfare, and property
damage caused by pollutants The kilowatts saved under Phase 1 of the EN VEST
project through the year 2005 will result In avoided costs to the Los Angeles basin of
$67,814 from reduced NOx and SOx emiSSIons. No cost Impacts are available due to
C02 emiSSions, however, the Intergovernmental Panel on Climate Change, a review
board for global warming, estimates that the average Amencan household produces
about 45,000 pounds of C02 every year from heating and electricity, automobile
travel, and airplane travel. Electricity accounts for about 8,000 pounds of CO2
annually from the average Southern Callforma household. The EN VEST project will
represent a reduction in electnclty consumption equal to 5875 households and the
total carbon dioxide produced by 1044 households
In December 1996, ENVEST staff approached the City to propose completing the
retrofIt of the remaining City faCIlities under the same terms stipulated In the Phase
One agreement An energy survey of the potential remaining sites was completed and
energy efficiency measures valued at over $784,156 were deemed to be of a high
enough level of cost-effectiveness to be eligible for a Phase Two ENVEST project.
Phase Two sites Include. City Yards, Fire Stations 1, 3, 4, and 5, the ammal shelter,
Montana branch library, Ken Edwards Center, the Bus Yard garage and administration
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bUildings, the airport maintenance hangar and administration bUilding; Virginia Park
Community Center, Memonal Park gym and arts bUIlding, the senior center at
Palisades Park; Joslyn Park Community and Senior Center, Douglas Park Clubhouse,
the Park D,vIsIon's airport faCIlIty, 612 Colorado, Woodlawn Cemetery bUlldmgs; and
miscellaneous park restrooms Each of the potential Phase Two sites is currently
being examined to determine If the facility meets federal criteria to qualify for tax -
exempt finanCIng. As In Phase One, the Phase Two proposed energy efficiency
measures 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), and dIrect digital control systems which maXimize
savings by modifYing equipment operation schedules based on the actual hours of
bUilding operation.
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. All of the equipment to be Installed Will have a
useful life beyond the length of the 12 year project payback penod As In the Phase
One agreement, the Phase Two ENVEST agreement 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
BUDGET/FISCAL IMPACT
Under the ENVEST framework, $156,831 of the total $784,156 project cost Will be paid
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by Edison ratepayers The City will have to repay the balance of $627,324 Sta ff
estimates that the City will realize an annual energy cost savmgs of $87,127 from the
proposed energy efficiency upgrades and Infrastructure Improvements The bulk of
these estImated savings ($78,220) will be used to pay back the inItIal capItal
Investment by the ENVEST program The remaining portion of the estimated savings
($8,907 per year) will be retained by the City. As In Phase One, the full payback term
to ENVEST will be 12 years. The California Public Utilities Commission authorized
rate of return whIch Edison is able to receive from thiS project IS 9 17 percent after tax
After the end of the payback penod, all future savings Will accrue directly to the City
The payback of ENVEST's project costs will be reconciled through the City's regular
monthly Edison bills
RECOMMENDATIONS
Staff recommends that the City Council authorize the City Manager to negotiate and
execute an agreement wIth Southern CalIfornIa EdIson (ENVEST) for Phase Two of
an energy effiCiency demonstration project for City facIlities
Prepared by: Craig Perkins, Environmental and Pubhc Works
Management Director
Susan Munves, Conservation Coordmator
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