SR-502-006
EPWM:adm/staffrpt/6-25-02MWD-CIIContract02-03Rev4.doc
Council Meeting: September 10, 2002 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Authorize the City Manager to Negotiate and Execute two Contracts with
the Metropolitan Water District of Southern California to Establish New
Rebate Programs for Water Efficient Devices
INTRODUCTION
This report recommends that City Council authorize the City Manager to negotiate and
execute two contracts with the Metropolitan Water District of Southern California
(MWD) to establish two new rebate programs, the Commercial, Industrial and
Institutional (CII) Regional Rebate Program and the Residential High Efficiency Clothes
Washer Rebate Program (HECW), from July 1, 2002 through June 30, 2003 with an
option to renew for FY03-04. The proposed Plan is an integral component of the Santa
Monica Sustainable City Program.
BACKGROUND
The City of Santa Monica has identified sustainability as a principle community priority.
Many departments within the City have included considerations of sustainability in their
decisions and operations to become more environmentally conscious, cost effective
and efficient.
In 1994, the City formalized its commitment to sustainability by adopting and
implementing the Sustainable City Program (SCP), which establishes a broad spectrum
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of goals, targets and indicators for City operations and the community at large,
including:
Reducing resource consumption
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Reducing waste and pollution generation
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Safeguarding environmental resources
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Safeguarding public health
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Maintaining a healthy and diverse economy and improving the livability of the
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community and quality of life for residents and visitors
This staff report addresses resource consumption and conservation with the goal of
reducing water consumption in the community.
Southern California enjoys a Mediterranean climate that cannot provide sufficient water
supplies to satisfy demand without importing water. In recognition of the relative
unsustainability of a system that extracts water from one region and transports it a long
distance to supply another region, the City has undertaken several initiatives over the
years to become more self-sufficient and sustainable.
For the past fifteen years, the City has invested in the development of local and
renewable groundwater resources for the community. These activities increased the
contribution of local water supplies to account for almost 80% of the community?s water
needs in 1995. Additionally, in response to periodic and severe droughts, the City
adopted stringent water conservation ordinances, codes and programs beginning in
1989 to encourage the installation of water efficient devices. These efforts included the
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Retrofit Upon Sale and No-Water-Waste Ordinances, the Bay Saver Program and
Plumbing Code requirements for new construction. The City also constructed the
Santa Monica Urban Runoff Recycling Facility (SMURRF) to capture, treat and reuse
urban runoff, thereby reducing demand (3-4%) for potable water. Throughout the latter
half of the 1990?s, City programs to encourage water conservation remained static, as
resources were diverted to other critical conservation programs, such as energy
efficiency. Interestingly, significant energy efficiency impacts are associated with the
more efficient use of water.
These strategies have been effective, although their contribution to the community?s
sustainability efforts has been compromised by unanticipated conditions. In 1996,
MTBE was discovered in numerous City water production wells, rendering the
underlying aquifers unusable until the contamination is removed. Hence, rather than
further development of local groundwater supplies, the City now imports approximately
80% of its water from the MWD. The community?s attention to and engagement in
water conservation has diminished since the focused efforts associated with the 1992
drought, and water use has increased annually. The expansion of commercial and
residential development associated with the economic boom of the 1990?s has also
increased daily demand. Though demand has increased, reduction in water supply is a
reoccurring problem. In 2001-02, Southern California experienced the driest winter in
recorded history.
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The goal originally set by the City Council and the SCP was a 20% reduction from the
1990 usage volume of 14.3 million gallons per day (MGD) to 11.4 MGD by the year
2000. Although the community achieved a 16% reduction in water usage in 1993, the
above noted conditions have combined to increase usage annually from a low of 12
MGD in 1993 to 13.4 MGD in 2000. The usage in 2000 represents a reduction of 6%
from 1990, which falls short of the goal of 20% reduction.
DISCUSSION
Base funding for the two programs in which contracts are requested comes from water
rate payers. Consequently, an important basis for the recommendation of each of
these programs is that the cost of implementation shall not exceed the cost of water
that the program will save. Currently, the cost of water from the MWD is $431 per acre-
foot (AF), while the average cost of the two new programs is $145 per AF. The
proposed programs can be partially funded by rebates and financial support from
outside agencies, such as Southern California Edison, the MWD and the U. S. Bureau
of Reclamation.
This report requests the execution of two agreements with MWD to assist in the funding
of the City?s two new water conservation programs. The two contracts will implement
four new water conservation strategies: Commercial, Industrial and Institutional (CII)
Bay Saver, Restaurant Retrofits, and Residential and Commercial HECWs. These new
rebate incentive programs will provide ratepayers with new and permanent means of
reducing their utility costs and reduce the City?s total water usage toward the 20% goal.
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The CII rebate program, including Restaurant Retrofits, has no limit on time nor the
MWD credits back to the City, which vary from $90-500 per water device, depending
upon the type of water device retrofitted. The Residential HECW rebate program has a
limited number of MWD rebates, 10,000, to be shared by 26 water agencies, first come,
first served. Each MWD rebate is $35 per HECW. After this initial period, the City can
continue to offer its own rebates.
BUDGET/FINANCIAL IMPACT
The fiscal impact of implementation of four new water conservation strategies
recommended by the Plan is the one-time expenditure of $211,790, which is in the
existing FY02-03 EPD Bay Saver budget line item, account 31662.544390. Over a
ten-year period (estimated life of new water devices), the value of the avoided water
usage, 1,224 acre-feet, is $527,544, assuming the MWD price remains at $431 per
acre-foot.
RECOMMENDATIONS
City staff recommends that the City Council authorize the City Manager to negotiate
and execute two contracts with the Metropolitan Water District of Southern California to
establish new rebate programs for water efficient devices from July 1, 2002 through
June 30, 2003 with an option for a second year, FY03-05.
Prepared by: Craig Perkins, Director, EPWM
Brian Johnson, Manager, Environmental Programs Division
Neal Shapiro, Senior Administrative Analyst -Water Resources
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