HomeMy WebLinkAbout3/20/2013 - STAFF REPORTS - 4A Table 1
City of Palm Springs Renewable Energy Program
Savings and Costs by Component-Water and Lighting
Green Campus Partners Proposal-21 Operating Years beginning 711/2013
Electricity Water Saved $Energy $Energy/ O&M Savings-
Year FYE June Saved in Kwh in CCF Per Savings- Water Savings Lighting 'Potential `� Allocable.Debt Net Benefit to
Per Year Year, Lighting Water System System -.'.Savings Service General Fund.
system
0 2013 - - - -
1 2014 - - -:.. $ - $ - $ -
2 2015 2,311,342 144,604 284,892 121,222 66,080 472195'- ,(280,000) 192,195
3 2016 2,311,342 -: 144,604 284,892 121,222 52,610 458 725. (242,20,2) - 216,523
4 2017 21311,342 >144,604 296,288 126,071 53,392 475,752. (250,858) ( 225,096
5 2018 2,311,342 .144,604 308,139 131,114 54.195 - 493-448i .(259,447) 234,002
6 2019 2,311,342 144,604 320,465 136,359 54,986 511810 (268,554) 243,256
7 2020 2,31.1,342 -.144,604 333,284 141,813 55,799 5308W (278027j .`- 252,869,
8 2021 , 2,311,342 :144,604'. 346,615 147,486 72,078 566179' (287 82 ) ' 276,357-
9 2022 2,311,342 •.144,604- 360.480 153,385 72,954 586:819' ;--(297,771) 289,049.
10 2023 2,311,342 144,604: 374,899 159,521 73,865 608284i'. , ':(308,159) .; 3001126
11 2024 2,311,342 -144;664' 389,895 165,902 74,649 630445. (31$830j 311,616
12 2025 2,311,342 144,604: 405,491 172,538 75,469 653498 (329975) . 323,522
13 2026 " 2,311,342 ,144,604. 421,710 179,439 76,489 .877,83t1' (341,7,M) 336.851'
14 2027 2,311,342 -144,6046 438,579 186,617 77,869 703,065'. (354,459) • 348,606-
15 2028 2,31,1,342 144,E 456,122 194,081 79,451 729,6541' (367,571)" '. 362,083
16 2029 2,311,342 -:144,604 474,367 201,844 81,073 - - 757,284 (381,238) 376,048..
17 2030 2,311,342 144,604 493,341 209,918 82,736 785 995`.. (395475) 390,520'
18 2031 2,311,342 144,604 513,075 218,315 84,441 '8t5,831, (419,310) 405,521
19 2032 2,311,342 ;144,604; 533,598 227,048 86,190 '846,636, "(42576ti), ".'i 421,070
20 2033 2,31�1,342 ' 144,604: 554,942 236,129 87,984 - 879,055: (441,865) 437,190
21 1 2034' 2,311,342 144,604` 577,139 245,575 89,823 912,5V 458,633 ' 453,904.
-_A,'.5,840 ( 2;892,080. $8,168,213 $ 3,475,600 $ 1,452,732 $ i13,095,945;-$ 8,898,542) $; -6;397,402
Final Payment 7/1134,Recovered from Year 21 Savings
0
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Table 2
City of Palm Springs Renewable Energy Program
Savings and Costs by Component-Sunrise Plant
Green Campus Partners Proposal.21 Operating Years beginning 7/1/2013
Electricity, Gas Saved $Energy O&M Net Cost to
FYE June Saved In, - m s Savings- Potential-. Allocable
Year In Therms Savings- General,:
30 Kwh PYearer Sunrise Savings.- DebtServiee
PerYear Sunrise -.Fun d. .
lant
0 2013
1 2014 - - - - -
2 2015 - $ - $
3 2016 (1,959,905) ; 344,081. 68,537 54,722 123,259 (20�1;242) (77,983)
4 2017 ".(1,959,905) 344,081': 71,279 55,639 126,9181 (208;267) (81,349)
5 2018 (1-,959,905). ' -344,081. 74,130 56,579 130,709r (215,571) (84,862)
6 2019 (1,959,905) 344,081 77,095 57,514 134609 "(223,136), (88,529)
7 2020 (1',959,905) =344,081. 80,179 58,473 138652 (41,000) ,(92,357)
8 2021 (1;959,905) - :344,081- 83,386 66,301 149687; (239,1„47) (89,460)
9 2022 (1,959,905) --344,081-. 86,722 67.107 153.828 (247,413) (93,585)
10 2023 (1;959,905) r 344,081: 90,190 67,944 158,135; (256;045) (97,910)
11 2024 (1,,959,905) '344,081; 93,798 68,666 162,464 (264,911) 0021448)
12 2025 ,(1,956,905) .: 344,081. 97,550 69,420 -- 10970 (274,172) (107,202)
13 2026 (1,959,905) „344,081', 101,452 70,358 IT T810 (283,986) " (112,176)
14 2027 (1,959,905) '.344,08.1 105,510 71,628 177,138`r (294,5-16) (1171376)
15 2028 .(1,959,905) 344,081' 109,730 73,083 182,813_ (30,5,4,10) (122,596)
16 2029 (19591905) '"344,08.1 114,120 74,575 188,694`.. (316,764) (1281069)
77 2030 -;,(1,959,905) ::•344,081- 118,684 76,105 194789 (32%595) (133,806)
18 2031 ;(1,959,905) �.`344,061 123,432 77,673 201;105 . .(340,921) (139,816)
19 2032 (1;959,905) 344,081' 128,369 79,282 2017,651:• (353,763) ,(146,112)
20 2033 -(11,959,905) - .3 WI,, 133,504 80,932 211,435< '(367,139) . (152,704)
21 2034- '- 1,959,905 - 344,081` 138,844 82.623 221,467• '' (3ST;071) `(I59,664)
(37,238195) - 6,537,539 1,896,512 1,308,623 3,205,.134( - (5,333077) - .(2,127,943)
'Final Payment 711134,Recovered from Year 21 Savings
I
Table 3
City of Palm Springs Renewable Energy Program
Savings and Costs by Component-Muni Plant
Green Campus Partners Proposal-21 Operating Years beginning 7/1/2013
Electricity Gas Saved Energy O&M - Net Cost- Net Cost-
FYE Potential Allocable Debt
June 30
Year Saved in Kwh In Therms Savings- Savings- Not Cos.t General Airport
S
r Per Year� .Per Y SaWngs ervice
Year Muni Plant Muni Fund Share Share
0 2013 - - - -
1 2014 - - - - - -
2 2015 l $ - .$ $. '` t$ .$ . $ - $
3 2016 --- . 3.285,649 (86,335) 308,069 26,660 334,729 (566,362) (231,633) (115,817) (115,817)
4 2017 3,2815,649 (86;334) 320,392 25,649 :346,041 (566,131) (240,090) (120,045) (120,045)
5 2018 3.285,649 (86 333) 333,208 24,618 357,826 ':- , (606,688) (248,862) (124,431) (124,431)
6 2019 3,205,049 (86,332) 346,538 23,498 - 370,034 (627,983)` (257,949) (128,975) (128,975)
7 2020 3,285,649 (86,331) 360,398 22,361 382,759 ' ,(650,1Uj (267i375) (133,688) (133,688)
8 2021 3,28.5,049 (86,330) 374,814 154701 '529 515 (673;039) , (143,524) (71,762) (71,762)
9 2022 3,285,649 (86;329) 389,806 156:682 "546,388 ` (696,304) (149,915) (74,958) (74,958)
10 2023 3,285,649 (86,328) 405,399 158,537 ; 563 935 (720,596) (158 660) (78,330) (78,330)
11 2024 3,285,649 (86,327) 421,614 160,220 ;581 834, (745;648) (163,714) (81.857) (81,857)
12 2025 3,285,848 (86;326) 438,479 161,981 800460 „ (171,151) (85,576) (85.576) j
13 2026 3,286.646 (86,325) 456,018 164,168 "' 620,18T (766 231) , ;. (179;045) (89,522) (89,522)
14 2027 3,285,649 (86,324) 474,259 167,132 - A41;391 (828,862) •(187,471) (93,736) (93,736)
15 2028 3,285,649 (86,323) 493,229 170,527 663,756 (859,524); (195;768) (97,884) (97,884)
16 2029 31285,649 (86,322) 512,958 174,008 686,968 -; (891,478) (204,512) (102,256) (102,256)
17 2030 - 3,285,649 (86,321) 533,476 177,577 '711,:Q54 - (924,779% (213721) (106,860) (106,860)
18 2031 3,20,6149 (86,320) 554,816 181,238 '.738,053 (959466) ; ,_ (223,412) (111,706) (111706)
19 2032 3,285;649 (86,319) 577,008 184,991 Y7,81,999 (995„0,,06) ,(23%607) (116,803) (116:803)
20 2033 - 37285,649 (86,318) 600,089 188.840 i788929' ;;; (1,033,252) (244,323) (122.182) (122,162)
21 2034- ' 3,285,649 (86,317) 624,092 192,788 -...816.680 `' • 1,072,462 ':' 255,582 127,791 (127,791)
.62,427,331- '.(1,640,194) 8,524,660 2,516,078 11,040,738 - (15,069i053) (3,969,315) (1,984,158) (1,984,158
*Final Payment 7/1/34,Recovered from Year 21 Savings
it
Table 4
City of Palm Springs Renewable Energy Program
Net Savings and Costs by Fund
Green Campus Partners Proposal.21 Operating Years beginning 7/1/2013
Lighting and Sunrise Muni Plant Muni Plant Overall Overall,
FYE June General Fund Program Electricity
30 Net Ben -
Year Water Plant Net Net Cost f Net Cosf to
efl -
Savings(GF) Cost(GF) (GF) Al Net(Cost)£ Saved in
qaVI
0 2013 -
1 2014 $ - $ - $ - '$ - $ - $ -
2 2015 192,195 - - .192,195 192,195 2.311,342
3 2016 216,523 (77,963) (115,817) 22,723, (115,617) (93,093) 3,637,086
4 2017 225,096 (81,349) (120,045) 23,702. (12004tj (96,343) 3,637,086
5 2018 234,002 (84,862) (124,431) ,.� 24,709 (124,431} (99,722) 3,637,W'
6 2019 243,256 (88,529) (128,975) 25,752. (128;875j (103,222) .3637,086.
7 2020 252,869 (92,357) (133,688) 26,825: (133,686) (106,863) 3,637,086
8 2021 278,357 (89,460) (71,762) 117,134: (71;762) 45,372 3,037,086
9 2022 289,049 (93,585) (74,958) ';. 120,506 . (74,958) 45,548 3;637,086
10 2023 300,126 (97,910) (78,330) "121,885, (78,330) 45,555 3;637,086
11 2024 311,616 (102,448) (81,857) 127,311. ' (814057) 45,454 -:3,637,086
12 2025 323,522 (107,202) (85,576) 1,30,745- (85,57,6) 45,169 -3,637,086-
13 2026 335,851 (112,176) (89,522) 134,152: (89,522) 44,630 -.3,637,086.
14 2027 346,606 (117,376) (93,736) " 137,494; (93;736) 43,759 3,637,086-
15 2028 362,083 (122,596) (97,884) 141,603 (97,884) 43,719 3,637,086-
16 2029 376,048 (128,069) (102,256) 145,i23 (102,256) 43,467 3;637,086
17 2030 390,520 (133,806) (106,860) 149,8,54-. (166,880) 42,994 3.637,066, '
18 2031 405,521 (139,816) (111,706) 153,998-- (11.1}706) 42,292 3,637,086-
19 2032 421,070 (146,112) (116,803) 158,155- (116,803) 41,352 -3,637,086
20 2033 437,190 (152,704) (122,162) 162.325 (122,162) 40,163 3,637,086.
21 1 2034 1 453,904 (159,604) (127,791) 166,510 (127,791 38,719 31637,088
6,397,402 (2,127,943) (1,984,158 "`:`2;285,302 1,984;158) 301,144 '71,415;976
II
Table 5-Sustainability Fund Contribution for 5 Years to Muni Plant Resource ManagenVerification
City of Palm Springs Renewable Energy Program -
Net Savings and Costs by Fund
Green Campus Partners Proposal-21 Operating Years beginning 7/1/2013
Lighting and Sunrise Muni Plant Sustainability Muni Plant Sustainability - Overall - Overall.
FYE June General Fund Net Cost to - : Electricity.
Year Water Savings Plant Net Net Cost Fund Net Cost to Fund Program Net -
30 (GF) Cost(GF) (GF) Contribution Net Benefit Contribution Atrport Savings `r _Saved In
Kwh
0 2013 - - - -
1 2014 $ - $ - $ - $ - $ . - $ - $
2 2015 192,195 - - - - 192,195 - - - ;192,195 c.2,311,342
3 2016 216,523 (77,983) (115,817) 67,350 . 90,073 _ (115,817) 67,350 (48,467) 41;607 3,637,086
4 2017 225,096 (81,349) (120,045) 69,450 -` 93,152 (120,045) 69,450 • (50,595) 'i-_ 42,557- 3 637,086:
5 2018 234,002 (84,862) (124,431) 71,600 - 96,309: (124,431) 71,600 (52,831) 434781- 3,637,066
6 2019 243,256 (88,529) (128,975) 73,800 99,552. (128,975) 73,800 '(55,175) 44�37$, , 3,637,086.
7 2020 252,869 (92,357) (133,688) 76,050 102,876 (133,668) 76,050 (57,638) " 45237• ---3,637,088-
8 2021 278,357 (89,460) (71,762) - 117,134 (71,762) - (71,762j •`: 45,372 '.3,637,086
9 2022 289,049 (93,585) (74,958) - 120,5W (74,958) - (74;956) 45 W4 _,3,637,0861
10 2023 300,126 (97,910) (78,330) - 123.885.. (78,330) - (78,330) 45555- 3,637,086
11 2024 311,616 (102,448) (81,857) - 127,311 (81,857) - (81,867) 45,45Q; -,3,637,086'
12 2025 323,522 (107,202) (85,576) - ,130;745: (85,576) - (85,576) 45169. ",3,637,086
13 2026 335,851 (112,176) (89,522) - 134,152 (89,522) - (89,522) r "44,B30 3,637,086
14 2027 346,606 (117,376) (93,736) - 137,494' (93,736) - (931736) 43 759' 31637,086
15 2028 362,083 (122,596) (97,884) - 141,603- (97,884) - (97,884) 43719. 3,637,086.
16 2029 376,048 (128,069) (102,266) - 145,123 (102,256) - (102,256) ;':: 43 467 3,637,086
J.
17 2030 390,520 (133,806) (108,860) - 149,854 (106,860) - ,(106,860) , , s: 42894,11.'.3,637,086
18 2031 405,521 (139,816) (111,706) - 153,998 (111,700) 42 297. -3,637,086
19 2032 421,070 (146,112) (116,803) - - 158,155 (116,803) - (116,803) 41;352. _3,637,086
20 2033 437,190 (152,704) (122,162) 162,325 (122,162) (122,162) '` 40183' '-31637,066_
21 2034 453,904 (159,604) (127,791) - 166,510 (127,791) - (127,791) • �.38,718. -' 3,637,086
6,397,402 (2,127,943) (1,984,158) 358,250 - 2;843,552 (1,984,158) 358,250 -(1,625,908) ; 1;017,644:':71;415;978.
I
F
,
,
Co-Gen Unscheduled Repairs 2011113
I
I Underground Piping Repairs
Date Location Contracted Service Cost
11/20/2011 (Sunrise) Library 17,542.00
12/2/2011 (Sunrise)Cerritos Road 5,500.00
i 12/11/2011 (Muni)El Cielo Road Airport 7,850.00
12/14/2012 (Muni)El Cello Road 2,900.00
1/3/2012 (Muni)Fire Station 2,645.00
4/11/2012 (Sunrise)Cerritos Road 2,900.00
4/12/2012 (Muni)El Cielo Road 3,600.00
5/22/2012 (Sunrise)Swim Center 2,822.00
5122/2012 (Sunrise)Stadium 2,550.00
7/1/2012 (Muni)City Hall 9,270.00
10/30/2012 (Muni)Corner of El Cielo and Tach. 9,453.00
11/1/2012 (Muni)Plant 3,178.00
11/16/2012 (Muni)Airport Terminal 12,434.00
12/1/2012 (Sunrise)Plant 3,250.00
85,894.00
Engine Repairs
1 212 912 01 1 (Muni) Engine#2 Rebuild 59,748.00
311 312 01 2 (Muni) Engine#1 Top End Rebuild 24,321.00
j 4/6/2012 (Sunrise)repairs 5,520.00
6/23/2012 (Muni)repairs 3,255.00
6/24/2012 (Sunrise)blown head 13,373.00
8/24/2012 (Sunrise)repairs 2,527.00
9/24/2012 (Muni)head,replacement 19,687:00
11/1212012 (Muni)valve repair 12,647.00
1/13/2013 (Muni) Engine#1 Actuator replacement 7,066.05
2/2 812 01 3 (Muni)Engine#2 Head replacement 21,700.00
3/15/2012 (Sunrise)Engine rebuild 67,923.00
237,767.05
Chiller Repairs
8/17/2012 (Muni) Repair 2,453.00
9/11/2012 (Sunrise) Repair 1,620.00
11/8/2012 (Muni) Repair 4,673.00
11/19/2012 (Muni)Repair 2,453.00
12/19/2012 Investigating Muni chilled water failures 4,023.00
3/3/2013 Investigating Sunrise chilled water failures 3,790.00
19,012.00
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�b9/.TE
c4[/FORN�P City Council Staff Report
Date: March 20, 2013 UNFINISHED BUSINESS
Subject: CITYWIDE ENERGY MANAGEMENT PROJECT
From: David H. Ready, City Manager
Initiated by: Public Works and Engineering Department
SUMMARY
On December 14, 2011 City Council approved the Comprehensive Energy Analysis,
directed staff to move forward with the work by Chevron Energy Solutions (CES) on the
recommended list of Energy Conservation Measures (ECM'S) and with the Third Party
review of the Comprehensive Energy Analysis (CEA).
This item provides an update to Council on the status and the details of the above
items, presents the results of the Third Party review, presents the financing and cost
savings projections of the recommended projects, and requests direction to bring
forward the Energy Services Contract for Council approval at the required public
hearing.
RECOMMENDATION:
1) Concur in the Third Parry's review findings.
2) Concur in the financing payback proposal from Green Campus Partners and direct staff
to bring back financing documents.
3) Direct staff to bring forward the Energy Services Contract for Council consideration at the
required public hearing.
STAFF ANALYSIS:
CES completed an audit of all City facilities and an analysis of various measures that could be
implemented by the City to achieve the most comprehensive energy savings. The main focus of
the analysis was the City's two co-gen plants.
In recent years these 30 year old plants have become increasingly unreliable resulting in the
plants being out of service an average of 34% of the time over the past 3 years. Major engine
repairs/rebuilds were necessary 11 times for both plants costing in excess of $237,000. These
ITEM NO.
City Council Staff Report
March 20, 2013- Page 2
Citywide Energy Management Project
were unbudgeted emergency repairs, as were the $19,012 in chiller repairs over the last 2
years. Data (attached) show the costs are likely to increase with time if nothing is done. It is
clear, in stafrs opinion, that a proactive resolution to preclude these increasing repair
costs is necessary.
As reported in the CEA, additional program options were analyzed:
1. Do Nothing
2. Abandon Cogeneration and purchase all electricity from Southern California Edison
The analysis showed doing nothing resulted in the following
Pros
• No capital Cost
• No Debt Service
Cons
• Aged equipment needs replacement (25+years)
• High maintenance
• High emissions
• Does not meet sustainability goals
• Increasing down time
• Current operation relies on several older inefficient systems
• Building efficiency doesn't tie back to the central plant operation
• No Renewable Energy Credits
Utility costs were projected to vary from $1.2 million more in the first year to $2.2 million more in
year 21 than the recommended Cogen upgrade project.
The conversion to SCE was also not recommended primarily due to the higher energy cost
(12¢/kwh vs 8¢/kwh) and the significant modification costs to remove the City facilities from
Cogen (Plant modifications, SCE power brought to site, on site electric backbone modifications,
on site equipment modification costs) See Table below.
Overview Muni Plant Analysis
Savings as compared to today's Municipal Plant cogen operation.
New Cogen Plant Abandon Cogan 100% SCE Service
Annual Utility Savings $ 329,430 Annual Utility Savings $(198,903)
Annual O&M Savings $ 132,796 Annual O&M Savings $ 257,438
Total Savings $ 462,226 Total Savings $ 58,534
20 Year Savings $13.04MM 20 Year Savings $ 0.33MM
Capital Cost $ -8.10MM Capital Costs $ -4.9MM
Net Benefit $ 4.44MM Net Benefit $ -4.57MM
Edison Upgrade $0 Edison Upgrade $ -4MM
(Additional Cost)
02
City Council Staff Report
March 20, 2013- Page 3
Citywide Energy Management Project
Determining which alternative is best for the City requires an understanding of how the co-gen
plants operate and provide electricity and heating/cooling to the various buildings they serve.
Co-generation is the sequential production of two energy forms, usually steam and electricity,
from a single fuel source. In our case, natural gas is used as fuel to run reciprocating engines
that turn generators to create electricity. Waste heat (heat created by a running engine) that
would normally escape into the air, is recovered from the engines and passed through an
absorption chiller to provide cold water for air conditioning. Alternatively, in the winter, waste
heat is used to heat water for space heating.
Co-generation was originally selected as the most appropriate alternative energy solution for
Palm Springs due to the City's tremendous cooling requirements in the summer. Therefore, a
co-gen plant can be a very valuable asset, in that it provides not only electricity for the City's
facilities, but through its internal mechanical process, provides thermal energy (heating and
cooling).
The 2009/2010 Fiscal Year was chosen for the analysis as the representative base line year,
because it provided the best representation of the City's historical operations with plants
operating more consistently and with less down time on the more recent years.
Analysis of the Municipal Plant determined that maintaining operation of the co-gen plant is the
most economical alternative to providing electricity and heating/cooling to the facilities it serves.
The direct cost to generate power through co-generation is less expensive than purchasing
electricity from SCE directly ($0.12 per kilowatt hour vs. $0.08 per kilowatt hour). During the last
3 fiscal years, the total power load on the Municipal Plant averaged 10.9 Million kilowatt hours.
Given that the direct cost to generate power through co-generation is 67% of the cost to
purchase electricity from SCE, it was recommended that the City make certain upgrades to the
Municipal Plant to take advantage of the lower direct generation cost and to make the plant
significantly more efficient that it is today.
At the Sunrise Plant at Sunrise Park, the co-gen plant distributes power and provides
heating/cooling to all of the facilities except the Boys and Giris Club and the Senior Center.
However, the analysis of the Sunrise Plant determined that maintaining operation of the co-gen
plant is not the most economic alternative at Sunrise Park. The overall electrical load on the
Sunrise Plant is much lower than the load on the Municipal Plant, and since its construction, the
Sunrise Plant has produced more power than necessary for the facilities it serves. The balance
of electricity produced is sold as excess electricity to SCE at a loss. Therefore, the analysis
determined that retiring the Sunrise Plant and purchasing electricity from SCE directly is the
most economic alternative for Sunrise Park.
Ultimately the ECM's were reviewed and recommended by the Sustainability Commission in
2011 and subsequently approved by Council included:
• Municipal Co-Generation Plant: replace two existing 650 kilowatt rich burn engines with one
1,135 kilowatt lean-burn engine, replace existing chillers and cooling towers with new
efficient equipment and add a new boiler.
03
City Council Staff Report
March 20, 2013- Page 4
Citywide Energy Management Project
• Sunrise Co-Generation Plant: modify the co-generation operation and replace with a new
gas and electric cooling and heating hot water plant
• Install a new Energy Management System for City facilities connected to the Municipal and
Sunrise Plants
• City-wide lighting retrofit and upgrade (approx. 11,000 interior and exterior fixtures)
• Install remote lighting control and monitoring program for Palm Canyon Drive palm tree and
decorative lights
• Install a new automated utility metering and monitoring system at the Municipal Plant
• Contract a CES Energy Resource Manager to manage and monitor the Municipal Plant
operation, and monitor implementation of all energy conservation measures to ensure
guaranteed energy savings are achieved for a period of 5 years
• Install centralized irrigation control system with weather stations for Parks and other
landscape area.
The categories of ECM's selected were:
1. Lighting and Irrigation Control
2. Utility System (Co-gen) Mechanical Improvements
The details of the two categories were spelled out in the attached December 14, 2011 staff
report to Council. The direction from Council was to maximize use of ECM's such that the
capital costs were paid for by energy savings, which is the proposal presented here.
Tables 1-3 indicates the projected savings and costs by project components. Cost savings were
estimated by applying a 4% annual inflation factor to existing energy costs. Table 4 combines
the 3 projects which shows an estimated benefit at the end of the year 21 of $2.2 million. It is
proposed that the airport and City equally share the costs of the Muni-co-gen plant.
As shown in the two right hand columns of Table 4 the overall general fund savings are
projected to be approximately $300,000 at the end of year 21, but as mentioned above, the key
is the 71 million kwh saved as shown in the far right hand column. Table 5 includes a 5year
sustainability fund contribution which serves to further reduce airport costs as well as general
fund co-gen project costs. Overall net program general fund savings is estimated at $1 million
as shown in Table 5. Table 5 is the recommended program.
Third Party Review:
At the time City Council approved the CEA, they also directed staff to move forward with a Third
Party peer review of the ECM's, cost estimates and energy savings, Staff hired Newcomb
Anderson McCormick (NAM) who completed their report in summer 2012. The report concluded
that the cost estimates were reasonable and the energy savings were also reasonable and in
some cases conservative. They also independently justified the recommendation to
decommission the Sunrise Plant. Further, the study recommended that the final agreement
include validation of the savings in the form of short term billing analysis for select meters. The
executive summary of the report is attached. 04
City Council Staff Report
March 20, 2013-Page 5
Citywide Energy Management Project
FISCAL IMPACT:
The estimated costs for the various components of the project are as follows:
Financing Cost Components
Component Lighting Water Sunrise Plant Muni Plant Total
Equipment $3,416,306 $1,022,752 $3,678,876 $9,389,909 $17,507,842
Rebates 82,407 18,114 24,181 124,702
Buydown (40,000) (40,000) 340,000 20,000 440,000
3,293,899 982,752 3,320,762 9,345,728 16,943,140
Costs of
Issuance 31,653 10,321 34,875 98,151 175,000
Capitalized
Interest 226,913 73,990 250,016 703,628 1,254,457
Total Amount
Financed $3,552,465 $1,067,063 $3,605,653 $10,147,507 $18,372,687
There were two proposals for financing the energy upgrade project. The first was from Green
Campus Partners, and the second was from Crews and Associates.
The Green Campus Partners proposal was for 20 years (18 operating years plus 2 years for
implementation of the program). The Crew and Associates proposal was for 22 years. The extra
2 years of financing do not provide enough cashflow to make a difference in the overall
financing costs and we are recommending that the City choose the Green Campus Partners
proposal.
The cashflows included with this memo are based on the term, interest rates (3.91%) and costs
based on the Green Campus Partners 20 year program. Because the final payment on the
financing is scheduled for July 1, 2033, which can be recovered in the operating year 2033/34,
we have effectively made the Green Campus Partners proposal payable over 21 years.
The City's financial consultant has reviewed the proposal from Green Campus Partners and
found it to be the most responsive to the City's needs Financing over a 20 year period, (2 years
of construction and 18 years of debt service) results in the following allocated dept service.
Allocated Debt Service
Li hting Water Sunrise Plant Muni Plant Total
2014 $ $ $ $ $
2015 280,000 - - - 280,000
2016 182,644 59,557 201,242 566,362 1,009,807
2017 189,020 61,636 208,267 586,131 1,045,054
2018 195,649 63,798 215,571 606,688 1,081,705
05
City Council Staff Report
March 20, 2013- Page 6
Citywide Energy Management Project
2019 202,516 66,037 223,138 627,983 1,119,675
2020 209,660 68,367 231,008 650,134 1,159,169
2021 217,046 70,775 239,147 673,039 1,200,008
2022 224,549 73,222 247,413 696,304 1,241,487
2023 232,383 75,776 256,045 720,596 1,284,800
2024 240,430 78,400 264,911 745,548 1,329,290
2025 248,834 81,141 274,172 771,611 1,375,758
2026 257,742 84,045 283,986 799,231 1,425,005
2027 267,297 87,161 294,515 828,862 1,477,835
2028 277,185 90,386 305,410 859,524 1,532,505
2029 287,490 93,746 316,764 891,478 1,589,478
2030 298,228 97,247 328,595 924,775 1,648,844
2031 309,415 100,895 340,921 959,466 1,710,697
2032 312,070 104,696 353,763 995,606 1,775,134
2033 333,210 108,655 367,139 1,033,252 1,842,256
2034 345,855 112,778 381,071 1,072,462 1,912,166
$5,120,223 $1,578,320 $5,330,077 $15,009,053 $27,040,672
Pursuant to the City's requirement that the energy and O&M savings pay for the project capital
cost, the following Tables, validated by NAM illustrate that savings are projected to cover costs.
O&M Savings
Lighting Water Sunrise Plant Muni Plant Total
2014 $ - $ $ - $ - $ -
2015 66,080 $ - $ - 66,080
2016 52,610 54,722 26,660 133,992
2017 53,392 55,639 25,649 134,681
2018 54,195 56,579 24,618 135,392
2019 54,986 57,514 23,498 135,997
2020 55,799 58,473 22,361 136,633
2021 72,078 66,301 154,701 293,080
2022 72,954 67,107 156,582 296,643
2023 73,865 67,944 158,537 300,346
2024 74,649 68,666 160,220 303,534
2025 75,469 69,420 161,981 306,870
2026 76,489 70,358 164,168 311,015
2027 77,869 71,628 167,132 316,630
2028 79,451 73,083 170,527 323,061
2029 81,073 - 74,575 174,008 329,656
2030 82,736 - 76,105 177,577 336,418
2031 84,441 - 77,673 181,238 343,352
2032 86,190 - 79,282 184,991 350,463
2033 87,984 - 80,932 188,840 357,756
06
City Council Staff Report
March 20, 2013-Page 7
Citywide Energy Management Project
2034 89,8231 1 82,6231 192,7881 365,234
$1,452,132 $ $1,308,623 $2,516,078 $5,276,832
Energy Cost Savings in $Dollars
Li hting Water Sunrise Plant Muni Plant Total
2014 $ $ - $ $ - $ -
2015 284,892 121,222 $ - $ - 406,115
2016 284,892 121,222 68,537 308,069 782,721
2017 296,288 124,071 71,279 320,392 814,030
2018 308,139 131,114 74,130 333,208 846,591
2019 320,465 136,359 77,095 346,536 880,455
2020 333,284 141,813 80,179 360,398 915,674
2021 346,615 174486 83386 374814 952,301
2022 360,480 153,385 86,722 389,806 990,393
2023 374,899 159,521 90,190 405,399 1,030,009
2024 389,895 165,902 93,798 421,614 1,071,209
2025 405,491 172,538 97,550 438,479 1,114,057
2026 421,710 179,439 101,452 456,018 1,158,619
2027 438,579 186,617 105,510 474,259 1,204,965
2028 456,122 194,081 109,730 493,229 1,253,163
2029 474,367 201,844 114,120 512,958 1,303,289
2030 493,341 209,918 118,684 533,476 1,355,420
2031 513,075 218,315 123,432 554,816 1,409,637
2032 533,598 227,048 128,369 577,008 1,466,023
2033 554,942 236,129 133,504 600,089 1,524,664
2034 577,139 245,575 138,844 624,092 1,585,650
$8,168,213 $3,475,600 $1,896,512 $8,524,660 $22,064,985
As an integral part of the financing mentioned previously there is a proposed allocation between
funds shown in Table 5 that serves to reduce costs to the City General Fund.
• One half of the Co-gen Muni capital cost is charged to the airport as they use half
of the energy generated by the plant.
• There is a $700,000 contribution from the sustainability fund used for the first 5
years of the program to pay for the Energy Resource Manager from CES.
Financial Summary
• Estimated capital cost of ECM's -$17.5 Million
• Average annual debt service cost (20yrs 3.91%) $1.35 Million
• Average annual utility savings over 20 yr period $1.37 Million
• The average reduced post project utility expense plus debt service is expected to
equal the current average annual utility expense paid by the city in recent years
• The guaranteed savings is in energy, pursuant to the proposed agreement and
council direction:
0 3.6 Million kwh energy saved per year (18%) 07
City Council Staff Report
March 20, 2013- Page 8
Citywide Energy Management Project
• 260,000 Therms saved per year (18%)
■ 108 Million gallons of water saved/year (14%)
The program's annual greenhouse gas emission reductions amount to removing 535 passenger
vehicles off Palm Springs roadways each year.
The results expected from these projects and updating of City equipment puts the City on the
sustainable track that Council has identified for Palm Springs' Future.
SUBMITTED:
Prepared by: vt 6VL
David J. Barakian
Director of Public Works/City Engineer
Approved
� y.
Tom Wilson, As ant City Manager David H. Ready, CityPgKarger
Attachments:
1. Table 1-5
2. NAM Third Party Peer Review-Executive Summary
3. Co-Gen Unscheduled Repairs
4. December 14, 2011 Staff Report
08
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Job No. 2451.o1Thirsj-Party Peer Review
SECTION 1:
��y Findings
St1f4t M RY
• CEA determined to be comprehensive
This report was produced by Newcomb Anderson McCormick and to adequately address the City's
(NAM) for the City of Palm Springs. The City of Palm Springs needs
contracted with NAM to provide a third-party peer review of a ° Guaranteed savings and costs reviewed
proposed contract with Chevron Energy Solutions (CES) and yield:
provide a review of: 0 3,610,112 kWh saved
• Energy conservation measures c 250,409 therms/yr saved
• Construction cost estimates c 144,604 ccf water saved
{ • The energy savings associated with these projects $79C,972/yr energy cost savings
• The financial savings resulting from their o $18,060,112 Program Cost
implementation c 22.5 year Simple Payback Period
• Projects have longer,payback periods
Additionally, through initial discussions with City Staff and the than typically associated with
City Council Subcommittee, specific areas of concern and efficiency measures but the scone
i project needs were noted,including: includes physical renewal measures.
! • The need for the project to address ailing cogeneration q Projected energy savings found to be
systems at the Municipal and Sunrise Plants, which are reasonable and persistent
f at the end of their useful lives • Additional main'enance and
f • Concerns about the retirement of the Sunrise non-energy benefits discussed,but not
cogeneration plant directly claimed in CEA, provide
• Concerns over the realization of energy savings from improved economics
this project,and risk management to protect the City's • MTV approach generally appropriate,
financial interests, as a loan will be obtained for the but detailed M&t plans should be
work. developed for approval prior to
construction
The results of our assessment are presented in the following ° ' Ongoing annual service payments are
report. NAM's analysis and recommendations are based on reasonabe
our review of Chevron's Comprehensive Energy Analysis and supporting energy calculations, cost estimates and
models provided by Chevron Energy Services,all of which are provided as Appendices to this report.
The Comprehensive Energy Analysis (CEA) identifies twelve individual measures addressing a range of projects
including lighting, mechanical, utility sub-metering, water conservation and solar. The proposed suite of
measures represents a comprehensive approach,and is in line with the expectations of a proposed program of
this nature. Overall,the energy savings for the measures were reviewed and found to be either reasonable, or
conservative as presented. Only energy and water savings have been accounted for, with maintenance savings
and other non-energy benefits not being claimed in the Executive Summary table (Table 1.1 of the CES CEA),
thereby making the overall approach conservative.
The costs were also found to be reasonable,and in line with industry standards for a project delivered through
an ESCO guaranteed savings contract. Hard construction costs account for approximately 70%of the total costs.
Individual measures were found to be supported with subcontractor quotes obtained by Chevron. It was
CITY OF PALM SPRINGS Newcomb j Anderson 1 McCormick
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I SECTION 1: EXECUTIVE SUMMARY
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determined that CES exercised reasonable diligence to obtain multiple quotes, and obtain the best value
solutions for the City. The remaining 30%of the cost constitute program soft costs,which were found to be in
line with expectations based on NAM's experience with similar projects. In addition to the $18M project cost,
CES also provided details regarding the ongoing annual service payments for review. The ongoing annual costs
are approximately 5%on top of the construction cost,and are reasonable.
The reviewed savings and costs from the Comprehensive Energy Analysis are presented below in Table 1.1, and
details of each individual measure are discussed in this report. It should be noted that after presentation of the
draft report to the City,further detailed review of the financial Pro Forma was requested. Subsequent changes
were made to the program,and the updated economics are discussed later in this section.
Table 1.1:Measure Summary(From Comprehensive Energy Analysis)
1 _ ,, Nnwl .; annsoli ,lrywl , Gmsa s sNer
I Elgttk 1lgmal Gas 11k'acer Utiply:: ,.. 5(mple s -` Estlmatetk Net t'Tajert sJmble;
s+MrKa d5avnrgs 9ari7�s s.anas mmauatm•, P+Y� �fN^'� Ust,' P4ybedi'
[t7x:. [adllesoipdw (kw4ryrl. 1lhermslyd ,(aaf(M (SIvO `` mat#g :.{Ymka�, 't$7'. -t41 �1$k= , lyr?(s_'
t Lighting Upgra des Interior
Ll and Exterio r0 Wsde 80.8302 ! ;$ 12p g04—._._ .... ..___ 'pee aumuaa
tlghting Upgrades Interior .._
Ll-A and Exterior Muni 1,251,068 '$ 141,204i r
.Ughting Upgrades Interior
u-B ;and Extedor5unrise
254,972 $ 22883 px>tgpaq
Ipalm canyon Ughting[ontml - -'
12 !&Remote Monitan ag $
$IbtaW tlglsGi4._ . . 3�,4t,1_4a T 5 79ABg`5 8,34Zi.00B 1]T',
@ntral%a nt COHene raiion
MI-A 'Upgrade-Muni 2809681^,
�,,,- 20.4 $ 7984478 $ 7994,478 29.2
'Energy Management control- '.273,347 5574549
M2-A .System Mum 475,969 $ 53,721 $ 817.M 15.2 $ 1,171k209:$ 24,181.$ 1,146,028 213
I Q!Mr,l Ma nt Upgra de(No - ---'
MS-8 :rngen)-Sunrise (21288561 34a081 $ 34374 $ 207502+ 6D4 j$ 2,972,933 f$ 18,114,$ 2,954,90 96.0
—B ... .__;..
s _.._.._._
Energy Management fnntrol - ---- --"" i—'—�
PA2 B i5ys tom 5unnse 1689G3 - $_.35163 $ 338366 22.3 $ 484614, -$ 484,644 32.0
!Utili Sub- _ .... . ...._ f
Ul_ jMonotori nB System.____._ r _... ._. .$ - $ 255,802-i n/a;$ 366388 ! $ 366.39 n/a
Wl Imgatlon/Water Mena Bement _304,604:$ 321,272 $ 713998 59 $ 1,02;666 i _ $ 1,022,G66. 84
Solar Photovoltaic-103kW at
Pv-iA iConwntien Center 155,442 $ 42,817 $ 444,978 10.9 $ 63],346 $ 111,124 I$ 526,222; 123
Tool 3,792,528 25],]84 14g604 $ 825,539 $ 12,fi09,086 r 253 $ ]8,060,112 $ 131,821 i$1],82],285{ 2L6
Motes:
1. Program soft costs Were not provided for review by measure,so soh costs are prorated according the construction costs-
2. Simple Payback Period calwlatiulls account only for energy savings. other benefits are not claimed in the CEA.
I 3. Gross Simple Payback Period acmums for hard construction costs,while net Simple Payback takes program costs and incentives into account
I
The total project economics presented here are not specifically shown in the CEA, and were assembled by
combining the savings presented in the CEA Executive Summary with the project costs provided independently
through the review. Consistent with CES' approach in the energy analysis,these economics do not include the
non-energy benefits.
As a result of these figures being obtained from different sources, this is the first time that a project simple
payback has been represented to NAM's knowledge. It is worth noting that the simple payback period is longer
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Job No. 2451.o1 Third-Party Peer Review
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than typical for a guaranteed savings contract,and there are two unique circumstances leading to this. First,the
proposed mix of projects is heavier on infrastructure related measures than normal. While there are moderate
energy savings associated with the central plant and energy management system measures, the payback for
these measures are expected to be longer as they are more capital intensive and incorporate more physical
renewal, replacing items that are at the end of their lives,which the City will likely have to replace anyway in the
next few years.These measures provide additional operational benefits,and provide the infrastructure for long
term energy savings, and it is recognized that CES addressed the needs of the City in selecting these measures.
The second unique factor is that CES has built in a layer of conservatism by omitting the non-energy benefits
from the savings estimates presented in the CEA.
Newcomb Anderson McCormick also performed a review of the Measurement and Verification(M&V)plans,the
contract terms with respect to energy savings and risk to the city, and the technical aspects of the individual
project. While the overall proposal is reasonable, there are a few minor items that were noted as areas of
concern. The following is a summary of the key findings,which are discussed in further detail in this report.
1. The energy savings and implementation cost estimates for both the Municipal and Sunrise Central plant
appear reasonable. However, current and future trends in both absolute and relative prices of
electricity and natural gas may have significant impacts on the overall ongoing cost savings which should
be considered by the City.
2. The smaller load served by the Sunrise Plant was found to justify the decision to decommission the
cogeneration system and replace it with a traditional central plant. The fixed costs associated with
operating a cogeneration plant outweigh the potential savings due to the size of the plant.
3. The effects of maintenance costs and savings associated with the central plant projects are as significant
as the associated energy considerations. While not directly addressed in the CEA,the maintenance cost
savings greatly improve the projects' economic benefits. At the same time, maintenance costs should
be considered while the City decides whether to keep cogenerating at the Municipal Plant.
4. The scope for the EMS upgrade should be clarified with regards to the Airport to reconcile an apparent
conflict between Attachment D and Attachment C of the CEA. The impact of this is minimal on energy
! savings,but should be clarified.
1 5. The incentives estimates appear to be reasonable and are appropriate as presented. It was noted that
incentives claimed for the lighting measure are based on the Express rebates available from Southern
California Edison (SCE). Higher incentives may be available through Customized Incentives offered
I through the Partnership with SCE,which the City may want to consider.
6. The M&V approaches are reasonable as proposed (with caveats listed below for the irrigation controls
and the Sunrise Central Plant), but detailed M&V plans should be provided to the City for review and
approval prior to start of construction.
7. Greenhouse Gas(GHG)legislation(State Assembly Bill AB32)was initially anticipated to affect the future
operation of the City's cogeneration systems. However, through further investigation at the City's
request, it was determined that the City of Palm Springs is not a "Regulated Entity" and it appears that
the impacts of AB32 will be minimal.
8. The Irrigation Controls measure is proposed as a stipulated savings measure. The savings are based on a
rule of thumb claim, and were not substantiated with solid engineering calculations. While the 30%
savings estimate is not unreasonable,it is recommended that some validation of the savings be required
in the form of short term billing analysis for a select number of meters. The savings should be evident
immediately,and Chevron has agreed in principal to discuss this with the City.
9. Chevron is proposing that a stipulated savings M&V approach be used for the Sunrise Plant project.This
CITY OF PALM SPRINGS Newcomb I Anderson I McCormick
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SECTION 1: EXECUTIVE SUMMARY 4
approach at first appears reasonable since the estimated savings are relatively small. However, the
overall energy quantities under consideration are large, which include the total electricity use and
natural gas use at the plant. Since a significant portion of the savings derives from "fuel switching',
relatively minor changes in these overall quantities can have large effects on the savings. For this
reason, NAM recommends that an International Performance Measurement and Verification Protocol
(IPMVP)Option C M&V approach be used for this measure.
10. The review of the contract terms relative to the energy savings and performance guarantees revealed
several articles or provisions that relate to construction management control mechanisms, mechanisms
for calculation of savings and risk to the City relative to the strength of the savings guarantee. NAM
recommends these be addressed prior to contract execution.
Upon presentation of the draft report to the City of Palm Springs, the City requested additional review of the
financial Pro Forma as presented by Chevron Energy Services based on the CEA. The City subsequently
requested that the solar measure be removed from the scope of work, and that the program pricing and Pro
Forma be revised accordingly.
NAM reviewed the Pro Forma provided by CES. As noted above, the CEA is conservative in that it omits non-
energy related savings. The Pro Forma analysis, however, does take the credit for non-energy operations and
maintenance savings obtained from the project. Another major component of the Pro Forma analysis not
included in the CEA are avoided cost escalation factors, which led to projections of higher savings in later years
of the project life. Yet another factor included in the Pro Forma are costs associated with project financing. A
( detailed discussion of CES's assumptions supporting the Pro Forma is presented in Section 3.4.
The assumptions put forth by CES within the Pro Forma analysis are not unreasonable, and are adequately
explained. However,, unlike the energy savings associated with the project, the non-energy operations and
maintenance savings will not be guaranteed and will not be measured and verified. Since the non-energy
savings are treated differently, NAM has generated a "worst-case" scenario,alternative Pro Forma analysis,that
i can be used to evaluate the uncertainty of possible outcomes. The"worst-case"version altered some of the Pro
' Forma assumptions regarding operations and maintenance savings to reflect a more conservative outlook.
i
Once the final version of the Pro Forma Analysis was submitted to NAM, Measure PV-1A "Solar Photovoltaic-
103kW at Convention Center" had been removed from the proposed Project. The following Table shows the
overall Project reflecting the removal of that measure.
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Newcomb Anderson I McCormick CITY OF PALM SPRINGS
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I Job No.2451.01 Third-Party Peer Review
Table 1.2: Measure Summary(from Pro Forma)
1 - AAiuet" �Aflnual Annual�'. Gross Nec'
ekchic',Aowai Gas. .W;ex Uphy; ,! Simpler rsgoraled Net Croktt sMlpla.:
Savkgs o SaWrEs Sevhgs ggv4gs C'atuLtAYlon' �U+d Ra'8�amfmt }goenlWe CasC. PaYhadc
K ECM1*a0p .IkNit+/r!1 •Ilberrns/M («iMl _f$Ivrj . -caati5)
um
IUghting upgrades-Incedor
Ll iandP riorCtyvide 805302 ! _ $ 120,804 ! '___..
'.11ghrng UP6m des Incetlor
LI-A 'and Exterior Muni
{ .. 1251,066 141204 i We amw9 ___
- LlgWfl UGHrades Intenor.. .-.. __ .__..... - —.—
U-8 land Estenor5undse 2549R: $ RB83 !W
Palmranyon Ughhng0ontrol _ .. -
L2 a Remote hasnitodng $
Srbfgtal ournas __ 2,311,342 ,_ 5 2ga.8B_ $ 2,38&763y: OA $ LL3.43g,15s S_29,W6�$ 3,3$8 747 13+8..
rrentrel Rant Wgenerahon_ I +---
M2-0. Upgrade Muni I 2809681 %337 -
___ _ -.�__ �._�_�� ,;.5 273,34]�$ 5574, 49. ..... WA 8,023,466' $ 8,023,466 29;4
'Energy Management Control
M2-A .System-Muni _ __ 475968; _„$-_53,R3 '$ 817,009 252 $ 1,175,924 $ 24181 $ 1,151,749 21.4
Antral Plant Upgrade(No
M1-e :r pr)-5unnse (2128,856)',_349081 --$ 34,374 $ 2075,622 WA $ 2,987,450 i$ 18,114 $ 2.%9,336`. 96.4
Energy Management(nntrol
M2-g $ysce jm-$undse 368,951! $ 338, 23
. $ 15,263 366 2 $ 487,011 -$ 4 '011 32A
i ;syste Sub-Me4rin88: i _..._...._ _ ..__.. -_,
U1 ...... dnB Sysem ! i_-,._._- $ __._-.-,_ $ 2558W n/a $ 368177 $ 368,177• n/a
wl Ica Hatlon/Wacer Managemen[I ' 14I,604 $ 121,222 $ 713998 59'$ 1,027,660 i $ 1,027,660 85
.__-� .__ -. . _....._____.__—�y._____..__._____.5
i -ISoiar Photowltaic-103kWat -
I ;rnovention@nter Measure removed from project at this time
T� I 3,637,086 257,744 144F04 j$ 7847LB $ W64AN I5.5 $ 17,507JW $ 12LM�$17,386,139 22211
(Notes:
1.-Program soft costs were not provided for review by measure,so soft costs are prorated according the construction costs.
2. Simple Payback Period calwlations amount only for energy savings. Other benefits are not claimed in the CEA.
3.,Gross Simple Payback Period accounts for hard construction casts,while net Simple Payback takes program costs and incentives into amount_
I
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Aa`P City Council Staff Report
Date: December 14, 2011 UNFINISHED BUSINESS
Subject: CITYWIDE ENERGY MANAGEMENT PROJECT
From: David H. Ready, City Manager
Initiated by: Public Works and Engineering Department
SUMMARY
On May 18, 2011, staff presented to Council a recommended list of energy conservation
measures ("ECMs") to be included in the overall Citywide energy management project.
At that time, Council deferred action on confirming the list of ECMs. Subsequently, on
July 20, 2011, staff presented the Comprehensive Energy Analysis ("CEA') of all City
facilities completed by Chevron Energy Solutions ("CES"), a subsidiary of Chevron
USA, Inc. CES is the City's energy services company (or"ESCO") for this project.
Staff is providing an update of the recommended list of ECMs and requesting Council
direction on a scope of the overall energy management project with which staff can
continue to pursue with CES.
Staff will return early next year to Council for your consideration of a performance
contract which will clearly define all of the project costs, project financing, utility savings
and guarantees. The performance contract recommended for Council approval will
have been thoroughly reviewed by an independent third party consultant retained by the
City to confirm the reasonableness of project costs, verify CES's baseline utility costs
and assumptions, verify CES's estimated utility savings, and validate the ability of the
project to be self-funded through the utility savings resulting from implementation of the
project.
RECOMMENDATION:
1) Direct staff to move forward with Chevron Energy Solutions on the recommended list
of Energy Conservation Measures to be included in the scope of the overall Citywide
energy management project; and
2) Approve the Comprehensive Energy Audit ("CE4J submitted by Chevron Energy
Solutions dated July 20, 2011; and
3) Direct staff to move forward with an independent third party review of the Citywide
energy management project.
107
City Council Staff Report
December 14,2011 - Page 2
Citywide Energy Management Project(City Project 09-05)
STAFF ANALYSIS:
For a detailed history and prior staff analysis of the energy management project, please
refer to copies of the July 21, 2010; May 18, 2011; and July 20, 2011, staff reports
included as Attachments to this report.
The energy management project may be grouped into three distinct categories related
to:
1) Lighting system and irrigation control retrofits
2) Utility system (Co-Gen) mechanical improvements
3) Solar Photovoltaic Systems
Category 1' Lighting System & Irrigation Control Retrofits
With regard to Category 1, CES has identified and recommended that the City pursue
retrofit and upgrade of approximately 14,000 interior and exterior light fixtures Citywide.
Lighting retrofit projects are the most common and least expensive ECM to implement.
Implementing this ECM is estimated to result in the following:
Energy Reduction: 2,088,358 kWh
Energy Savings: $264,687 Annually
Cost: $2.7 Million
Related to Category 1, CES has also identified and recommended that the City pursue
implementation of a centralized irrigation control system with a centrally located weather
station for its parks and other landscaped areas. Currently, there are 75 water meters
providing irrigation to the City s parks and landscaped areas — accounting for over 500
million gallons of consumed water per year (73% of the City's total water consumption).
This total excludes any reclaimed water consumption at the City's golf courses.
Installation of smart controllers that automatically update the watering schedule will
allow for changes in water needs as dictated by the actual weather conditions
throughout the year. Controllers will be fined-turned to the actual conditions of the City.
In addition to smart controllers, existing irrigation heads will be fitted with proper
nozzles, and inoperative irrigation heads will be replaced to provide uniformity of
irrigation throughout the City. Implementing this ECM is estimated to result in the
following:
Energy Reduction: 108,163,785 gallons of water
Energy Savings: $121,222 Annually
Cost: $976,000
These two ECM's related to Category 1 are the easiest to implement, and it is staffs
recommendation that Council approve these ECMs as part of the Citywide energy
management project.
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Citywide Energy Management Project(City Project 09-05)
Category 2: Utility System (Co-Gen) Mechanical Improvements
With regard to Category 2, it is necessary to separately consider the two different Co-
Generation Plants operated by the City, as the stories related to these two co-
generation plants are very different.
Municipal Plant
The Municipal Plant behind City Hall provides electricity, and heating/cooling to the
Airport, Fire Station No. 2, City Hall, and the Police Station. Approximately 280,000
square feet of floor space is dependent upon the Municipal Plant for utility service.
During the 2009/2010 fiscal year, the total power load on the Municipal Plant was 10.9
Million kWh. Also, with the Airport, Fire Station No. 2, and Police Station buildings
connected to the Municipal Plant, there is a sizeable amount of energy demand on a 24-
hour/day — 7-days/week (°24R") cycle. Given the high electric consumption and 24f7
operation of the facilities served by the Municipal Plant, the analysis continues to
recommend that maintaining a co-generation operation for the Municipal Plant is the
most cost effective solution. This recommendation is primarily based on the following
factors:
1. The direct cost to generate power through co-generation at the Municipal Plant is
less expensive than purchasing electricity from SCE directly ($0.12 per kWh vs.
$0.08 per kWh)'
2. Cogeneration provides not only electricity for the City's facilities, but through its
internal mechanical process, provides thermal energy (heating and cooling).
Abandoning cogeneration would require the City to spend $4.9 Million for all new
boilers and chillers to supply heating/cooling at each of the City's facilities which
would increase the City's energy consumption in order to operate this new
equipment.
3. Ail of the City's facilities provided with electricity by the Municipal Plant are
connected to a system owned by the City — not SCE. In order to abandon co-
generation and connect directly to SCE's grid, SCE would require installation of
separate electric meters at each City building. This would require extension of
underground electrical infrastructure by SCE to each point of connection at the
buildings, at an estimated cost of$4 Million.
Utility costs are from the 2009/2010 fiscal year (the baseline year) during which the
City's cost to purchase natural gas averaged $6.57 per Dekatherm. The City just
recently entered a one-year contract to purchase natural gas at a rate of $4.72 per
Dekatherm —the lowest rate in 10 years. At this rate the City's cost to generate power
through co-generation is further reduced to $0.06 per kWh —approximately half the cost
to purchase electricity directly from SCE_
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In reviewing a 20 year life-cycle analysis for the Municipal Plant, it has been determined
that upgrading the Municipal Plant with a new generator engine to continue self-
generating power is the most cost-effective solution. Specifically, the life-cycle analysis
for upgrading the Municipal Plant with a new co-generation system shows:
• Annual Utility Savings $329,430
Annual O&M Savings $132,796
Total Annual Savings $462,226
• 20 Year Savings $13.04 Million
• Capital Cost of New Plant -$8.6 Million
• Net Benefit $4.4 Million
• Measurement &Verification $167,211 average annual cost first 5 years
As a result of CES's analysis, it is recommended that the City upgrade the existing
Municipal Plant by replacing the existing 650 kW engine set with a single 1,135 kW
natural gas burning (lean-burn) engine with a 450 ton cooling/4,606 MBtu double effect
absorption chiller, and two new 2 Million Btu boilers (combined 3.4 Million Btu output) to
supplement heating/cooling of the City's facilities. The size of the engine recommended
(1,135 kW) best follows the City's electrical load pattern, allowing the engine to operate
at its most efficient capacity. A lean-bum engine is also 25% more efficient than the
existing engine set the City operates today. These recommendations will allow the City
to provide up to 850 tons of instantaneous cooling load and an 8 Million Btu heating
load at minimum operating cost.
While the Municipal Plant upgrade will address the "supply side" of the City's energy
conservation effort, it is equally important to address the "demand side" of the equation.
Therefore, in addition to the Category 1 lighting system retrofits, it is critical that the City
implement an energy management controls system to integrate the City's facilities with
the Municipal Plant operation. Currently, the City's facilities all have individual controls
for lighting and heating/cooling ("HVAC") systems — many of which are very outdated
and operate on a 2417 basis even if the space is not continuously used. To realize the
greatest energy efficiencies, a full retrofit to replace existing controls with electric
controls as part of a centralized energy management system ("EMS") ensures the City's
facilities and the Municipal Plant operate in unison, with capabilities to remote access
the operation of the various lighting and HVAC systems, and to implement the most
efficient use of these systems based on actual use of the room or building.
Based on these facts, it is staffs recommendation that Council approve this ECM as
part of the Citywide energy management project.
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Citywide Energy Management Project(City Project 09-05)
Implementing this ECM is estimated to result in the following:
Annual Electric Energy Savings: 3,326,220 kWh
Annual Gas Energy Savings: (93,672)Therms (increased cost)2
Total Energy Savings: $329,430 Annually
Cost: $8.6 Million
It should be noted that the City's Airport is a significant user of energy generated by the
Municipal Plant. For the 2009/2010 fiscal year (the baseline year for the
Comprehensive Energy Audit), the Airport consumed over 50% of the total energy
produced by the Municipal Plant. Included with the Municipal Plant improvements is a
new automated utility metering system which will give the City capability to provide real-
time power demand and energy use by the Airport. Through the City's Internal Service
Fund, the Airport is billed for its energy consumption, which offsets a significant portion
of the costs incurred in generating power at the Municipal Plant
Sunrise Plant
The Sunrise Plant at Sunrise Park provides electricity, and heating/cooling to the
Leisure Center, Library, Pavilion, Palm Springs Stadium, and Swim Center.
Approximately 70,000 square feet of floor space is dependent upon the Sunrise Plant
for utility service. During the 2009/2010 fiscal year, the total power load on the Sunrise
Plant was 2.7 Million kWh. Unlike the Municipal Plant, at the Sunrise Plant there is very
little energy demand on a 24-hour/7-day a week cycle. Given the modest electric
consumption and primarily 7 AM to 7PM energy use, the analysis recommends as the
most cost effective solution that the City retire the co-generation operation at the
Sunrise Plant and modify the plant to operate as an electric plant (distributing electricity
provided by SCE as done today when the co-generation engine is not operating)
modified with new heating/cooling equipment This recommendation is primarily based
on the following factors:
1. The co-generation engines must operate on a 24/7 cycle to run at their most efficient
peak capacity; given the fact that most of the facilities do not generate an electric
load on a 2417 cycle, excess electricity has historically been generated by the
Sunrise Plant which is sold to SCE. Although the direct cost to generate power
through co-generation at the Sunrise Plant is less expensive than purchasing
electricity from SCE directly ($0.16 per kWh vs. $0.09 per kWh), excess power is
2 This ECM results in an increase of natural gas used due to the fact that the proposed
engine will be operating more consistently throughout the year (assumed 11 months of
every year), as opposed to the current engine set which is prone to mechanical
problems and operates inconsistently and was often not operating 5 months every year.
This shows the energy shift, away from purchasing electricity from SCE at higher rates
when the engines are not operating, to purchasing more natural gas to self-generate
electricity at lower rates.
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Citywide Energy Management Project(City Project 09-05)
sold to SCE at the rate of$0.04 per kWh. Based on these rates, the City should not
operate the Sunrise Plant whereby it generates excess power to be sold to SCE.
2. The average baseline electric load on the Sunrise Plant is approximately 350 kW, a
total load that is on the lower end of a plant to be operated by a generator engine.
The limited size ranges of today's generating equipment would require the City to
invest in a new generator engine with a capacity that exceeds the baseline electric
load.
In reviewing a 20 year life-cycle analysis for the Sunrise Plant, it has been determined
that the significant capital cost and on-going operation and maintenance costs of a new
generator engine exceed the benefits of self-generating power. Specifically, the life-
cycle analysis for replacing the Sunrise Plant with a new co-generation system shows:
• Annual Utility Savings $74,899
• Annual O&M Savings $60,193
• Total Annual Savings $135,092
• 20 Year Savings $3.7 Million
• Capital Cost of New Plant -$5.1 Million
• Net Cost -$1.4 Million
Due to the smaller size and bad requirements of the Sunrise Plant, it is recommended
that the City upgrade the existing Sunrise Plant by removing the existing 650 kW engine
and abandon co-generation and simply operate a central plant taking power purchased
directly from SCE and distributing it via the existing City-owned electrical infrastructure
throughout Sunrise Park. Additionally, to maintain the City's ability to provide
heating/cooling to the City's facilities within Sunrise Park, it is recommended that a
modem, high efficiency 250 ton electric chiller and two new 2 Million Btu boilers be
installed at the Sunrise Plant. The new equipment will take advantage of the existing
Thermal Energy Storage ("TES") system. Traditional TES is a load shifting strategy that
involves making and storing chilled water at night (when the lowest electric rates apply),
and then utilizing the chilled water as the main cooling source during the day. It is a
very effective way of reducing demand capacity of the electric system by reducing
chiller loads during peak periods.
While the Sunrise Plant upgrade will address the "supply side" of the City's energy
conservation effort, it is equally important to address the "demand side" of the equation.
Therefore, in addition to the Category 1 lighting system retrofits, it is critical that the City
implement an energy management controls system to integrate the City's facilities with
the Sunrise Plant operation. Currently, the City's facilities all have individual controls for
lighting and heating/cooling ("HVAC") systems — many of which are very outdated and
operate on a 24/7 basis even if the space is not continuously used. To realize the
greatest energy efficiencies, a full retrofit to replace existing controls with electric
controls as part of a centralized energy management system ("EMS") ensures the City s
facilities and the Sunrise Plant operate in unison, with capabilities to remote access the
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Citywide Energy Management Project(City Project 09.05)
operation of the various lighting and HVAC systems, and to implement the most efficient
use of these systems based on actual use of the room or building.
Based on these facts, it is staffs recommendation that Council approve this ECM as
part of the Citywide energy management project.
Implementing this ECM is estimated to result in the following:
Annual Electric Energy Savings: (1,969,905) kWh (Increased cost)3
Annual Gas Energy Savings: 344,081 Therms
Total Energy Savings: $32,816 Annually
Cost: $3.4 Million
Category 3: Solar Photovoltaic Systems
With regard to Category 3, there were two solar photovoltaic systems previously
proposed to Council:
1. 103 kW solar system at the Convention Center
2. 439 kW solar system at Sunrise Pavilion Parking Lot
Convention Center
As part of its direction to staff at the May 18, 2011, Council meeting, the Council
authorized staff to apply to the California Solar Incentive Program to secure $111,124 in
Performance Based Incentives for a solar system at the Convention Center. Staff has
applied for and secured this incentive in the event Council proceeds with implementing
a solar system application at the Convention Center.
As outlined to Council on May 18, 2011, the proposed 103 kW solar system at the
Convention Center would be constructed on the roof of the building, and although
unseen by the public a real-time electronic display would be installed at a location inside
the Convention Center to showcase generation of solar power at the facility. A solar
system installed over the entire roof area of the Convention Center would generate
approximately 1,344,000 kWh annually. However, the cost of a solar system of that
size is approximately $4.5 Million and would only generate 60% of the 2,220,000 kWh
used by the Convention Center in 2010.
3 This ECM results in an energy shift, away from self-generating electricity through
natural gas co-generation to purchasing electricity from SCE. Given the fact that the
Sunrise Plant generates too much electricity (at a cost of$0.09 / kWh) with excess sold
back to SCE (at a rate of$0.04/kWh), continuing to operate the Sunrise Plant results in
a net overall cost to the City, and it is more economical to abandon co-generation at the
Sunrise Plant as recommended.
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Citywide Energy Management Project(City Project 09-05)
The size of the system is recommended as it is the smallest system that qualifies for the
SCE renewable energy rate reduction, R-Rate (to qualify, at least 15% of the current
overall energy demand at the Convention Center must be provided by the solar
system). A larger solar system is not being recommended as the capital cost of the
solar system is significant.
The capital cost of a 103 kW solar system at the Convention Center is approximately
$600,000. Considering this cost separately, if financed over 20 years at 4.75% the
annual debt service would be approximately $46,500. The 103 kW solar system can
generate 155,442 kWh of power, equivalent to $42,817 in utility savings. Thus, the 103
kW solar system at the Convention Center is very close to a net-neutral cost ECM, in
that it can be paid for from savings. However, the 103 kW solar system generates only
a small amount of the total energy used at the Convention Center, and will not offset a
majority of its total SCE utility charges($330,000 in 2010).
Based on the fact that this ECM is merely a net-neutral cost, it is Council's choice
whether or not to approve this ECM as part of the Citywide energy management project
Implementing this ECM is estimated to result in the following:
Energy Reduction: 165,422 kWh
Energy Savings: $42,817 Annually
Cost $600,000
Sunrise Pavilion Parking Lot
The proposed 439 kW solar system to be installed at Sunrise Park was proposed on
new shade structures within the Pavilion Parking Lot. The shade structures with solar
panels would provide covered parking and an opportunity to self-generate solar power.
A solar system at Sunrise Park would be beneficial in that it would offset the total power
load on the Sunrise Plant, however, the high capital cost of a 439 kW solar system
exceeds the utility savings that result.
The capital cost of a 439 kW solar system at the Sunrise Pavilion Parking Lot is
approximately $2.7 Million. Considering this cost separately, if financed over 20 years
at 4.75% the annual debt service would be approximately $209,500. Although, the 439
kW solar system can generate 661,814 kWh of power, equivalent to $69,613 in utility
savings, the 439 kW solar system at the Sunrise Pavilion Parking Lot is not a net-
neutral cost ECM, and cannot be paid for from savings. Based on this fact, it is staffs
recommendation that Council not include this ECM as part of the Citywide energy
management project.
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Citywide Energy Management Project(City Project 09-05)
Project Benefits
The benefits of implementing all of the recommended energy conservation measures as
a single energy management project include:
• Energy Reduction = 3.6 Million kWh = 18% reduction of total energy used
• Annual Electric Savings = $499,690
• Solar Generation = 155,442 kWh
• Natural Gas Reduction = 250,409 Therms = 18% reduction of total natural gas used
o Annual Gas Savings=$170,060
• Water Savings = 108 Million Gallons = 10% reduction of total water used
• Annual Water Savings = $121,222
Additionally, this program will provide new energy efficient equipment for the City's
antiquated energy systems, and replace equipment currently in service that is beyond its
useful life.
FISCAL IMPACT:
Implementation of all of the ECMs recommended for approval is estimated at
$16,275,000. Using a financing rate of 4.75% over 20 years requires an annual debt
payment of approximately $1 Million. As shown on the table on the following page,
according to CES's analysis, after implementation of all of the ECMs, approximately
$1.2 Million in utility and O&M savings will be realized and will offset the annual debt
service required to pay for construction.
This was the underlying factor of this project — that it would be a "paid from savings"
project requiring no upfront capital investment.
As the City would incur additional debt to pay for this project (paid from energy and
O&M savings), the City will be required to maintain existing budget levels for utility and
O&M costs. According to CES's analysis, after the project is implemented the reduced
utility costs will result in a surplus of funds from which the debt service is paid, The key
issue here is that, although savings are realized, those savings pay for the project.
Therefore, moving forward on an annual basis the City will need to maintain its current
budget levels for utility costs to ensure the savings are available to pay the debt service.
As a condition of a performance based contract with CES, CES will guarantee that
these savings occur for a five year period.
The guarantee occurs through a Measurement and Verification program implemented
by CES as part of the performance contract. Over the first 5 years of this program at an
average cost of $167,211 annually, CES will monitor and verify the lighting system
upgrades, the Municipal Plant and energy management control system operation, and
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City Council Staff Report
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Citywide Energy Management Project(City Project OM5)
solar photovoltaic system operation to ensure that the efficiencies in energy generated
from the new equipment are achieved.
Energy usage, facility operational changes, gas costs and utility rates are dynamic and
must be closely monitored to ensure that energy savings guaranteed are achieved.
CES's proposal is to guarantee the savings of the installed program. To provide project
savings reports, detailed ongoing measurement and evaluation must be completed.
CES's Measurement & Verification Program provides constant monitoring of the
implemented ECM's to verify savings, and ensure the City's compliance with state
requirements for solar incentives. Monitoring of systems will be performed on a daily
basis and an Energy Resource Manager provided by CES will be onsite 20 hours per
week to verify that installed equipment is operating as guaranteed.
Annually, CES will prepare a report that identifies the actual utility costs incurred and
compare them to utility costs that were estimated to occur absent implementation of the
energy management project This will clearly identify if, and to what degree, the
estimated utility savings were achieved. In the event utility savings are not achieved,
CES guarantees the savings by modifying or replacing installed equipment at their cost
as may be necessary to achieve the guaranteed savings. Ultimately, if CES is unable to
achieve the guaranteed savings, CES provides the City cash payments equivalent to
those savings to make up the difference.
The following table identifies the City's various utility related costs for the 2008/2009 to
2011/2012 fiscal years:
Co-Gen
YEAR Electricity Gas Water O&M Total
08/09 $1,769,830 $1,421,833 $618,180 $589,849 $4,399,692
09110 $1,594,605 $838,147 $632,731 $582,167 $3,647,648
10/11 $1,681,721 $693,470 $706,969 $639,157 $3,721,318
What the above Table identifies is the fact that overall utility costs have decreased since
the 2008/09 fiscal year, primarily due to the significant decrease in natural gas prices.
Annual electricity costs have fluctuated at an average of$1,682,052 over the three year
period, and will continue to escalate in the future as utility rate increases are
implemented.
The Comprehensive Energy Analysis used the 2009/10 fiscal year as a baseline model
year, and determined (from the SCE and natural gas utility rates in effect at that time)
that implementing the recommended package of ECM's will result in the following utility
savings:
Co-Gen
Electricity Gas Water O&M Total
Savings $499,690 $170,060 $121,222 $361,671 $1,152,643
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Citywide Energy Management Project(City Project 09-05)
The total annual savings achieved by implementing this project will be sufficient to pay
the debt service on the total capital cost of the project.
The 2009/10 fiscal year was a good representation of the City's operations, considering
that in that fiscal year the Municipal Plant's engines operated more consistently than in
the 2010111 and current fiscal year. Although utility savings from the baseline year
factored the City's average cost for natural gas of $6.57 per Dekatherm, and the City
just entered into a one-year contract on purchase of natural gas at a lower rate of$4.72
per Dekatherm, the 2009110 fiscal year remains an appropriate baseline year given the
historic volatility of the natural gas market. As shown in the Chart below, the natural
gas price has varied from a low of $4.56 during the 2002/2003 fiscal year to a high of
$13.06 in July 2008.
Gas Price
$14.00 -,-- --
$12.00
$10.00 —
$a00 T—
$dUo
$4.00 —
$2.00 ' —Gas Price
$0.00
M vt N Yf tD n n OD CC O O � .�-1 W eta
z ? ' z z° z° z' z°
c o 9 0
0 0 0
The following table is specific to the Municipal Plant, and identifies how its costs were
distributed by Fund:
YEAR Airport 415 MVR 510 Facilities 520 Total
08109 $1,750,832 $97,228 $946,323 $2,794,383
09/10 $1,593,121 $92,158 $776,587 $2,461,866
10111 $1,546,377 $92,505 $885,858 $2,524,740
As shown in the Table above, the Airport's portion of Municipal Plant costs averages
63% of the total cost to generate power at the Municipal Plant, consistent with its total
use of energy. As the single largest user of energy from the Municipal Plant, the
improvements to be made to the Municipal Plant will allow the City to more efficiently
generate power for the Airport, and significantly reduce the amount of excess power
purchased from SCE (at a much higher rate) required to satisfy the Airport's high energy
demand, particularly in the summer.
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Citywide Energy Management Project(City Project 09-05)
Following Council's approval of the list of ECMs to be included in the scope of the
overall Citywide energy management project, staff will work with CES to finalize the
guaranteed fixed price to design-build all of the improvements. CES's proposal will
subsequently be reviewed by a third party to verify that all of the proposed costs are
reasonable with industry standards, that the resulting utility and O&M savings are
appropriate, and that the performance contract proposed by CES establishing the
financial terms to the City for financing construction and implementation of the project is
supported.
After a competitive consultant selection process, staff has retained Newcomb Anderson
McCormick, Inc., to provide the third party independent review of this project. Their
contract fee, not to exceed $25,000, will be paid from the Sustainability Fund (account
138-1270-43200).
Following the independent third-party review of the financial terms of the CES's
performance contract, if the baseline assumptions and estimated savings are verified,
staff will schedule Council approval of the performance based guaranteed fixed price
contract with CES (estimated by April 2012).
This project will be financed directly between the City and a financial institution of the
City's choosing; CES, or its parent corporation Chevron, Inc., will not finance this
project. CES recovers its costs for the engineering phase through the construction
contract, and as the General Contractor will include an appropriate overhead margin on
its administration. The overhead margin and all other terms and conditions of CES's
performance contract will be reviewed by the independent third-party consultant. The
performance contract's terms and conditions will be outlined in a future staff report to
Council at the time it is scheduled for approval.
The action taken at this time does not commit the City to constructing any of the
measures recommended for approval; it merely confirms for CES the scope of the
energy management project from which they can seek bids and finalize their
performance contract for City approval. However, in the event the Council determines
not to proceed with the energy management project, pursuant to the terms of the
current agreement between the City and CES approved by Council on July 21, 2010,
the City is obligated to pay CES a project fee of $250,000 as payment for its costs to
develop and complete the Comprehensive Energy Audit ("CEA") filed with the City
Council on July 20, 2011, in which the recommended ECMs have been identified. In
that case, the reports, analysis and recommendations outlined in the CEA would remain
the property of the City for our reference in any future energy management project.
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Citywide Energy Management Project(City Project 09-05)
SUBMITTED:
Prepared by: Recommended
by:
Marcus L. Fuller David J. Barakian
Assistant Director of Public Works Director of Public Works/City Engineer
Approved by:
Thomas J. Vy9on, Asst. City Manager David H. Ready,, 2 r�IV ra efer-
Attachments:
July 21, 2010; May 18, 2011; and July 20, 2011, staff reports
119
j ���7ALM sp4
iy
Citv Council Staff Re Dort
Date: July 21, 2010 NEW BUSINESS
Subject: APPROVAL OF A PROFESSIONAL SERVICES AGREEMENT WITH
CHEVRON ENERGY SOLUTIONS COMPANY, A DIVISION OF
CHEVRON U.S.A., INC., FOR THE CITYWIDE ENERGY MANAGEMENT
PROJECT, CITY PROJECT NO. 09-05
From: David H. Ready, City Manager
Initiated by: Public Works and Engineering Department
SUMMARY
On June 17, 2009, the City Council approved the release of a Request for Statements
of Qualifications (SOQ#11-09), for Energy Management Services. In keeping with the
City Council's endeavor to implement sustainability measures throughout the City, the
Ckty's SOO solicited qualifications from firms that specialize in analyzing the energy
efficiency of buildings and equipment, and to determine a range of solutions to
implement that result in energy cost savings which may be used to offset the capital
expense of implementing those energy efficiency measures.
Following a competitive, technical two-part qualification process, Chevron Energy
Solutions ("CES'), a subsidiary of Chevron USA, Inc., was selected as the most
qualified Energy Services Company("ESCO")for this project.
RECOMMENDATION•
1. Approve Agreement No. with Chevron Energy Solutions, a division of
Chevron USA, Inc., for energy management services for the Citywide Energy
Management Project(City Project 09-05); and
2. Provide direction on the use of energy savings (maximization of general fund
savings versus maximization of energy efficiency measures paid for with energy
efficiency savings); and
3. Provide direction on the use of solar photo-voltaic power at the Airport and City
Hall parking lots as one available option to generate additional power to meet
demand.
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Citywide Energy Management Project(City Project 09-05)
STAFF ANALYSIS:
Background
The City of Palm Springs owns,operates, and maintains a variety of facilities throughout
the City, ranging from fire stations, libraries, a Convention Center, a police station, an
airport, recreation facilities, as well as two co-generation power plants. The cast to
operate and maintain all of these various facilities is a substantial burden to the City's
General Fund.
The 2010/2011 fiscal year budget set aside significant General Fund revenue for
operation and maintenance of the Citys various facilities. Departments budget a
•Facilities Maintenance Service"fee,which is used to offset operation and maintenance
expenses for the City. In the 2010/2011 fiscal year, the City budgeted approximately
$3,500,000 for Facilities Maintenance Service fees to offset its operation and
maintenance expenses for the year, which covers building maintenance and repairs, co-
generation plant special parts and repairs, and utilities(water, gas and electricity)_
The 2010/2011 fecal year budgeted$480,000 for electricity, and $1,470,000 for natural
gas for the City's two co-generation plants. Of the$1,470,000 budgeted for natural gas,
$1,015,000 is budgeted for the Municipal co-generation plant, and $455,000 is
budgeted for the Sunrise co-generation plant.
To address the City's high energy costs, staff previously prepared a Request for
Statements of Qualifications(SOQ)which states the following purpose:
The City of Palm Springs is requesting statements of qualltications (SOO's) from
qualified energy services companies (•ESCOsJ to provide the city with Energy
Management Services to provide a Comprehensive Energy Audit (CEA) to
develop a set of programs that wilt be combined as a performance-based single
energy project with the intended purpose to save energy, reduce greenhouse gas
emissions and cut the City's energy and maintenance and capital equipment
expenditures throughout all of the City's facilities, including two co-generation
plants.
The selected ESCO will perform an audit of all of the City's facilities to ensure
appropriate HVAC (heating, ventilation and air conditioning) measures are identified
(such as upgrading thermostats, installing programmable lighting sensors, etc.), with
more important attention given to the co-generation plants to identify cost-effective
solutions to improving their pedormanoe while decreasing their operating and
maintenance costs. Although the purpose of the SOQ was to find the most qualified
firm to provide energy management services City-wide, the focus of the ESCO's
attention will be given to evaluating the City's co-generation plants, to make them more
energy efficient, given they satisfy a majority of the City s energy demands.
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i July 21,2010-Page 3
Citywide Energy Management Project(City Project 09-05)
Consultant Selection Process
On June 17, 2009, the City Council approved of the release of the SOO,and authorized
the City Manager to appoint an Evaluation Committee to review and recommend the
most qualified ESCO responding to the City's solicitation. The Evaluation Committee
appointed by the City Manager consisted of:
Jan Anderson, Facilities Maintenance Manager
David Barakian, Detector of Public Works/City Engineer
Marcus Fuller,Asst. Dir. of Public WorkstAsst City Engineer
Wil Kleindienst, Architectural Advisory Committee Member
Michele Mician, Manager of.Sustainability
Mark Nichols, Sustainablity Commissioner
Doug Wylie, Sustainability Commissioner
Although the SOO was advertised locally in The Desert Sun, staff researched listings of
ESCOs registered in the state, as well as national registrations, and made efforts to
outreach to all recognized ESCOs that could be found. Due to the highly technical
nature of this project, with its focus on co-generation technology, staff did not expect or
anticipate that small local vendors would respond to the SOO. However, a local
preference criterion was included in the SOO to give a primary firm an advantage for
including local firms as part of their team.
The firms initially responding to the Cty's SOO were:
• Ameresco; upland, CA
• Chevron Energy Solutions; Pasadena, CA
• FPT Group; San Diego, CA
• JCI —Building Efficiency; Milwaukee,WI
• SIEMENS Building Technologies; Cypress, CA
• Veolia Energy; Diamond Bar, CA
The Evaluation Committee reviewed the documents submitted by the 6 firms, and
independently evaluated the firms based on the criteria included in the SOO. The
Evaluation Committee met and discussed the qualifications of the firms, and ultimately
determined that 5 of the 6 firms warranted further evaluation (FPT Group was
disqualified pursuant to the criteria established in the SOO).
As the solicitation requests services that are highly technical in nature, staff prepared a
second step to the evaluation process, where firms were required to respond to a
technical exercise to provide the City with an example of the nature, quality and extent
of their technical services. Finns were required to prepare a technical memorandum
discussing opportunities to address the energy challenges represented by the City's two
co-generation plants, as well as water supply demands at Sunrise Park. Instructions
iw2
City Council Staff Report
July 21,2010-Page 4
Citywide Energy Management Project(City Project 0"5)
1 and parameters of the second phase of the solicitation process were provided to the
ifirms.
i Four of the five firms that passed the initial evaluation process agreed to proceed to the
second step of the evaluation process (Veolia Energy elected not to continue with the
solicitation process). The final four firms participating were:
• Ameresco; Upland, CA
• Chevron Energy Solutions; Pasadena, CA
• JCI—Building Efficiency; Milwaukee, WI
• SIEMENS Building Technologies; Cypress, CA
The required technical memoranda were submitted to the City by the March 29, 2010,
deadline, and on April 29, 2010, final interviews were conducted with each of the four
firms. The Evaluation Committee, after reviewing the technical memoranda and
conducting the formal interviews, by a near-unanimous decision, selected Chevron
Energy Solutions as the most highly qualified firm for this project.
Why Chevron?
One of the first issues the Evaluation Committee addressed in selecting Chevron
Energy Solutions (°CES") is the potentially negative association of Chevron USA (its
parent company) with the environment, and how or why CES may be the best firm to
address energy efficiency issues for Palm Springs in its efforts to become more
sustainable and energy independent. On this issue, CES was best prepared, and offers
the following facts for the Chy's consideration:
• Largest California—based ESCO
• Chevron owns, operates and maintains over 3,100 MW of co-generation plants
• Largest solar provider in California's public sector(over 30 MW installed)
• Fortune 3 company with over 130 years in California backing performance
guarantees
• 98.7% success rate in achieving energy management project savings in a current
portfolio of$430 million in performance guarantees
• Successful placement of over $1.260 billion in combined project financing for
customer performance contracts
• Provides unbiased recommendations—vendor neutral
• Has corporate commitment ttY Palm Springs' Path to Sustainability
First and foremost, Chevron is an energy company. As a company that uses
California's natural resources to produce energy, Chevron bears a special responsibility
for California's environment. Their corporate environmental vision and the City's
environmental vision are aligned.
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City Council Staff Report
July 21, 2010-Page 5
Citywide Energy Management Project(City Project 09-05)
Chevron is committed to energy efficiency and conservation, actions that Chevron
makes every day. To raise public awareness of the impact even small steps can
contribute, Chevron launched the `I will" campaign; a public outreach campaign to
highlight awareness for energy efficiency. For more information, visit their website:
www.willyoujoinus.com
CES partners with businesses and institutions to help lower their overall energy costs in
ways that improve their financial performance. Through energy efficiency, energy
management and power system solutions, CES helps customers use less energy, pay
less for energy, and ensure reliable, high-quality power for critical operations.
CES also provides the energy efficiency best practices and technical expertise to its
parent company, Chevron, at facilities around the world. Because energy costs are
Chevron's third largest expense, CES is focused on saving energy, saving the
environment and saving money, all from an owner's perspective. On an annual basis,
CES saves Chevron nearly $100 Million by implementing energy efficient operations at
Chevron's facilities_
The Evaluation Committee was impressed with CES's commitment to energy efficiency,
its extensive experience in the public sector on performance based and financially
guaranteed energy management projects, and by a near-unanirrwus decision, the
Committee determined CES to be the most qualified firm to provide the City with the
required services.
Palm Springs'Journey into Power Generation
A History of the Co-Generation Plants
In May 1985,the City of Palm Springs began to supply its energy needs through the use
of two co-generation plants. The larger of the two plants (the Wunicipal'co-generation
plant) grates elechicity, heating and air conditioning for the City's Municipal
Complex: a group of government buildings consisting of the City Hall, Police Station,
Fire Station No. 2, Airport and Riverside County administration buildings. The smaller
of the two plants (the "Sunrise" co-generation plant) generates electricity, heating and
air conditioning for the Sunrise Plaza, the City's recreational center consisting of the
library, entertainment pavilion, administrative offices and community swimming pool.
Spiraling utility costs forced the City to examine alternative energy sources. Although
the City instituted strict energy conservation measures in 1980, the City was paying
$1.3 Million in energy costs in 1984, double what was paid in 1978. At the time, many
alternative sources of energy were studied:methane recovery, hydro power, geothermal
energy, wind resources, solar energy, and co-generation. Of all of these alternative
sources of energy studied, the co-generation process was determined to be the best
process for the City.
124
City Council Staff Report
July 21,2010-Page 6
Citywide Energy Management Project(City Project 09-05)
Co-generation is the sequential production of two energy forms, usually steam and
electricity, from a single fuel source. In our case, natural gas is used as fuel to run
reciprocating engines that turn generators to create electricity. Waste heat (heat
created by a running engine)that would normally escape into the air, is recovered from
the engines and passed through an absorption chiller to provide cold water for air
conditioning. Alternatively, in the winter, waste heat is used to heat water for space
heating and hot water needs. Co-generation proved to be the most appropriate
alternative energy solution for Palm Springs due to the Citys tremendous cooling
requirements in the summer.
Facility Facts, Municipal Co-Generation Plant:
• Two 660 kW enginelgenerator sets
• 360 tons of absorption chilling capacity
• 400,000 gallon thermal energy storage(TES)tank
• 3 miles of underground electrical and thermal distribution lines
Facility Facts, Sunrise Co-Generation Plant
e One 650 kW engirWgenerator set
• 130 tons of absorption chilling capacity
• 137,000 gallon thermal energy storage(TES)tank
• 1 mile of underground electrical and thermal.distribution lines
The two co-generation plants initially cost $6,292,691 (including planning, engineering,
legal fees, etc.). This cost was financed through the City's sale of Certificates of
Participation from the Citys Public Facilities Corporation, in the amount of$11,820,000
on April 1, 1984. This bond sale also included $2.5 Million for construction of the new
police station'
At the time the co-generation plants were constructed, they were intended to
accommodate 100% of the.CiVs energy needs at the Municipal complex and Sunrise
recreation area. (All other City facilities not connected to the co-generation plants
remain dependent on SCE for electricity). The City expected to use only 50%-55% of
the electricity generated by the co-generation plants, with excess sold to SCE,
anticipating that the co-generation plants would generate $16 Million in excess
electricity sales to SCE over 20 years following construction.
For the Sunrise co-generation plant, the City realizes the sale of excess electricity
generated year-round. The electrical load on the Sunrise co-generation plant is slightly
1 The original bonds were scheduled to mature in 2W6, but in 1996 the outstanding
debt on these bonds was consolidated with other debt being carried on several facilities,
extending the maturity date for the bonds to 2026.
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July 21,2010-Page 7
Citywide Energy Management Project(City Project 0g-05)
less than half its capacity (300 kWh of the 650 kWh generated). From July 1, 2007, to
June 30, 2008, the City realized $137,243.14 in electricity sales to SCE from the
Sunrise co-generation plant.
For the Municipal co-generation plant, the story is somewhat different. Following the
City's expansion of the Airport, the total energy demand on the Municipal co-generation
plant significantly increased; (expansion of the Airport was not considered in the original
design of the Municipal co-generation plant). The energy demand has increased so
much so, that, in the summer months the co-generation plant is unable to generate
electricity to meet our energy demands. Whereas the two 650 kW engine/generator
sets are capable of generating 1,300 kW of electricity, in the summer the total electrical
load is 300 to 400 kW more than the 1,300 kW that can be produced.
This fact requires the City to purchase additional electricity from SCE. The 2010/2011
fiscal year budget allocates over $f,200,000 for electricity from SCE. Of this total,
$400,000 is budgeted for additional electricity for the Municipal cogeneration plant(due
to the inability of the plant to meet the electrical load demand imposed by the Airport);
$80,000 is budgeted for electricity for the Sunrise co-generation plant(to allow the plant
to go off-line for annual maintenance); $220,000 is budgeted for electricity for traffic
signals and street lighting; and the balance is budgeted for electricity at various facilities
throughout the City.
Why not abandon the co-gen plants?
The City's investment in the co-generation technology is significant, and staff does not
recommend that the City consider abandoning the co-generation plants (particularly
considering the fad that the City continues to carry outstanding debt on its initial
construction). Furthermore, to abandon the City's generation of power would require
significant investment (in excess of several million dollars) to install SCE owned
infrastructure to conned all of the municipal facilities to the SCE grid, as SCE would not
likely consider the City s electrical distribution grid equal to theirs.
The co-generation plants have tremendous value to the City, and although the
Municipal Co-Generation Plant can not currently meet the City's total energy demand
(particularly due to the Airport), measures can be taken to improve the efficiency of the
plant, to increase its power output, and to eliminate the need to purchase excess
electrical power from SCE.
How to address the Municipal Co-Generation Plant's inability to meet the City's total
energy demand was one of the specific issues CES was required to address as part of
2 The unit "kWh" refers to the amount of power, expressed in terms of 1,000 watts (i.e.
kilowatts), generated in one hour. Therefore, a 650 kWh engine can generate 650,000
watts of power in one hour.
City Council Staff Report
July 21,2010-Page 8
Citywide Energy Management Project(City project 0"5)
the second phase of the solicitation process_ In CES's technical memorandum, CES
estimated that $430,000 may be saved annually through a combination of energy
efficiency and conservation measures (new lighting controls, energy efficient lights, new
efficient HVAC equipment, energy management system, etc.), and making
improvements to the co-generation plant. Specifically, CES's initial recommendations
are to replace the existing 650 kWh engines with "lean-bum" engines, or lean
combustion reciprocating engines that meet much more strict air quality control
requirements. CES estimates that lean-bum engines will produce 25% more power
than the existing 650 kWh engines with the same amount of fuel consumption_
Ano0w component to CES's initial strategy to address the City's challenges at the
Municipal Co-Generation Plant is to increase the size of the existing Thermal Energy
Storage(TES) . Generally, the 400 kW of excess power demand from the Airport is due
to the large air conditioning bad at the Airport during the summer. By doubling the size
of the TES, an additional 700 tons of cooling for four hours a day world help satisfy the
shortfall in cooling at the Airport while eliminate the peak load shortfall of 400 kW.
Staff expects CES will be able to assemble a successful energy management project
that, with certain mechanical changes to the Municipal Co-Generation Plant, wig enable
the City to once again meet the energy demand placed upon it by the municipal facilities
that rely on it for energy.
Solarpower
One available component of a successful energy management project is photovoltaic
power self-generation. It has already been demonstrated that the Municipal Co-
Generation Plants engines do not produce sufficient power to meet peak demand;
however, installing new engines to meet the peak demand may not be the most cost
effective, or sustainable option. There are opportunities in and around the City Hall and
Airport(particularly the parking lots)where solar shade systems and solar roof-mounted
systems could be considered as a means to supplement power generated by new
engines in the Municipal Co-Generation Plant CES's initial recommendation indicated
in.their technical memorandum included se"eneration of 750 kW of solar power. CES
estimates that, with 750 kW of solar power combined with new lean-bum engines at the
Municipal Co-Generation Plant,the City can reduce its natural gas consumption by 45%
(a savings of approximately$450,000), and also eliminate the need to purchase excess
electricity from SCE (estimated at$400,000 this fiscal year).
A-critical decision for City Council to consider is the installation of solar power facilities
in and around City Hall and the Airport. The best opportunity for solar power facilities is
8 A Thermal Energy Storage (TES) system is a giant underground cold water storage
tank; when buildings need cold water for air conditioning, it is taken from the storage
tank and circulated through the buildings for cooling, then returned to the storage tank
where it is continuously chilled by the absorption chillers within the co-generation plant.
127
CJtj Council Staff Report
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City Council Staff Report
i July 21,2010-Page 11
Citywide Energy Management Project(city Project 09-05)
expediting and financing energy conservation measures. This statutory procedure
eliminates the necessity to separately contract for the design and construction phases
of a project, as well as eliminates the public bidding process.
This project will use this legislation to the Citys fullest advantage. The legislation
encourages public agencies to develop energy conservation, cogeneration and
alternative energy supply sources at public facilities in order to implement the policy of
the State of California as set forth in Public Resources Code 25008, which states its
intent
"...to promote aN feasible means of energy and water conservation and all
feasible uses of altemative energy and water supply sources."
The legislation further states:
"The provisions of this chapter shah be constwed to provide the greatest possible
fiexibirtty to pubic agencies in structuring agreements entered into hereunder so
that economic benefits may be maximized and financing. and other costs
associated with the design and construction of alternative energy projects may
be minimized. To this end, public agencies and the entities with whom they
contract under this chapter should have great latitude in characterizing
components of energy conservation facilities as personal or real property and in
granting security interests in leasehold interests and components of the
alternative energy faciNhas to project lenders.'
What this legislation does is allows the City to sole-source an energy conservation
project to an individual firm, provided the energy conservation project has the following
results:
(1) The anticipated cost to the public agency for thermal or electrical energy or
conservation services provided by the energy conservation facility under the contract
will be less than the anticipated marginal cost to the public agency of thermal, electrical,
or other energy that would have been consumed by the public agency in the absence of
those purchases; and
(2) The difference, if any, between the fair rental value for the real property subject to
the facility ground lease and the agreed rent, is anticipated to be offset by below-market
energy purchases or other benefits provided under the energy service contract.
Many local agencies have used this legislation to implement energy conservation
measures at their facilities that otherwise would not be implemented dire to fiscal
constraints. With the implementation of energy efficiencies,various local agencies have
seen reductions in their energy use and costs, and have been able to replace old
equipment that has had high operational and maintenance costs.. The up front capital
costs normally necessary for construction and implementation of energy conservation
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City Council Staff Report
July 21,2010-Page 12
Citywide Energy Management Project(City Project 09-06)
projects is financed and offset by the corresponding energy efficiency and conservation
savings that result from the project.
Therefore, there will be no out-of-pocket expense for the City to pursue design and
construction of the energy management project, which will be financially guaranteed by
CES through a performance based contract based on the final energy management
project selected by the City that results in energy efficiency savings City wide.
Genera/Fund Savings vs. Energy Efficiency Measures
A critical issue to consider is what the City Council's expectation is for the results or
outcome of an energy management project ultimately developed by CES in consultation
with staff. Given the City's current economic crisis and on-gang budget deficits, staff
understands the need to find General Fund savings wherever possible. Thus, this
energy management project is vital to ensuring the City is spending its money wisely.
Currently, given the inability of the City$ Municipal Co-Generation Plant to meet peak
power demand, and the outdated WAC and fighting equipment throughout facilities
City-wide, the City is spending money to produce power while spending even more
money to buy power. Measures can be implemented to eliminate this practice and to
make the City much more efficient in its use of resources, its generation of power, and
reduce its overall dependence on electricity and natural gas.
Because the energy management project is self-funded by the energy efficiency and
conservation measures implemented, the overall scope and cost of the project is
dictated on exactly how much savings is estimated and how those savings are used.
In simpler terms, the City can choose to use all of its energy savings to pay for
construction of energy efficiency and conservation measures City-wide, where the City
ultimately pays nothing for the benefit of reducing its overall energy use and being much
more efficient and sustainable in its practices than it is today. Or, the City can choose
to use only as much of its energy savings to implement those energy efficiency and
conservation measures determined to be most cost-effective (such as improving the
j efficiency of the Municipal Co-Generation Plant), while reserving the remaining savings
to be used at the City's discretion as pure General Fund realized savings.
The following graphic demonstrates the choice to be made:
City Council Staff Report
I July 21,2010-Page 13
Citywide Energy Management Project(City Project Og-05)
!P
CES will be tasked with developing a cost-effective, self-funded energy management
project, where all of the costs for design and construction are financed through annual
energy savings realized by those measures. The question is: does the City Council
want the most energy efficiency measures implemented resulting in less realized
Genera( Fund savings for discretionary use, or a.project limited to only those energy
efficiency measures deemed critical resulting in more realized General Fund savings for
discretionary use?
For the most part, there will be certain mechanical and equipment costs which will be
necessary (stew HVAC equipment, lighting systems, energy management systems,
etc.). The most expensive component of the energy management project will likely be
related to the new engines for the co-generation plants, and expansion of the Thermal
Energy Storage (TES) systems which will provide the greatest energy efficiencies
available to the City. The question on this matter, of"it would be nice to have° vs. 'we
must have"is particularly related to installation of solar power facilities in and around the
City Hall and Airport parking lots. Installing solar power on fiat-roofs is common, but
can lead to complications especially given older roofs prone to leaking, or roof tops that
have miscellaneous equipment that can not be removed or relocated without great
expense. The easiest method to install solar power facilities in our case would be by
constructing shade strictures in parking lots, and it is the cost of the shade structures
(and related parking lot improvements) that add to the overall cost of the solar power
generation system which ultimately must be paid'for by the energy savings resulting
from the system. It is the capital costs of the shade structures and parking lot
improvements related to the solar power generating facilities that would ultimately
reduce the overall General Fund savings that might otherwise be available in the
absence of any solar power facilities.
City Council Staff Report
July 21,2010-Page 14 '
Citywide Energy Management Project(City Project 09.05)
CES can provide a range of opportunities, with a variety of solar power generating
sizes, in the menu of items to include in the final energy management project. If the
City Council ultimately determines that solar power should be a critical element of the
overall energy management project, it will be important to choose a system of
appropriate size where it is cost effective to construct the system and it generates
sufficient power, as opposed to merely constructing a very small system as a token
effort to include solar power in the project at a high cost with relatively little solar power
generated from f.
Mat happens from here?
This project will consist of two phases. The first phase of the project begins with the
City Council's approval of the agreement with CES. CES will begin to perform full
audits of all City facilities to determine power use and demand, facility use, inventory
existing HVAC and lighting equipment, and evaluate measures to implement that will
reduce energy costs and improve energy efficiency. CES will work collaboratively with
City staff to identify appropriate measures to include or exclude, and will identify the
most cost-effective measures to implement that result in the shortest pay-back for the
City. The result of the first phase will be a proposal for a 'Design-Build"project, where
CES, acting as the general contractor, assembles a construction project for a foxed fee
on a performance based contract, funded solely from energy savings resulting from the
project-
The second phase of this project will begin with the City Council's review and approval
of a performance based contract, which if approved, would implement and construct all
of the energy efficiency measures recommended by CES in consultation with the City.
What does this cost?
There is no fee associated with the proposed agreement with CES, with the expectation
that CES will identify an energy management project that is cost-effective, reflects the
scope of work requested by the City, results in significant energy savings which in turn
pay for the performance based contract to implement and install the energy efficiency
measures. However, in the event CES identifies an energy management project that
can be self-funded through energy savings, and the City Council determines not to
proceed with the project, the City would be liable for the foxed design fee of$250,000.
A performance based contract is an agreement between CES and the City, under which
CES develops and implements facility improvements at no up-front cost to the City.
CES assures the City a minimum level of energy savings from energy efficiency
measures and helps the City secure financing based on that assurance. Over the
contract period the savings from reduced utility bills are used to pay back the capital
investment in the equipment, installation, and related financing fees. No City funding is
required up front— all project performance and savings risks are shifted to CES, with
excess savings to be used at the Clty's discretion. CES's financial guarantees assures
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City Council Staff Report
July 21, 2010-Page 15
Citywide Energy Management Project(City Project 0945)
the City that if energy savings to finance the project are not realized, CES will pay the
City the difference, and will take steps to modify or otherwise improve the project (at
their cost)to realize the savings they had estimated would be achieved.
Is this the right ume to do this?
CES is a highly qualified ESCO providing energy management services to public
agencies throughout California, with special expertise on oo-generation technology.
CES's initial investigation based on the technical exercise performed during the
evaluation process revealed that the City's energy management project might be one of
the most energy efficient projects CES has developed.
CES's preliminary assessment is that the City's project may result in up to a 38%
reduction in overall energy use, equivalent to the following significant environmental
benefits:
CO2 Reduction =6,193 metric tons
Cars Offset Annually=1,164
Homes Powered Annually=752
Acres of Trees Saved=1,321
Every day the City does not implement energy efficiency measures is a day that the City
spends excess funds for energy resources that are not required. it is staffs
recommendation that the City Council approve the agreement with CES to allow staff to
coordinate on the development of the most cost-effective energy management project
that can realize the.goal of up to a 38% reduction in overall energy use, and ultimately
help the City realize the environmental benefits and General Fund savings that would
result.
FISCAL IMPACT:
There is a project development fee of $250,000 for this project. However, CES
assumes the risk of developing a cost-effective energy management project that is sW-
funded by the energy savings resulting from its implementation. If CES cannot develop
a paid-for project, no matter how much effort undertaken by CES, there is no cost to the
City and the project development fee is wa'nred. However, if CES develops a paid-for
project for the City, the project development fee is included as part of the overall cost of
the energy management project implemented through the performance based contract
paid for by the energy savings. In the event CES develops a paid-for project and the
City determines not to implement the project, the City would be liable to pay CES its
project development fee at that time.
Given the results of CES's preliminary assessment, it is anticipated that an energy _
management project resulting in significant energy savings will be developed, and as
such, the project development fee of$250,000 will be absorbed as part of the energy
_.. 134
City Council Staff Report
July 21,2010-Page 16
Citywide Energy Management Project(City Project 09-05)
Ii
E management project's overall cost paid for by those savings. Therefor;, on the basis
that the City Council will remain committed to the policies set forth in the Palm Springs
Path to Sustainability, and will support implementation of a performance based contract
to construct the energy management project, there will be no 'up front' cost to the City
for the services provided by CES, as they will be offset by energy savings.
SUBMITTED:
Prepared by: Recommended by:
�i�A 94t—
Marcus L. Fuller Oavid J. Baraldan
Assistant Director of Public Works Director of Public Works/City Engineer
Approved by:
Thomas J.Wiis ,Asst. City Manager David H. Ready, QSLIOWer
Attachments:
1. Agreement
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Council Staff Report
Date: May 18, 2011 NEW BUSINESS
Subject CITYWIDE ENERGY MANAGEMENT PROJECT
From: David H. Ready, City Manager
Initiated by: Public Works and Engineering Department
SUMMARY
On July 21, 2010, following a competitive, technical two-part qualification process, the
City Council awarded Chevron Energy Solutions ("CES"), a subsidiary of Chevron USA,
Inc., a professional services agreement for this project. Subsequently, CES has
performed energy audits of all of the City's facilities, and completed its
recommendations for a Citywide energy management project. On April 19, 2011, the
Sustainabilily Commission reviewed the list of energy conservation measures ("ECMs)
to be included in the overall Citywide energy management project, and has
recommended the City Council approve the project which implements the most ECMs
possible to be paid from savings. Following the Council's concurrence with the
Sustainability Commission's recommendation, or an alternative recommendation by
Council, staff will coordinate with CES to finalize the scope of the energy management
project, confirm construction costs and prepare a performance based guaranteed fixed
price contract for future Council review and approval.
RECOMMENDATION:
1) Review and approve the list of Energy Conservation Measures to be included in
the scope of the overall Cltywide energy management project; and
2) Authorize the City Manager to submit an application and pay applicable fees
(estimated at $15,000) to the Califomia Solar Incentive Program as may be
necessary to secure as much as $600,000 in Performance Based incentives and
$282,000 in renewable energy credits for the photovoltaic systems (if included in
the scope of the overall Citywide energy management project).
STAFF ANALYSIS:
Since the City Council's approval of a contract with CES on July 21, 2010, CES has
performed an audit of all City facilities (for a complete list, see Attachment 1), and
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City Council Staff Report
May 18,2011 -Page 2
Citywide Energy Management Project(City Project 09-05)
completed analysis of various measures that could be implemented by the City to
achieve the most energy savings possible. A significant amount of effort has been
completed to analyze the City's co-generation plants, interior and exterior lighting
systems, heating and cooling systems, and irrigation systems throughout all City
facilities. CES has identified a list of measures that were reviewed and recommended
for approval by the Sustainability Commission at its April 19,2011, meeting.
The primary purpose of this project is to evaluate the City's co-generation plants, and to
recommend cost effective improvements that enable the plants to run more efficiently,
and to reduce the City's overall energy consumption. Other primary goals are:
• Lower electric consumption
• Reduce water consumption
• Lower green house gases
• Reduce natural gas consumption
• Achieve the City's adopted Sustainability Goals
• Develop a "paid from savings" project requiring no capital contribution from the
City, and paid for entirely with energy and operation & maintenance ("O&M")
savings resulting from implementation of the ECMs.
CES analyzed the City's two co-generation plants to determine what alternatives would
best suit the City today, given its current energy demands and utility costs. For each of
the co-gen plants, CES analyzed the following altematives:
• Continue existing co-gen operations—do nothing approach
• Replace existing co-gen engines with new lean-bum engines
• Abandon co-gen operations and purchase all electricity from SCE
• Retire co-gen operations and implement solar generation
Determining which alternative is best for the City requires an understanding of how the
co-gen plants operate and provide electricity and heating/cooling to the various
buildings they serve. Cogeneration is the sequential production of two energy forms,
usually steam and electricity, from a single fuel source. In our case, natural gas is used
as fuel to run reciprocating engines that turn generators to create electricity. Waste
heat (heat created by a running engine) that would normally escape into the air, is
recovered from the engines and passed through an absorption chiller to provide cold
water for air conditioning. Alternatively, in the winter, waste heat is used to heat water
for spats heating. Co-generation was originally selected as the most appropriate
altemative energy solution for Palm Springs due to the City's tremendous cooling
requirements in the summer. Therefore, a co-gen plant can be a very valuable asset, in
that it provides not only electricity for the City's facilities, but through its internal
mechanical process, provides thermal energy(heating and cooling).
137
City Council Staff Report
May 18.2011 -Page 3
Citywide Energy Management Project(City Project 09-05)
At the Municipal Plant behind City Ball, the co-gen plant distributes power to City Hall,
the Police Station, Fire Station No. 2, Airport and Riverside County administration
buildings, and the City Yard. The co-gen plant also provides heating/cooling to all of the
buildings (except the City Yard) through the use of its absorption chillers and cooling
tower. An exhibit showing the existing City-owned utility infrastructure (electrical lines,
and hot/cold water lines) connecting the various municipal facilities is included as
Attachment 2.
CES' analysis of the Municipal Plant determined that maintaining operation of the co-
gen plant is the most economical alternative to providing electricity and heating/cooling
to the facilities it serves. The direct cost to generate power through co-generation is
less expensive than purchasing electricity from SCE directly($0.12 per kilowatt hour vs.
$0.08 per kilowatt hour)'. During the 2009/2010 fiscal year, the total power load on the
Municipal Plant was 10.9 Million kilowatt hours. Given that the direct cost to generate
power through co-generation is 67% of the cost to purchase electricity from SCE, CES
recommends that the City make certain upgrades to the Municipal Plant to take
advantage of the lower direct generation cost, and to make the plant significantly more
efficient than it is today.
At the Sunrise Plant at Sunrise Park, the co-gen plant distributes power and provides
heatingl000ling to all of the facilities at Sunrise Park except the Boys and Gifts Club and
the Senior Center.
However, CES' analysis of the Sunrise Plant determined that maintaining operation of
the co-gen plant is not the most economic alternative at Sunrise Park. The overall
electrical load on the Sunrise Plant is much lower than the load on the Municipal Plant,
and since its construction, the Sunrise Plant has produced more power than necessary
for the facilities lt serves. The balance of electricity produced is soli as excess
electricity to SCE at very low rates. Therefore, the analysis determined that retiring the
Sunrise Plant and purchasing electricity from SCE directly is the most economic
altemative for Sunrise Park. A 439 kilowatt solar system is proposed to be constructed
at the Pavilion Parking lot at Sunrise Park which will supplement the electricity required
to be purchased from SCE.
In addition to the recommendations related to the co-gen plants, CES has identified
lighting, energy management system (uEMSJ control technologies, and building
optimization measures at many of the City's facilities. Installation of these cost effective
energy efficient technologies is estimated to reduce electric consumption and demand
by over 2.7 Million kilowatt hours. Retrofit will include over 14,000 lighting fixtures within
various City buildings, at the airport, on the City's palm tree uplights, and downtown
decorative street lights. An integrated web-based energy management system is
' The direct cost to generate power through co-generation was determined by
calculating only the cost to purchase natural gas to generate power, and excludes other
overhead and maintenance costs associated with the co-generation plant.
� 38
City Council Staff Report
May 18,2011 -Page 4
Citywide Energy Management Project(City Project 09-05)
recommended that will allow buildings to integrate and optimize the use of lighting, and
heatirVair conditioning systems. Water saving measures are recommended that
include a new web-based irrigation controls system and improved irrigation coverage for
enhanced water performance and efficiency which is estimated to save over 100 Million
gallons of water annually.
On April 19, 2011, the Sustainability Commission reviewed the list of ECMs to be
included in the overall Citywide energy management project,and has recommended the
City Council approve the project which implements the most ECMs possible to be
funded through energy savings. The list of ECMs includes:
• Municipal Co-Generation Plant: replace two existing 650 kilowatt rich bum engines
with one 1,135 kilowatt lean-bum engine, replace existing chillers, boilers and
cooling towers with new efficient equipment
• Sunrise Co-Generation Plant: modify the co-generation operation and replace with a
new gas and electric cooling and heating hot water plant
• 439 kilowatt solar system at the Pavilion Parking Lot to provide power to Sunrise
Park facilities
• 103 kilowatt solar system at the Convention Center
• Install a new Energy Management System for City facilities connected to the
Municipal and Sunrise Plants
• City-wide lighting retrofit and upgrade (approx. 14,000 interior and exterior fixtures)
• Install remote lighting control and monitoring program for Palm Canyon Drive palm
tree and decorative lights
• Install a new automated utility metering and monitoring system at the Municipal Plant
• Utilize a CES Energy Resource Manager to manage and monitor the Municipal Plant
operation, and monitor implementation of all energy conservation measures to
ensure guaranteed energy savings are achieved
Solar System Installations
Included with the recommended list of measures are two solar system installations that,
if installed separately, would not be covered entirely by energy savings. It is only with
the use of energy savings resulting from measures implemented City-wide (i.e.
Municipal co-gen upgrade, lighting retrofits and water savings measures) that these
solar system installations may be paid from energy savings when bundled together as a
single energy management project.
The proposed 439 kilowatt solar system to be installed at Sunrise Park would be
constricted on new shade structures within the Pavilion Parking Lot. The shade
structures with solar panels will provide covered parking and an opportunity to generate
solar power. An example of the proposed solar system installation is shown on the next .
page:
139
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City Council Staff Report
May 18, 2011 -Page 7
Citywide Energy Management Project(City Project 09-05)
facilities connected to the Sunrise Plant. The City would continue to purchase electricity
from SCE in addition to the power generated by the solar system. Eliminating this solar
system from the overall energy management project would free up energy savings for
our own use that would otherwise be used to offset the capital cost of the system.
However, the Sustainability Commission recommended the City Council approve an
energy management project paid from savings that encompasses as much solar (and
other renewable energy sources) as possible regardless of the payback or economic
cost of the measure itself.
The proposed 103 kilowatt solar system to be installed at the Convention Center would
be constructed on the roof of the building, and although unseen by the public a real-time
electronic display would be installed at a location inside the Convention Center to
showcase generation of solar power at the facility. The size of the system is being
recommended as it is the smallest system that qualifies for SCE renewable energy rate
reduction, R-Rate (to qualify, at least 15% of the current overall energy demand at the
Convention Center must be provided by the solar system). A larger solar system is not
being recommended as the capital cost of the solar system is significant.
Moving forward with the proposed 103 kilowatt solar system at the Convention Center
represents an approAmate $600,000 cost to the overall energy management project.
Taken separately, installation of this solar system does not pay for itself with energy
savings over the 25-year life of the solar panels, as the capital cost of the system far
exceeds the energy savings realized. What must also be understood is that the 103
kilowatt solar system will only supplement the average 560 kilowatt power demand from
the Convention Center. The City would continue to purchase electricity from SCE in
addition to the power generated by the solar system. Eliminating this solar system from
the overall energy management project would free up energy savings for our own use
that would otherwise be used to offset the capital cost of the system. However, the
Sustainability Commission recommended the City Council approve an energy
management project paid from savings that encompasses as much solar (and other
renewable energy sources) as possible regardless of the payback or economic cost of
the measure Itself.
Project Benefits
The benefits of implementing all of the recommended energy conservation measures as
a single energy management project include:
• Energy Reduction =2.7 Million kilowatt hours= 15% reduction of total energy used
• Solar Generation =817,000 kilowatt hours
• Natural Gas Reduction =250,000 Therms=21% reduction of total natural gas used
• Water Savings = 100 Million Gallons = 17% reduction of total water used
• Carbon Footprint Reduction =611 cars or 3,116 Tons COZ, or power for 378 homes
142
City Council Staff Report
May 18, 2011 -Page 8
Citywide Energy Management Project(City Project 09-05)
• The City is enable to invest and construct significant capital improvements which are
paid from resulting energy and Operation & Maintenance savings estimated at$1.2
Million annually;
• New Municipal Co-Generation Plant is fully SCAQMD compliant, meeting all new
stringent air quality permitting requirements;
• Remaining debt service on existing co-generation engines(approximately $270,000)
Is paid off•,
• Project will be implemented by CES with a focus on local job creation and local
economic stimulus which is estimated at an additional 192 indirect and induced jobs
and more than $4 Million in additional economic impact (based on the National
Renewable Energy Laboratory studies)—the local business preference program will
be followed by CES to the greatest degree possible
• Project directly accomplishes 5 of the City s Sustainability Goals
Project is an affirmation to the residents of Palm Springs of the City's focus on fiscal
and environmental stewardship
• Project diversifies the City's energy generation mix and improves the City's air
quality
• Project allows the City to take advantage of over$1 Million in uglily Incentives and
renewable energy credits
FISCAL IMPACT:
Implementation of all of the Energy Conservation Measures recommended for approval
(including the two solar systems) is estimated at approximately $20 Million (after
crediting the City with incentives and rebates). Using the approximate estimate of $20
Million (assuming financing at 5.25%for 20 years) requires an annual debt payment of
approximately $1.2 Million. According to CES' analysis, after implementation of all of
the Energy Conservation Measures, $1.2 Million in energy and O&M savings will be
realized which offsets the annual debt service required to pay for construction.
This was the underlying factor of this project — that it would be a "paid from savings"
project requiring no upfront capital investment.
As the City would incur additional debt to pay for this project (paid from energy and
O&M savings), the City will be required to maintain existing budget levels for utility
costs- According to CES' analysis, after the project is implemented the reduced energy
and water costs will result in a surplus of funds from which the debt service is paid. The
key issue here is that, although savings are realized, those savings pay for the project.
Therefore, moving forward on an annual basis the City will need to maintain its current
budget levels for energy and water costs to ensure the savings are available to pay the
debt service. As a condition of a perfomranoe based contract with CES, CES will
guarantee these savings.
143
City Council Staff Report
May 18, 2011 -Page 9
Citywide Energy Management Project(City Project 0"5)
In the current 2010/2011 fiscal year budget, the City budgeted $6,439,908 for utflity
costs and another $2,478,723 for facilities maintenance (including co-gen plant
maintenance) for a total budget of neatly $9 Million. implementing this project is
projected to reduce the City's energy and O&M costs by $1.2 Million or nearly 15% of
this total, allowing for the City to appropriately finance construction of this project from
those savings.
Following Council's approval of the list of Energy Conservation Measures to be included
in the scope of the overall Citywide energy management project, staff will work with
CES to finalize the guaranteed foced price to design-build all of the improvements. CES'
proposal will subsequently be reviewed by a third party to confirm that all of the
proposed costs are reasonable with industry standards, that the resulting energy and
O&M savings are appropriate, and that the profomta proposed by CES establishing the
financial terms to the City for financing construction and implementation of the project is
supported.
Following the third-party review supporting the financial terms of the CES' proforma,
staff will schedule Council approval of the performance based guaranteed fixed price
contract with CES(estimated by September 2011).
This project will be financed directly between the City and a financial institution of the
City's choosing; CES, or its parent corporation Chevron, Inc., will not finance this
project CES recovers its costs for the engineering phase through the constriction
contract, and as the General Contractor,will include an appropriate overhead margin on
administration of f. The terms and conditions of CES' design-build contract will be
detailed in a future staff report to Council at the time the performance contract is
scheduled for approval.
The action taken at this time does not commit the City to constructing any of the
measures recommended for approval; it merely confirms for CES the scope of the
energy management project from which they can seek bids and finafte their design-
build contract for City approval. However, in the event the Council determines not to
proceed with the energy management project, pursuant to the terms of the current
agreement between the City and CES approved by Council on July 21, 2010. the City is
obligated to pay CES a project development fee of$250,000 as payment for its costs to
perform the energy audits and complete the preliminary engineering with which the
recommended Energy Conservation Measures have been identified.
The only financial commitment recommended for approval by the Council at this time is
to authorize application to the state for solar incentives (assuming Installation of solar
systems at Sunrise Park and the Convention Center remain in the scope of the project).
Application for these incentives is time-sensitive as the program is administered as a
"first-come—first served' basis, and the state can end the program without notice. The
application fee for the proposed solar systems is approximately$15,000 which would be
144
City Council Staff Report
May 18, 2011 -Page 10
Citywide Energy Management Project(City Project 09-05)
paid from the Sustainability Fund, account 138-1270-50000 (unscheduled capital
projects).
SUBMITTED:
Prepared by: Recommended by:
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M rcus L. Fuller David J. Barakian
Assistant Director of Public Works Director of Public Works/City Engineer
Approved by:
Thomas J. WII Asst. City Manager David H. Ready, C' ger
Attachments:
1. List of City Facilities Included in Energy Audit
2. Municipal Co-Gen Plant Utility System Map
145
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Program Options 1%
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• Municipal CO-Generation Plant(1135 kW) Yes Yes Yes
• Sunrise Electric Plant Yes Yes No
• 439 kW Solar at Pavilion Parking Lot Yes No No
• 103 kW at Convention Center Yes Yes Yes
• EMS Upgrade for Municipal&Sunrise Plants Yes Yes Yes
Vlfi 3• City- de Lighting Upgrade Yes Yes Yes m
• Palm Canyon (rive Lighting Control&Remote Monitoring Yes Yes No z'
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• City-Wide Irrigation Control and Remote Monitoring Yes Yes Yes
• Automated Utility Metering/Monitoring Yes Yes No
• CES Energy Resource Manager Yes Yes Yes
• Variable Air Volume Upgrade(City Hall, PD, FS#2) No Yes No
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c4Afro aN�p - City Council Staff Report
Date: July 20, 2011 CONSENT CALENDAR
Subject CITYWIDE ENERGY MANAGEMENT PROJECT
From: David H. Ready, City Manager
Initiated by: Public Works and Engineering Department
SUMMARY
Pursuant to its agreement with the City, Chevron Energy Solutions (uCES'), a subsidiary
of Chevron USA, Inc., has completed a Comprehensive Energy Analysis CCEA') of all
City facilities. The CEA identified certain energy conservation measures("ECM`s) and
it identifies a proposed scope for an energy efficiency and renewable energy project for
the City. The CEA will be referred to by staff and the Council in ultimately determining
the final scope of the energy management project undertaken by the City.
I
RECOMMENDATION:
1) Receive and file the Comprehensive Energy Analysis dated June 30, 2011,
prepared by Chevron Energy Solutions Co.; and
2) Schedule a Study Session for September 28, 2011, for a separate discussion
with staff and CES to review the list of ECMs proposed as part of the citywide
energy management project, and to determine the final scope of the energy
management project undertaken by the City.
STAFF ANALYSIS:
On May 18, 2011, the City Council was given a presentation by staff on the Citywide
energy management project, including the results of CES' energy audit of all City
facilities. At that time, Council deferred giving staff direction on the final scope of the
Citywide energy management project; and requested that staff return to Council at a
future Study Session to continue a detailed discussion of the project.
Subsequently, pursuant to the terns of the agreement between the City and CES, CES
has completed its detailed Comprehensive Energy Audit CCEW) of all of the City
facilities it analyzed, and subrni ted it to,City staff on June 30, 2011, for review and
151 .
City Council Staff Report
July 20, 2011-Page 2
Citywide Energy.Management Project(City Project 09-05)
approval. The temts of the City's agreement with CES require the City to review and
agree on a recommended package of Energy Conservation Measures ("ECM"s) within
90 calendar days after submission of the final CEA report to the City. in the event the
City does not move forward with the energy management project, the City is required to
pay CES a$250,000 fee for preparation of the CEA, otherwise the fee is rolled into and
is paid as part of the energy management project. A copy of Exhibit "B" to the City's
agreement with CES is included as Attachment 1.
It continues to be staffs recommendation that the City move forward with a bundled
project of ECM's that enable the City to leverage energy savings for needed capital
investments to the Municipal Co-Gen plant, the Sunrise Co-Gen plant, lighting retrofits
Citywide, and other Identified measures. The complete list of ECM's previously
reviewed and recommended for approval by the Sustainability Commission were
presented to Council on May 18,2011.
The list of ECM's included:
Municipal Co-Generation Plant replace two existing 650 kilowatt rich bum engines
with one 1,135 kilowatt lean-bum engine, replace existing chillers, boilers and
cooling towers with new efficient equipment
• Sunrise Co-Generation Plant: modify the co-generation operation and replace with a
new gas and electric cooling and heating hot water plant
• 439 kilowatt solar system at the Pavilion Parking Lot to provide power to Sunrise
Park facilities
103 kilowatt solar system at the Convention Center
• Install a new Energy Management System for City facilities connected to the
Municipal and Sunrise Plants
• City-wide lighting retrofit and upgrade(approx. 14,000 interior and exterior fixtures)
• Install remote lighting control and monitoring program for Palm Canyon Drive palm
tree and decorative lights
• Install a new automated utility metering and monitoring system at the Municipal Plant
Given the discussion on the economics of solar photovoltaic systems with Council on
May 18, staff will be recommending against including the 439 kilowatt solar system at
the Pavilion Parking Lot, which will reduce the overall cost of the energy management
project by approximately$2.7 Million. Whether or not to include the 103 kilowatt system
proposed at the Convention Center can be further discussed with.Council at a future
Study Session.
Due to the provisions in the City's agreement with CES, it is important that the City
Council schedule a Study Session for September 28, 2011, to ensure that the City
provides CES with direction on the scope of the energy management project prior to the
90 day deadline established by the agreement
152
i
City Council Staff Report
July 20,2011 -page 3
Citywide Energy Management Project(City Project 09-05)
FISCAL IMPACT:
In the event the Council determines not to proceed with the energy management
project, pursuant to the terms of the current agreement between the City and CES
approved by Council on July 21, 2010, the City is obligated to pay CES a project
development fee of$250,000 as payment for its costs to perform the energy audits and
complete the Comprehensive Energy Audit in which the recommended ECM's have
been identified.
SUBMITTED:
Prepared by: Recommended by:
Marcus L. Fuller David J. Barakian
Assistant Director of Public Works Director of Public Works/City Engineer
Approved by:
Thomas J.WOW,Asst. City Manager G�David H. Readt ity Manager
Attachments: �f
1. Exhibit"B"to Agreement with CES
NOTE: Comprehensive Energy Audit(on file in the Office of the City Clerk)
153
EXHISIT "B"
Fee Estimate
Except as provided for below,within 90 calendar days of the CWs review and approval
of final Comprehensive Energy Analysis(CEA)report as submitted by the Consultant,
City shall compensate Consultant for performance of the Energy Audit by payment to
Consultant of Two Hundred Fifty Thousand Dollars ($250,000). This fee is for
performance of the Scope of Work set forth In Exhibit A.:
As set forth in Exhibit A(1XJ-LJ the City.shag have input and discretion in determining
the conclusions, recommendations and ECMs to be incorporated in the final CEA
report. As indicated in the Scope of Work set forth in Exhibit A,the City shall be entitled
to review the retrofit options proposed In the Energy Audit, and to agree on the
Consultant's reeommartdad padcage of ECMs consistent with the CWs irrmllment and
Infrastructure improvement goals.
A. City shall have no payment obligations at the time of execution of ants Agreement,
but acknowledges that the fee indicated above shag be incorporated into the total
contract amount in the event City and Consultant execute an Energy Services
Agreement within ninety(90)calendar days after submission of the first CEA report
by Consultant to the City. However, If the parties do not execute an Energy Services
Agreement within ninety (90) calendar days after the City review and approval of
Consultant's final CEA report to City, than the audit fee set froth above shag be
Immediately due and payable by City to Consultant. City and Consultant agree to
enter Into good faith negotiations of an Energy Services.Agreement immediately
following completion of the Energy Audit
B. City and/or Consultant reserve the right to terminate the Agreement at any time .
during the comprehensive audit. If canceled by City, costs incurred by Consultant at
Ow date of termination would be pro-rated based on percentage of completion, and
payable by City.
C. Should the Consultant determine any time during the Energy Audit that the projected
savings to City will not support a paid-from-savings project Consultant shall
Immediately notify City, and the audit shall be terminated by Consultant. In this
event, this Agreement shall terminate and the City shall have no obligation to pay
any amount to the Consultant. For purposes of this Agreement, a 'paid-from-
samngs project' shag mean an energy service contract as identified in Section
4217.12 of the California Government Code.
s s
713666.1 .
154