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Council Meeting December 14, 2011
Good Evening Honorable Mayor and City Council members. My
name is Joe Palma and I am here representing Desert Electric
Supply. We have been in business here in Palm Springs for over
forty years. We are strong supporters of the concept that this
energy proposal entails. We have supplied the City of Palm
Springs occupancy sensors that are being used in several buildings
right now. We are very big in energy savings products from
occupancy sensors, vacancy sensors, new ballasts, lamps and the
newest thing on the market being LED lamps. We just recently
supplied all of the lamps and ballasts used in the Palm Springs
Unified School District school lighting upgrade completed over the
Summer.
The City. of Palm Springs has a policy to support local businesses
which we believe to be smart, fair and good for everyone in our
community. Our only concern about the proposal from
Chevron is to make sure that this,in no way eliminates that ,
policy. We can and do compete with anyone and everyone on these
electrical energy savings products. We just want to make sure that
Chevron or anyone they may contract with has to allow local
businesses the opportunity to participate in these projects.
Our company is a good member of this community and we are
willing to participate in any studies, meetings, hearings or the like
that involve anything regarding electrical or lighting upgrades and
we can bring in manufacturer experts to help out at no charge to
the City.
Thank You
Desert Electric Supply
4604 E. Sunny Dunes Road
Palm Springs, CA 92264
760-327-1146
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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 ("CEA") 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.
ITEM NO.
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.
02
City Council Staff Report
December 14, 2011 - Page 3
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 ("24/7") cycle. Given the high electric consumption and 24/7
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. Co-generation provides not only electricity for the City's facilities, but through its
internal mechanical process, provides thermal energy (heating and cooling).
Abandoning co-generation 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. All 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.
03
City Council Staff Report
December 14, 2011 - Page 4
Citywide Energy Management Project(City Project 09-05)
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-burn 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 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 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 staff's recommendation that Council approve this ECM as
part of the Citywide energy management project.
04
City Council Staff Report
December 14, 2011 - Page 5
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)Z
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 24/7 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.
05
City Council Staff Report
December 14, 2011 - Page 6
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 load 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
modern, 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
06
City Council Staff Report
December 14, 2011 - Page 7
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: (1,959,905) kWh (Increased cosk)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.
07
City Council Staff Report
December 14, 2011 - Page 8
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: 155,422 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.
08
City Council Staff Report
December 14, 2011 - Page 9
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
• 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
09
City Council Staff Report
December 14, 2011 - Page 10
Citywide Energy Management Project(City Project 09-05)
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
10
City Council Staff Report
December 14, 2011 - Page 11
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 2010/11 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 2009/10 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 T
$10.00
$8.00 —
$6.00
$4.00 �--
$2.00 —Gas Price
$0.00
o o 0 0 0 0 0 0 0 0 0 0 0 _1
c n a > > > > > C 5 > > > > >
Z Z Z Z Z
O p O p O O Otko �+ �
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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
08/09 $1,750,832 $97,228 $946,323 $2,794,383
09/10 $1,593,121 $92,158 $776,587 $2,461,866
10/11 $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.
11
City Council Staff Report
December 14, 2011 - Page 12
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 ("CEK) 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.
12
City Council Staff Report
December 14, 2011 - Page 13
Citywide Energy Management Project(City Project 09-05)
SUBMITTED:
Prepared by: Recommended by:
Jx.A tn L
Marcus L. Fuller David J. Barakian
Assistant Director of Public Works Director of Public Works/City Engineer
Approved by:
Thomas J. on, Asst. City Manager David H. Ready, C' er
Attachments:
July 21, 2010; May 18, 2011; and July 20, 2011, staff reports
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cq<iFpaN%p City Council Staff Re�nort
Date: July21, 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
City's SOQ 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 cost 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 City's 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 fiscal 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 qualifications (SOQ's) from
qualified energy services companies rESCOs7 to provide the city with Energy
Management Services to provide a Comprehensive Energy Audit (CEA) to
develop a set of programs that will 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 performance 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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Citywide Energy Management Project(City Project 09-05)
Consultant Selection Process
On June 17, 2009, the City Council approved of the release of the SOQ, 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, Director of Public Works/City Engineer
Marcus Fuller, Asst. Dir. of Public Works/Asst City Engineer
Wil Kkeindienst, Architectural Advisory Committee Member
Michele Mician, Manager of Sustainability
Mark Nichols, Sustainability Commissioner
Doug Wylie, Sustainability Commissioner
Although the SOQ 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 SOQ. However, a local
preference criterion was included in the SOQ to give a primary firm an advantage for
including local firms as part of their team.
The firms initially responding to the City s SOQ 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 SOQ. 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 SOQ).
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. Firms 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
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Citywide Energy Management Project(City Project 09-05)
and parameters of the second phase of the solicitation process were provided to the
firms.
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 City'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 $1.250 billion in combined project financing for
customer performance contracts
• Provides unbiased recommendations—vendor neutral
• Has corporate commitment to 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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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-unanimous 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 "Municipal" co-generation
plant) generates electricity, 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.
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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
altemative energy solution for Palm Springs due to the City's tremendous cooling
requirements in the summer.
Facility Facts, Municipal Co-Generation Plant:
• Two 650 kW engine/generator 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:
• One 650 kW engine/generator 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 City's 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.City's energy needs at the Municipal complex and Sunrise
recreation area. (AII 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
' The original bonds were scheduled to mature in 2006, 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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Citywide Energy Management Project(City Project 09-05)
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 $1,200,000 for electricity from SCE. Of this total,
$400,000 is budgeted for additional electricity for the Municipal co-generation 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 fact 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 connect 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.
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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-burn" engines, or lean
combustion reciprocating engines that meet much more strict air quality control
requirements. CES estimates that lean-burn engines will produce 25% more power
than the existing 650 kWh engines with the same amount of fuel consumption.
Another 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)3. Generally, the 400 kW of excess power demand from the Airport is due
to the large air conditioning load at the Airport during the summer. By doubling the size
of the TES, an additional 700 tons of cooling for four hours a day would 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, will enable
the City to once again meet the energy demand placed upon it by the municipal facilities
that rely on it for energy.
Solar Power
One available component of a successful energy management project is photovoltaic
power self-generation. It has already been demonstrated that the Municipal Co-
Generation Plant's 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 self-generation of 750 kW of solar power. CES
estimates that, with 750 kW of solar power combined with new lean-burn 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
3 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.
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Citywide Energy Management Project(City Project 09-05)
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installation on raised steel shade systems (i.e. shade structures) within the City Hall and
Airport parking lots. This system provides "free" shade to parked cars, and could
provide additional revenue for the Airport for increased fees for covered parking.
However, given the historic designation of the City Hall and Airport, further
consideration of installing solar power facilities at parking lots around these facilities will
only be pursued if the City Council provides staff with general direction on limitations
where these structures should or should not be placed.
CES has prepared visual simulations of solar panels with covered parking shade
structures that may be installed in and around the City Hall and Airport, seen below:
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Photo Simulation 1 (Airport Short-Term Parking Lot)
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Photo Simulation 2 (Airport Rental Car Parking Lot)
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It is also recommended that CES include analysis of solar power generating facilities at
the City's wastewater treatment plant. The 2010/2011 fiscal year budget for the
Wastewater Fund budgeted $210,000 for electricity to operate pumps and equipment at
the treatment plant. Installation of solar panels in available open space within the
wastewater treatment plant may prove to be more cost-effective at generating electrical
power than the using methane (bio-gas) naturally produced as a bi-product of the
wastewater treatment process.
Ultimately, the final recommendation to include or exclude solar power from the menu of
options to include in the energy management project will be based on the overall cost-
effectiveness of the entire project.
How will the City pay for this?
The state of California enacted special legislation in Government Code 4217.10 —
4217.18 in 1984, as a result of an energy crisis, as a way to assist local agencies in
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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 City's 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 all feasible means of energy and water conservation and all
feasible uses of alternative energy and water supply sources."
The legislation further states:
"The provisions of this chapter shall be construed to provide the greatest possible
flexibility to public 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 facilities 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 due 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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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.
General 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-going 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's Municipal Co-Generation Plant to meet peak
power demand, and the outdated HVAC and lighting 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:
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P,11
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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
General 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 (new 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 flat-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 structures 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.
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CES can provide a range of opportunities, with a variety of solar p 9 Pp ty 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 it.
What 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 fixed-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 lost-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 fixed 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 City's discretion. CES's financial guarantees assures
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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 time to do this?
CES is a highly qualified ESCO providing energy management services to public
agencies throughout California, with special expertise on co-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= 1,184
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 self-
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 waived. 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
28
City Council Staff Report
July 21, 2010-Page 16
Citywide Energy Management Project(City Project 09-05)
Ii
! management projects overall cost paid for by those savings. Therefore, 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:
,4 94t—
Marcus L. Fuller David J. Barakian
Assistant Director of Public Works Director of Public Works/City Engineer
Approved by:
aTf
Thomas J. Wfls , Asst. City Manager ` David H. Ready, � er
Attachments:
1. Agreement
29
eALMS
�V A
a0 Rey
O
4 N
f
Oq<lFORe`P City 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
Sustainability 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 Citywide energy management project; and
2) Authorize the City Manager to submit an application and pay applicable fees
(estimated at $15,000) to the California 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
30
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 alternatives:
• 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. 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).
, 3i
City Council Staff Report
May 18, 2011 - Page 3
Citywide Energy Management Project(City Project 09-05)
At the Municipal Plant behind City Hall, 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
heating/cooling to all of the facilities at Sunrise Park except the Boys and Girls 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 it serves. The balance of electricity produced is sold 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
alternative 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 ("EMS") 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.
32
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
heating/air 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
constructed 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:
33
j City Council Staff Report
May 18, 2011 - Page 5
Citywide Energy Management Project(City Project 09-05)
A photo simulation of Sunrise Pavilion Parking Lot solar system with shade structures is
shown here:
or=
1
,
The location of the Pavilion Parking Lot is adjacent to Angel's Stadium, and includes
mature landscaping and shade trees that would require removal to allow for
construction of the shade structures to house the solar panels. The location of the
Pavilion Parking Lot is shown on the next page:
34
City Council Staff Report
May 18, 2011 - Page 6
Citywide Energy Management Project(City Project 09-05)
Pavilion Parking Lot.
92262
gi
ell
g
4
Although there is a slight risk of balls from the adjacent field flying into the parking lot,
staff consulted with Parks and Recreation staff and determined that the Pavilion Parking
lot has a low risk of fly balls, with most landing in the Library Parking Lot. However,
installation of a solar system in this area will carry some degree of risk, which would not
be covered or guaranteed by CES. Removal and replacement of solar panels damaged
by fly balls (or vandalism and theft of panels) would be the responsibility of the City.
Moving forward with the proposed 439 kilowatt solar system at the Sunrise Pavilion
Parking Lot represents an approximate $2.7 Million 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
to construct the shade structures and install the solar panels far exceeds the energy
savings realized. What must also be understood is that the 439 kilowatt solar system
will only supplement the average 550 kilowatt power demand from the various City
35
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 approximate $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 CO2, or power for 378 homes
36
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 utility 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 performance based contract with CES, CES will
guarantee these savings.
37
City Council Staff Report
May 18, 2011 -Page 9
Citywide Energy Management Project(City Project 09-05)
In the current 2010/2011 fiscal year budget, the City budgeted $6,439,908 for utility
costs and another $2,478,723 for facilities maintenance (including co-gen plant
maintenance) for a total budget of nearly $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 fixed 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 proforma 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 construction
contract, and as the General Contractor, will include an appropriate overhead margin on
administration of it. 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 finalize 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
38
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:
r
K] 6'-C � ..
Mdreus L. Fuller Davidoi. Barakian
Assistant Director of Public Works Director of Public Works/City Engineer
Approved by:
Thomas J. Wile6h, Asst. City anager David H. Ready, Cik ger
Attachments:
1. List of City Facilities Included in Energy Audit
2. Municipal Co-Gen Plant Utility System Map
39
ATTACHMENT
UST OF CITY FACILITIES TO DE INCLUDED IN ENERGY AUDIT
Sire suuftg address Yea same
city hall adorn 016CeU=Mc l dlamUersranlim restrdom 3200 Tahqulz Canyon way 1956 17.847
city nalf eoc MOM opces 3200 TalWM canyon way 1965 14.116
City hall CMICIA SrCOVered walkWays 3200 Tatrgtrftr caWM way 1965 3,647
Ponce station admn a cawspatrn wNerflaussly eels 200 s.dwc drive 1985 d4.946
library center scary 300 s surifse way 1975 33,920
plan theater treater 126 S.Petro carryon 1938 15,100
city to amar admin amm 3200 TSgj1z canyon way 1983 '12,573
laity hen 8nnerr canopkLCovered walkways 3200 Talgulh canyon way 1983 3.666
Police station training site 9akrkrp center classrooms 200 S.cvlc Drive 1977 4,200
Ponce station training site Indoor thing range"range addition 200 s.civic drive 1977 3.453
polioe station training site Library nt0cercorifererue room 200 s.ciNc drive 1977 t,p81
ponce station training site carport canm 200 s.civic Hive 1977 940
aaport the station 02 admit OmCP341ce station#2 300 N.EI Cielo road 1975 18.109
airport Are station 02 hose dying CNWPY 300 N.EI Cielo,road 1977 12M
airport fire station 02 boler room 300 N.El Cielo road 1975 300
Are station#1 we MOM#1 277 n.Inman canyon drive 1957 5,364
Are station#3 Are station 03 590 e.raquet dub road 1964 507
Are station#4 Are still=04 1300 la yeme way 1971 4.608
Are station#5 Are station 05 - 5800 bolero road 1981 3.764
city yard strop repair bog 425 s.chric drive 1961 22,671
city yard adrain OUiceslslops 425 s.Cbric dive 1985 19.627
city Yard welds g shop 425 s.dvk dire Ism 700
city Taro gas PLOW Cormpy/COrer 425 s.Civic dive 19M 650
tars hwptrg tootling o8rcemreak room 310 s.eh clelo 2000 I'M
downt(Am parldng sbudLffe parking garage 275 s.Indian canyon 2002 124.251
train station re*00111310rage 63950 palm sprigs station roc 1998 1,483
co-generapr,mutt generation station 201 norm el clelo road 1984 1.914
covererebr.suutse generator bW*g 402 south cerdtos drive 19" 1,702
wastewalertreat plant administration building(10.9 mgd pwm 4375 mequfte avemle 1960 2,412
wastewater but plant maintamnce/shop bi i"irg 4376 mwAste avenue 1960 3.055
Patin sprigs bdemallonaf alpon airport term"-zones a,b,c.d of 3400 east Wrqulcl Canyon 1966 104AI6
palm sprigs international aport sonny bona cm mesa-zones g 31(gates 4-11)3400 east Whqullz canyon 1999 78,722
palm Springs Intematiorld)airport east'!'hanger 34M east IalguMz canyon INS 10.114
palm springs IftledlabOnal aiport west-r helper 3400 east tatngwz canyon 1968 10.114
palm springs fnkrtW00na1 alport temporary taproom#1(gate#3) 3400 east tahgUAz canyon 1999 3.471
palm springs international a" temporary holdroom#2(gate 02) 3400 east tehqukz canyon 19" 3,471
71Shj
40
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41
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g � Ill
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7� Sc�wwwaa'(w����NNuwe�SeS SZSiS�7CXSFiS���TSSb�Zo�$�
+NfOV O+ ON U+ N+ W NNN V 1p NO
Victoria Park Restoom BdWQ 2650 Via Miraleste 1965 694
McManus Wlege Canetia House-141910fical 211-233 South Paton Canyon 1 1952 940
McManus Village Museum I Gallery-Hatonical 211-233 Samm Paton Canyon 1 1952 3.310
Ma"M V41W Museum I Candy Stop-Fblorkal 211-233 South Patin Canyon 1 1967 2.685
McManus Village RWay's General Sore 211-233 South Patin Canyon 1 1987 916
EvefyDOaYs ViLWe Thealre Building 538 NOM Patin Canyon Of. 1974 9,a20
Everybodys Wtiege North Wag-Meeft Roans 53a North Palm Canyon Or. 1974 2.079
Everybody's Village South Wing-Meeting Rooms 538 Norton Pawn Canyon Or. 1974 1.300
Arts Springs Center Gallery/Same Meeting;Roan 5W Nati1 Palm Cafym Drive 1974 3.023
Arta Springs Cener North Mft"Room 550 North Palm Canyon Drive 1974 2,050
Jayoea Frey Center(Homeless Shelter) Homeless Shelter 1911 Bansto Road 1964 3.617
Pawn SpMp Youth Boxing Club Badlfg Club 225 El Clelo Road 1963 2.11%
Convention Center(with 2W3 3 2005 AdMonCamven5m Center 277 Norton Avenge Cabdlero8 1987 264,479
Well Senior Center Senior Center 400 South Sunise Way 1991 14,262
YMCA YMCA 3601 E Mesquae Ave. 21 A31
Downtown Decorative Street lighting
nnas.m
42
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I
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Program Options Iftld
• 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
x
• City-Wide Lighting Upgrade Yes Yes Yes
m
z
• Palm Canyon Drive Lighting Control& Remote Monitoring Yes Yes No
w
• 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
02011 Chevron awAmEnemsduum 8
44
;O�Q ALM Sp4
iy
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V N
"``F° 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 ("CES"), a subsidiary
of Chevron USA, Inc., has completed a Comprehensive Energy Analysis ("CEA") 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 terms of the agreement between the City and CES, CES
has completed its detailed Comprehensive Energy Audit ("CEA") of all of the City
facilities it analyzed, and submitted it to City staff on June 30, 2011, for review and
45
City Council Staff Report
July 20, 2011-Page 2
Citywide Energy.Management Project(City Project 09-05)
approval. The terms 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 burn 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.
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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 EOM's have
been identified.
SUBMITTED:
Prepared by: Recommended by:
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Marcus L. Fuller David J. Barakian
Assistant Director of Public Works Director of Public Works/City Engineer
Approved by:
Thomas J. WilsqK, Asst. City Manager -rlavid H. Read ity Manager
Attachments: �f
1. Exhibit "B"to Agreement with CES
NOTE: Comprehensive Energy Audit(on file in the Office of the City Clerk)
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i
EXHIBIT "B"
Fee Estimate
Except as provided for below, within 90 calendar days of the City's 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 (IXJ-L), the City shall 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 recommended package of ECMs consistent with the City's investment and
infrastructure improvement goals.
A. City shall have no payment obligations at the time of execution of this Agreement,
but acknowledges that the fee indicates above shall 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 final 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, then the audit fee set forth above shall be
immediately due and payable by City to Consultant. City and Consultant agree to
enter into good faith negotiations of an Energy Service 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
the 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-
savings project" shall mean an energy service contract as identified in Section
4217.12 of the California Government Code.
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