HomeMy WebLinkAbout01-17-2012 ph5 energy efficiency projectMeeting Dat e
January 17,201 2
Item Number
PH 5
counci l~ j acEnc~a aEpoR t
C I T Y O F S A N L U I S O B I S P O
FROM :
Carrie Mattingly, Utilities Directo r
Prepared By :David Hix, Wastewater Division Manage r
Aaron Floyd, Environmental Programs Manage r
Howard Brewen, Water Reclamation Facility Superviso r
Ron Munds, Utilities Conservation Manage r
SUBJECT :WATER RECLAMATION FACILITY ENERGY EFFICIENCY PROJEC T
RECOMMENDATIO N
1.Conduct a public hearing to consider a resolution authorizing the City to enter into a n
agreement to participate in Pacific Gas & Electric Company's Sustainable Solution s
Turnkey Program .
2.Adopt a resolution authorizing the City Manager to enter into a service agreement fo r
Energy Efficiency and Renewable Energy Upgrades at the Water Reclamation Facility
pursuant to Government Code 4217 .
3.Authorize the City Manager to execute a Work Order, upon approval of the City Attorney a s
to form, to implement the Investment Grade Analysis with the Work Order amount not t o
exceed $400,000 .
4.Approve the deferral or elimination of identified Water Reclamation Facility capita l
improvement projects and the use of up to $400,000 of previously appropriated sewer fun d
capital funds to proceed with the Phase 3, 50% design .
REPORT-IN-BRIE F
The Utilities Department spends approximately $1,160,000 each year for electricity with the singl e
largest user being the Water Reclamation Facility (WRF). The WRF treats over 4 million gallons o f
wastewater per day at an average cost of $450,000 per year for electricity .
In January 2011, Utilities staff contacted Pacific Gas & Electric Company (PG&E) to inquire abou t
available funds or incentives for energy efficiency projects . PG&E representatives stated there wa s
an upcoming opportunity to participate in its Sustainable Solutions Turnkey (SST) program which
had previously only been available to federal facilities . The program is divided into four phases .
Sustainable Solutions Turnkey Program Phases Complet e
1 Feasibility Discussio n
2 Preliminary Energy Analysi s
3 Investment Grade Audi t
4 Finance and Implementation
•
Phase 3, the Investment Grade Audit (IGA), provides further engineering calculations and includes
a 50% design of the projects identified in Phase 2 . To date, the City has participated in the first tw o
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WRF Energy Efficiency Project Page 2
•phases of the program at no charge . Participating in Phase 3 requires an investment from the Cit y
and will require Council approval of expenditures and an agreement with PG&E .
The proposed agreement with PG&E is atypical of the City's usual contracting procedures whic h
are defined in the City's Charter in Article IX, Section 901 . The City's Charter, Article IX, Sectio n
907 and the California Government Code Section 4217 allows the City to forgo standar d
procurement processes for energy services if it finds it best serves the City interest .
The City's cost for the IGA will not exceed $400,000 and will be paid for from the deferral o r
elimination of identified Water Reclamation Facility capital improvement projects and the use of u p
to $400,000 of previously appropriated sewer fund capital funds .
Documents and policies that support the City's participation in the SST Program include the majo r
City Goal on climate protection, the draft Climate Action Plan, the Conservation and Open Spac e
element of the City's General Plan, and the Utilities Department Strategic Plan .
DISCUSSION
"As California continues to struggle with its many critical energy supply an d
infrastructure challenges, the state must identify and address the points of highest stress .
At the top of this list is California's water-energy relationship : water-related energy us e
consumes 19 percent of the state's electricity, 30 percent of its natural gas, and 88 billio n
gallons of diesel fuel every year - and this demand is growing ."
- California Energy Commission ; California's Water-Energy Relationship
Backgroun d
The Utilities Department spends approximately $1,160,000 each year for electricity with the singl e
largest user being the Water Reclamation Facility (WRF). The WRF treats over 4 million gallons o f
wastewater per day at an average cost of $450,000 per year for electricity . Council-supporte d
actions have previously been taken to successfully reduce utility expenses throughout the facility .
As the City focuses on continuous improvement, it is time to take a refreshed look at environmental
and fiscal sustainability of the City's provision of utilities .
Inspired by information received at several conferences and in trade journals, over the last couple o f
years staff realized the potential for achieving even greater energy efficiency at the WRF . A n
underlying factor is the desire of staff to create a sustainable wastewater treatment facility that coul d
showcase the commitment to the triple bottom line that has been identified in the Utilitie s
Department Strategic Plan and is aligned with Council's commitment to climate protection .
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•Focused on putting together a project that reflected the City's fiscal, social, and environmenta l
commitment to sustainability, staff began gathering information on ways to lower energy costs an d
the air emissions associated with treating wastewater . All operation s
staff was included at the origin of this project, therefore informatio n
from a wide array of sources and experience was brought to the
S o c i a ldiscussion table . Through extensive professional networking, staff
met with several leaders in the utilities energy field . Visiting other
(People )
facilities helped to determine what was proving most effectiv e
in meeting the goals of sustainability in the wastewate r
industry . Seeing alternative processes in action allows staf f
to consider what might work best for the City's WRF a s
aging infrastructure requires replacement in the future .
Environment Economi c
(Planet)(Prosperity)
Staff extended invitations to various groups to tour and
comment on potential projects at the WRF . Chevron (2011),
PG&E (2010), and the California Energy Commission (2010),
were some of the better known entities that performed assessments . The information provided b y
this diverse group of experts has allowed staff to develop a multifaceted understanding of th e
potential for future energy upgrades at the facility .
Equipped with the information from the various energy efficiency evaluations, staff began th e
process of looking for an opportunity to simultaneously lower energy demands, take advantage o f
•energy efficiency knowledge, address aging infrastructure, and, if at all possible, find a program
that would assist with the associated costs . In January 2011, Utilities staff contacted PG&E t o
investigate any available funds or incentives . PG&E representatives stated there was an upcomin g
opportunity to participate in its Sustainable Solutions Turnkey (SST) program .
The SST program is a design, construction, and financing program which had previously only bee n
available to federal institutions . PG&E is looking for an opportunity to expand the successfu l
program to the municipal sector through a partnership with a motivated city, such as San Lui s
Obispo . Since January 2011, the City of San Luis Obispo has been at the forefront of this successfu l
program's expansion to the municipal sector . Once partnered with a matched municipality, PG&E
intends to expand this template throughout its coverage area to showcase this program .
PG&E Sustainable Solutions Turnkey (SST) Program Overvie w
The Sustainable Solutions Turnkey (SST) Program involves a unique approach that allows for a
streamlined solution to implementing energy conservation projects . The goal of the SST Program i s
to implement energy saving projects at facilities and use the money saved from reduced energ y
consumption and operational maintenance costs to pay the debt service for the design an d
construction of the project . The SST Program has the flexibility to allow participants to finance th e
entire project by this method or to pay for part of it out of existing funds and/or finance th e
remainder .
•The SST Program is divided into four phases briefly described in Table 1 . The first two phases o f
the program are provided at no cost to the participant . After each phase, participants determine i f
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the program meets the organization's objectives and a decision is made on whether to continue t o
the next phase .
•
Feasibility Discussio n
•City and SST tea m
discuss progra m
•City expresse s
interest, share s
previous energ y
audit s
•PG&E prepares
feasibility audit base d
on energy use an d
metric s
*Review feasibility
Preliminary Energy
Assessmen t
•PG&E prepares PE A
based on sit e
investigation at n o
cost to Cit y
*PEA lists potentia l
Energy Conservatio n
Measures (ECM )
•PEA identifie s
potential energ y
savings and cost t o
implement
Investment Grad e
Audi t
•PG&E and City ente r
into agreemen t
•IGA lists ECMs energ y
savings, preliminar y
engineering o f
measures, costs t o
implement, an d
paybac k
•IGA identifies utility
rebates an d
incentives
Finance &
Implementatio n
•City selects ECMs an d
decides to procee d
•PG&E provide s
assistance for 3r d
party financing i f
neede d
*Agreements put i n
plac e
*PG&E provide s
engineering an d
design for ECM s
*Contractor build s
ECM s
Table 1 .Sustainable Solutions Turnkey Program Outlin e
Public/Private Partnershi p
There are advantages to partnering with PG&E for an energy efficiency project . As the City's local
energy provider, it has access to all relevant billing rate structure information and availabl e
incentives . PG&E plays a large role in San Luis Obispo County and the local economy and i s
aiming to find creative ways to work together to support the community . Its long standing presenc e
in the community allows for increased assurances in any partnerships formed . PG&E benefits fro m
these projects by being able to add renewable/sustainable projects to its energy portfolio whic h
defers the expense of building future electricity sources . The SST program has been successfully
utilized at federal facilities and PG&E is now looking to find suitable municipal partners t o
participate in the program .
City's Participation to Dat e
Starting with its work at the federal level, PG&E has gone through a thorough selection process t o
contract with experts related to the field . As an engineering firm with expertise in water an d
wastewater utilities engineering, with a focus on energy efficiency, AECOM was selected by PG&E
to provide the engineering services required for these projects . In January of 2011, City staf f
initiated Phase 1 of the program by meeting with PG&E and the project team to discuss th e
feasibility of partnering on an energy project . In discussions, City staff shared its desire to mee t
several citywide and Utilities Department goals and objectives (discussed in more detail later in th e
report) and elements of the WRF Master Plan which could potentially be addressed as part of th e
evaluation process .
Based on the feasibility discussion (Phase 1), the City, PG&E, and AECOM began Phase 2 b y
developing a Preliminary Energy Assessment (PEA) that identified the most economical and viabl e
energy projects for the City to undertake . The assessment process was strengthened by th e
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WRF Energy Efficiency Project Page 5
•institutional knowledge of City staff from all the Utilities Department's water and wastewate r
facilities . Based on the assessments, City staff and AECOM worked together to build a list of al l
potential energy conservation projects at the WRF .
To be considered as a viable option, a potential project was required to meet several criteria :
1.Projects must adhere to the concepts of being both environmentally and fiscally sustainable .
2.Where feasible, replace aging infrastructure identified in the WRF Master Plan with mor e
energy efficient options .
3.Projects needed to be evaluated on their impact to the entire treatment process, as opposed t o
being studied individually, so that the maximum efficiencies could be realized .
4.Projects needed to be independent of any potential upcoming decisions that would affec t
treatment requirements .
The list of potential projects was then evaluated to determine if they were cost effective and had a
reasonable payback period . City staff assisted in data collection for the draft Preliminary Energ y
Assessment and reviewed the report for accuracy . Not all of the identified projects met the criteri a
to be included in the proposed project list . An example of this was staff's request to investigate th e
potential for wind and solar photovoltaic power generation . After researching the feasibility, it wa s
determined that there was not enough space available for the solar panels or consistent wind t o
make these measures cost effective .
•Completed in August of 2011, the 100% Preliminary Energy Assessment identified the most viabl e
projects in a package type proposal . The final Preliminary Energy Assessment includes 1 3
individual projects of the original 18 that were surfaced . Based on the estimated costs identified i n
the Preliminary Energy Assessment, final project costs are projected to be between $5 .8 to $6 .7
million dollars . These engineering estimates are conservative ; lower financing and constructio n
costs are anticipated . The finalized document completed the second phase of the SST Program . Thi s
proposal was prepared at no cost to the City and provided a comprehensive review of potentia l
energy reduction strategies by one of the leading engineering firms in the utilities industry. Th e
estimated cost of Phase 1 and 2, paid entirely by PG&E, is between 3% and 5% of the total projec t
cost ; at least $180,000 . Typically, the feasibility study costs related to any design and constructio n
project would be incurred by the City .
Next Step s
Participation in the third phase of the SST Program would involve the City entering into a servic e
agreement and negotiating the terms of a Work Order with PG&E to fund the development of th e
Investment Grade Analysis (IGA). Based on the initial proposal (Attachment 2)provided by PG&E ,
the City's portion of the cost for an IGA will not exceed $400,000 . The overall cost of the IGA is i n
line with industry standards (10 to 15% of project cost) related to design . The proposal will be use d
to develop the Work Order which will include the final scope and the terms and conditions for th e
work to be performed .
•This phase of the program, and the associated costs, would provide further engineering calculation s
and would include a minimum 50% design of the identified projects . The Investment Grad e
Analysis would be a more in-depth evaluation of the implementation costs of the project, includin g
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WRF Energy Efficiency Project Page 6
•utility rebates and incentives, and potential energy savings . This part of the program is, in essence,a
partial design and a final project proposal, a typical step in any construction project . The Investmen t
Grade Analysis will require City funding to complete but does not commit the City to the fina l
design and construction component of the SST program .
Once completed, the City will own the 50% design documents generated during this phase, creatin g
a tool by which to assess the individual components of the energy project . The IGA can also serv e
as a marketing tool to secure outside funding if necessary . In addition, the Investment Grad e
Analysis provides the City with a set of documents that can be used for the energy efficienc y
component of the WRF Master Plan should the Council decide not to continue to Phase 4 of th e
SST program . This document can be used on a stand-alone basis or used as a comparison and value -
added feature for the future design and upgrades at the facility .
Phase four of the program would involve making a final decision on which of the proposed project s
to move forward with based on the IGA . The final design and construction would be included in th e
phase four costs . Staff would return to the City Council at this point with a complete phase fou r
project package proposal including funding options for the Council's consideration . If approved by
the City Council, sub-contractors would be hired at this point on a bid for proposal basis an d
construction of the accepted projects would commence .
Alternate Procurement Process for Energy Service s
The proposed agreement with PG&E is atypical of the City's usual contracting procedures whic h
are defined in the City's Charter in Article IX, Section 901 . In a typical scenario, the City woul d
identify a project and solicit proposals for the design of that project, then award a constructio n
contract to the lowest responsible bidder .
The City's Charter, Article IX, Section 907 and the California Government Code Section 421 7
allow the City to forgo standard procurement processes for energy services if it finds it best serves
the City interest . Based on the cost and payback period on investment and the long term benefit t o
the City's wastewater ratepayers, it is recommended the City Council adopt findings to support th e
continued participation in the SST Program .
Included in this report is a proposed resolution (Attachment 1)and service agreement that support s
energy efficiency and energy upgrades utilizing the procurement process allowed by the City's
Charter and California Government Code 4217 . To ensure the City's interests are protected in thi s
contracting process, the City Attorney will continue to be involved in reviewing and negotiating th e
final terms and conditions, primarily in the Limitation of Liability and Indemnification sections o f
the agreement and final Work Order .
Supporting Policies and Document s
The City and the Utilities Department have guiding policies and documents that set the course fo r
the organization in terms of energy efficiency and conservation . The proposed energy efficienc y
project is supported by several of these guiding documents .
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WRF Energy Efficiency Project Page 7
•City Goal :
Climate Protection : Implement greenhouse gas reduction and Climate Action Plan . Conduct energyaudits of all city facilities, increase energy conservation, invest in infrastructure which will sav eenergy and funds in the future .
Conservation and Open Space Element :
COSE 4.3 .1 : The City will employ the best available practices in energy conservation, procurement,use and production, and will encourage individuals, organizations and other agencies to d olikewise.
COSE 4.3 .2 : City Buildings and facilities will be operated in the most energy-efficient manne rwithout endangering public health and safety and without reducing public safety or service levels.
COSE 4.3.3 : The City will continue to identify energy efficiency improvement measures to thei rgreatest extent possible, undertake all necessary steps to seek funding for their implementation and ,upon securing availability offunds, implement the measures in a timely manner .
COSE 4 .6.11 : The City will actively seek all available sources offunding for implementing energyefficiency improvement and utilities infrastructure renewal projects, including federal and stat ebudget appropriations, federal, state and private sector grant opportunities, utilities and othe runique public/private sector financing arrangements .
•Climate Action Plan (Draft):
The City of San Luis Obispo is developing a Climate Action Plan in response to AB 32 : the GlobalWarming Solutions Act . The draft Climate Action Plan contains a strategy directing energy efficien timprovements be made to the City's wastewater infrastructure . In addition to this work effort, th eCity is also implementing new Title 24 Energy Efficient Standards and CALGreen Buildin gStandards; making upgrades to City facilities such as the Water Reclamation Facility, an dparticipating with the Local Government Commission to develop strategies to adapt to climat echange in the future .
Utilities Strategic Plan – Outcome Oriented Goals :Infrastructure
Goal: The Department will have a clear understanding of its long-range infrastructur erequirements and a plan to address them .Objective : Increase planning efforts that identify and address infrastructure improvement sconsidering impacts to economic, environmental, and long term factors . (e.g. inflow &infiltration ;Capital Project planning ; Master Planning for water, wastewater, water recycling ; energyefficiency).
Stewardship
Goal: The Department will be recognized by regulators, the public, and all stakeholders as a neffective steward of natural and fiscal resources .Objective : Expand the identification and implementation ofpractices that increase the conservatio n•of all natural resources .
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WRF Energy Efficiency Project Page 8
Image
Goal. Our customers will have a better understanding of the Utilities Department's role, and wil l
value the services that we provide to the community .
Objective . Expand our community engagement and public education activities .
CONCURRENCE S
The City Attorney and Finance Director concur with the contracting procedures recommended i n
this report .
FISCAL IMPACT
The cost to proceed with Phase 3 of the Investment Grade Audit (IGA) will not exceed $400,000 . It
is recommended this funding come from previously appropriated capital funding for improvement s
at the Water Reclamation Facility, so there would be no additional appropriation required t o
proceed with this step . This project will not be funded by Measure Y .
As this project will result in upgrades and better efficiencies of the processes and equipment at th e
Water Reclamation Facility, the following previously approved projects are recommended fo r
deferral or elimination at this time since they are being incorporated into the SST Program :
201 1-2012 WRF Capital Improvement Plan Approved Budge t
Replace belt press — deferred at this time (incorporated into the SST )
2011-13 Financial Plan, Appendix B, page 3-98 .
$150,00 0
Replace micro-turbine cogeneration — eliminate (incorporated into SST )
2011-13 Financial Plan, Appendix B, pages 3-83 — 3-86 .
100,00 0
Savings from completed WRF Major Equipment Maintenance projects 150,00 0
Total $400,000
The expenditure associated with Phase 3 of the IGA is directly related to the implementation o f
energy efficiency elements identified in the WRF Master Plan and, essentially, accelerate thi s
component of the upcoming plant upgrade . This will allow the City to start receiving financia l
benefit from reduction in energy use more rapidly than if these projects were incorporated into th e
larger WRF upgrade project .
ALTERNATIVE S
1 . Deny the request to participate in the PG&E Sustainable Solutions Turnkey Program .
Council should only select this alternative if it feels this public/private partnership will no t
provide a quality, cost effective project and is not in the best interest of the community . The
recommended action will allow the City to operate its enterprise fund in a successfu l
business model and pursue projects it already needs to do in partnership with private
companies .
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WRF Energy Efficiency Project Page 9
2 .Pursue a standard engineering services procurement process .If the Council agrees wit h
the preliminary scope of the project, it could direct staff to pursue a standard engineerin g
services procurement process . This action would delay energy cost savings approximatel y
nine months to a year as project implementation would be deferred while a project packag e
for bidding purposes was developed . A significant amount of quality design work has bee n
accomplished at no cost up to this point and the SST program team's technical capabilitie s
are excellent . As a reminder, in order to realize energy savings as soon as possible throug h
these types of programs, California Government Code Section 4217 supports forgoin g
standard procurement processes for energy services .
ATTACHMEN T
1.Resolution
2.PG&E Proposal for Investment Grade Energy Assessmen t
AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE
Preliminary Energy Assessment available in Council Reading Fil e
t :\council agenda reports12012\2012-01-171ph3-water reclamation (mattingly-brewer-Oo,arc-wui4y .;,ida report.docx
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Attachment 1
RESOLUTION NO .
(2012 Series )
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISP O
AUTHORIZING A SERVICES AGREEMENT WITH PACIFIC GAS AND ELECTRI C
COMPANY PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 421 7
WHEREAS,the City of San Luis Obispo desires to install certain Energy Efficiency an d
Renewable Energy Upgrades ; and
WHEREAS,Section 907 of the City Charter exempts energy projects from th e
requirements of Article IX of the City Charter ; an d
WHEREAS,the State of California Government Code 4217 .12 authorizes loca l
municipalities to enter into energy services and financing agreement, outside of the adopte d
procurement process, that the governing body finds best serves the public agency ; and
WHEREAS,the City Council desires to use the California Government Code 4217 .12 as a
basis to negotiate contracts and possible financing for certain Energy Efficiency and Renewabl e
Energy Upgrades to utilize programs offered by its energy provider Pacific, Gas & Electri c
Company ("PG&E"); and
WHEREAS,the City Council considered the aforementioned contracts with PG&E at a
public hearing during a regularly scheduled meeting on January 17, 2012, public notice of whic h
was given at least two weeks in advance ; an d
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Lui s
Obispo as follows :
SECTION 1 .Findings :Based upon the City's staff report, which included projection s
for electrical energy rates from PG&E which provides electricity to the City of San Luis Obispo ,
and other evidence presented at the public hearing, the Council hereby finds :
1.The energy efficiency and renewable energy project subject to Government Code 421 7
and Article IX Section 907 of the City Charter are unique and provide benefits to th e
public ;
2.The anticipated cost to the City for the energy efficiency and renewable energy upgrade s
under the contract with PG&E will be less than the anticipated marginal cost to the Cit y
for the electrical energy that would have been consumed by the City in the absence o f
those purchases ;
3.
The project is exempt from Article IX Section 901 of the City Charter and is allowed b y
Government Code 4217 as an energy efficiency and renewable energy project .
SECTION 2 .The City approves the agreement substantially in the form attached a s
Exhibit A .
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Resolution No . (2012 Series)
Attachment 1
Page 2
SECTION 3 .The City Council authorizes the City Manager to execute the Service Agreemen t
and the Work Order with PG&E for the Investment Grade Analysis of Energy Efficiency an d
Renewable Energy Upgrades, subject to the City Attorney's approval as to the form of th e
agreements .
Upon motion of , seconded by
and on the following vote :
AYES :
NOES :
ABSENT :
The foregoing resolution was adopted this day of 2012 .
ATTEST :
Mayor Jan Mar x
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Elaina Can o
City Clerk
APPROVED AS TO FORM :
/s/J .Christine Dietric k
J . Christine Dietrick
City Attorney
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Exhibit A
SERVICES AGREEMEN T
This Services Agreement is made and entered into as of , 2011 ("Effective
Date")
by
and
between
with
offices
a t
("Customer") and Pacific Gas and Electric Company, Californi a
corporation, with offices at 77 Beale Street, San Francisco, California 94105 ("PG&E"). Customer and
PG&E shall each individually be referred to as a "Party" and together constitute the "Parties ."
RECITAL S
WHEREAS, Customer desires assistance in implementing energy conservation and managemen t
services and other energy-related projects and services at one or more of its facilities located in PG&E's
service territory ;
WHEREAS, PG&E desires to assist Customer implement the energy conservation measures a s
more fully set forth herein ; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreement s
set out in this Agreement, Customer and PG&E agree as follows :
1 . DEFINITIONS .In addition to those definitions set forth elsewhere in this Agreement, the followin g
capitalized terms shall have the meanings set forth below :
1 .1 "Agreement" shall mean this Agreement, and all such Agreement's Exhibits, Work Orders an d
Change Orders, all of which are incorporated herein, as such Agreement, Exhibits, Work Orders o r
Change Orders may be amended, changed or modified from time to time .
1 .2 "Change" shall mean : (a) any material addition to, deletion from, suspension of or othe r
modification that materially affects the design, configuration, quality, or function of the Project or th e
Services ; (b) a change or modification to or repeal of an applicable law after the Effective Date, (c) delay
or other demonstrable material adverse impact to the Work Order resulting from a Force Majeure Event ,
or (d) any applicable performance or compliance requirement which Customer may newly articulate o r
revise during the Term .
1 .3 "Change Order" shall mean a written document signed by the Parties that describes a Change t o
the Scope of Work or Work Order, and authorizes and directs PG&E to perform such Change . Th e
Change Order may also authorize the additional compensation, if any, to be paid PG&E to perform such
Change .
1 .4 "Investment Grade Audit" shall mean the detailed analysis of all or a portion of a Facility t o
determine the technical and financial feasibility of implementing, operating and maintaining one or mor e
ECMs at such Facility .
1 .5 "Energy Conservation Measures ("ECM")"means an energy conservation measure which ma y
include a feasibility study, engineering and design (e .g., Investment Grade Audit), operation an d
maintenance .
1 .6
"Facility(ies)" shall mean the above-ground buildings and related premises owned or leased b y
Customer as set forth in the applicable Delivery Order .
Page 1 of 14
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Exhibit A
1 .7 "Force Majeure Event" shall mean any cause, act, event, condition or other occurrence materiall y
impacting the Work or the Schedule not caused by the Party asserting the Force Majeure Event and tha t
is beyond the control of such Party to avoid, overcome or remedy through the exercise of due diligenc e
and reasonable efforts . Without limiting the foregoing, the following are examples of Force Majeure
Events : acts of God and the public enemy ; the relocation, repair, shut down, or construction of PG&E
transmission or distribution facilities ; flood, earthquake, tornado, storm, fire, power failures, epidemics ,
civil disobedience, labor disputes, shortage of components and supplies .
1 .8 "Material Changed Condition" shall mean the unforeseeable or unanticipated discovery of th e
presence of Hazardous Materials or other unanticipated or unforeseeable condition or circumstance, at o r
near a Facility or Project site that has occurred or has been discovered after the Work has commence d
that materially impacts the Schedule, the Work or PG&E's costs to perform the Work, was not caused b y
PG&E and that PG&E could not have discovered through the exercise of reasonable due diligence . Only
by way of example, a Material Changed Condition includes but is not limited to (i) Hazardous Material s
or other differing and unexpected site conditions, surface or subsurface conditions, (ii) adverse weathe r
conditions unusual to the area where the Work is to be performed and that could not have bee n
anticipated and that materially impacts the Work or Schedule ; or (iii) unforeseeable material delays i n
Equipment, material deliveries or the availability of labor that materially impacts the Work or Projec t
Schedule .
1 .9 "Project" shall mean energy efficiency, energy conservation, energy management, energ y
production or other energy-related measures or projects ; or any other energy-related matter, measure o r
project that is, or will become, the subject of a Work Order .
1 .10 "Services" mean, collectively all activities to be performed by PG&E pursuant to this Agreemen t
to complete a Project, including, without limitation, preliminary and/or Investment Grade Audit, design ,
Equipment or materials procurement, construction, installation, testing, completion, maintenance an d
operation of a Project . Work shall also include all labor, services, Equipment fabrication, assembly ,
modification, repair and replacement, and other activities as the Parties may agree upon and are set fort h
in a Work Order .
1 .11 "Scope of Work" shall mean all of the Services to be performed by PG&E and/or it s
Subcontractors pursuant to the terms and conditions of a Work Order, and any Change Orders to a Wor k
Order, as well as all other efforts of PG&E and other entities with respect to such Work Order, for th e
implementation of an ECM alone or as part of a Project pursuant to the terms and conditions of thi s
Agreement and as specifically described in each Work Order and applicable Change Orders .
1 .13
"Subcontractor" shall mean any corporation, limited liability company, partnership, association ,
or individual hired by PG&E to perform Services .
1 .14
"Substantial Completion" shall mean the Project is generally capable of being used for or o f
achieving the purpose intended by the Work Order .
1 .15 "Work Order" means the document executed by both Parties to complete the Services identifie d
in such Work Order . Each Work Order shall be subject to the terms and conditions of this Agreemen t
and the terms and conditions set forth in such Work Order . If there is a conflict between the Work Orde r
•
or Change Orders and the terms and conditions of this Agreement, such Work Order/Change Order shal l
take precedence and shall establish the Scope of Work of each Project .
Page 2 of 1 4
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PH5-13
Exhibit A
2.
SCOPE .This Agreement sets forth the terms and conditions under which PG&E may assist
•
Customer implement ECMs at one or more of Customer's Facilities through Work Orders . Thi s
Agreement sets forth the terms and conditions under which Work Orders may be entered into by th e
Parties . All Work Orders shall be subject to and governed by this Agreement .
3.
RELATIONSHIP OF THE PARTIES .
3 .1 Independent Contractors .The Parties are independent contractors . Nothing herein shal l
be construed as creating any agency, partnership, or other form of joint enterprise between the Partie s
and neither Party may create any obligations or responsibilities on behalf of the other Party .
3 .2 Subcontractors .PG&E may subcontract its obligations hereunder to other persons or
entities in order to perform the Services hereunder . PG&E agrees to impose on its Subcontractor s
obligations consistent with those set forth in this Agreement with respect to safety, security ,
confidentiality, insurance and indemnification . The fees and costs billed to Customer shall be inclusiv e
of any and all fees and compensation due to any Subcontractors .
3 .2 .1 Subcontractor Selection .PG&E may perform some or all of the Services under a
Work Order itself or through Subcontractors . Subcontractor selection shall be based on cost, experience ,
past performance, reliability and such other factors as practicably related to the Customer's needs .
3 .3
Project Management .
3 .3 .1 Authorized Persons .Customer and PG&E will each designate an employee wh o
is sufficiently experienced to provide the information and support necessary to the other party for th e
performance of this Agreement (the "Authorized Person"). The Authorized Person for each party shal l
be the primary point of contact for inquiries and requests . Each such Authorized Person shall provide th e
other with such information and assistance as may be reasonably requested by the other from time to tim e
for the purpose of the performance of this Agreement .
3 .3 .2 Approvals .The Authorized Person for each party will have the authority t o
issue, execute, receive, grant and provide any and all approvals, requests, notices and othe r
communications permitted, required or requested by the other party ; provided, however, that neither
Customer nor PG&E shall rely for any purpose on any oral communication not confirmed in writing b y
an Authorized Person within twenty-four (24) hours, and provided however, that neither Customer no r
PG&E shall rely for any purpose on any oral communication which would have the effect of amendin g
this Agreement .
4.
SERVICES .
4 .1 General .Customer may request that PG&E assist Customer in the implementation of
one or more of the ECMs at set forth in Exhibit A, which is attached hereto and incorporated b y
reference herein .
4 .1 .1 Preliminary Audit .At Customer's written request, PG&E or its Subcontracto r
will conduct, at no cost to Customer,a preliminary audit consisting of an on-site building investigatio n
and evaluation for a mutually agreeable Facility to determine if any significant energy conservation
opportunities exist and whether a further Investment Grade Audit is needed .
Page 3 of 14 PH5-14
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Exhibit A
4 .1 .2 Investment Grade Audit .After reviewing the Preliminary Audit, the Parties ma y
enter into a Work Order setting forth a scope of work for a Investment Grade Audit ("IGA") to determin e
whether the ECMs proposed in the Preliminary Audit are feasible . The Work Order for the IGA shal l
specify the terms for completing the DAR and establish a price for the IGA . Customer shall pay for the
IGA in accordance with the payment terms of this Agreement and the applicable Work Order . Unles s
otherwise agreed upon in the Work Order for the Investment Grade Audit, Customer shall provide PG&E ,
at Customer's sole cost and expense, legible and complete copies of all floor plans, drawings and an y
other documents deemed necessary by PG&E in order to provide the Investment Grade Audit ..
4 .1 .3 Design and Implementation Phase .After Customer's evaluation of the IGA ,
Customer may elect to proceed with the engineering and design phase . Prior to proceeding, the Partie s
shall agree upon a Work Order for all engineering and design services necessary for the implementation o f
a particular ECM, a time frame for the completion of these Services, and a price for the engineering an d
design work for said ECM (collectively, the "Design Services"). If Customer elects to proceed with th e
Implementation Phase as set forth below, the Design Services will be included in the total Project Cost o f
the ECM .
Upon completion of the Design Services, PG&E will provide an ECM implementatio n
proposal (the "Proposal"). Customer shall evaluate the Proposal for technical and price reasonableness . I f
Customer elects to proceed with the ECM, the Parties will agree upon a scope of work with specifications ,
time of performance, ECM cost, source and cost of capital or financing, payment terms, amortizatio n
schedule and termination schedule which shall be set forth in a Work Order . If required, PG&E wil l
provide acceptable payment and performance bonds .
4 .1 .4 Assumptions .Customer understands that performance of the Services i s
dependent upon Customer's cooperation . Therefore, Customer agrees to use its best efforts to cooperat e
with PG&E in the performance of the Services and shall provide PG&E with timely access to, durin g
normal business hours, and use of Customer's personnel, facilities, data, Equipment, materials an d
information to the extent necessary for PG&E to perform the Services . Customer acknowledges and
agrees that Work Orders may set forth additional details regarding PG&E's access to and use of th e
foregoing as well as Customer's computer systems and networks .
4 .2 Changes and Change Orders .If a Change has occurred the Parties shall, if reasonably
possible, agree on a Change Order . If the Parties are unable to agree on a Change Order, PG&E shal l
suspend its performance of the Services including the Change, until such time as the Parties '
disagreement has been resolved pursuant to Section 12 (Dispute Resolution).
4 .2 .1 Material Changed Condition .PG&E will give written notice to Customer of th e
discovery of Hazardous Materials on or near a Facility, or other condition or circumstance PG&E or it s
Subcontractor believes to be a Material Changed Condition . Neither PG&E nor its Subcontractor wil l
remove, remediate, repair or otherwise disturb any site, soil, subsurface conditions, Hazardous Material s
or other adverse impacts on the Services or the Facility until Customer has had a reasonable opportunit y
to investigate to determine whether a Material Changed Condition has occurred . If Customer reasonably
determines a Material Changed Condition has occurred, the Parties will, if reasonably possible, agree o n
a Change Order with respect to such Material Changed Condition . If the Parties fail to agree on a
Change Order relating to a Material Changed Condition, PG&E shall suspend Services until such time a s
the Parties have resolved the disagreement pursuant to Section12 (Dispute Resolution).
(a)
Handling and Disposal of Hazardous Materials . Customer acknowledges and
agrees that PG&E has no obligation to investigate or inspect the Facility for the presence of Hazardous
Page 4 of 14 PH5-15
Exhibit A
Materials, or to identify, remove, dispose of, abate, or remediate Hazardous Materials . Customer shal l
have sole responsibility for the identification, removal, disposal, abatement or remediation of Hazardou s
Materials, and for the clean-up, transport and disposal of any fixtures, materials, equipment, o r
substances containing, exposed to or contaminated by Hazardous Materials, all in accordance wit h
applicable laws .
4 .2 .2 Unanticipated Conditions .If any unusual or unanticipated conditions exist or arise at th e
Site (such as Hazardous Materials, environmental conditions or pollution), which conditions woul d
involve the incurrence by PG&E of any expenses to correct such conditions, PG&E shall submit a
written request to Customer for Customer's prior written approval of the corrective work and payment o f
the related expenses . The additional Services resulting therefrom will be set forth in a Change Orde r
signed by both Parties .
4 .2 .3 Safety Waiver and Repair Services .If in the process of performing the Services ,
a condition is discovered at the Facility that, in the sole judgment of PG&E, (a) represents an extrem e
safety hazard to its worker's safety or other personnel, (b) may cause operational failure of the equipment
comprising the Facility, or (c) may cause damage to other equipment being served by the Facility, PG&E
will immediately notify Customer in writing of such condition and the Services necessary to remedy th e
condition . Customer will be asked to sign this written notification in the form of Exhibit B (Safet y
Waiver). Failure or refusal to sign the Safety Waiver will relieve PG&E and its Subcontractors of an y
responsibility to perform the Services .
4 .3 .4 Customer Delay .If the performance of particular Services by PG&E depend s
upon approvals or other decisions by Customer, or Customer furnishing particular data, drawings,
documents or other information, and Customer does not timely perform or provide the same, th e
minimum time estimate for PG&E's completion of the particular Services which are dependent thereo n
shall be extended by the period of Customer's delay with respect thereto .
4 .3 .5 Change Costs .Customer shall reimburse PG&E for those reasonable cost s
incurred by PG&E or its Subcontractor(s) to implement a Change in accordance with the Change Order .
These costs include, but are not necessarily limited to, increased costs for design and other professiona l
services, expenses and taxes, if any .
4 .3 .6 With respect to any Change Order made in accordance with this Section 4 ,
Customer acknowledges that PG&E and its Subcontractors shall not be obligated to commence and/o r
perform any Services pursuant to a Change Order unless and until PG&E has received the signed Chang e
Order and Customer has issued PG&E a Purchase Order for such Change Order .
4 .4 PG&E's Utility Obligations .Customer acknowledges that PG&E has an obligation t o
maintain, repair and service its own facilities, including those under the operation and control of th e
California Independent System Operator, in order to perform its duties as a public utility, which
obligation takes precedence over any obligations undertaken in this Agreement . Accordingly, if PG&E
determines at any time, in its sole discretion, that it requires any personnel or resources previousl y
committed to the performance of Services under a Work Order in order to maintain adequate service t o
PG&E's other customers or to fulfill its duties as a public utility, then PG&E shall have the right to diver t
the use of such personnel or resources to satisfy such requirements . If as a result of such action, PG&E i s
unable to perform its obligations under this Agreement and is unable to procure a third party to perfor m
the Services (or a portion thereof), then PG&E shall be excused from the performance of the Service s
affected by such action to the extent so affected . In that event, PG&E shall have no liability to Customer ,
and shall not be considered in default under this Agreement, for such failure to perform .
Page 5 of 14
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PH5-16
Exhibit A
5.FACILITY SAFETY AND HAZARDOUS MATERIAL S
5 .1 Facility Safety .Customer shall be responsible for ensuring that the Facilities are safe fo r
PG&E personnel and Subcontractors performing Services at Customer's facilities . Customer shall als o
cooperate with PG&E personnel working on-site and shall promptly take such actions that may b e
requested by PG&E personnel to help ensure a safe working environment .
5 .2 Hazardous Materials .Prior to performing any Services at a Facility, Customer wil l
inform PG&E and Subcontractors of the presence of any Hazardous Materials of which Customer i s
aware exist inside the Facility (e .g., asbestos). If PG&E or its Subcontractor discovers any Hazardou s
Materials at or around the Facility after commencement of the Services, the procedures specified belo w
in Section 5 .3 shall apply . Neither PG&E nor its Subcontractors shall handle, remove, dispose of o r
remediate any Hazardous Materials absent Customer's prior written instructions and the execution of a
Change Order .
5 .3 If, during performance of the Services, PG&E or a Subcontractor reasonably believe s
that it has encountered or detected the presence of Hazardous Materials, PG&E will promptly sto p
performing the Services and notify Customer of such Hazardous Materials or conditions . Customer wil l
promptly investigate for the presence of Hazardous Materials and inform PG&E of the results of thi s
evaluation . PG&E will not resume the performance of the Services until the Hazardous Materials hav e
been removed, disposed of, abated or remediated to PG&E's reasonable satisfaction . Any delay o r
increase in the Services or costs as a result of the testing, presence, removal, disposal, abatement o r
remediation of Hazardous Materials shall be grounds for a Change Order .
6.COMPENSATION .
6 .1 Payment Terms .Customer shall pay PG&E for the Services performed in accordanc e
with payment terms set forth in the applicable Work Order . Unless otherwise set forth in the Wor k
Order, each payment made by Customer must reference this Agreement, the Work Order and invoic e
number and be mailed to PG&E to the attention of Accounts Payable .
6 .2 Late Payments .All late payments shall be subject to an interest charge, which is the
greater of : (i) one and one half percent (1 .5%) per month, or (ii) the maximum legal rate . In the event
that any unpaid amounts are referred to collection, including but not limited to any applicable late fees ,
Customer shall reimburse PG&E for all costs and expenses of collection, including all reasonabl e
attorneys' fees and costs related thereto .
6 .3 Expenses .Customer agrees to reimburse PG&E for all expenses incurred in connectio n
with PG&E's performance of the Services, including but not limited to all travel and lodging expenses .
Expenses shall be invoiced at their actual cost and will be reflected on PG&E's invoices and shall be pai d
in accordance with the payment terms set forth in the applicable Work Order .
6 .4 Taxes .Customer shall be solely responsible for the payment of any and all sales, use ,
transfer, and other taxes and duties, whether state, federal, national or international, however designated ,
which are levied or imposed on PG&E because of the Services performed under this Agreement (othe r
than taxes based on PG&E's net income) ("Taxes"). If PG&E has the legal obligation to pay or collec t
•
Taxes for which Customer is responsible under this Section 5 .4, the appropriate amount shall be invoice d
to and paid by Customer unless Customer provides PG&E with a valid tax exemption certificat e
Page 6 of 1 4
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PH5-17
Exhibit A
authorized by the appropriate taxing authority verifying that Customer is not required to pay those Taxe s
and is legally exempt .
8 .WARRANTIES AND WARRANTY DISCLAIMER S
8 .1 Customer Warranties .Customer represents and warrants to PG&E that : (a) it has the ful l
corporate right, power, and authority to enter into the Agreement and to perform its obligation s
hereunder ; (b) the terms of the Agreement and the performance by such Party of its duties an d
obligations hereunder, do not violate and will not cause a breach of the terms of any other agreement o r
any applicable law to which such Party is a party or by which it is subject or bound ; (c) when execute d
and delivered by such Party, the Agreement will constitute the legal, valid and binding obligation of suc h
Party, enforceable against such Party in accordance with its terms ; and (d) it is either the owner or lesse e
of the Facility and has all necessary rights to allow PG&E and Subcontractors access to such Facility s o
that they may perform the Services .
8 .2
PG&E Limited Warranties .
8 .2 .1 PG&E warrants that the Services will be performed in a commercially reasonable
manner consistent with the level of care and skill exercised by others when performing Services of a
similar nature under similar circumstances . Unless otherwise agreed to by PG&E in writing, the
warranty period for Services furnished hereunder shall be for a period of twelve (12) months from th e
date of Substantial Completion ("Service Warranty Period").
8 .2 .2 Remedies .Customer must notify PG&E of any non-conformity or defect in the Service s
within the Service Warranty Period . If Customer notifies PG&E within the Services Warranty Period ,
and PG&E confirms the Services were not performed in accordance with Section 8 .2 .1, then PG&E, in it s
sole discretion, will either re-perform the non-conforming Services within a commercially reasonabl e
period of time at PG&E's cost and expense or (b) refund the applicable fees paid to PG&E by Custome r
for the non-conforming Services . THIS SECTION 8 .2 .2 STATES CUSTOMER'S SOLE AN D
EXCLUSIVE REMEDY AND PG&E' S SOLE LIABILITY FOR A BREACH OF THE SERVIC E
WARRANTIES SET FORTH ABOVE IN SECTION 8 .2 .1 . THE SERVICE WARRANTIES EXTEN D
TO CUSTOMER ONLY AND CANNOT BE ASSIGNED BY CUSTOMER .
8 .3 Third Party Warranties .PG&E shall use commercially reasonable efforts to obtain from al l
manufacturers, Customers and distributors standard guarantees and warranties ("Third Part y
Warranties") on the machinery, equipment, technology and/or other materials or items ("Equipment")
used in the Services or in an ECM, and any warranty for the Equipment shall be limited to the Thir d
Party Warranties provided by manufacturers, Customers, and distributors . All such Third Part y
Warranties, including without limitation those for defects, whether latent or patent, in Equipment shal l
terminate upon the conclusion of each such applicable Third Party Warranty period . Neither PG&E no r
its Subcontractors shall have any liability for breach of a Third Party Warranty, whether express o r
implied, or for any latent or patent defect of any kind . PG&E shall assign all Third Party Warrantie s
directly to Customer. At Customer's written request, PG&E will act as Customer's agent in workin g
with the Equipment manufacturers, Customers and distributors to resolve any Third Party Warrant y
issues, and, if material defects are discovered within the Third Party Warranty period, PG&E will wor k
with the guarantor/warrantor as Customer's agent to facilitate the correction of the Equipment defect o r
replacement of the Equipment . Under no circumstances will PG&E or its Subcontractors have an y
liability with respect to its actions as Customer's agent .
Page 7 of 14
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PH5-18
Exhibit A
• 8 .3 .1 The Third Party Warranty expressly excludes any remedy or liability for damage o r
defect caused by the improper use, or improper or inadequate operations or maintenance of Equipment o r
for the Services by users other than the Customer ; corrosion, erosion, deterioration, abuse, modification s
or repairs not performed by an authorized subcontractor ; or for wear and tear under normal usage . At
Customer's option, Customer may contact the Equipment manufacturer, Customer or distributor directl y
to resolve any Third Party Warranty issues and Customer acknowledges that Customer and Equipmen t
manufacturer, Customer or distributor shall have sole responsibility for such issues .
8 .4 No Guarantee of Energy Savings .PG&E DOES NOT WARRANT OR GUARANTEE ANY
LEVEL OF ENERGY, WATER SAVINGS, COST REDUCTIONS OR EQUIPMENT OR EC M
PERFORMANCE .
8 .5 Disclaimer .EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 8, CUSTOME R
EXPRESSLY AGREES THAT PG&E MAKES NO OTHER WARRANTIES AND ASSUMES N O
OTHER LIABILITIES, WHETHER IN CONTRACT OR IN TORT, IN CONNECTION WITH TH E
AUDIT, DESIGN, ENGINEERING, EQUIPMENT PROCUREMENT, CONSTRUCTION ,
IMPLEMENTATION, OPERATIONS, MAINTENANCE, SERVICES, EQUIPMENT OR ECM S
HEREUNDER WHETHER EXPRESS OR IMPLIED, IN LAW, IN EQUITY OR I N
COMMUNICATIONS BETWEEN PG&E AND CUSTOMER . PG&E SPECIFICALLY DISCLAIM S
ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULA R
PURPOSE . CUSTOMER SHALL HAVE NO REMEDIES AGAINST PG&E FOR ANY DEFECTIV E
SERVICES, INSTALLED EQUIPMENT, OR OPERATION OF AN ECM EXCEPT I N
ACCORDANCE WITH THE WARRANTY SET FORTH IN THIS SECTION 7 OR AS THE PARTIE S
MAY EXPRESSLY AGREE IN ANY WORK ORDER OR AMENDMENT TO THIS AGREEMENT .
9 .
LIMITATION OF LIABILIT Y
9 .1 IF PG&E IS HELD TO BE LIABLE TO CUSTOMER OR TO ANY PART Y
CLAIMING BY OR THROUGH CUSTOMER BY REASON OF PG&E'S PERFORMANCE O F
SERVICES UNDER THIS AGREEMENT, PG&E'S TOTAL AGGREGATE LIABILITY WITH
RESPECT TO DAMAGES AND LOSSES RELATING TO THIS AGREEMENT SHALL BE LIMITE D
TO THE LESSER OF : (A) THE PRICE FOR THE SERVICES UNDER THE WORK ORDER GIVIN G
RISE TO THE CLAIM ; OR (B) THE TOTAL AMOUNT PAID BY CUSTOMER TO PG&E FOR TH E
SERVICES UNDER THE WORK ORDER GIVING RISE TO THE CLAIM .
9 .2 IN NO EVENT SHALL PG&E BE LIABLE TO CUSTOMER OR ANY THIR D
PARTY FOR INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGE S
INCLUDING, BUT NOT LIMITED TO, LOSS OF USE, COST OF DELAYS, REPLACEMENT OF
POWER, OR LOSS OF PROFITS, EVEN IF PG&E IS ADVISED BY CUSTOMER OF TH E
POSSIBILITY OF SUCH DAMAGES .
9 .3 THE ABOVE LIMITS OF LIABILITY ARE EXCLUSIVE AS TO ALL REMEDIE S
AND THE LIABILITY CAP SHALL NOT BE COMBINED WITH ANY OTHER LIMITS O F
LIABILITY SO AS TO INCREASE THE CAP VALUE IN ANY PARTICULAR INSTANCE O R
SERIES OF INSTANCES . THE PARTIES AGREE THE ABOVE SECTIONS 8 - 10 REPRESENT TH E
BASIS OF THE BARGAIN AND A FAIR ALLOCATION OF RISK BETWEEN THE PARTIES .
• 9
.4 Basis of the Bargain .THE PARTIES ACKNOWLEDGE AND AGREE THAT THE
FOREGOING SECTIONS ON WARRANTIES, WARRANTY DISCLAIMER AND LIMITATION O F
LIABILITY IN THE AGREEMENT FAIRLY ALLOCATE THE RISKS BETWEEN THE PARTIE S
Page 8of1 4
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PH5-19
Exhibit A
AND ARE ESSENTIAL ELEMENTS OF THE BASIS OF THE BARGAIN BETWEEN THE PARTIE S
SUCH THAT THE PARTIES WOULD NOT HAVE ENTERED INTO THIS AGREEMEN T
WITHOUT SUCH SECTIONS .
10.INDEMNIFICATION.Customer covenants and agrees that Customer will indemnify, defend and hol d
harmless PG&E, its affiliates, and PG&E's and its affiliates' respective directors, officers, employees ,
agents, successors and assigns (collectively, the "PG&E Indemnitees") from and against any and al l
claims, damages, costs, expenses, (including attorneys' fees and court costs) and liabilities (includin g
settlements) brought or asserted by any third party against the PG&E Indemnitees resulting from, arisin g
out of or related to any claim : (i) for personal injury, including death, or property damage, includin g
theft, caused to any of the PG&E Indemnitees, Subcontractors or a third party by Customer's action o r
inaction, whether negligence or intentional misconduct ; and (ii) resulting from Customer's breach of an y
representations, warranties or covenants contained above in Sections 8 .1 or 8 .2 ; and (iii) any data ,
Equipment, information, software or other property provided to PG&E hereunder or any element s
embodied therein, or that any of the PG&E Indemnitees' use of any of the foregoing infringe o r
misappropriate the intellectual property rights of any third party (each of the foregoing (i) through (iii )
are referred to as a "Claim"). PG&E shall promptly notify Customer of any Claim and shall (a t
Customer's sole expense) reasonably cooperate with Customer to facilitate the settlement or defense o f
such Claim. Customer shall, at its own expense, indemnify, defend and hold harmless the PG&E
Indemnitees from and against all costs of defending the Claim, including attorneys' fees and court costs
(including those incurred by the PG&E Indemnitees in enforcing this provision). Customer shall keep
PG&E Indemnitees informed of, and consult with PG&E Indemnitees in connection with the selection o f
counsel to defend the Claim and the progress of such litigation or settlement . Customer shall not hav e
any right to settle any such Claim without the specific prior written approval from a designated lega l
representative of the PG&E Indemnitees .
11 .
TERM, SUSPENSION AND TERMINATIO N
11 .1 Term .This Agreement shall commence on the Effective Date and shall terminate upo n
later of: (a) three (3) years from the Effective Date, or (b) the Final Completion of all then-outstandin g
Work Orders, unless otherwise terminated earlier pursuant to this Section 10 (the "Initial Term"). Thi s
Agreement may be renewed, upon thirty (30) days prior written notice, for two (2) additional one (1) yea r
periods upon the mutual written agreement of the Parties (each a "Renewal Term"). The Initial Term an d
all Renewal Terms shall be collectively referred to as the "Term".
11 .2 Termination for Cause .If either Party materially defaults in the performance of any o f
its duties and obligation hereunder, or such material default is not cured within thirty (30) days afte r
written notice thereof, this Agreement may be terminated by the non-defaulting party for cause as of th e
date specified in the notice . In addition, a Party may be entitled to terminate the Agreement immediatel y
if a Party files a petition in bankruptcy, makes an assignment for the benefit of its creditors, become s
insolvent, fails to do business in the ordinary course, shall have or suffer the appointment of a receiver o r
trustee for its business or property, or be adjudicated bankrupt or insolvent, or bankruptcy proceeding s
are commenced by or against such Party .
11 .3
PG&E's Additional Termination Rights .
11 .3 .1 Change in Law .In the event legislation or governmental regulations woul d
prohibit PG&E from providing the Services under this Agreement (in whole or in part), PG&E
may terminate the Agreement or any Work Order (without any liability or penalty) upon thirt y
(30) days' notice . Upon the effective date of PG&E's termination notice under this Section ,
Page 9 of 14
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PH5-20
Exhibit A
•
Customer will pay PG&E for all of the Services provided to Customer as of the effective date o f
the termination notice .
11 .3 .2 Program Change .PG&E may terminate this Agreement immediately an d
without prior notice in the event the California Public Utilities Commission ("CPUC") issues a
ruling or order prohibiting or otherwise preventing PG&E from fulfilling, or substantiall y
interfering with PG&E's ability to fulfill, its obligations under this Agreement, or finding tha t
this Agreement is contrary to the policies of the CPUC ..
11 .4 Suspension of Service .PG&E reserves the right (in addition to any and all other right s
and remedies PG&E may have) to suspend the performance of the Services, including those performe d
by Subcontractors, without any penalty or liability to Customer, if any invoice remains unpaid (in whol e
or in part) after the date payment is due until such invoice (including late penalties) is paid in full .
11 .5 Effect of Termination .Upon any expiration or termination of this Agreement, PG&E's
obligations to Customer shall be to continue to perform the Services until the effective date of suc h
termination (except as otherwise instructed in writing by PG&E), to wind down and terminate th e
Services in an efficient, workmanlike and cost-effective mariner, and to cooperate with PG&E in th e
transition to third parties or employees designated by PG&E .
11 .5 .1 Effect of Customer's Termination .
(a)If Customer terminates a Work Order for cause pursuant to Section 11 .2 an d
prior to Substantial Completion, Customer may do so by giving written notice to PG&E at leas t
thirty (30) days prior to the effective date of such termination . In that event, Customer shall pa y
PG&E the amount set forth in the termination schedule set forth in the applicable Work Order .
(b)If Customer terminates a Work Order for cause pursuant to Section 11 .2 and
after Substantial Completion, Customer may do so by giving written notice to PG&E at leas t
thirty (30) days prior to the effective date of such termination . In that event, Customer shall pa y
PG&E the amount set forth in the termination schedule set forth in the applicable Work Order .
11 .6 Survival .The following Sections of this Agreement shall survive expiration ,
cancellation or other termination of this Agreement : 1, 6, 8 through 10, 11 .5, 11 .6 and 12 through 14 .
Any other provisions of this Agreement that would generally be construed as intended to survive th e
expiration, cancellation or other termination of this Agreement shall also survive such expiration ,
cancellation or other termination .
12 . DISPUTE RESOLUTION .If any dispute, excluding payment defaults or delinquencies, arises unde r
the Agreement that is not settled promptly in the ordinary course of business, the Parties shall first see k
to resolve any such dispute between them by negotiating promptly in good faith in face-to-fac e
negotiations . These face-to-face negotiations shall be conducted by the respective designated senio r
managers of each Party responsible for their relationship, and shall be escalated internally by each Part y
as reasonably necessary to seek resolution of the dispute . If the Parties are unable to resolve the disput e
between them through these face-to-face negotiations within thirty (30) business days following thei r
commencement (or within such other period as the parties may otherwise mutually agree upon), then th e
parties shall escalate the dispute to their most senior executives within their organization . If the Parties '
•
most senior executives are unable to resolve the dispute within thirty (30) business days or such othe r
period as they may mutually agreed, then either Party may pursue available legal and equitable remedies .
Page 10 of 14 P H 5-21
Exhibit A
13 . GOVERNING LAW AND VENUE .This Agreement shall be construed and interpreted in accordanc e
with the laws of the State of California, excluding any choice of law rules that may direct the applicatio n
of the laws of another jurisdiction . Any controversy or claim arising out of or in any way relating to thi s
Agreement shall be litigated in a California Superior Court of competent jurisdiction ; or if jurisdictio n
over the action cannot be obtained in a California Superior Court, in a Federal District Court o f
competent jurisdiction situated in the State of California, and Customer hereby consents to the persona l
jurisdiction of such courts .
13.FORCE MAJEURE .A Party will be excused from a delay in performing, or a failure to perform, it s
obligations under this Agreement (excluding Customer's payment obligations) to the extent such delay o r
failure is caused by the occurrence of a Force Majeure Event . In such event, the performance times shal l
be extended for a period of time equivalent to the time lost due to the Force Majeure Event . However, i f
a Force Majeure Event (excluding any affecting Customer's payment obligations) continues more tha n
ninety (90) days, the party not relying on the excusable delay may, at its option, terminate the affecte d
Product Order Form or Work Order, in whole or in part, upon notice, without penalty or obligation to th e
party suffering under the Force Majeure Event .
14.GENERAL TERMS .This Agreement contains the entire agreement between the parties regarding th e
Services and supersedes any other prior oral or written agreements . In the event of any conflict o r
inconsistency between the terms of this Agreement and any Work Order, such Work Order shall control .
Any different or additional provisions in purchase orders, invoices or similar documents issued b y
Customer are hereby deemed refused by PG&E and such refused provisions will be unenforceable . An y
modifications hereto must be in writing and signed by the parties . A waiver by any party of any breac h
will not constitute a waiver of any different or subsequent breach . If any part of this Agreement i s
invalid, illegal or unenforceable for any reason, that portion shall be replaced with a valid provisio n
appropriate to the parties' original intent and the remainder shall be enforced .
IN WITNESS THEREOF, the parties have caused this Agreement to be executed as of th e
Effective Date first set forth above .
PACIFIC GAS AND ELECTRIC COMPANY CUSTOME R
77 Beale Street
San Francisco, CA 94104
By : By :
(Signature)
(Signature)
Name :
Name :
Title :
Title :
Date :
Date :
Page 11 of 14
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P H 5-22
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Exhibit A
EXHIBIT A
POTENTIAL ECM S
Potential ECMs that may be included in a Work Order are set forth below :
a.Implementation, modification, repair, maintenance and/or operation of on-sit e
generation/cogeneration facilities, including those fueled by alternative resources ,
emergency and back-up power supply systems ,
b.Power quality and power reliability solutions including uninterruptible power suppl y
systems, thermal energy storage systems and fuel switching technology ,
c.Power factor correction measures and equipment,
d.Transformer replacement ,
e.Interior and exterior lighting system replacement ,
f.Lighting control improvements ,
g.Occupancy sensors ,
h.LED exit sign installation ,
i.Motors replacement with high efficiency motors ,
J .
Packaged air conditioning unit replacement ,
k .
Cooling tower retrofit ,
1 .
Economizer installation ,
m.Energy management control system installation/alteration/repair ,
n.Fans and pump replacement or impeller trimming ,
o.Chiller retrofit ,
p.Variable frequency or variable speed drive utilization ,
q.Replacement of air conditioning & heating unit with a heat pump ,
r.Addition of liquid refrigerant pump to a reciprocating air conditioning unit ,
s.Heat pipe dehumidification ,
t.High efficiency window air conditioner replacement ,
u.Upgrade of natural gas-fired boilers with new controls (low NOx burners),
v.Boiler control improvements ,
w.Steam trap maintenance and replacement ,
x.Infrared heating system ,
Y .
Solar domestic hot water system,
z .
Solar air preheating system ,
aa.
Insulation installation ,
bb .
Weatherization ,
cc .
Window replacement,
dd .
Window coverings and awnings ,
ee .
Reflective solar window tinting ,
ff.
High efficiency refrigerator replacement ,
gg .
Water conservation device installation (e .g ., flow restrictors, low flow flush valves ,
waterless urinals, horizontal axis washing machines),
hh .
Faucet replacement (infrared sensor),
ii .
Water distribution system leak detection, and cost effective repair ,
jj .
Flash bake commercial cooking ,
kk .
Operation, maintenance, modification and/or extension of utility distribution an d
collection system ,
11 .
Training that will result in reduced energy costs ,
mm .
Installation, maintenance and operation of standby propane facility,
1 4PH5-23
Exhibit A
nn .
Installation, maintenance and operation of gas distribution system and associate d
equipment ,
oo . Any other cost-effective ECM, including those that reduce Customer's energ y
consumption, energy demand or energy costs, provide energy savings, improve energ y
reliability, and other energy infrastructure improvements, and water conservation .
pp . Design and/or scoping efforts in support of Authorization(s) other than the Authorizatio n
in .which such design and/or scoping efforts are ordered and under which they ar e
compensated .
1 4P H 5-24
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Exhibit A
EXHIBIT B
SAFETY WAIVE R
PG&E has informed the Customer's on-site representative of the following condition(s) which, i n
the opinion of PG&E's on-site representative, should be remedied before the Services may be resumed a t
the Facility . Customer recognizes that if the below-listed condition at the Facility is not remedied a s
recommended by PG&E, an accident may occur causing damage to the Facility, equipment and/or injur y
to persons, including but not limited to, the employees of Customer, PG&E and Subcontractors .
By signing this waiver, Customer acknowledges and accepts all liability associated with thi s
condition
Description of condition :
Equipment ID#: (If applicable )
Executed this day of , 201 1
Facility name :
CUSTOMER
Sign :
Name (print):
Titl e
Date :
PACIFIC GAS AND ELECTRIC COMPAN Y
Sign :
Name (print):
Title :
Date :
1 4PH5-25
Pacific Gas an d
Electric Company
Attachment 2
September 2, 201 1
Mr . Howard Brewe n
Water Reclamation Facility Superviso r
CITY OF SAN LUIS OBISP O
35 Prado Roa d
San Luis Obispo, 9340 1
Re :PG&E SST Program, City of San Luis Obispo Water Reclamation Facility Projec t
Proposal for Investment Grade Energy Assessmen t
Dear Howard ,
Pacific Gas and Electric (PG&E) is pleased to our proposal to the City of San Luis Obispo (SLO )
for Sustainable Solutions Turnkey (SST) services . The services are for professional consultin g
and engineering required to complete an Investment Grade Assessment (IGA) of energ y
conservation and power generation opportunities at the SLO Water Reclamation Facility .
PG&Es services will be performed with our consultant AECOM who assisted in preparing th e
Preliminary Energy Assessment with your team . The scope of work in this proposal reflects ou r
current understanding of the City s goals and preferred energy conservation measures (ECMs )
for the Water Reclamation Facility .
Our effort will include a detailed evaluation and presentation of ECMs and a digester-gasfuele d
power generating system described in the Final Preliminary Energy Assessment Report date d
August 30, 2011 prepared for SLO by PG&E and AECOM . The following sections of thi s
proposal describe the proposed scope of work, assumptions, schedule, and estimated cost t o
complete the work .
SCOPE OF WOR K
Investment grade assessment services will be performed as described below :
ECM s
Evaluate the thirteen (13) ECMs shown below, these ECMs are described in the 100% Draf t
Preliminary Energy Assessment Report for SLO dated July 19, 2011 .
Facility ECM ID ECM Descriptio n
WRF WRF-1 Cogeneration System Upgrad e
WRF WRF-2 Upgrade Headwork s
WRF WRF-3 Retrofit Primary Sludge Pumps •
PH5-2 6
Pacific Gas an d
Electric Company
Attachment 2
WRF WRF-5 Aeration Tank Air Pressure Set-Point Contro l
Improvement s
WRF WRF-6 Install RAS Pump VFD s
WRF WRF-7 DAFT Upgrade s
WRF WRF-8 Filter Backwash Control s
WRF WRF-9 Cooling Tower Upgrade s
WRF WRF-10 Office Indoor Lighting Upgrade s
WRF WRF-11 Outdoor Lighting Upgrades
WRF WRF-13 WAS Pumping System Modification s
WRF WRF-14 Solids De-Waterin g
WRF WRF-16 Upgrade SCADA Systems
Project Meeting s
1) Project meetings will include a project kickoff meeting with PG&E and SLO at the WR F
to review the project and start the project activities including :
•Discuss project goals, scope, process and schedule .
•Discuss PG&E and SLO s expectations, needs and preferences as well as an y
issues and constraints .
•Discuss AECOM s data needs .
•Discuss site work protocols and procedures for AECOM including safety, security ,
allowable work hours, vehicle parking, and access to facility areas .
2)Bi-weekly status, planning and coordination meetings with PG&E and SLO via telephon e
conference call .
3)An IGA completion meeting with PG&E and SLO at the WRF to discuss the findings an d
recommendations presented in the IGA report and determine the next steps .
Site Visits
Site visits will occur as required to meet with site personnel, collect facility information, tak e
measurements, install data collection equipment, and meet with vendors and subcontractors .
Final IGA Repor t
PG&E and AECOM will develop and submit an IGA report including :
•Executive Summary - Provides an overview of the project s scope of work, financials an d
next steps .
•Approach to Investment Grade Assessment Provides a detailed description of how th e
IGA report is developed .
PH5-2 7
Pacific Gas an d
Electric Company
Attachment 2
••Updated Utility Analysis The utility analysis from the PEA will be reviewed and update d
as needed to account for changes in usage and/or rates . This analysis examine s
relevant utility information for the past thirty-six (36) months (as available from SLO an d
PG&E) to establish base year consumption, costs and rates for electricity and natura l
gas .
•Updated Energy Allocation Analysis The energy allocation analysis from the PEA wil l
be reviewed and updated as needed to reflect actual end use energy consumptio n
determined from measurements and data gathered during the IGA . This analysis
examines end use energy consumption for significant systems and equipment at th e
WRF and relates it to the total utility consumption for the facility . AECOM will utiliz e
metered data provided by SLO and will also install data loggers for key systems a s
required .
•Energy Conservation Measures Provides a detailed discussion of each ECM includin g
existing conditions, proposed solution, scope of work for implementation, and expecte d
benefits, savings and implementation costs . Data to support the recommendations an d
conclusions for each ECM will be provided in sufficient detail to enable SLO to make a n
independent evaluation of each ECM . For example, the energy and O&M saving s
analysis will include the following :
o Base year energy use and cost .
o Post-retrofit energy use and cost .
o Savings estimates including analysis methodology, supporting calculations an d
assumptions .
o Explanation of how savings duplication or interactions between retrofit options i s
avoided .
o Operation and maintenance savings methodology, calculations and ke y
assumptions .
o Spread sheet analysis and/or computer simulation (where appropriate). Eac h
analysis will include a short description and statement of key input data .
•Cost Benefit Analysis Provides a detailed financial analysis including Pro Forma (cas h
flow) models and Life Cycle Cost Analysis (LCCA). These analyses will include inflatio n
rates, discount rates and fuel and electricity escalation rates . Future savings wil l
reasonably consider such factors as equipment degradation, expected usage factor ,
incremental increase in maintenance costs, if applicable, overhaul reserves, etc . a s
appropriate for the project .
•Project Rebates, Grants, and Incentives Provides a detailed description of availabl e
rebate and incentive programs that the proposed projects are eligible for including al l
related documentation necessary to successfully complete the application process .
AECOM (with support and direction from PG&E) will initiate the rebate and incentiv e
process and will provide a schedule identifying key tasks, milestones and roles an d
responsibilities .
•Project Cost Estimates Provides a detailed cost estimate for each recommended EC M
and the overall project package . Includes a preliminary schedule of values for th e
implementation phase of the project .•
PH5-28
Pacific Gas and
Electric Company
Attachment 2
••Project Design and Construction Schedule Provides a preliminary project design an dconstruction schedule (Microsoft Project Gantt Chart format) identifying each tas k
function including key milestones and responsible parties .
•Design Drawings Design drawings will be provided as needed to supplement th e
written description of each ECM, sufficiently describe the function and features of th e
proposed solution, and to provide sufficient detail for developing firm design-buil d
construction costs .
The type of drawings needed will vary from schematic/conceptual design level up t o
approximately 50% design level . Some ECMs such as interior lighting may not have drawings .
ASSUMPTIONS AND CLARIFICATION S
The following assumptions and clarifications apply to the scope and costs presented in thi s
proposal .
•Facility data/information will be made available in a timely fashion including utility bills ,
facility construction drawings, equipment data, and O&M data .
•Costs for subcontracted analytical testing are not included . PG&E/AECOM can provide a
quote for these services as additional compensation .
•Costs for procurement or installation of permanent measurement and monitorin g
equipment (e .g . digester gas flow meter) is not included . These services can be provide d
for additional compensation .
••PG&E and AECOM will require close coordination with facility staff and other SLO cit y
personnel in order to successfully complete the IGA . We assume that appropriat epersonnel will be available to support the project during the site visits and meetings, an d
also will be available by for follow-up consultations .
•SLO will provide escorts for our engineering personnel if needed while visiting th e
facility . SLO will arrange and provide access for AECOM to all facility areas an d
equipment as needed to complete the work .
•The scope of work and pricing in this proposal are contingent upon the final negotiate d
terms and conditions in the proposed Master Implementation Agreement (MIA) betwee n
PG&E and SLO .
IGA Deliverables :
•Meeting Note s
•Preliminary Report (45%)
•Pre-Final Report (90%)
•Bound Final Report
•CD copies of all documents
IGA Exclusions :
•• Detailed construction plans if needed will be developed in a future phase .
•Stamped design drawings are not included
P H 5-29
Attachment 2
•Specifications are not include d
•Permits are not include d
SCHEDUL E
PG&E is prepared to begin work immediately upon execution of an agreement and bein g
provided a Notice to Proceed (NTP). The work IGA will take five (5) calendar months from th e
NTP . A preliminary list of task and time frames is included below, upon receipt of the NTP w e
will provide a more developed schedule for the IGA work and arrange the kick-off meeting .
Tasks
Calendar Day s
From NT P
•Kick-off Meeting 7
•Submission of Preliminary Report (45%)6 0
•ECMs Formulation Conference 7 2
•Submission of Pre-Final Report (90%)12 0
•Pre-Final Report Review Conference 13 4
•Submission of Final Repot 150
COST
PG&Es pricing to provide the services described herein is a fixed lump-sum price of 398,67 5
(three hundred eighty-four thousand one hundred seventy six dollars).
We look forward to working with the City of San Luis Obispo on this and future phases of thi s
important project . Please contact me at (415) 973-5335 if you have any questions about thi s
proposal .
Respectfully submitted ,
PACIFIC GAS AND ELECTRIC COMPAN Y
Brent Patera
Business Development Manager
P H 5-3 0
Pacific Gas an d
Electric Company
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