HomeMy WebLinkAbout10-16-2018 Item 9 - Authorization to submit PGE on-bill financing loan - Energy Efficiency lighting retrofits Meeting Date: 10/16/2018
FROM: Robert Hill, Interim Deputy Director, Office of Sustainability
Prepared By: Chris Read, Sustainability Manager
SUBJECT: AUTHORIZATION TO SUBMIT PG&E ON-BILL FINANCING LOAN
AGREEMENTS IN SUPPORT OF ENERGY EFFICIENCY LIGHTING
RETROFITS
RECOMMENDATIONS
1. Authorize staff to negotiate PG&E On-Bill Financing Loan Agreements (Attachment A);
2. Adopt a resolution making findings on energy savings as required by Government Code
4217.12 (Attachment B); and
3. Authorize the City Manager to submit On-Bill Finance Loan Agreements and documents
related to the Loan Agreements to PG&E in a form subject to the approval of the City
Attorney.
DISCUSSION
Background
On August 21, 2018, Council received information about the On-Bill Financing opportunity for
energy efficiency lighting retrofits (as described below) to implement the Climate Action Major
City Goal and achieve cost savings as outlined in the City’s Fiscal Health Response Plan.
Council voted 5-0 in the affirmative to “Authorize the submittal of the non-binding PG&E On-
Bill Financing Application.”
This report provides a brief overview of the On-Bill Financing Opportunity (for a full report, see
the Council Agenda Report for Item #16 on the August 21, 2018 Council Agenda), an update on
the On-Bill Financing Applications, considerations regarding California Government Code 4217,
and process and timing considerations should Council approve staff’s recommendations.
On-Bill Financing Opportunity
In April of 2018, the SLO EnergyWatch Partnership provided an overview of the City of San
Luis Obispo municipal operations energy use by building/facility. EnergyWatch Partnership staff
also provided access to resources for further assessment and lighting energy efficiency project
implementation, including introduction to PG&E’s trade professional Eco Green Solutions. Eco
Green Solutions is a PG&E certified “Trade Professional and Authorized Agent” and provide s
energy efficiency audits, installs products consistent with an approved project, and provide s
access to PG&E rebates and financing tools.
Packet Page 33
Item 9
Importantly, PG&E and Eco Green Solutions provide access to and assistance with utilizing
PG&E’s “on-bill financing” (OBF). OBF is a financing mechanism provided by PG&E that
allows the City to receive a 0% loan for energy efficiency projects with no up-front costs. The
City then amortizes the debt using monthly bill savings achieved through the project. During the
payback period, the City’s bill would appear unchanged. Upon full payback, the City’s energy
bill would reflect the savings.
On-Bill Finance Application Update
Since submitt al of the non-binding PG&E On-Bill Financing Applications, staff has received
approvals from PG&E for lighting energy efficiency retrofit projects at ten properties, as outlined
in Table 1. The projects are a mix of lighting fixture retrofits and replacements. For each
approved property, PG&E confirmed, and where necessary amended, project performance
assumptions on the initial applications to more accurately reflect current and projected operating
conditions. For each approved project, PG&E has held the loan amount in reserve and has
provided On-Bill Financing Agreements (Attachment A). Staff has the capacity to further refine
the assumptions in the agreements, including eliminating fixtures, requesting alternative fixtures,
requesting additional components such as controls/dimmers, and adjusting operating hour
assumptions.
Table 1 lists the project sites and provides the estimated project performance for each site and in
total. The ten proposed projects would be financed with approximately $1.3 million in OBF
financing and are estimated to save a total of $18,478 per month. Of that total, approximately
$377,142 in OBF financed retrofits would occur in Parking Fund properties and would save
approximately $7,847 per month. The remaining $964,012 in OBF financed retrofit costs and the
associated $10,631 monthly savings would benefit the General Fund.
Table 1. Project List and Performance Estimates
Project Site
Estimated Project
Cost After Rebates
Estimated Energy Bill
Savings per Month
Simple Payback
(Years)
1. 871 Marsh Street Parking Structure $213,238.96 $4,334.82 4.1
2. 842 Palm Street Parking Structure $104,691.88 $2,083.33 4.2
3. 919 Palm Street Parking Structure $61,474.39 $1,428.73 3.6
4. City Hall $87,380.84 $797.90 9.1
5. Corporation Yard $210,586.56 $1,810.32 9.7
6. Police Station and Annex $114,302.24 $1,126.72 8.5
7. Ludwick Community Center $51,837.00 $476.61 9.1
8. Damon Garcia Park $412,859.18 $5,048.33 6.8
9. Santa Rosa Park $60,989.76 $1,130.57 4.5
10. Parks and Recreation Office $24,908.92 $240.36 8.6
Total $1,342,269.73 $18,477.69
Note: Costs, savings, and payback estimates are vetted by PG&E as described in Attachment A. These
figures are subject to revision based on project negotiations.
Note: Damon Garcia Park (#8), Santa Rosa Park (#9), and the Parks and Recreation Office (#10)
applications are still in the approval process. Numbers provided in Table 1 for these projects are estimates
and are subject to change based on PG&E vetting and further project negotiations.
Packet Page 34
Item 9
California Government Code 4217.10 et seq.
California Government Code section 4217 provides broad contracting authority for public
agencies to enter into “energy service contracts” such as the OBF. To illustrate consistency with
Government Code 4217, the City provided public notice for this meeting, and must adopt a
resolution making certain findings related to energy and cost savings. The resolution, which is
provided as Attachment B, would allow the City to continue working with PG&E and Eco Green
Solutions to implement the projects described in this report.
Process and Timing Considerations
Should Council approve staff’s recommendation, staff would proceed with negotiating OBF
agreement terms and conditions for each of the ten sites. Staff has already requested that Eco
Green Solutions install demonstration fixtures at City Hall and the 919 Parking Structure to
ensure fixture and installation quality. As specific site project characteristics, expected
performance, terms, and conditions meet staff’s expectations and are in a form to the satisfaction
of the City Attorney, the OBF agreements would be provided to the City Manager for execution.
Staff expects all project sites with OBF agreeme nts submitted in October to be fully installed and
operational by December 31, 2018.1
CONCURRENCES
The Public Works Department concurs with this report.
ENVIRONMENTAL REVIEW
The execution of an OBF Agreement with PG&E and the subsequent lighting fixture retrofits
and replacements are statutorily and categorically exempt from environmental review on the
basis that the projects are: installation of LED upgrades in and on existing facilities or at existing
parking lots (Public Resources Code § 21080.35; new construction or conversion of small
structures (CEQA Guidelines § 15303); minor alterations to land (CEQA Guidelines § 15304);
projects which consist of the construction or placement of minor accessory structures to existing
facilities (CEQA Guideline s § 15311); and activities which can be seen with seen with certainty
that there is no possibility that the activity in question may have a significant effect on the
environment (CEQA Guidelines § 15061(b)(3)).
FISCAL IMPACT
Should the City proceed with a project using OBF, no capital outlay funding would be required.
Payback of loan amounts will be realized in each facility’s utility bill based on the savings
calculated by PG&E. Once the loan amount is paid off via the utility bill, savings will be reali zed
from then forward. Table 1 provides an overview of projected savings by project site based on
the preliminary analysis. As currently estimated, once the payback period has concluded, the
project would save the Parking Fund approximately $7,8 47 per month and the General Fund
approximately $10,631 per month.
1 PG&E’s incentives and financing programs run on calendar year cycles. If a project is not installed b y December
31, 2018, staff would need to resubmit OBF applications for 2019.
Packet Page 35
Item 9
ALTERNATIVES
1. The City could pursue an alternative financing mechanism for funding lighting retrofits. Staff
does not recommend this alternative as the 0% financing and ability to use electricity sav ings
as loan payments allows the City to achieve lighting, greenhouse gas, and cost savings
objectives without any up-front costs.
2. The City could choose not to pursue lighting retrofits at this time. Staff does not recommend
this alternative as it does not provide greenhouse gas emissions reductions or electricity bill
savings.
Attachments:
a - On -Bill Financing Agreements
b - Gov. Code 4217 Resolution
Packet Page 36
Item 9
Packet Page 37
Item 9
Packet Page 38
Item 9
Packet Page 39
Item 9
Packet Page 40
Item 9
Packet Page 41
Item 9
Packet Page 42
Item 9
Packet Page 43
Item 9
Packet Page 44
Item 9
Packet Page 45
Item 9
Packet Page 46
Item 9
Packet Page 47
Item 9
Packet Page 48
Item 9
Packet Page 49
Item 9
Packet Page 50
Item 9
Packet Page 51
Item 9
Packet Page 52
Item 9
Packet Page 53
Item 9
Packet Page 54
Item 9
Packet Page 55
Item 9
Packet Page 56
Item 9
Packet Page 57
Item 9
Packet Page 58
Item 9
Packet Page 59
Item 9
Packet Page 60
Item 9
Packet Page 61
Item 9
Packet Page 62
Item 9
Packet Page 63
Item 9
Packet Page 64
Item 9
Packet Page 65
Item 9
Packet Page 66
Item 9
Packet Page 67
Item 9
Packet Page 68
Item 9
R ______
RESOLUTION NO. _____ (2018 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, MAKING FINDINGS ON ENERGY SAVINGS
AND DETERMINING OTHER MATTERS IN CONNECTION WITH
ENERGY EFFICIENCY RETROFITS
WHEREAS, it is the policy of the State of California and the intent of the State Legislature
to promote all feasible means of energy conservation and all feasible uses of alternative energy
supply sources; and
WHEREAS, the City of San Luis Obispo (“City”) desires to reduce energy costs at its
facilities; and
WHEREAS, the City proposes to enter into an On-Bill Financing Agreement (“OBF
Agreement ”) and related contract documents with PG&E (“Utility”), who in turn will use
EcoGreen Solutions (“Contractor”) as the Contractor for facilities at the City’s real property sites,
pursuant to which Contractor will remove old lighting fixtures and install new Energy Star and
DLC listed LED lighting in the City’s facilities. Contractor will also arrange with the Utility to
secure rebates and incentives to help lower the cost of the project ; and
WHERAS, through the Utility On-Bill Financing Program the City will have no capital
outlay and will continue to pay their utility bills through the loan’s existence ; and
WHEREAS, Contractor has provided the City with analysis showing the financial and
other benefits of entering into the OBF Agreement, which analysis is attached here to as Exhibit
A and made part hereof by this reference; and
WHEREAS, Exhibit A includes data showing that the anticipated cost to the City for the
electrical energy saved by the LED upgrades will be equal to/or less than the anticipated cost of
the project thus making these projects bill neutral; and
WHEREAS, Contractor was the selected vendor for the On-Bill Financing project due to
their status as a PG&E Customer Authorized Agent and Contractor’s carrying the costs and
structuring of the project to have no capital outlay to the City. T he City adopts Utility’s competitive
process as its own; and
WHEREAS, the City proposes to enter into the On-Bill Financing Agreements and related
contract documents in substant ially the form presented at this meeting, subject to such changes,
insertions or omissions as the City Manager and City Attorney reasonably deems necessary
following the Council’s adoption of this Resolution; and
WHEREAS, pursuant to Government Code section 4217.12, this Council held a public
hearing, public notice of which was given two weeks in advance, to receive public comment .
Packet Page 69
Item 9
Resolut ion No. _____ (2018 Series) Page 2
R ______
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
t hat:
SECTION 1. The terms of the OBF Agreements and related agreements are in the best
interests of the City.
SECTION 2. In accordance with Government Code section 4217.12, and based on data
provided by Exhibit A, the Council finds that the anticipated cost to the City for lighting retrofits
provided by the OBF Agreements will be less than or equal to the anticipated cost to the City of
electrical energy that would have been consumed by the City in the absence of the OBF
Agreements.
SECTION 3. The City Manager and City Attorney are hereby authorized and directed to
negotiate any further changes, insertions and omissions to the OBF Agreements as they reasonably
deem necessary, and thereafter to execute and deliver the OBF Agreements following the
Council’s adoption of this Resolution. The Cit y Manager is further authorized and directed to
execute and deliver any and all papers, instruments, opinions, certificates, affidavits and other
documents and to do or cause to be done any and all other acts and things necessary or proper for
carrying out this Resolution and said Agreements.
SECTION 4. Environmental Review. The City Council hereby determines that the
execution of an OBF Agreement with Utility are statutorily and categorically exempt from
environmental review on the basis that the project s are: installation of LED upgrades in and on
existing facilities or at existing parking lots (Public Resources Code § 21080.35; new construction
or conversion of small structures (CEQA Guidelines § 15303); minor alterations to land (CEQA
Guidelines § 15304); projects which consist of the construction or placement of minor accessory
structures to existing facilities (CEQA Guidelines § 15311); and activities which can be seen with
seen with certainty that there is no possibility that the activity in question may have a significant
effect on the environment (CEQA Guidelines § 15061(b)(3)).
SECTION 5. City staff are hereby authorized to file and process a Notice of CEQA
Exemption for the each project in accordance with CEQA and the State CEQA Guidelines, and
the findings set forth in this Resolution.
Upon motion of _______________________, seconded by _______________________, and on
the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2018.
Packet Page 70
Item 9
Resolut ion No. _____ (2018 Series) Page 3
R ______
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo , California, this ______ day of ______________, _________.
____________________________________
Teresa Purrington
City Clerk
Packet Page 71
Item 9
Page intentionally left
blank.
Packet Page 72
Item 9
-C! L
rrHE Newspaper of the Central Coast S L0 CITY �71
MBUNT
3825 South Higuera • Post Office Box 112 • San Luis Obispo, California 93406-0112 • (805) 781-7800
In The Superior Court of The State of California
In and for the County of San Luis Obispo
AD #3876405
CITY OF SAN LUIS OBISPO
OFFICE OF THE CITY CLERK
STATE OF CALIFORNIA
ss.
County of San Luis Obispo
I am a citizen of the United States and a resident of the
County aforesaid; I am over the age of eighteen and not
interested in the above entitled matter; I am now, and at
all times embraced in the publication herein mentioned
was, the principal clerk of the printers and publishers of
THE TRIBUNE, a newspaper of general Circulation,
printed and published daily at the City of San Luis
Obispo in the above named county and state; that notice
at which the annexed clippings is a true copy, was
published in the above-named newspaper and not in any
supplement thereof — on the following dates to wit;
OCTOBER 1, 2018 that said newspaper was duly and
regularly ascertained and established a newspaper of
general circulation by Decree entered in the Superior
Court of San Luis Obispo County, State of California, on
June 9, 1952, Case #19139 under the Government Code
of the State of California.
I certify (or declare) under the penalty of perjury that the
foregoing is true and correct.
(Signature of Principal Clerk)
DATE: OCTOBER 1, 2018
AD COST: $164.72
CM OF
',,�-V sgn L= OBISPO
SAN LUIS OBISPO CITY COUNCIL
NOTICE OF PUBLIC HEARING
Tne San Luis Obispo City Council invites
all interested persons to attend a public
hearing on Tuesday, October 16, 2016,
at 6:00 p.m. in the City Hall Council
Chamber, 990 Palm Street, San Luis Obi-
spo, California, relative to the following:
The Council will consider directing staff
to work with PG&E and EcoGreen Solu-
tions, for the Installation of certain ener-
gy savings measure8 on the property of
tate City. The Council will also ccns;der
a resolwton to adopt findings required
by Government Code section 4217.12 re-
garding anticipated energy cost sav-
ings and other benefits the City may re-
ceive if the Council decides to enter in-
to the energy service contracts. Th e res-
olution, agreement and supporting
documents will be included with the
Counm:'s regular public agenda for the
Octodar 16, 2016 meeting.
For more information, you are invited to
contact, Chris Read, Sustainability Manag-
er, at (805) 781-7151 or by email atcread
®S4oc4y_or4
The City Council may also discuss other
hearings or business items before or after
the dems listed above. If you challenge the
proposed project in court, you may be limit-
ed to raising only those issues you or
somecne else raised at the public hearing
described in this notice, or in written corre-
spondence delivered to the City Council at,
or prior to, the public hearing.
Reports for this meeting will be available
for review in the City CterWs Office and on-
line at vrww.slocity.00 on Wednesday, OC-
tober 10, 2018. Please tail the City CSerk's
Office at (805) 781-7.100 for more Informa-
tion. The City Council meeting will be tele-
vised live on Charter Cable Channel 20
and live streaming on www.slocity.org.
Teresa Punington
City Clerk
City of San Luis Obispo
October 1. 2018 3876405