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HomeMy WebLinkAboutIR 8359 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. .3.9 Date: October 30, 2001 To the Mayor and Members of the City Council I � Page 1 of 3 f SUBJECT: Energy Efficiency Requirements of Senate Bill 5 Proposed Performance Contracting Program Legislative Mandate: During the 77th Legislature of the State of Texas, Senate Bill 5 (the Texas Emissions Reduction Plan or the "TERP") was enacted. The TERP was designed to give the state and local governments the tools to enact the requirements of the State Implementation Plans mandated under the Federal Clean Air Act. The North Texas Region is under serious non-attainment designation by the Environmental Protection Agency and has until 2007 to ensure attainment or face more severe federal pollution reduction mandates. The toolbox created by the TERP provides incentives to citizens, business, and governments to reduce emissions created by on= and off- road sources, building construction and building operations. The purpose.of this Informal Report is to update the Fort Worth City Council on the energy conservation mandates within the TERP and recommend a plan of action to address these mandates. Under the TERP, all municipal bodies within an affected area (Tarrant County and Fort Worth included) are required to reduce the aggregate consumption of on grid electric power by 5% per annum over the next 5 years (25% by 2007). This reduction can be achieved through one of many opportunities including, but not limited to, improved building operations and equipment. replacement. The City of Fort Worth has a history of smart building wherein energy conservation improvements, such as lighting and chiller upgrades resulting in lower building operational costs, have been implemented. As the City moves forward in compliance, it must do so with thoughts of further reducing its total energy consumption while maintaining the highest level of service to its customers, the citizens and the community of Fort Worth. Implementation Options: Two alternatives present themselves as the City prepares to fund the compliance with the mandates of Senate Bill 5; the traditional direct funding methods (budget line item assignment, certificates of obligation, bond programs, loans, and/or grants) and performance contracting. Over the past 5 years, the City of Fort Worth has succeeded on several fronts in its attempt to reduce its consumption of electrical power. Beneficial energy improvement projects including, but not limited to, the re-tamping of the Municipal Complex, installation of high efficiency chillers, and the upgrade of the generation system at Village Creek Waste Water Treatment Plant were Implemented and funded via line item budget allocation funding. While the afore mentioned upgrades are anticipated to result in utility savings, the energy reduction realized as a result of these projects are unknown due to the absence of a baseline study. The identified electric s reductions of this traditional contracting system were not guaranteed for the City. In this time of ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8359 Date: October 30, 2001 To the Mayor and Members of the City Council Page 2 of 3 14"S Proposed Energy Efficiency Requirements of Senate Bill 5 Proposed Performance Contracting Program economic uncertainty, the availability of funds for energy management upgrades may not be readily available. As the City approaches the mandates of Senate Bill 5, the City can ideally identify feasible energy conservation opportunities (with acceptable payback periods), implement selected reduction measures and pay for these improvements out of the savings in energy bills through a mechanism known as Performance Contracting. Performance contracting is a program where a private company is retained by the City of Fort Worth to determine what equipment, controls and operating improvements can be made to reduce electric consumption within our facilities. Once the recommendations are approved, the private company funds the equipment upgrades and the City reimburses the company through a portion of the savings resulting from the reduced energy bills. In essence, this method of contracting allows the City to use operational funds to pay off, over a period of years, the cost of capital improvements within City facilities. Under the performance contracting model, the contractor guarantees the energy reductions and, if the savings are not realized, then the City reduces payments to the contractor by the amount of guaranteed savings not realized Cities who have implemented energy reduction programs through the use of performance contracting include: City Date of Project Cost Guaranteed Actual Project Completion Annual Annual Square Savings Savings Footage Tarrant Co. 1992 $3,457,536 $1,628,492 $1,876,261 1,950,000 Palo Pinto Co. August 2000 $915,300 $114,403 $193,678 197,000 City of December $722,791 $101,553 $124,922 100,000 Hamilton 1998 City of Tyler 1995 $604,084 $671,564 &702,221 206,000 Types of improvements at the above referenced agencies include: • Installation of an energy management system • Upgrade of Variable Frequency Drives • Cooling tower Replacement • Pneumatic system calibration • High Efficiency Motors • Outdoor Lighting Upgrades • Replacement/Rightsizing of HVAC equipment • High efficiency Boiler installation ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8359 f Date: October 30, 2001 x To the Mayor and Members of the City Council I Page 3 of 3 SUBJECT: Energy Efficiency Requirements of Senate Bill 5 Proposed Performance Contracting Program Program Recommendations In this time of economic uncertainty, it is the position of the staff that the performance contracting model is the best option and will be the most beneficial to the City as it attempts to comply with the Senate Bill 5 mandates. The City of Fort Worth through the Environmental Management Department will shortly be ready to begin the process of selecting a company to provide performance contracting services to reduce energy consumption within City facilities. It is anticipated that the City will contract with the most qualified company by the end of February 2002. It is important for the City to act now to meet the required targets in its compliance. The anticipated timing of this project is as follows: Early November 2001 — Request for Qualifications released and publicly advertised Mid November 2001 - Pre-Submittal Meeting Mid December, 2001 —Statement of Qualifications due Mid December 2001 to January 31, 2002 — Review of Proposal Packages and selection of contractor Early February 2002 — City Council to review contractor selection and award contract February 2002 —Contractor reviews identified facilities and begin an implementation plan. All contracts associated with this project will be brought before the Fort Worth City Council for approval prior to project implementation. It is the recommendation of the staff that we precede with this process and, without objection, we will issue Request for Qualifications document. Should you have any comments or questions concerning the information in this document, please contact Brian Boemer, Director of Environmental Management. n Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS