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Home My WebLink AboutIR 9185 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9185 To the Mayor and Members of the City Council February 02, 2010 ' Page 1 of 4 x SUBJECT: ENERGY CONSERVATION PROGRAM FUNDING The purpose of this Informal Report is to inform the Mayor and Council about the City's Energy Conservation Program funding based on specific initiatives developed in response to the City's goal of Improved Mobility and Air Quality. Following are summary tables and discussion associated with the funding mechanisms employed in implementing Energy Conservation Program projects to date. Additionally, information is provided regarding the funding of future such projects, all of which continue to be developed, constructed, and tracked to ensure their continuing cost-neutrality to the City's budget. Program Background The City' Energy Conservation Program continues to implement projects both in service of the above- stated Council goal and in response to the State's goal of improved environmental air quality as forwarded through the passage of Texas Senate Bills 5 (SB5/771h Legislature, 2001) and 12 (SB12/801h Legislature, 2006.) Both these bills provide amendments to Local Government Code Chapter 302, Energy or Water Conservation Measures for Local Governments. The current goal is to achieve electricity usage reductions of 5-percent annually through 2012, using 2007 as the baseline year. In fiscal year 2002, staff identified energy savings performance contracts (ESPCs) as a technically, financially, and legally viable vehicle to implement such conservation projects. To this end, the City developed and issued a Request for Proposal (RFP) to identify qualified Energy Services Companies (ESCos.) Johnson Controls, Inc. (JCI) was ultimately selected as the preferred ESCo to assist the City in implementing ESPCs for City facilities. TPW's Facilities Management Group is responsible for managing these and other internal Energy Conservation Program efforts. Energy Conservation Program projects continue to be developed as budget-neutral to the City. Project are funded such that utility, operations, and maintenance savings accumulate to recover any and all project costs including any necessary finance and service contract costs. During construction of any Energy Conservation Program project, progress payments are made to contractors as approved by City staff while cost savings accrue to City accounts. Following is a discussion of different funding approaches utilized to implement Energy Conservation Program projects: Financed, Cash-Funded and Grant-Funded. Financed Projects With a project financed through an approved municipal equipment lease agreement, construction progress payments are made from a City Escrow Fund. With proof of City progress payment approval, the contractor makes application to the City's escrow agent to secure payment directly from escrow bank funds. Lease re-payment typically begins after substantial completion of the project. For ESPCs, the ESCo guarantees projected cost savings to the City, tracking and reporting this avoided cost during the subsequent performance period, using a 3`d-party approved measurement & verification (M&V) plan. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9185 To the Mayor and Members of the City Council February 02, 2010 �` 4e Page 2 of 4 s ,,. SUBJECT: ENERGY CONSERVATION PROGRAM FUNDING +.rs In June 2008, M&C C-22868 authorized execution of ESPC Phase IV that includes lighting, air- conditioning, plumbing and irrigation improvements to 90-City buildings. Currently in construction, ESPC Phase IV is planned for completion by March 2010. During an accounting review, City auditors determined that an appropriation was necessary for the City to properly account for approved progress payments from escrow to the contractor during construction. Today, staff is forwarding an M&C requesting approval of an appropriation ordinance to account for such escrow payments. With a project financed through an approved Texas Loan Saving Taxes & Resources (LoanSTAR) agreement, construction progress payments are made from a City Grant Fund. With proof of City- approved progress payment to the contractor, the City makes application to secure State reimbursement from LoanSTAR funds to the City's Grant Fund. LoanSTAR re-payment begins after Substantial Completion of the project. Again for ESPCs, the ESCo guarantees projected cost savings to the City using a 3`d-party approved measurement & verification(M&V)plan. The table below presents information for each project financed through either loan- or lease-agreement: Project Name M&C No. (Date) CSC No. Party Funding Principal Savings* C-19681 (29JUL03) 28983 SECO LoanSTAR $2,596,469 ESPC Phase I $ 1,958,647 C-19739(02SEP03) 29155 Wells Fargo Muni.Lease $466,620 ESPC Phase II C-21289(07FEB06) 33530 SECO LoanSTAR $2,395,659 (Included in Amendment Phase III) ESPC Phase III C-21737 (26SEP06) 34228 SECO LoanSTAR $ 5,000,000 $2,233,059 LED Signals C-22063 (17APR07) 35252 AAIG Muni.Lease $2,060,000 $979,566 ESPC Phase IV C-22868 (17JUN08) 37322 JCI Muni.Lease $ 9,248,307 $944,814 ESPC Phase V(2) TBD TBD TBD TBD $ 20,287,378 $ 1,528,971 Totals $ 42,054,433 1 $7,645,057 Note: *Saving are actual cumulative to-date, with italicized information representing year-one estimates. In September 2008, M&C C-23046 authorized execution of a Project Development Agreement with JCI to conduct a Detailed Energy Study of the Fort Worth Water Department (FWWD) Village Creek Wastewater Treatment Plant (WWTP) to identify energy saving equipment retrofit and process improvement opportunities. In March 2010, staff plans to seek authority to execute agreements necessary to implement a section of this project as ESPC Phase V. Financing of this section is under evaluation by FWWD in consultation with both Financial Management Services and Bond Counsel. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9185 0#1410- To the Mayor and Members of the City Council February 02, 2010 ' Page 3 of 4 x SUBJECT: ENERGY CONSERVATION PROGRAM FUNDING }.ss Cash-Funded Projects With a cash-funded project, construction progress payments are made from a City Project fund. With City progress payment approval, the City pays the contractor directly from the City's project fund. Again for ESPCs, the ESCo guarantees projected cost savings to the City using a P-party approved measurement&verification (M&V) plan. The table below presents information for each cash-funded project: Project Name M&C No. (Date) CSC No. Party Fun(ling Cost Savings ESPC Phase V(1) Pending TBD FWWD Cash $ 13,577,350 $829,428 Note: *Again, italicized information represents year-one estimates. As stated above, a Detailed Energy Study of the Village Creek WWTP has been conducted by JCI in identifying energy saving equipment retrofit and process improvement opportunities. Today, staff is forwarding an M&C contract request seeking authority to execute the first section of this project as ESPC Phase V, Section 1. This project is critical to the proper functioning of the Village Creek WWTP as it primarily involves the replacement of its primary process control ("SCADA") system that is well beyond its useful life, with many parts no longer manufactured. Section 1 has an 18-month construction period with completion in 2011; a utility incentive application is anticipated, with deposit to a Water & Sewer Fund account dedicated to future such efforts. Grant-Funded Proiects With a project financed through an approved Energy Efficiency & Conservation Block Grant (EECBG) agreement, construction progress payments are made from a City Grant Fund. With proof of City- approved progress payment to the contractor, the City makes application to secure Federal reimbursement from EECBG funds to the City's Grant Fund. Again for ESPCs, the ESCo guarantees projected cost savings to the City using a 3`d-party approved measurement & verification(M&V) plan. The table below presents information for each grant-funded project: Project Name N1&C No. (Date) CSC No. Party Fun(lino Grant Sa%ins* ESPC Phase VI(a) TBD TBD EECBG Grant $ 1,905,886 $211,387 ESPC Phase VI(b) TBD TBD EECBG Grant $2,478,273 $ 125,945 ESPC Phase VI S 4,384,159 $337,332 Note: *Again, italicized information represents year-one estimates. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9185 To the Mayor and Members of the City Council February 02, 2010 t Page 4 of 4 a r„ SUBJECT: ENERGY CONSERVATION PROGRAM FUNDING In June 2009, M&C C-23554 authorized application for & acceptance of an EECBG award funded through the federal American Recovery & Reinvestment Act of 2009 (ARRA). Since the September 2009 grant award (CSC No. 39311), City staff has been working with JCI and the federal Department of Energy (DOE) in development of 1) a Detailed Energy Study to consider EECBG objectives for City Water Fund facilities, and 2) a Preliminary Energy Assessment to consider EECBG objectives for City General Fund facilities. In March 2010, staff plans to forward M&C contract requests seeking authority to execute EECBG- funded projects constituting an ESPC Phase VI including: a) ESPC amendment for Phase VIa to implement improvements to FWWD Village Creek WWTP building systems as outlined in the aforementioned Detailed Energy Study, and b) Detailed Energy Study development of a potential ESPC Phase VIb to improve General Fund facilities as outlined in the aforementioned EECBG Preliminary Energy Assessment. Other Energy Conservation Program initiatives are under development. Council briefs will be provided as these plans progress. If you have any questions, please contact Glenn Balog, Facilities Manager in the Transportation and Public Works Department, at 817.392.2028. Dale A. Fisseler, P.E. City Manager F ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS