Resolution No. 77713
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RESOLUTION NO. 7771
A.RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE IMPLEMENTATION
OF AMENDED CUSTOMER INCENTIVE AND CUSTOMER DIRECTED
PROGRAMS RELATING TO THE CITY OF VERNON UTILITIES
DEPARTMENT PUBLIC BENEFITS PROGRAMS
WHEREAS, on September 19, 2000, the City Council of the City
of Vernon adopted Resolution No. 7632 implementing the Customer
Incentive Program and Customer Directed Program of the City of Vernon
Utilities Department Public Benefits Program; and
WHEREAS, Vernon's electric customers have expressed
increasing interest in the Public Benefits Programs in light of the
increasing cost of power and the threat of rolling blackouts; and
WHEREAS, the City of Vernon wishes to expand its incentive
programs to encourage more widespread use and increased energy savings
by:
1. Increasing the current lighting and motor efficiency
parts of the program from 35% of the customer's cost to 50%, and from
a maximum of $35,000 for each part to $75,000;
2. Increasing the limits of the customer -directed program
from $75,000 to $150,000 but no more than 50% of the customer's cost
for each part; and
WHEREAS, on May 23, 2001, the Finance Committee recommended
that the City Council approve the recommendation of Bruce V.
Malkenhorst, the Director of Finance, dated May 17, 2001, that the
Customer Incentive and Customer Directed Programs be modified.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
1 SECTION 1: The City Council of the City of Vernon hereby
2 finds and determines that the recitals contained hereinabove are true
3 and correct.
4 SECTION 2: The City Council of the City of Vernon hereby
5 approves the Customer Incentive Program, a copy of which is attached
6 hereto as Exhibit "A" and made a part hereof, and the Customer
7 Directed Program, a copy of which is attached hereto as Exhibit "B"
8 and made a part hereof.
9 SECTION 3: The City Clerk of the City of Vernon shall
10 certify to the passage of this resolution, and thereupon and
11 thereafter the same shall be in full force and effect.
12 APPROVED AND ADOPTED this 23rd day of May, 2001.
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15 LEONIS C. MALBU G, Mayo
16 ATTEST:
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19 BRUCE V. MALKENHORST, City Clerk
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EXHIBIT
Vernon Utilities Public Benefits Programs
Customer Incentive Program Proposal
(Amended May 23, 2001)
Program Name: Customer Incentive Program
Program Objectives:
1. Promote long-term energy efficiency by encouraging commercial and industrial customers to
implement energy efficiency measures that exceed minimum standards;
2. Provide incentives that encourage customers to investigate and apply the latest energy efficient
technology;
3. Promote economic development and business retention by attracting and retaining customers who will
enjoy the benefits of energy efficiency.
4. Encourage customer investigation of efficiency opportunities
5. Improve competitiveness of Vernon businesses
6. Increase customer awareness of efficient practices (including O & M)
Program Category Energy Efficiency
Customer Class Commercial and Industrial
Energy End -Use Technologies High efficiency lighting, motors, controls, energy management
systems.
Energy End Uses Lighting, air compressors, production equipment, HVAC.
Start Date August, 2000
Recommended Length of Program One year pilot --continuity subject to customer participation
Annual Program Cost $345,000 (50% lighting, 50% other)
Incentive Amounts Maximum annual incentive amount is $75,000, or 50% of total
project cost, whichever is lower.
Customer Incentive Program
May 2001
Page 2
I. OBJECTIVES
The Customer Incentive Program
(Department) in achieving its Public
program objectives are as follows:
is designed to assist the City of Vernon Utilities Department
Benefit Program, demand -side management (DSM) goals. The
• Promote long-term energy efficiency by encouraging commercial. and industrial customers to
implement energy efficiency measures that exceed the minimum standards established by Title 24 or
general industry standards;
• Provide incentives for customers to apply the latest technology and energy using devices that are
otherwise cost -prohibitive;
• Promote economic development and business retention by serving as an instrument to attract and
retain customers who will enjoy the long-term benefits of energy efficiency.
II. BACKGROUND
In response to Assembly Bill 1890 regarding California electric utility restructuring, the Vernon City
Council, by Resolution, established the Public Benefit Programs (PBP) and enacted a California Public
Benefits Charge at its meeting of December 16, 1997. Paragraphs (1), (2), and (3) of subdivision (c) of
Section 381 and Section 382 of the legislation specify that the Public Benefits Charge is to fund
investments by the utility and other parties in any or all of the following:
(1.) Cost-effective demand -side management services to promote energy
efficiency and energy conservation;
(2.) New investment in renewable energy resources and technologies consistent
ich promote those resources and technologies;
With existing statutes and regulations wh
(3.) Research, development and demonstration programs for the public interest
to advance science or technology which is not adequately provided by competitive and
regulated markets;
(4.) Services provided for low-income electricity customers, including but not
limited to, targeted energy efficiency services and rate discounts.
The City of Vernon may choose any of the four program categories, as long as the emphasis is on the
compliance with the intent of AB 1890. Currently, Vernon Utilities is recommending programs within the
area of energy efficiency, as this meets the expressed interest of Vernon,$ industrial and commercial
customers. Providing cash incentives for lighting upgrades and energy efficient technologies is one way
of promoting the implementation of energy efficiency measures.
Through the Customer Incentive Program, the Department recognizes that the customer knows his or her
business and its operation best. It is, however, almost impossible for any individual or organization to
keep abreast of all the changing technologies related to energy efficiency. Therefore, it is appropriate to
have a program that rewards innovation in energy efficiency whether in terms of hardware or operation.
III. PROGRAM DESCRIPTION
The Customer Incentive Program is designed to encourage energy efficient lighting systems and the
exploration and implementation of energy efficient technologies. Often, the latter technologies are
overlooked because customers are either unfamiliar with them, think they are too costly to apply at their
facilities, or do not believe such technologies can effectively meet their energy needs. These technologies
may address either equipment or operational change, therefore, if the Department can quantify a demand
reduction and/or energy savings, there is a basis for providing an incentive to assist the customer.
Customer Incentive Program
May 2001
Page 3
This program provides incentives in two separate areas, lighting, and energy efficient equipment.
The lighting incentive portion of the program is designed to provide a cash incentive to Vernon customers
interested in implementing the latest lighting technology. Developments in technology have produced new
lamps and related equipment, including T-8 fluorescent lamps, electronic ballasts, and more affordable
compact fluorescent lamps that use less energy and last longer. The future promises continuing
advancement in lighting technology.
This program will provide rebates of $0.055 per kWh of reduced lighting energy usage. The maximum
incentive for lighting improvements by qualified customers is $75,000, or 50% of the lighting retrofit cost,
whichever is less. Rebate amounts will be based on Department audits as described in this document.
The non -lighting incentive portion of this program can include, but is not limited to: variable speed drives,
air compressors, motors, refrigeration, chiller replacement, air conditioner replacement, and building
envelope. The Incentive Program also includes energy management systems and other load and energy
controlling devices.
The following is a list of the measures and incentives covered under the non -lighting portion of the Energy
Efficiency Incentives Program:
Motors - Rebates will be based upon qualifying equipment exceeding the standards set by the National
Energy Policy Act passed in October 1997. Customers will receive $150/kW of reduced demand above
NEPA standard whether the motor is new or a replacement. See Attachments A and B.
Air Compressors - Rebates will be based upon the efficiency of the installed device. There are two sets of
efficiencies for two different types of air compressors --oil flooded and oil -free. The rebate will be $150/kW
of reduced demand above the set standard for new or replacement air compressors. See Attachment C.
Other Equipment - Rebate will be based upon $150/kW of reduced demand or $.055/annualized kWh
saved, whichever is greater for replacement of existing equipment. Savings will be established either
through customer metering of load for the existing and new machines or by the Department's calculation
of savings. (Variable volume pumps qualify for rebates in other applications whenever kWh savings can
be verified).
For new installations, the Department will provide rebates only on systems with variable volume pumps.
Savings for new installations will be according to the Department's established formula.
Air Conditioning - All qualifying electric air conditioning equipment (including heat pumps) that is installed
as replacement equipment shall qualify for rebates based on cooling capacity. Rebates for customers will
range between $75 to $150 per ton. See Attachment D.
Other Unspecified Measures - All other measures not specified above that qualify (including building
envelope, refrigeration equipment and operational modification, motor controllers, variable volume pumps,
variable speed drives, chiller replacement, etc.) will earn rebates in the following manner:
1) $150/kW of reduced demand or
2) $.055 per annualized kWh saved
The greater of the two methods for determining rebates will be applied at the Departments discretion.
The maximum rebate per customer for all measures under this portion of this program will be the lesser of.
$75,000 or 50% of the investment (material & labor and taxes).
Customer Incentive Program
May 2001
Page 4
the Customer Incentive Progwmtheraarticulartechnology
will include
funding
feasibility
applest
In addition to cash incentives, o a
The feasibility study is often the first step in determining he p
specific operation or energy using device. Feasibility studies will be limited to a maximum of $10,000 per
project.
IV. PROGRAM IMPLEMENTATION
Staffing
The Department has engaged an Energy AuditingServices consultant who will provide energy efficiency
audit services and program administration support. Other programs administered by the consultant an
described in companion documents include:
Feasibility Studies
Customer -Directed Programs
Specific consultant administrative activities related to the Customer Incentive Program include:
1. The consultant will provide an energy efficiency opportunities report for each audit customer. The
audit report will include an analysis of all major equipment, proposed efficiency upgrades, an
energy cost evaluation, estimated installation cost, incentive amount, simple payback, and other
benefits.
The consultant will assist the customer with preparation of an energy efficiency incentive application form
form" (PF). The
to be submitted to the Department with the "pre-approvalPF will include the customer's
proects as described in
agreement that incentive payments are contingent upon installation of approvedP 1
the form.
2. Participating customers must allow the installat on, and mpacts.conduct reasonably eduled site visits to
verify energy efficiency equipment recommendations,
3. The consultant will assist the customer in obtaining three installation bids for energy efficiency
equipment technologies. equipment
4. In order to maintain eligibility, energy efficient completed within a sullations must commence within 90
bsequent120 day period
days of PF approval. Installation must be
5. The consultant will verify the installation of approved energy efficient equipment or lighting
letion Notice (PCN) to
improvements. Upon verification, the consultant will submit a Project Comp
the Department, verifying that all eligible efficiency measures have been installed and requesting
payment of the authorized incentive.
g. The Department will process the PCN and mail the customer's rebate check within six weeks of
receipt.
Marketing ill be
of the
The outreach and promotion of the Customer centany ofthe coin erimarily ec al/ ndusbr ailitj public c
ive Program
Department staff. This program has one of the larger budgets of
benefits programs; therefore, special attention to marketing is essential to guarantee success of the
program.
f
Customer Incentive Program
May 2001
Page 5
Air compressors and injection molding are two applications that hold significant appeal. Previous
experience gained by staff indicates that there are considerable potential energy savings, if these markets
are targeted. The businesses that use large air compressor and injection molding machines are easily
identifiable. Workshop attendance rosters and the customer database will serve to identify most of the
large customers who would benefit from the rebate program.
There are a variety of methods available to effectively promote the Program. These would include: use of
the Internet, direct mail to the top 500 customers, newsletters, customer visits by Department staff, trade
show displays, presentations at business forums and Chamber meetings.
The Energy Efficiency Incentives Program must be part of the greater marketing plan the Department is
developing for the Public Benefits Programs. However, the plan must address the specific needs of the
Customer Incentive Program to ensure the success of this program.
Program Delivery
After an initial expression of interest by the customer, the first step will be to assess the feasibility of
alternate energy efficient equipment. This preliminary assessment will be performed by the consultant who
will provide a demand and energy impact assessment and cost-effectiveness analysis. The consultant's
role in estimating and verifying impacts is an integral part of the decision -making process. The consultant
will provide the results of the cost- effectiveness evaluation to the customer with an agreement form
allowing the consultant to request vendor bids.
The agreement form will be forwarded to the Department as a notification that incentive funds may be
obligated, allowing the Department to participate in the decision -making loop and to manage funding for
budgetary purposes. In the event that annual program budget limits are exceeded, the receipt date of the
pre -approval form will dictate order of eligibility.
The consultant will help the customer prepare and issue requests for a minimum of three retrofit
proposals. Bids will be returned to the customer. The RFP will allow vendors to incorporate the
anticipated Department rebate as an element of the bid so that the customer's economic analysis is
simplified. The consultant will also review the returned bids with the customer to assist in bid evaluation
and selection. It is the consultant's responsibility to assist customers in evaluating bids, identifying
financing options, and motivating the customers to undertake implementation of the projects.
Customers electing to participate only in the Customer Incentive Program must follow the procedures
described in the incentive application procedures that follow.
Customer Initiated Incentive Application Procedure
• The customer contacts the Department or the consultant;
• The consultant will inspect the specific equipment before and after installation
• The consultant will complete all pre -approval and project completion notices. Customer initiated
installations prior to Department acceptance of the pre -approval form may be rejected;
• Upon project completion, the consultant will prepare the energy efficiency incentive form and forward it
to the Department for approval;
• The Department will process the energy efficiency incentive application and issue an incentive check
to the customer.
Verification
The verification procedure is intended to verify installation of eligible equipment and to confirm the
reasonableness of pre -installation saving estimates. The consultant may use customer billing histories,
customer feedback on lighting schedules and post installation billings to evaluate impacts.
�1 +
Customer Incentive Program
May 2001
Page 6
restrictions regarding use and
The consultant must agree to comply with the� of the
course ialityn
s tproject dThteserestrictions are described in the
ownership of customer data obtained in the
standard contract.
Program Tracking and Reportingcts
in a
The consultant will create and maintain cwildlsof alsoubeo maintained forepe manenall ecordtaThis'shame
City -approved database. Hardcopy files problems in achieving
information will be used for program process and impact evaluation purposes. Key p
sales as well as successful tactics will be recorded and evaluated to "enhance the program. The
information recorded in the evaluation system
Y e will
land the ethe consultant'stion of loeva nation of that oposal willion and rbe
impacts. Files related to the customer'sproposal
maintained.
The consultant will propose monthly contact and sales goals in its original bid. Progress in meeting. those
goals will be monitored on a bi-monthly basis with the following points considered:
Program expense
Labor
Customer and trade ally contacts
Customer costs incurred
Customer complaints
Customer energy and demand profiles predicted in the absence of the program
Projects in progress including projected kW and kWh impacts
Completed and verified projects including kW and kWh impacts
The Department expects all vendors to meet accepted standards customer complaints are herDepard ent will
initiate a review of contractor performance if more than 3iany
program quarter.
The Department will require the consultant emed'an event of default,fy significant ' at the Departments discretion.
ons in program progress. to
substantially meet .key milestones can b
All information developed or acquired in the course of this project is to remain the property of the City of
n of this
Vernon. All hardcopies and electronic data will be tran eforsferrd oany otherDepartment the purposethe
and must'oma maintain
contract. The consultant may not use this information
confidentiality of information.
Participation in
tive
rogram and receive
Staff anticipates that 75 customers will other participate
end uses).eThe $30,000 allocated customer nPfo9 feasibility studies
$545,000 in rebates (50 /o fighting - 50 /a
will allow an estimated 4 - 8 customers to benefit from this aspect of the Program. See Attachment E for a
sample of a customer incentive application.
Customer Incentive Program
May 2001
Page 7
V. PROGRAM COSTS AND BENEFITS
Non —Lighting Program Costs
Design Assistance $ 30,000
Customer Rebates: 230,000
Advertising and Special Activities 12,500
Total $272,500
Lighting Program Costs
Rebates $250,000
Contract Labor 15,000
Program Cost 7,500
Total $272,500
TOTAL ANNUAL PROGRAM COSTS $545,000
Program Benefits
The Customer Incentive Program is an umbrella approach to energy efficiency. The customer is rewarded
for exercising innovation in his or her quest to achieve energy efficiency. The customer now may qualify
for a Department approved feasibility study and receive cash incentives for energy measures
implemented. A principal benefit of long-term energy efficiency investment is reduced energy costs.
The community benefits to the extent that the load and energy usage is reduced and conceivably, the
environment is spared further pollution due to a decrease in generation requirements, over time.
VI. SUMMARY AND RECOMMENDATIONS
Recommendations
1. Emphasize implementation of specific measures within the spectrum of the Program, specifically,
motors, air compressors and injection molding machines. Identify and target the market for
these applications.
2. Design and implement a marketing plan to promote the program.
3. Authorize and fund the Customer Incentive Program for one full year term of the Public Benefit
Program, subject to continuation based on the success of the program.
Summary
The Customer Incentive Program provides a clear demonstration of the Department's commitment to
assisting customers achieve energy efficiency in their businesses. It rewards those who search for and
apply innovative energy efficient technologies, reduces the Department's summer energy purchases and
benefits society. The environmental benefit is reduced carbon dioxide, which is the primary contributor to
green house gases into the atmosphere.
Furthermore, the Program supports .the City's economic development efforts to attract and retain
business, thereby contributing to the growth and prosperity of the community.
ATTACHMENT A
Open Motors
Minimum Qualifying Efficiency
Hp 2 Pole 4 Pole 6 Pole 8 Pole
1.0
-
82.5
80.0
74.0
1.5
82.5
84.0
84.0
75.5
2.0
84.0
84.0
85.5
85.5
3.0
84.0
86.5
86.5
86.5
5.0
85.5
87.5
87.5
87.5
7.5
87.5
88.5
88.5
88.5
10.0
88.5
89.5
90.2
89.5
15.0
89.5
91.0
90.2
89.5
20.0
90.2
91.0
91.0
90.2
25.0
91.0
91.7
91.7
90.2
30.0
91.0
92.4
92.4
91.0
40.0
91.7
93.0
93.0
91.0
50.0
92.4
93.0
93.0
91.7
60.0
93.0
93.6
93.6
92.4
75.0
93.0
94.1
93.6
93.6
100.0
93.0
94.1
94.1
93.6
125.0
93.6
94.5
94.1
93.6
150.0
93.6
95.0
94.5
93.6
200
94.5
95.0
94.5
93.6
250
94.5
95.4
95.4
94.5
300
95.0
95.4
95.4
350
95.0
95.4
95.4
400
95.4
95.4
450
95.8
95.8
500
95.8
95.8
Motor efficiencies stated
at 100% load
Rebates based on motor size, type and efficiency.
Rebate is $150/kW of reduced load above NEPA
standards whether motor
is new or a replacement.
ATTACHMENT B
ENCLOSED MOTORS
Minimum Qualifying Efficiency
Hp 2 Pole 4 Pole
6 Pole 8 Pole
1.0 75.5 82.5
80.0
74.0
1.5 82.5 84.0
85.5
77.0
2.0 84.0 84.0
86.5
82.5
3.0 85.5 87.5
87.5
84.0
5.0 87.5 87.5
87.5
85.5
7.5 86.5 89.5
89.5
85.5
10.0 89.5 89.5
89.5
88.5
15.0 90.2 91.0
90.2
88.5
20.0 90.2 91.0
90.2
90.2
25.0 91.0 92.4
91.7
89.5
30.0 91.0 92.4
91.7
91.0
40.0 91.7 93.0
93.0
91.0
50.0 92.4 93.0
93.0
91.7
60.0 93.0 93.6
93.6
91.7
75.0 93.0 94.1
93.6
93.0
100.0 93.6 94.5
94.1
93.0
125.0 94.5 94.5
94.1
93.0
150.0 94.5 95.0
95.0
93.6
200 95.05 95.0
95.0
94.1
250 95.4 95.0
95.0
94.5
300 95.4 95.4
95.0
350 95.4 95.4
95.0'
400 95.4 95.4
450 95.4 95.4
500 95.4 95.8
Motor efficiencies stated at 100% load
Rebates based on motor size, type and efficiency.
Rebate is $150/kW of reduced load above NEPA
standards whether motor is new or replacement.
ATTACHMENT C
AIR COMPRESSORS
TYPE SIZE
Oil Flooded
Below 50 HP
50 to 100 HP
Above 100 HP
Oil -Free Below 50 HP
50 to 100 HP
Above 100 HP
EFFICIENCY
REBATE
(ACFM/BHP)
3.6
$150
4.2
$150
4.6
$150
3.2
$150
3.7
$150
4.1
$150
ATTACHMENT D
AIR CONDITIONER REPLACEMENT
PROGRAM
Through the Wall Air Conditioner
Less than 65,000 Btu/hr
Efficiency Ratinq
Rebate
EER 8.7 and above
$ 75
Air -Cooled Central Package & Split
System
Less than 65,000 Btu/hr
Efficiency Rating
Rebate
SEER 11 to 11.9
$ 75/ton
SEER 12 to 12.9
$100/ton
SEER 13 and above
$150/ton
65,000 Btu/hr to less than 135,000 Btu/hr
Efficiency Ratinq
Rebate
EER 9.2 to 9.4
$ 75/ton
EER 9.5 to 9.9
$100/ton
EER 10 and above
$150/ton
135,000 Btu/hr to less than 760,000
Btu/hr
Efficiency Rating
Rebate
EER 8.7 to 8.9
$ 75/ton
EER 9.0 to 9.5
$100/ton
EER 9.6 and above
$150/ton
760,000 Btu/hr and greater
Efficiency Rating
Rebate
EER 8.4 to 8.6
$ 75/ton
EER 8.7 to 9.2
$100/ton
EER 9.3 and above
$150/ton
ATTACHMENT E
Sample Customer Incentive Program Application
Coupon No.;
Issue Date:
Expiration Date:
Customer Name
DBA Business Name:
Account Number:
Customer Contact:
Installation Address:
Federal Tax ID:
Rate Schedule:
Phone Number:
Vernon, CA 90058
CUSTOMERS MAILING ADDRESS FOR INCENTIVE CHECK
Name of Payee:
Address:
City: Vernon
PROJECT DETAILS
State`. CA Zip Code: 90058
MEASURE
kW Savings
kWh Savings
Tons
SEER/EE
ESTIMATED
DESCRIPTION
R
REBATE
AMOUNT
Replace package
AC
Replace existing
chiller with a new
high efficiency chiller
Replace existing
cooling tower with
high efficiency
cooling tower
Upgrade tower with
VSD
Install Primary -
Secondary Pumping
Estimated Project Cost: Final Rebate Amount: Final Project Cost
ATTACHMENTS: Vernon Utilities Rebate Estimate and Final Rebate Analysis
AGREEMENT CLAUSE: I / We agree as follows: 1.) To begin the project within 90 days of initial
registration and finish within 180 days of project commencement; 2.) To allow Vernon Utilities to verify the
sales transaction and installation of the hardware specified in this project; 3.) To provide the original,
itemized, paid proof of purchase (sales slip or invoice); 4.) This rebate is not to exceed thirty thousand
dollars or thirty percent of the paid proof of purchase (sales slip or invoice), whichever is less; 5.) Rebate
will be calculated per the rebate schedule in effect at the time of approval of this Coupon; 6.) Rebates are
subject to availability of funds; 7.) That the City of Vernon may withhold payment of any rebate until
satisfaction of any and all of the above listed conditions are met; and 8.) To maintain the kWh savings for
a minimum of five years from date of the inspection.
Signature:
Printed Name:
Title:
Company:
Vernon Utilities Department Only (Department Worksheet Must be Attached for Each Project)
Date Inspected: Inspector Name:
Total Rebate Amount: Measure Code:
Authorized Signature No. 1: Authorized Signature No. 2:
Check No.: Date Issued:
EXHIBIT
Vernon Utilities Public Benefits Programs
Customer -Directed Program Proposal
(Amended May 23, 2001)
Program Name: Customer -Directed Program
Program Objectives:
1. Help business customers develop sound and effective energy projects for growing their
businesses through appropriate strategies and partnerships.
2. Increase the efficiency and productivity of energy use, while limiting environmental impacts.
3. Support the development and demonstration of new energy technologies and products for
business opportunities.
4. Stimulate increased energy efficiency in buildings and operations.
5. Lead community efforts to develop innovative energy -related technologies and to accelerate
their acceptance and use at the community level.
6. Strengthen working relationships and networking among the business community in Vernon
and energy -related businesses.
Program Category Energy Efficiency; and Research, Development, and
Demonstration
Customer Class Commercial and Industrial
End -use technologies Product Development, Energy Efficient Technologies
Energy End Uses Energy efficient equipment
Start Date August 2000
Recommended Length of Program One year
Annual Program Cost: $600,000
Customer -Directed Program
May 2001
Page 2
I. OBJECTIVES
This proposal outlines a program to provide funds for customer -directed projects involving the use
of energy efficient technologies and research, development & demonstration (RD&D) of energy -
related technologies. The Vernon Utilities Department (Department) will solicit proposals from
commercial and industrial (Cl) customers for innovative projects. The following are the objectives
of the program:
• Help business customers develop sound and effective energy projects to grow their
businesses through appropriate strategies and partnerships.
• Increase the efficiency and productivity of energy use, while limiting environmental impacts.
• Support the development and demonstration of new energy technologies and products for
business opportunities.
• Stimulate increased energy efficiency in buildings and operations and the increased use of
alternative energies.
• Lead community effortstodevelop and utilize efficient energy technologies and to accelerate
their acceptance and use at the community level.
• Strengthen working relationships and networking among the business community in Vernon.
IL. BACKGROUND
At its meeting on December 16, 1997, the City Council approved implementation of the public
benefits charge to fund public benefits programs, as mandated by Assembly Bill 1890.
Specifically, the public benefits charge is to fund programs in any of four areas: 1.) cost effective
energy efficiency, 2.) research, development, and demonstration, 3.) low-income assistance, and
4.) renewable resource technologies. There are sufficient funds in the fiscal year 2000-2001
budget to initiate the program.
The electric industry is expanding to include energy services, power marketing, and information
technology -based services and products, all of which are designed to provide greater customer
value. The new business environment suggests that successful distribution utilities know who their
customers are, what they need, and tailor services to match these customer needs. Results of the
Customer -Directed Program will allow customers to further their business goals and become more
competitive in their industry. Through this program, the Department will enhance customer
communications, be able to offer more services, and develop new information on customer
priorities.
The menu of public benefits programs recommended by Vernon Utilities does not exhaust all
opportunities for energy efficiency measures, therefore, customized proposals from Vernon
customers are encouraged as a way of meeting specialized energy efficiency needs.
Customer -Directed Program
May 2001
Page 3
III. PROGRAM DESCRIPTION
The Customer -Directed Program will fund up to $150,000 or 50% of total project cost for each
project selected that demonstrates energy -related and/or future commercial market potential in the
area of energy efficiency. The customer must provide at least twenty-five percent of the total
project cost. During the evaluation, projects will be weighted according to customer participation
funding levels. A total of $600,000 is available for the year. All Vernon commercial and industrial
customers are eligible to respond to the Department's request for proposals.
Projects may fall within one of the -following two categories:
1. In-house opportunities
In-house opportunities consist of installing or retrofitting companies' facilities with RD&D
technologies. Some examples may include photovoltaic systems, electric vehicles charging
systems, electrotechnologies, and energy efficient or new energy technologies that are applied to
facilities and/or processes.
2. Product commercialization
Product commercialization consist of developing new technologies that will be used for production
and sale. These items will most likely fall in the RD&D category and must be energy related.
Products must be ready for testing and/or production to be considered for funding. Some
examples of past technologies that were developed for commercialization include: nickel -metal
hydride batteries; aerosol duct sealer, which plugs air leaks in duct systems; and compact
fluorescent lights.
All expenses related to proposal preparation and submission and the oral presentation will be the
sole responsibility of the customer. Customers are allowed to submit one application per year.
Timeline for Phase 1:
• Formal program announcement - August 2000
• Applications are accepted through October 16, 2000
• Evaluations completed - November 15, 2000
• City Council approval - December 2000
• Awards announcement - January 2001
Awards for approximately $300,000
Timeline for Phase 2: Awards for approximately $300,000
• Applications accepted from February 1, 2001 through April 1, 2001
0 Evaluations completed - May 15, 2001
Customer -Directed Program
May 2001
Page 4
• City Council approval - June 2001
• Awards announcement - June 2001
IV. PROGRAM IMPLEMENTATION
Program Delivery
Announcement of the Customer -Directed Program will be at the Summer 2000 Business Meetings,
which will provide informational materials to the senior management of businesses in Vernon.
Program informational material will be distributed at the meeting. Informational material will also be
distributed through on -site energy audits, seminars, and conferences. Advertisements will be
displayed at the Vernon Chamber of Commerce, the Vernon Journal, and the web site.
Proposals will be accepted by fax at 323.583.1983, by e-mail �at edelarosa@ci.vernon.ca.us, or by
postal mail at: Vernon Utilities, 4305 Santa Fe Avenue, Vernon, CA 90058. Proposals 'submitted
via e-mail must be in Microsoft Word. Please send all proposals to the attention of Eva De La
Rosa, Energy Management Representative. Ms. De La Rosa is the contact for all proposals, and
she may be reached at 323.583.8811, extension 332 No proposals will be accepted after 5:00
p.m. on Monday, October 16, 2000 for Phase 1 and Monday, April 2, 2001 for Phase 2.
Evaluation Criteria
The Customer -Directed Program proposals will be evaluated based on the following criteria:
• Concept description
• Electricity related innovation /project tasks
• Energy savings
• Environmental impacts
• Economic competitiveness
• Commercialization/ technology transfer
• Community benefits
After Department staff evaluates the proposals, finalists will be required to provide an oral
presentation to the Department's selection committee. Oral presentations will be evaluated on the
comprehensive knowledge and understanding of the types of technologies developed or
implemented. Research, barriers, and processes for technology development will be discussed.
Other project evaluation components will include: the business plan and budget; cost controls; the
probability of fulfillment of contract deliverables; corporate commitment and dedication to the
project; and schedule. Please review Exhibit "A",the project application.
Customer -Directed Program
May 2001
Page 5
In order to award a project, a written agreement may be required at the discretion of the Director of
Utilities.
V. PROGRAM COST AND BENEFITS
Program Costs
Incentives /Contract Services..............................................................$ 900,000
Advertising........................................................................................ $ 5,000
TOTAL PROGRAM BUDGET.............................................................. $ 905,000
Program Benefits
The priority of the program is to foster increased use of energy efficiency and facilitate the
adoption of new technologies.
The specific benefits to the Department will depend on the types of projects selected.
Electrotechnologies and electric vehicle projects will result in new electric load. Photovoltaic
projects are expected to increase supply of on -peak energy to the system. RD&D projects may
result in efficient use of energy. The Department is also expected to benefit from improved
communications with business customers, new value added services, and energy efficiency
opportunities.
Customers can select projects that best meet their needs and concerns, therefore, adding value to
their company's operations. Customers' benefits will include financial assistance for new
technologies that may result in business expansion, improved energy efficiencies in operations,
and improved environmental applications.
VI. SUMMARY AND RECOMMENDATIONS
All commercial and industrial electric customers are eligible to submit applications for matching
funds for projects that qualify in the areas of energy efficiency and RD&D. The Department will
evaluate the projects and award a total of $450,800 during the first year for projects that best meet
the criteria. Customers will have a chance to submit applications twice during the year. The
projects will be awarded in two phases: the first awards will be announced January 2001; and the
second awards will be announced in May 2001.
EXHIBIT "A"
CUSTOMER -DIRECTED PROGRAM APPLICATION
Title of Project:
Company:
Address:
Project Manager:
Title:
Phone:
Fax:
E mail•
Project Manager:
Phone:
Title:
E mail•
Subcontractor(s) if applicable, including contact name, address and phone
Duration of Project:
Proposed Start Date:
Proposed Completion Date:
Amount of funds requested
Funding from other sources
List each amount from other grants or the proposing company, if applicable. Also indicate whether
the contribution is in -kind or monetary.
Total Project Budget $
Please provide descriptions in response to the following topics. Please be as complete as
possible. The length of the application should be no longer than six pages; including the cover
sheet. Attach additional pages as needed for subcontractor and other information pertinent to the
proposed project.
1.) Project Description Summary
Provide a summary description of the project, including general scope, location, and the expected
end result of the project.
2.) Project Objective(s)
List the goals and objectives of this project. What does it fix, what does it improve, what benefits
are derived? Include all economic, technical, energy, and environmental aspects.
3.) Scope of Work
Sufficiently detail the scope of work in chronological order.
4.) Perceived Risks
List all potential risks associated with implementing the project.
6.) Financial Analysis
Provide costs for implementation of the project. Sufficiently itemize all labor, material, operational
processes, and all associated project costs. Indicate the basis for these costs or provide sufficient
back up, such as contractor bids and vendor proposals. Also, summarize the total financial
benefits that result from the project.
7.) Tasks Time Schedule
Provide a project schedule. Show all project milestones and expected completion date(s).
8.) Approval Process
Describe your company's internal approval process for this project. Indicate if this project has
been discussed and has received authorized approval.
9.) Energy Savings Calculations
Provide calculations for energy and energy cost savings. Provide a summary of all key
assumptions and inputs. Provide sufficient detail for review.
10.) Measurement and Verification
Provide an evaluation criteria and methodology to which the project's effectiveness can be
measured. (Projects that replace or modify lighting or HVAC energy consuming systems may
follow the procedures outlined in the International Performance, Measurement, and Verification
Protocol published by the Department of Energy.)
11.) Project Type
Please answer one of the appropriate questions below based on whether your project is for your
own facility or for product development and commercialization.
a.) In-house Opportunities Projects
How will the project benefit your organization and the community?
b.) Product Commercialization Projects
Have you conducted a literature or product search to determine if information resulting from a
similar project already exists? If so, describe any similar projects. Please explain how this
.proposed project would be different from the one identified in the search.
12.) Project Stage
At what stage of development is the project? Please check one of the stages below.
Projects must be in Stage 3, 4, or 5 to be considered for funding. Please check off the appropriate
stage of the proposed project:
Stage 1: Conceptual
The objective is to demonstrate through tests or analyses the performance and implementation
potential of a concept.
Stage 2: Technical Feasibility
The objective is to confirm the performance of the new product by experimenting and/or preparing
engineering analysis. This stage validates that there are no technical or economical barriers for
implementation.
Stage 3: Development
The objective into make improvements on the materials, designs, and processes of the product,
as well as to confirm that the product will perform as specified. This stage entails the construct of
testing prototype.
Stage 4: Commercial Validation or Demonstration
The objective is to develop manufacturing techniques and the introduction of a new process in a
system.
Stage 5: Full Scale Production and Deployment
The objective is to build the manufacturing or process facility and to make full scale production
runs.
h
13.) Attachments
Provide all additional documents such as plans and process diagrams that support the project
application. Please do not attach originals, as the attachments will not be returned to applicants.
Upon approval, the City of Vernon will provide you with a Customer Directed Contract that will
specify the terms and conditions for project acceptance and the total funding allotted for this
project.)
c:\mydocuments\customerdirected.doc
SUPPORTING
DOCUMENTS
W I- +
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro—Tem
WM. 'BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator / City Clerk
FAX (323) 581-7924
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811
May 17, 2001
EDUARDO OLIVO
City Attorney
FAX: (562) 927-8722
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 588-2761
KENNETH J. DeDARIO
Director of Municipal Utilities
FAX: (323) 583-1983
STEVEN E. PARKER
Fire Chief
FAX: (323) 581-1385
BRUCE W. OLSON
Police Chief
FAX: (323) 583-5236
Finance Committee
City of Vernon
Honorable Members:
The Utilities Department is requesting to make the following
modifications to the City's Public Benefits Programs to encourage
more widespread use and increased energy savings.
• Increase the current lighting and motor efficiency parts of
the program from 35% of the customer's cost to 50%, and from a
maximum of $35,000 for each part to $75,000.
• Increase the current customer -directed program from $75,0OO to
$150,000 but no more than 50% of the customer's cost for each
part.
This has been reviewed by the Director of Utilities, and it is
hereby recommended that the above listed modifications be
approved and a Resolution adopted approving same.
Very truly yours,
Bruce V. Malkenhorst
Director of Finance
BVM/gst
May 16, 2001
TO: Bruce V. Malkenhorst, City Administrator
FROM: Kenneth J. DeDario, Director of Utilities 01r,",
SUBJECT: Public Benefits Program — Incentive Programs
Because of the increasing cost of power and the threat of rolling blackouts, Vernon
customers are expressing increasing interest in the Public Benefits Programs offered by
the City. These programs are funded through a 2.85% surcharge on customers' bills
mandated by AB 1890. Also, with the increased cost of electricity and the
corresponding increase in rates, funds collected have increased from approximately
$1.95 million to $2.4 million annually.
Based on the above, I recommend expansion of the City's Incentive Programs to
encourage more widespread use and increased energy savings. Current limits for both
the lighting and motor efficiency parts of the program are set at 35% of the customer's
cost and a maximum of $35,000 for each part. I recommend increasing these limits to
50% of the customer's cost with a maximum disbursement of $75,000 for each part. I
also recommend'increasing the limits of the customer -directed program from $75,000 to
$150,000 but no more than 50% of the customer's cost for each part,
If you have any questions or comments, please contact me. Thank you for your
consideration.
KJD:ah
r
f
City of Vernon Utilities Department
Public Benefits Programs
2001
I. BACKGROUND
Assembly Bill 1890 (AB 1890) was passed by the State Legislature in August 1996 and signed into law
by former Governor Pete Wilson on September 23, 1996. Fundamentally, the intent of this bill was to
lower the price of electricity for consumers by opening California's electric utility industry to competition.
Although most of AB 1890 does not apply to publicly owned utilities such as the City of Vernon, Vernon
customers are subject to certain provisions of the law, including a mandated Public Benefits Charge.
AB 1890 provides, in part, that the City of Vernon collect a Public Benefits Charge from all its customers.
The intended purpose of this charge is to fund Public Benefits Programs The mandated charge is 2.85
percent of customers' total monthly electric bill before any special fees or charges. Governor Gray Davis
signed Senate Bill 995 (SB 995) on September 30, 2000. SB 995 extends the Public Benefits Charge
through the year 2012.
AB 1890 establishes four main categories of Public Benefits Programs that may be funded by the Public
Benefits Funds. These are: 1.) energy efficiency; 2.) research, development and demonstration; 3.)
low-income assistance; and 4.) renewable resource technologies. Based on an assessment of Vernon
customers' needs and interests, the Utilities Department recommended, and City Council adopted,
programs in the area of energy efficiency.
IL FUNDING
To -date, approximately $4.8 million in Public Benefits Funds is available for Public Benefits Programs.
The proposed budget allocates these funds among all suggested programs and customer classes. The
Public Benefits Funds budget is monitored by Utilities Department staff.
111. PROGRAM DESCRIPTIONS
Utilities Department staff has implemented four programs in the area of energy efficiency intended to.
benefit participating customers.
A. Energy Education and Demonstration Workshops
A fundamental and necessary first step to promoting customer participation in energy efficiency programs
is creating a heightened awareness for energy efficiency opportunities. Utilities Department staff can
serve as a catalyst for reducing information barriers. The Utilities Department proposes to increase
access to educational materials through channels that reach all customer segments. The Utilities
Department will provide an array of information resources to accommodate customers' varying levels of
knowledge and experience with energy efficiency. The focus of these resources will be to encourage the
undertaking of energy efficiency measures within business operations. Electric utility customers can then
make informed business decisions leading to measurable energy and cost savings.
The Department proposes to host several energy efficiency workshops with presentations and
discussions on various topics led by industry experts. These workshops will provide training and
demonstration efforts needed for "market transformation" and will further complement other elements of
the various public benefits programs.
Y
i
City of Vernon
Public Benefits Programs 2001
Page 2 of 2
B. Energy Audit Program
The Department is continuing its energy audit project for interested commercial and industrial customers.
The energy audits are an excellent starting point for customers interested in developing a broader energy
management strategy. The focus is on customized audits. Customers receive detailed analyses of
energy usage and suggestions for energy efficiency efforts which can lead to measurable energy and
cost savings. The audit recommendations frequently will encourage participation with other projects of
the Public Benefits Program.
C. Customer Incentive Proaram
Financial incentives (rebates) are offered to customers who replace lighting or motors with efficient
equipment and technologies. Rebates for energy efficient equipment may help shift the customers'
decision -making process by lowering the first cost concerns and bringing energy costs into consideration.
Although rebates are suggested for replacement of lighting and motors with higher efficiency models,
replacement of other technologies may qualify for rebates as well. Participants will be required to submit
detailed specifications and proof of replacement. Department staff will monitor the implementation of the
proposed efficient equipment. The maximum incentive amount available to any customer during a one
year period is $75,000 or 50% for lighting retrofits. The maximum incentive amountavailableto any
customer during a one-year period is $75,000 or 50% for motor and technology upgrades. Potentially,
customers may qualify for a maximum combined total of $150,000 for the incentive funding.
D. Customer Directed Program
The portfolio of energy efficiency public benefits projects proposed by the Utilities Department does not
exhaust all energy efficiency opportunities. Funds are proposed to support customers with the
implementation of self -designed energy efficiency projects. These Customer Directed Projects are
intended to encourage customers to self -design energy efficiency measures that produce a public benefit.
Electric Utility customers can incorporate their plant specific knowledge and business expertise to
positively impact energy usage patterns and processes.
Customer Directed Projects will receive matching funds for expenditures that lead to demonstrable
energy savings. Project funds may intervene in the purchase of energy efficient equipment or new
electrotechnologies, for example. Demonstrated energy savings will be a requirement for project
approval. The maximum funding available for qualifying projects is $150,000 or 50% of total project cost,
whichever is the lesser of the two. The customer must pay for 50% of the total project cost.