Resolution No. 7900I
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RESOLUTION NO. 7900
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON ADOPTING A CITY OF VERNON UTILITIES
DEPARTMENT MINIMUM INVESTMENT REPORT AS AN
ALTERNATIVE TO AN INTEGRATED RESOURCE PLAN UNDER
THE GUIDELINES SET FORTH BY THE WESTERN AREA POWER
ADMINISTRATION PURSUANT TO THE ENERGY POLICY ACT OF
1992
WHEREAS, on October 24, 1992, President George Bush signed
into law the Energy Policy Act of 1992 (EPA) which amended various
laws, one of which was the Hoover Power Plant Act of 1984 (Hoover Act),
in order to promote energy efficiency by the users of Federal power and
laid the basic groundwork for the deregulation of the electric utility;
and
WHEREAS, the amendments to the Hoover Act required all
Western Area Power Administration (WAPA) customers to prepare an
Integrated Resource Plan (IRP), which is a plan to meet long-term
power resource needs in the most efficient way possible and in
accordance with EPA provisions; and
WHEREAS, the City of Vernon adopted Resolution No. 6532 on
November 1, 1994, determining pursuant to the EPA that Vernon would not
11implement 16 U.S.C. §2621(d)(9); and
WHEREAS, effective November 20, 1995, the WAPA Energy
Planning and Management Program (EPAM) adopted EPA mandates for WAPA's
customers to prepare an IRP and established the framework for extension
of firm power resource commitments; and
WHEREAS, on November 5, 1996, the City Council of the City
of Vernon adopted Resolution No. 6879 adopting an IRP for the
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period 1996 through 2001 under the guidelines set forth by WAPA
pursuant to the EPA; and
WHEREAS, the intent of AB 1890, which was signed into law on
September 23, 1996, was to lower the price of electricity for consumers
by opening California's electric utility industry to competition; and
WHEREAS, AB 1890 included a state -mandated Public Benefits
Charge to be collected from all of Vernon's customers with the intended
purpose of funding Public Benefits Programs; and
WHEREAS, on March 21, 2000, the City Council of the City of
Vernon adopted Resolution No. 7511, as amended by Resolution Nos. 7632
and 7771 adopted on September 19, 2000 and May 23, 2001, respectively,
approving Public Benefits Programs; and
WHEREAS, effective May 1, 2000, WAPA revised the IRP
regulations to allow its customers the choice of continuing to prepare
IRPs or adopt approaches that are emerging in lieu of IRP
requirements; and
WHEREAS, on November 8, 2001, WAPA granted Vernon's October
24, 2001 request to prepare a minimum investment report for the period
2002 through 2006 for its Public Benefits Programs in lieu of the IRP
requirements; and
WHEREAS, by letter dated January 16, 2002, Bruce V.
Malkenhorst, City Administrator/City Clerk, recommended that the City
of Vernon Utilities Department Minimum Investment Report 2002-2006'be
japproved.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City.of Vernon hereby
finds and determines that the recitals contained hereinabove are true
- 2 -
and correct.
SECTION 2: The City Council of the City of Vernon hereby
approves and adopts the "City of Vernon Utilities Department Minimum
Investment Report 2002-2006," a copy of which is attached hereto as
Exhibit "A" and made a part hereof.
SECTION 3: The City Council of the City of Vernon hereby
determines that in the preparation and development of the Minimum
Investment Report there was ample opportunity for full public
participation.
SECTION 4 The City Council of the City of Vernon hereby
directs the City Clerk, or his designee, to file with WAPA by
January 31, 2002, the Minimum Investment Report 2002-2006 and a copy
of this resolution at the following address:
Stephen P. Szarka, Energy Services Program Manager
Western Area Power Administration
Desert South-West Regional Office
615 S. 43rd Avenue (85009)
P. 0. Box 6457
Phoenix, AZ 85005-6457
SECTION 5: The City Clerk of the City of Vernon shall
certify to the passage of this resolution, and thereupon and
thereafter the same shall be in full force and effect.
APPROVED AND ADOPTED this 22"d day of January, 2002.
EONIS C. MAL URG, Mayor
ATTEST:
BRUCE V. MALKENHORST, City Clerk
- 3 -
STATE OF CALIFORNIA )
ss
COUNTY OF LOS ANGELES )
I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do
hereby certify that the foregoing Resolution, being Resolution No.
7900, was duly adopted by the City Council of the City of Vernon at an
adjourned regular meeting of the City Council duly held on Tuesday,
January 22, 2002, and thereafter was duly signed by the Mayor of the
City of Vernon.
BRUCE V. MALKENHORST, City Clerk
(SEAL)
- 4 -
SUPPORTING
DOCUMENTS
EXHIBIT
FAA
CITY OF VERNON
UTILITIES DEPARTMENT
MINIMUM INVESTMENT REPORT
2002 - 2006
Pursuant to the
Western Area Power Administration
Integrated Resource Planning Requirements
TABLE OF CONTENTS
Pain
1
EXECUTIVESUMMARY......................................................................................
3
INTRODUCTION..................................................................................................
1. CITY Of VERNON PUBLIC BENEFITS PROGRAMS
..................................
4
4
1.1 Legislative Mandate
............................................................................
1.2 Adoption of a Public Benefits Charge ..................................:............ 5
1.3 Electric Utility Customer Survey........................................................ 5
1.4 Policy Statement.................................................................................. 6
1.5 Approval and Adoption of Public Benefits Programs ...................... 6
1.6 Program Implementation
1.6.1 Energy Audits.............................................................................. 7
1.6.1.1 Conformance of the Energy Audit Program with the
Intentof AB 1890........................................................... 8
1.6.1.2 Activities and Results ..................................................... 8
1.6.2 Energy Education and Demonstration Workshops .................... 9
1.6.2.1 Activities and Results ................................................... 10
1.6.3 Customer Incentive Program ..................................................... 10
1.6.3.1 Activities and Results...................................................16
1.6.4 Customer Directed Program ...................................................... 16
1.6.4.1 Activities and Results ................................................... 18
2. CONSERVATION 20/20 PROGRAM........................................................... 19
2.1 Overview.............................................................................................19
2.2 Implementation and Results..............................................................19
2.2.1 Determination of Baseline Power Usage ................................... 19
2.3 Methodology for Calculating kW Savings ........................................ 19
TABLE OF CONTENTS
Page No.
2.4 Customer Participation and Expenditure of Funds ........................
20
3. PUBLIC BENEFITS CHARGE AND EXPENSES ........................................
21
3.1 Public Benefits Charge ......................................................................
21
3.2 Public Benefits Programs Expenses ................................................
21
4. FUTURE PLANS..........................................................................................
22
4.1 Continuing Programs............................................................................ 22
4.2 New Programs...................................................................................... 22
LIST OF TABLES
Table 1.1 Audit Recommendations.................................................................... 9
Table 1.2 Open Motors Minimum Qualifying Efficiency....................................12
Table 1.3 Enclosed Motors Minimum Qualifying Efficiency..............................13
Table 1.4 Air Compressors Qualifying Efficiencies ........................................... 14
Table 1.5 Rebates for Air Conditioner Replacement Program .......................... 15
Table 1.6 Implemented Measures....................................................................16
Table 2.1 Energy Savings and Credits by Month ............................................. 20
Table 3.1 Public Benefits Charge by Fiscal Year ............................................. 21
Table 3.2 Public Benefits Programs Expenses by Fiscal Year.........................21
EXECUTIVE SUMMARY
The City of Vernon's minimum investment report is prepared in lieu of the five-
year integrated resource planning (IRP) report. The report,covers the five-year
planning period from year 2002 through 2006. The minimum investment report
allows Vernon to meet the objectives of section 114 of EPAct through attaining a
minimum level of investment in energy efficiency and collecting a charge to
support defined public benefits.
Effective May 1, 2000, Western revised the IRP regulations to allow its
customers more alternatives in meeting the IRP requirements. Western's
customers can choose to continue preparing IRPs, or can adopt approaches that
are emerging in lieu of IRP requirements. These new approaches are (1)
complying with a defined level of investment in demand side management (DSM)
and/or renewable energy, including a public benefits program, or (2) complying
with mandated energy efficiency and/or renewable energy activities and related
reporting requirements.
California Assembly Bill 1890 (AB 1890) deregulated the electricity industry and
established nonbypassable Public Benefits Charge (PBC) on all customer bills in
California to support statewide public benefit programs in energy efficiency,
renewable technology, low-income, and research, demonstration, and
development (RD&D). In compliance with the requirements of AB 1890, the City
of Vernon adopted and implemented Public Benefits Programs in the area of
energy efficiency: Energy Audits, Energy Education and Demonstration
Workshops, Customer Incentive Program, and Customer Directed Program.
The intent of the energy audit is to identify energy and cost savings for
businesses in Vernon. During the reporting period ending June2001, energy
audits were performed at fifty-seven (57) customer facilities. The findings and
recommendations are delivered to the participating customers. Customers are
encouraged to implement the audit recommendation and participate in the City's
Customer Incentive and Customer Directed programs.
The Energy Education and Demonstration Workshops are intended to increase
customers' awareness and promote customer participation in energy efficiency
programs. A number of industrial and commercial utility customers participated
in Energy Education and Demonstration Workshops hosted by the Utilities
Department.
The Customer Incentive Program is designed to encourage energy efficient
lighting systems and the exploration and implementation of energy efficient
technologies. These technologies may address either equipment or operational
change. This program provides financial incentives (rebates) in two separate
areas, lighting, and energy efficient equipment. As a result of measures
implemented under this program, demand reduction of 37 kilowatts and energy
savings of 330,832 kilowatt-hours was achieved during the reporting period
ending June 2001.
The Customer Directed Program is intended to provide funds for customer -
directed projects, involving the use of energy efficient technologies and research,
development and demonstration (RD&D) of energy related technologies. The
program offers businesses in Vernon the opportunity to submit.a customized
proposal itemizing energy and cost savings for their facilities. The program
permits customers to self -design energy efficiency measures that derive a public
benefit. As of June 2001, one customer is participating in the Customer Directed
Program. The customer's project is to demonstrate the economic, quality, and
environmental benefits of a new energy efficient microwave system for pre -dying
fabric entering a single pass conveyor dryer.
In addition to the Public Benefits Programs, the City of Vernon successfully
implemented a conservation incentive program during the summer months of
2001. The objective of the Conservation 20120 Program was to promote demand
reduction and energy savings. The program extended over the months of June,
July, August and September 2001. The credits made available to customers
through the program provided the necessary financial incentives for businesses
to reduce their energy usage. As of the conclusion of the program, a total of
$1,088,987.62 was issued as credits and an estimated 31,025,598 kWh was
saved since the inception of the program as compared to last year during the
same period.
Future plans include continuing implementation of existing programs, updating
prior year energy audits to reflect affects of recent rate increases on payback
period and rebate incentives, and developing new public benefit programs in the
area of energy efficiency and applications of renewable technologies.
2
INTRODUCTION
The City of Vernon's minimum investment report is prepared in lieu of the five-
year integrated resource planning (IRP) report. The report covers the five-year
planning period from year 2002 through 2006. The minimum investment report
allows Vernon to meet the objectives of section 114 of EPAct through attaining a
minimum level of investment in energy efficiency and collecting a charge to
support defined public benefits.
In the past, Vernon prepared its IRP pursuant to Western's IRP regulations. IRP
is a planning and selection process for new energy resources that evaluates the
full range of alternatives, including new generating capacity, power purchases,
energy conservation and efficiency, and renewable energy resources, to provide
adequate and reliable service to a utility's electric customer.
Effective May 1, 2000, Western revised the IRP regulations to allow its
customers more alternatives in meeting the IRP requirements. Western's
customers can choose to continue preparing IRPs, or can adopt approaches that
are emerging in lieu of IRP requirements. These new approaches are (1)
complying with a defined level of investment in demand side management (DSM)
and/or renewable energy, including a public benefits program, or (2) complying
with mandated energy efficiency and/or renewable energy activities and related
reporting requirements.
Requirements for the minimum investment report alternative are that the
minimum investment must be either: (1) A mandatory set percentage of
customer gross revenue or other specific minimum investment in DSM and/or
renewable energy mandated by a State, Tribal, or Federal Government with
jurisdictional authority; or (2) A required public benefits charge, including charges
to be collected for and spent on DSM; renewable energy; efficiency and
alternative energy -related research and development; low-income energy
assistance and any other applicable public benefits category, mandated by a
State, Tribal, or Federal Government with jurisdictional authority.
California Assembly Bill 1890 (AB 1890) deregulated the electricity industry and
established nonbypassable Public Benefits Charge (PBC) on all customer bills in
California to support statewide public benefit programs in energy efficiency,
renewable technology, low-income, and research, demonstration, and
development (RD&D). In compliance with the requirements of AB 1890, the City
of Vernon adopted and implemented public benefits programs.
On October 24, 2001, Vernon requested Western to allow Vernon to prepare a
minimum investment report for its Public Benefits Programs in lieu of the IRP
requirements. On November 8, Western granted Vernon's request.
3
1. CITY OF VERNON PUBLIC BENEFITS PROGRAMS
1.1 Legislative Mandate
California Assembly Bill 1890 (AB 1890) was passed by the State
Legislature in August 1996 and signed into law by former Governor
Pete Wilson in September 1996. The intent of AB1890 was to
lower the price of electricity for consumers by opening California's
electric utility industry to competition. AB 1890 deregulated the
electricity industry and established a nonbypassable Public Benefits
Charge (PBC) on all customer bills in California to support
statewide public benefit programs in energy efficiency, renewable
technology, low-income, and research, demonstration, and
development (RD&D). The legislation specifies the amount of
money that California IOUs - PG&E, San Diego Gas and Electric,
and Southern California Edison - must collect from ratepayers to
fund public benefit programs, as well as how those funds must be
spent.
For publicly owned utilities including the City of Vernon (Vernon)
the legislation contains two mandates. The first one is pursuant to
Section 9606, a requirement to report on the periodic electric bill
the amount expected to be transferred to the general fund on a no
less than annual basis.
The second mandate is pursuant to Section 385; a requirement to
collect a nonbypassable usage based PBC on local distribution
service to fund investments in energy efficiency, low-income,
renewable energy, and RD&D programs. The amount that publicly
owned utilities must designate for these programs is tied to
historical levels of funding by the IOUs. The legislation was
interpreted by the California Municipal Utilities Association to
require publicly owned utilities to collect and spend the equivalent
of 2.85% of the utility's revenues during the years 1998 through
2000, and 2.7% of revenues in 2001.1
Assembly Bill 995, which was approved by the Governor on
September 30, 2000, extended the collection of the nonbypassable
PBC through January 1, 2012 at a rate not to exceed the level that
was used to collect these charges on January 1, 2000. Pursuant to
the mandates of Assembly Bill 995, a publicly owned utility will
collect and spend the equivalent of 2.85% of the utility's revenues
through January 1, 2012.
' California Municipal Utilities Association, Energy Services and Marketing Committee, AB 1890 Public
Benefits Program Guidebook May 7, 1997. Sacramento, California.
4
The full text of AB 1890, Article 8 is as follows.
Article 8. Publicly Owned Utilities
385. (a) Each local publicly owned electric utility shall establish a
nonbypassable, usage based charge on local distribution
service of not less than the lowest expenditure level of the
three largest electrical corporations in California on a
percent of revenue basis, calculated from each utility's total
revenue requirement for the year ended December 31,
1994, and each utility's total annual expenditure under
paragraphs (1), (2), and (3) of subdivision (d) of Section
381 and 38Z 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 with existing statutes
and regulations which promote those resources
and technologies.
(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.
1.2 Adoption of a Public Benefits Charge
At its meeting on December 16, 1997, the City Council of the City of
Vernon approved implementation of the public benefits charge
effective January 1, 1998. The City Council approved a public
benefits charge for electric customers equal to 2.85% of net
revenue collected from such Vernon customers to be used for
certain defined public benefits pursuant to AB 1890.
1.3 Electric Utility Customer Survey
Customer survey was identified as a tool for soliciting the interests
and suggestions of Vernon customers. In order to identify public
benefits programs, a customer survey was conducted during the
months of April through July 1998.
The customer survey consisted of sixteen questions, ranging from
energy efficiency to overall satisfaction with the City's services.
A total of 1,066 surveys were mailed to customers with a self-
addressed and stamped return envelope. One hundred eighty
surveys (approximately 17% of all surveys distributed) were
answered and returned). The survey was an effective tool that
captured necessary and direct input from customers.
Customers' response data was organized and analyzed in order to
objectively assess the customers' needs and interests.
1.4 Policy Statement
It is the policy of the City of Vernon to allocate revenues derived
from the Public Benefits Charge, less the cost to administer
programs, in a fair and equitable manner. Specific projects and
expenditures will be consistent with Section 385 of the Public
Utilities Code.
Entities conducting approved projects shall maintain appropriate
records to document project -related expenditures and project -
related benefits. These records shall be available to the Utilities
Department upon request. The rapid growth in demand for electric
energy is in part due to wasteful, uneconomic, and inefficient uses
of power. The energy efficiency programs recommended by The
Utilities Department may provide opportunities for participating
Vernon customers to reduce energy usage and costs. As
customers become more conversant with energy management,
they may discover new ways to save energy and improve the
bottom line. Low energy costs can improve the competitive position
of businesses. All Vernon electric utility customers may benefit
from energy efficiency programs, as energy efficiency may control
rising energy demands, assisting the City of Vernon to maintain its
low energy rates.
1.5 Approval and Adoption of Public Benefits Programs
Based on customers' response to the survey conducted* the
Utilities Department of the City of Vernon (Utilities Department)
assessed customers' needs and interests and determined that
programs in the area of energy efficiency would be of benefit to
electric customers.
A
The proposed Public Benefits Programs consisted of the following
five projects in the area of energy efficiency:
1. Energy Audits
2. Energy Education and Demonstration Workshops
3. Equipment Loans
4. Customer Incentive
5. Customer Directed Projects
At its meeting on March 21, 2000, the City Council of the City of
Vernon approved and adopted the Public Benefits Programs and
authorized for implementation at that time two of the five projects
contained in the Public Benefits Programs, the Energy Audits and
the Energy Education and Demonstration Workshops.
Later, at its meeting on September 19, 2000, the City Council
approved and authorized for implementation at that time two of the
three remaining projects contained in the Public Benefits Programs,
the Customer Incentive Program and the Customer Directed
Program.
1.6 Program Implementation
1.6.1 Energy Audits
Vernon offers energy audits to all commercial and industrial
customers. The intent of the audit is to identify energy and
cost savings for businesses in Vernon. On -site energy audit
also increases the energy user's attention on how energy is
used thus promoting energy conservation.
Energy audits include three key parts:
• Data Gathering: Identification of where and how a
structure, process or equipment uses energy, along with
the costs and utility uses affecting the energy usage;
• Data Analysis: Identification of energy conservation
measures that when implemented, will make the energy
usage more efficient, less expensive or more
environmentally friendly; and
7
• Recommendations: A final report detailing the findings,
areas for improvement and recommended actions
accompanied by some type of economic justification.
A team of energy professionals conducts an on -site review
and analysis of customers' energy usage patterns and
recommends energy efficiency measures.
An energy audit report is prepared and delivered to
participating customers approximately thirty days after the
facility review. Utilities staff delivers and reviews the audit
findings with participating customers and promotes the
interface between the audit findings and other Public
Benefits Programs.
1.6.1.1 Conformance of the Energy Audit Program with
the Intent of AB 1890
The Energy Audit Program provides interested
Vernon utility customers with the initial energy
usage analyses needed to develop a broader
energy management plan. informed decision -
making is a critical first step to implementing energy
efficiency and conservation measures, which are
key objectives of the Public Benefits Programs
required by AB 1890.
1.6.1.2 Activities and Results
During the reporting period ending June 2001,
energy audits were performed at fifty-seven (57)
customer facilities. The findings and
recommendations are delivered to the participating
customers. Customers are encouraged to
implement the audit recommendation and
participate in the City's Customer Incentive and
Customer Directed programs.
The following table summarizes recommended measures and the
attendant benefits:
N
Table 1.1 Audit Recommendations
TO
Y edi�cta e o
Air Compressor VSD 70.7 4,886,776
Change of Operating Schedule 0
Load Shedding Controls 4,102
100% OSA Dry Bulb Economizer 0.0 149,702
Chiller Replacement 75.3 251,692
Cooling Tower Retrofit w/ VSD 355,751
Energy Management System (EMS) 72.3 290,176
HVAC — General/Other 38.8 1,168,758
Package AC/HP replacement 501.7 1,464,320
VAV Air Handier VSD Retrofit 0.0 85,857
Wet-Bulb'Free Cooling' Economizer 0.0 49,901
EXIT Sign Retrofit 1.6 18,223
High Efficiency Lighting Retrofit 1,512.6 7,103,808
High -Bay Lighting Retrofit 88.4 416,828
Lighting Timer Controls 5.6 332,297
Occupancy Sensors 0.0 381,159
High Efficiency Electric Motors 379.6 1,143,077
Liquid Pressure Amplification 145.9 652,416
Refrigeration Compressor VSD 408,881
Replacement Refrigeration
Compressor 176.9 10,741,983
y ,
1.6.2 Energy Education and Demonstration Workshops
A necessary first step to promoting energy efficiency
measures among utility customers is creating heightened
awareness for the existing opportunities. The "market
transformation" intended by AB 1890 begins with imparting
the knowledge and tools crucial for customers to become
active participants and beneficiaries of the Public Benefits
Programs.
The Energy Education and Demonstration Workshops are
intended to increase customers' awareness and promote
customer participation in energy efficiency programs.
0
Vernon hosted several energy efficiency workshops with
presentations and discussions on various topics lead by
energy experts.
The workshops covered a variety of topics relative to energy
efficiency and current technologies. The range of topics are
based on customer survey, discussions with a cross section
of Vernon's electric utility customers, and the projected need
of Vernon's customer base.
1.6.2.1 Activities and Results
A number of industrial and commercial utility
customers participated in Energy Education and
Demonstration Workshops hosted by the Utilities
Department. Workshop discussions focused on the
following main topics:
1. Public Benefits Programs
• AB 1890 legislative overview and
discussion on mandated program
categories.
2. City of Vernon Efficiency Programs
• Discussion of the various programs and the
application process for participating in the
programs.
3. Energy Audits
• Discussion on the benefits of energy audits
and the audit process review. Participants
were handed sample audit reports and
were encouraged to sign-up for audits.
1.6.3 Customer Incentive Program
The Customer Incentive Program objectives are as follows:
• 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 of general industry
standards;
10
Provide incentives for customers to apply the latest
technology and energy using devices that are otherwise
cost -prohibitive;
• Promote business retention by serving as an instrument
to retain customers who will enjoy the long-term benefits
of energy efficiency.
The 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. If the Department can
quantify a demand reduction and/or energy savings, financial
incentives to assist customers are justified.
This program provides financial incentives (rebates) 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 lighting incentive portion of the program provides
rebates of $0:055 per kWh of reduced lighting energy usage.
The maximum incentive for lighting improvements by
qualified customers during a one-year period is $75,000 or
50% of the lighting retrofit cost whichever is less.
The non -lighting incentive portion of this program can
include, but is not limited to: variable speed drives, air
compressors, motors, refrigeration, chiller replacement, and
building envelope. The Incentive Program also includes
energy management systems and other load and energy
controlling devices.
The following is a discussion of the measures and incentives
covered under the non -lighting portion of the Customer
Incentive Program:
11
Motors - Rebates are based upon qualifying equipment
exceeding the standards set by the National Energy Policy
Act (NEPA) passed in October 1997. Customers receive
$150/kW of reduced demand above NEPA standard whether
the motor is new or a replacement.
The following two tables list minimum qualifying motor
efficiencies:
Table 1.2 Open Motors Minimum Qualifying Efficiency
74.0
1.0
-
82.5
80.0
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
91.0
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 states at i uu"/o ioaa.
12
Table 1.3 Enclosed Motors Minimum Qualifying Efficiency
..�.,
Pole
hRo
80.0
74.0
1.0
75.5
82.5
1.5
62.5
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 statea at -i uu-/o Foau.
Air Compressors - Rebates are based upon the efficiency
on the installed device. There are two sets of efficiencies for
two different types of air compressors - oil flooded and oil
free. The rebate is $150/kW of reduced demand above the
set standard for new or replacement air compressors. The
following table lists qualifying efficiencies for air
compressors.
13
Table 1.4 Air Compressors Qualifying Efficiencies
EF74.01EN"
Oil Flooded
Below 50 HP
3.6
50 to 100 HP
4.2
Above 100 HP.
4.6
Oil -Free
Below 50 HP
3.2
50 to 100 HP
3.7
Above 100 HP
4.1
Other Equipment - Rebate is based upon $150/kw of
reduced demand or $0.055/annualzed kWh saved,
whichever is greater, for replacement of existing equipment.
Saving is established either through customer metering of
load for the existing and new machines or by the
Department's calculation of savings.
Air Conditioning - All qualifying electric air conditioning
equipment (including heat pumps) that is installed as
replacement equipment qualifies for rebates based on
cooling capacity. Rebates for customers range between $75
to $150 per ton. The following table shows rebate amounts
for the air conditioner replacement program.
14
Table 1.5 Rebates for Air Conditioner Replacement Program
e Y
IN
Less than 65,000 8.7 and above
$75
Through the Wall Air
Conditioner
Air -Cooled Central
Less than 65,000
11 —11.9
$75
Package and Split
System
12 —12.9
$100
13 and above
$150
65,000 - 135,000
9.2 - 9.4
$75
9.5 - 9.9
$100
10 and above
$150
135,000 - 760,000
8.7 - 8.9
$75
9.0 - 9.5
$100
9.6 and above
$150
760,000 and greater
8.4 - 8.6
$75
8.7 - 9.2
$100
9.3 and above
$150
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.) earn rebates in the following
manner:
1. $150/kW reduced demand or
2. $0.055 per annualized kWh saved
The greater of the two methods for determining rebates is
applied at the Department's discretion.
The maximum rebate per customer for all measures under
the non -lighting portion of the program is the lesser of
$75,000 or 50% of the investment (material, labor and
taxes).
In addition to cash incentives, the Customer Incentive
Program includes funding for feasibility studies. The
feasibility study is often the first step in determining whether
a particular technology applies to a specific operation or
15
energy -using device. Feasibility studies are limited to a
maximum of $10,000 per project.
1.6.3.1 Activities and Results
The following table is a summary of measures
implemented under the Customer Incentive
Program:
Table 1.6 Implemented Measures
onted; [iramfdt%tion Energy�educt�on
Lighting Retrofit
30.2 306,765 $33,985.16
Air Conditioning
-
13,878
$375
Replacement
Air Compressor
7.17
-
$1,075.50
Replacement
Variable Speed Drive
- 6,087 $2,641.61
Installation
Operational Change
- 4,102 $267.96
(Load Shifting)
1.6.4
Customer -Directed Program
The Customer Directed Program is intended to provide funds
for customer directed projects involving the use of energy
efficient technologies and research, development and
demonstration (RD&D) of energy related technologies. 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.
T
• 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 efforts to develop 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.
The Customer Directed Program offers businesses in
Vernon the opportunity to submit a customized proposal
itemizing energy and cost savings for their facilities. The
program permits customers to self -design energy efficiency
measures that derive a public benefit. 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 applies to facilities
and/or processes.
2. Product Commercialization
Product commercialization consists 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.
The program funds up to $150,000 or 50% of total
project cost for each project selected that
17
demonstrates energy -related an/or future commercial
potential in the are of energy efficiency. The
customer must provide at least twenty-five percent of
the total project cost.
1.6.4.1 Activities and Results
As of June 2001, one customer is participating in the
Customer Directed program. The customer's
project is to demonstrate the economic, quality, and
environmental benefits of a new energy efficient
microwave system for pre -dying fabric entering a
single pass conveyor dryer. This technology
uniformly heats and dries continuously flowing, wide
web materials, thus enabling the economic and
performance benefits of microwave energy to be
successfully applied to the textile industry.
During the reporting period, the customer's project
received City rebates for $50,000.
18
2. CONSERVATION 20/20 PROGRAM
2.1 Overview
In addition to the Public Benefits Programs, the City of Vernon
successfully implemented a conservation incentive program during
the summer months of 2001.
On March 13, 2001, Governor Gray Davis issued Executive Order
D-30-01 providing for credit to customers (of the three investor -
owned utilities) of up to twenty percent (20%) for reducing electricity
usage by at least twenty percent (20%) during the billing period
covering from June 2001 through September 2001.
On May 3, 2001, the City Council of the City of Vernon approved a
similar conservation reward program, Conservation 20/20 program,
The program provided credits to any electric customer that reduced
its electric usage at least 10% from the equivalent period in the
summer months of 2000. At this initial level of conservation, the
City provided a credit of 5% on the energy and demand portion of
the customer's bill. To encourage further conservation efforts, the
City provided a credit of 12% for customers achieving a 15%
energy reduction and a credit of 20% if the customer reduced its
energy usage by at least 20%.
The objective of the Conservation 20120 Program was to promote
demand reduction and energy savings. The program extended over
the months of June, July, August and September 2001. The credits
made available to customers through the program provided the
necessary financial incentives for businesses to reduce their energy
usage.
2.2 Implementation and Results
2.2.1 Determination of Baseline Power Usage
Historic bills for all participating customers were analyzed in
order to determine the baseline energy usage.
2.3 Methodology for Calculating kW Savings
An analysis of historic billing data was conducted for all
participating customers. The billing system automatically identified
customer usage data. Previous year billing data was compared
against current year billing data to determine energy savings.
Wel
2.4 Customer Participation and Expenditure of Funds
The Vernon Conservation 20120 Program was a success.
As of the conclusion of the Program a total of $1,088,987.62
was issued as credits and an estimated 31,025,598 kWh
was saved since the inception of the program as compared
to last year during the same period. The energy savings
exceeded the program target of 20,000,000 kWh. Following
is a breakdown of energy savings and credits issued by
month.
Table 2.1 Energy Savings and Credits By Month
20
3. PUBLIC BENEFITS CHARGE AND EXPENSES
3.1 Public Benefits Charge
Pursuant to the mandates of Assembly Bill 1890 and as amended
by Assembly Bill 995, the City of Vernon assesses a charge of
2.85% the total customer's bill before any special fees or charges.
The following table shows the Public Benefits Charge collected by
fiscal year (July 1 through June 30) starting from January 1, 1998
through June 30, 2001.
Table 3.1 Public Benefits Charge By Fiscal Year
Pi�i;IIc��enefts Ch�r'ge
CIlect`ed
9�19830(,Y,,
001
$ 641,413.73
$ 1,578,885.41
$ 1,611,035.90
$2,047,008.94
" Public Benefits charge is assessea siarung alive.
3.2 Public Benefits Programs Expenses
Up until recently most of the work has been in the area of
assessing and developing public benefits programs. The following
table shows the Public Benefits Programs expenses by fiscal year
(July 1 through June 30) starting from January 1, 1998 through
June 30, 2001.
Table 3.2 Public Benefits Programs Expenses By Fiscal Year
21
Al
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) 826-1438
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811
January 23, 2002
Stephen P. Szarka
Energy Services Program Manager
Western Area Power Administration
Desert South-West Regional Office
615 S. 43rd Avenue (85009)
P.O. Box 6457
Phoenix, AZ 85005-6457
Re: City of Vernon
Minimum Investment Report 2002 - 2006
Dear Mr. Szarka:
EDUARDO OLIVO
City Attorney
FAX: (562) 927-8722
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
KENNETH J. DeDARIO
Director of Municipal Utilities
FAX: (323) 826-1425
STEVEN E. PARKER
Fire Chief
FAX: (323) 826-1407
BRUCE W. OLSON
Police Chief
FAX:(323)826-148i
Transmitted herewith is the above referenced report approved by the
Vernon City Council on January 22, 2002, and a copy of the resolution
adopting same
If you have any questions regarding this matter, please call Mr.
Kenneth DeDario at 323/583-8811 ext. 211,
Very truly yours,
i . osco
Chief Dep y City Clerk
GJO:ng
CC: Kenneth DeDario
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro -Tern
WM. 'BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator / City Clerk
FAX (323) 826-1438
City Council
City of Vernon
Honorable Members:
EDUARDO OLIVO
City Attorney
FAX: (562) 927-8722
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
KENNETH J. DeDARIO
Director of Municipal Utilities
FAX: (323) 826-1425
STEVEN E. PARKER
Fire Chief
FAX: (323) 826-1407
CITY HALL BRUCE W. OLSON
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief
TELEPHONE (323) 583-8811 FAX: (323)826-1481
January 16, 2002 000
The Utilities Department is transmitting the City of Vernon Utilities
Department Minimum Investment Report (MIR) pursuant to the Western
Area Power Administration (Western) Integrated Resource Plan (IRP)
requirements associated with the City's Hoover allocation. Western
requires each customer to submit a new IRP every five years with
annual updates but allows an MIR as an alternative to the IRP upon
request from the customer and approval by Western. The City's MIR
incorporates the City of Vernon Utilities Department Public Benefits
Programs and covers the five-year planning period for calendar years
2002 through 2006 and it is hereby recommended that the MIR of the
Utilities Department be approved.
Very truly yours,
Bruce V. Malkenhorst
City Administrator/City Clerk
BVM/ng
C�
January 16, 2002
TO: Bruce V. Malkenhorst, City Administrator
FROM: Kenneth J. DeDario, Director of Utilities k\
SUBJECT: Minimum Investment Report
I recommend approval of the attached City of Vernon Utilities Department Minimum Investment
Report (MIR) pursuant to the Western Area Power Administration (Western) Integrated
Resource Plan (IRP) requirements associated with the City's Hoover allocation. Western
requires each customer to submit a new IRP every five years with annual updates but allows a
MIR as an alternative to the IRP upon the customer's request and with Western's approval. The
MIR incorporates the City of Vernon Utilities Department Public Benefits Programs and covers
the five-year planning period from calendar years 2002 through 2006.
If you have any questions or comments, please contact me. Thank you for your consideration.
KJD:ah
Attachment
CITY OF VERNON
UTILITIES DEPARTMENT
MINIMUM INVESTMENT REPORT
2002 - 2006
Pursuant to the
Western Area Power Administration
Integrated resource Planning requirements
TABLE OF CONTENTS
Pane No.
EXECUTIVE SUMMARY...................................................................................... 1
INTRODUCTION.................................................................................................. 3
1. CITY OF VERNON PUBLIC BENEFITS PROGRAMS .................................. 4
1.1 Legislative Mandate............................................................................ 4
1.2 Adoption of a Public Benefits Charge ............................................... 5
1.3 Electric Utility Customer Survey........................................................ 5
1.4 Policy Statement ................................................ .............................. 6
1.5 Approval and Adoption of Public Benefits Programs ...................... 6
1.6 Program Implementation
1.6.1 Energy Audits.............................................................................. 7
1.6.1.1 Conformance of the Energy Audit Program with the
Intent of AB 1890........................................................... 8
1.6.1.2 Activities and Results ..................................................... 8
1.6.2 Energy Education and Demonstration Workshops ...................... 9
1.6.2.1 Activities and Results ................................................... 10
1.6.3 Customer Incentive Program ..................................................... 10
1.6.3.1 Activities and Results ................................................... 16
1.6.4 Customer Directed Program ...................................................... 16
1.6.4.1 Activities and Results ................................................... 18
2. CONSERVATION 20/20 PROGRAM........................................................... 19
2.1 Overview............................................................................................. 19
2.2 Implementation and Results.............................................................. 19
2.2.1 Determination of Baseline Power Usage ................................... 19
2.3 Methodology for Calculating kW Savings ........................................ 19
TABLE OF CONTENTS
Page No.
2.4 Customer Participation and Expenditure of Funds ........................ 20
3. PUBLIC BENEFITS CHARGE AND EXPENSES ........................................ 21
3.1 Public Benefits Charge...................................................................... 21
3.2 Public Benefits Programs Expenses ................................................ 21
4. FUTURE PLANS.......................................................................................... 22
4.1 Continuing Programs............................................................................ 22
4.2 New-Programs......................................................................................22
LIST OF TABLES
Table 1.1 Audit Recommendations.................................................................... 9
Table 1.2 Open Motors Minimum Qualifying Efficiency .................................... 12
Table 1.3 Enclosed Motors Minimum Qualifying Efficiency .............................. 13
Table 1.4 Air Compressors Qualifying Efficiencies ........................................... 14
Table 1.5 Rebates for Air Conditioner Replacement Program .......................... 15
Table 1.6 Implemented Measures.................................................................... 16
Table 2.1 Energy Savings and Credits by Month ............................................. 20
Table 3.1 , Public Benefits Charge by Fiscal Year ............................................. 21
Table 3.2 Public Benefits Programs Expenses by Fiscal Year ......................... 21
EXECUTIVE SUMMARY
The City of Vernon's minimum investment report is prepared in lieu of the five-
year integrated resource planning (IRP) report. The report covers the five-year
planning period from year 2002 through 2006. The minimum investment report
allows Vernon to meet the objectives of section 114 of EPAct through attaining a
minimum level of investment in energy efficiency and collecting a charge to
support defined public benefits.
Effective May 1, 2000, Western revised the IRP regulations to allow its
customers more alternatives in meeting the IRP requirements. Western's
customers can choose to continue preparing IRPs, or can adopt approaches that
are emerging in lieu of IRP requirements. These new approaches are (1)
complying with a defined level of investment in demand side management (DSM)
and/or renewable energy, including a public benefits program, or (2) complying
with mandated energy efficiency and/or renewable energy activities and related
reporting requirements.
California Assembly Bill 1890 (AB 1890) deregulated the electricity industry and
established nonbypassable Public Benefits Charge (PBC) on all customer bills in
California to support statewide public benefit programs in energy efficiency,
renewable technology, low-income, and research, demonstration, and
development (RD&D). In compliance with the requirements of AB 1890, the City
of Vernon adopted and implemented Public Benefits Programs in the area of
energy efficiency: Energy Audits, Energy Education and Demonstration
Workshops, Customer Incentive Program, and Customer Directed Program.
The intent of the energy audit is to identify energy and cost savings for
businesses in Vernon. During the reporting period ending June 2001, energy
audits were performed at fifty-seven (57) customer facilities. The findings and
recommendations are delivered to the participating customers. Customers are
encouraged to implement the audit recommendation and participate in the City's
Customer Incentive and Customer Directed programs.
The Energy Education and Demonstration Workshops are intended to increase
customers' awareness and promote customer participation in energy efficiency
programs. A number of industrial and commercial utility customers participated
in Energy Education and Demonstration Workshops hosted by the Utilities
Department.
The Customer Incentive Program is designed to encourage energy efficient
lighting systems and the exploration and implementation of energy efficient
technologies. These technologies may address either equipment or operational
change. This program provides financial incentives (rebates) in two separate
areas, lighting, and energy efficient equipment. As a result of measures
implemented under this program, demand reduction of 37 kilowatts and energy
savings of 330,832 kilowatt-hours was achieved during the reporting period
ending June 2001.
The Customer Directed Program is intended to provide funds for customer -
directed projects involving the use of energy efficient technologies and research,
development and demonstration (RD&D) of energy related technologies. The
program offers businesses in Vernon the opportunity to submit a customized
proposal itemizing energy and cost savings for their facilities. The program
permits customers to self -design energy efficiency measures that derive a public
benefit. As of June 2001, one customer is participating in the Customer Directed
Program. The customer's project is to demonstrate the economic, quality, and
environmental benefits of a new energy efficient microwave system for pre -dying
fabric entering a single pass conveyor dryer.
In addition to the Public Benefits Programs, the City of Vernon successfully
implemented a conservation incentive program during the summer months of
2001. The objective of the Conservation 20120 Program was to promote demand
reduction and energy savings. The program extended over the months of June,
July, August and September 2001. The credits made available to customers
through the program provided the necessary financial incentives for businesses
to reduce their energy usage. As of the conclusion of the program, a total of
$1,088,987.62 was issued as credits and an estimated 31,025,598 kWh was
saved since the inception of the program as compared to last year during the
same period.
Future plans include continuing implementation of existing programs, updating
prior year energy audits to reflect affects of recent rate increases on payback
period and rebate incentives, and developing new public benefit programs in the
area of energy efficiency and applications of renewable technologies.
V,
INTRODUCTION
The City of Vernon's minimum investment report is prepared in lieu of the five-
year integrated resource planning (IRP) report. The report covers the five-year
planning period from year 2002 through 2006. The minimum investment report
allows Vernon to meet the objectives of section 114 of EPAct through attaining a
minimum level of investment in energy efficiency and collecting a charge to
support defined public benefits.
In the past, Vernon prepared its IRP pursuant to Western's IRP regulations. IRP
is a planning and selection process for new energy resources that evaluates the
full range of alternatives, including new generating capacity, power purchases,
energy conservation and efficiency, and renewable energy resources, to provide
adequate and reliable service to a utility's electric customer.
Effective May 1, 2000, Western revised the IRP regulations to allow its
customers more alternatives in meeting the IRP requirements. Western's
customers can choose to continue preparing IRPs, or can adopt approaches that
are emerging in lieu of IRP requirements. These new approaches are (1)
complying with a defined level of investment in demand side management (DSM)
and/or renewable energy, including a public benefits program, or (2) complying
with mandated energy efficiency and/or renewable energy activities and related
reporting requirements.
Requirements for the minimum investment report alternative are that the
minimum investment must be either: (1) A mandatory set percentage of
customer gross revenue or other specific minimum investment in DSM and/or
renewable energy mandated by a State, Tribal, or Federal Government with
jurisdictional authority; or (2) A required public benefits charge, including charges
to be collected for and spent on DSM; renewable energy; efficiency and
alternative energy -related research and development; low-income energy
assistance and any other applicable public benefits category, mandated by a
State, Tribal, or Federal Government with jurisdictional authority.
California Assembly Bill 1890 (AB 1890) deregulated the electricity industry and
established nonbypassable Public Benefits Charge (PBC) on all customer bills in
California to support statewide public benefit programs in energy efficiency,
renewable technology, low-income, and research, demonstration, and
development (RD&D). In compliance with the requirements of AB 1890, the City
of Vernon adopted and implemented public benefits programs.
On October 24, 2001, Vernon requested Western to allow Vernon to prepare -a
minimum investment report for its Public Benefits Programs in lieu of the IRP
requirements. On November 8, Western granted Vernon's request.
1. CITY OF VERNON PUBLIC BENEFITS PROGRAMS
1.1 Legislative Mandate
California Assembly Bill 1890 (AB 1890) was passed by the State
Legislature in August 1996 and signed into law by former Governor
Pete Wilson in September 1996. The intent of AB1890 was to
lower the price of electricity for consumers by opening California's
electric utility industry to competition. AB 1890 deregulated the
electricity industry and established a nonbypassable Public Benefits
Charge (PBC) on all customer bills in California to support
statewide public benefit programs in energy efficiency, renewable
technology, low-income, and research, demonstration, and
development (RD&D). The legislation specifies the amount of
money that California IOUs PG&E, San Diego Gas and Electric,
and Southern California Edison must collect from ratepayers to
-fund public benefit programs, as well as how those funds must be
spent.
For publicly owned utilities including the City of Vernon (Vernon)
the legislation contains two mandates. The first one is pursuant to
Section 9606, a requirement to report on the periodic electric bill
the amount expected to be transferred to the general fund on a no
less than annual basis.
The second mandate is pursuant to Section 385; a requirement to
collect a nonbypassable usage based PBC on local distribution
service to fund investments in energy efficiency, low-income,
renewable energy, and RD&D programs. The amount that publicly
owned utilities must designate for these programs is tied to
historical levels of funding by the IOUs. The legislation was
interpreted by the California Municipal Utilities Association to
require publicly owned utilities to collect and spend the equivalent
of 2.85% of the utility's revenues during the years 1998 through
2000, and'2.7% of revenues in 2001.E
Assembly Bill 995, which was approved by the Governor on
September 30, 2000, extended the collection of the nonbypassable
PBC through January 1, 2012 at a rate not to exceed the level that
was used to collect these charges on January 1, 2000. Pursuant to
the mandates of Assembly Bill 995, a publicly owned utility will
collect and spend the equivalent of 2.85% of the utility's revenues
through January 1, 2012.
' California Municipal Utilities Association, Energy Services and Marketing Committee, AB 1890 Public
Benefits Program Guidebook May 7, 1997. Sacramento, California.
4
The full text of AB 1890, Article 8 is as follows.
Article 8. Publicly Owned Utilities
385. (a) Each local publicly owned electric utility shall establish a
nonbypassable, usage based charge on local distribution
service of not less than the lowest expenditure level of the
three largest electrical corporations in California on a
percent of revenue basis, calculated from each utility's total
revenue requirement for the year ended December 31,
1994, and each utility's total annual expenditure under
paragraphs (1), (2), and (3) of subdivision (c) of Section
381 and 38Z 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 with existing statutes
and regulations which promote those resources
and technologies.
(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.
1.2 Adoption of a Public Benefits Charge
At its meeting on December 16, 1997, the City Council of the City of
Vernon approved implementation of the public benefits charge
effective January 1, 1998. The City Council approved a public
benefits charge for electric customers equal to 2.85% of net
revenue collected from such Vernon customers to be used for
certain defined public benefits pursuant to AB 1890.
1.3 Electric Utility Customer Survey
Customer survey was identified as a tool for soliciting the interests
and suggestions of Vernon customers. In order to identify public
benefits programs, a customer survey was conducted during the
months of April through July 1998.
5
The customer survey consisted of sixteen questions, ranging from
energy efficiency to overall satisfaction with the City's services.
A total of 1,066 surveys were mailed to customers with a self-
addressed and stamped return envelope. One hundred eighty
surveys (approximately 17% of all surveys distributed) were
answered and returned). The survey was an effective tool that
captured necessary and direct input from customers.
Customers' response data was organized and analyzed in order to
objectively assess the customers' needs and interests.
1.4 Policy Statement
It is the policy of the City of Vernon to allocate revenues derived
from the Public Benefits Charge, less the cost to administer
programs, in a fair and equitable manner. Specific projects and
expenditures will be consistent with Section 385 of the Public
Utilities Code.
Entities conducting approved projects shall maintain appropriate
records to document project -related expenditures and project
related benefits. These records shall be available to the Utilities
Department upon request. The rapid growth in demand for electric
energy is in part due to wasteful, uneconomic, and inefficient uses
of power. The energy efficiency programs recommended by The
Utilities Department may provide opportunities for participating
Vernon customers to reduce energy usage and costs. As
customers become more conversant with energy management,
they may discover new ways to save energy and improve the
bottom line. Low energy costs can improve the competitive position
of businesses. All Vernon electric utility customers may benefit
from energy efficiency programs, as energy efficiency may control
rising energy demands, assisting the City of Vernon to maintain its
low energy rates.
1.5 Approval and Adoption of Public Benefits Programs
Based on customers' response to the survey conducted, the
Utilities Department of the City of Vernon (Utilities Department)
assessed customers' needs and interests and determined that
programs in the area of energy efficiency would be of benefit to
electric customers.
0
The proposed Public Benefits Programs consisted of the following
five projects in the area of energy efficiency:
1. Energy Audits
2. Energy Education and Demonstration Workshops
3. Equipment Loans
4. Customer Incentive
5. Customer Directed Projects
At its meeting on March 21, 2000, the City Council of the City of
Vernon approved and adopted the Public Benefits Programs and -
authorized for implementation at that time two of the five projects
contained in the Public Benefits Programs, the Energy Audits and
the Energy Education and Demonstration Workshops.
Later, at its meeting on September 19, 2000, the City Council
approved and authorized for implementation at that time two of the
three remaining projects contained in the Public Benefits Programs,
the Customer Incentive Program and the Customer Directed
Program.
1.6 Program Implementation
1.6.1 Energy Audits
Vernon offers energy audits to all commercial and industrial
customers. The intent of the audit is to identify energy and
cost savings for businesses in Vernon. On -site energy audit
also increases the energy user's attention on how energy is
used thus promoting energy conservation.
Energy audits include three key parts:
• Data Gathering: Identification of where and how a
structure, process or equipment uses energy, along with
the costs and utility uses affecting the energy usage;
• Data Analysis: Identification of energy conservation
measures that when implemented, will make the energy
usage more efficient, less expensive or more
environmentally friendly; and
_A
• Recommendations: A final report detailing the findings,
areas for improvement and recommended actions
accompanied by some type of economic justification.
A team of energy professionals conducts an on -site review
and analysis of customers' energy usage patterns and
recommends energy efficiency measures.
An energy audit report is prepared and delivered to
participating customers approximately thirty days after the
facility review. Utilities staff delivers and reviews the audit
findings with participating customers and promotes the
interface between the audit findings and other Public
Benefits Programs.
1.6.1.1 Conformance of the Energy Audit Program with
the Intent of AB 1890
The Energy Audit Program provides interested
Vernon utility customers with the initial energy
usage analyses needed to develop a broader
energy management plan. Informed decision -
making is a critical first step to implementing energy
efficiency and conservation measures, which are
key objectives of the Public Benefits Programs
required by AB 1890.
1.6.1.2 Activities and Results
During the reporting period ending June 2001,
energy audits were performed at fifty-seven (57)
customer facilities. The findings and
recommendations are delivered to the participating
customers. Customers are encouraged to
implement the audit recommendation and
participate in the City's Customer Incentive and
Customer Directed programs.
The following table summarizes recommended measures and the
attendant benefits:
Table 1.1 Audit Recommendations
Air Compressor VSD
70.7
4,886,776
Change of Operating Schedule
0
Load Shedding Controls
4,102
100% OSA Dry Bulb Economizer
0.0
149,702
Chiller Replacement
75.3
251,692
Cooling Tower Retrofit w/ VSD
355,751
Energy Management System (EMS)
72.3
290,176
HVAC — General/Other
38.8
1,168,758
Package AC/HP replacement
501.7
1,464,320
VAV Air Handler VSD Retrofit
0.0
85,857
Wet -Bulb 'Free Cooling' Economizer
0.0
49,901
EXIT Sign Retrofit
1.6
18,223
High Efficiency Lighting Retrofit
1,512.6
7,103,808
High -Bay Lighting Retrofit
88.4
416,828
Lighting Timer Controls
5.6
332,297
Occupancy Sensors
0.0
381,159
High Efficiency Electric Motors
379.6
1,143,077
Liquid Pressure Amplification
145.9
652,416
Refrigeration Compressor VSD
408,881
Replacement Refrigeration
Compressor
176.9
10,741,983
1.6.2 Energy Education and Demonstration Workshops
A necessary first step to promoting energy efficiency
measures among utility customers is creating heightened
awareness for the existing opportunities. The "market
transformation" intended by AB 1890 begins with imparting
the knowledge and tools crucial for customers to become
active participants and beneficiaries of the Public Benefits
Programs.
The Energy Education and Demonstration Workshops are
intended to increase customers' awareness and promote
customer participation in energy efficiency programs.
9
Vernon hosted several energy efficiency workshops with
presentations and discussions on various topics lead by
energy experts.
The workshops covered a variety of topics relative to energy
efficiency and current technologies. The range of topics are
based on customer survey, discussions with a cross section
of Vernon's electric utility customers, and the projected need
of Vernon's customer base.
1.6.2.1 Activities and Results
A number of industrial and commercial utility
customers participated in Energy Education and
Demonstration Workshops hosted by the Utilities
Department. Workshop discussions focused on the
following main topics:
1. Public Benefits Programs
• AB 1890 legislative overview and
discussion on mandated program
categories.
2. City of Vernon Efficiency Programs
• Discussion of the various programs and the
application process for participating in the
programs.
3. Energy Audits
• Discussion on the benefits of energy audits
and the audit process review. Participants
were handed sample audit reports and
were encouraged to sign-up for audits.
1.6.3 Customer Incentive Program
The Customer Incentive Program objectives are as follows:
• 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 of general industry
standards;
icl
• Provide incentives for customers to apply the latest
technology and energy using devices that are otherwise
cost -prohibitive;
• Promote business retention by serving as an instrument
to retain customers who will enjoy the long-term benefits
of energy efficiency.
The 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. If the Department can
quantify a demand reduction and/or energy savings, financial
incentives to assist customers are justified.
This program provides financial incentives (rebates) 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 lighting incentive portion of the program provides
rebates of $0.055 per kWh of reduced lighting energy usage.
The maximum incentive for lighting improvements by
qualified customers during a one-year period is $75,OOO or
50% of the lighting retrofit cost whichever is less.
The non -lighting incentive portion of this program can
include, but is not limited to: variable speed drives, air
compressors, motors, refrigeration, chiller replacement, and
building envelope. The Incentive Program also includes
energy management systems and other load and energy
controlling devices.
The following is a discussion of the measures and incentives
covered under the non -lighting portion of the Customer
Incentive Program:
11
Motors- Rebates are based upon qualifying equipment
exceeding the standards set by the National Energy Policy
Act (NEPA) passed in October 1997. Customers receive
$150/kW of reduced demand above NEPA standard whether
the motor is new or a replacement.
The following two tables list minimum qualifying motor
efficiencies:
Table 1.2 Open Motors Minimum Qualifying Efficiency
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
91.0
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.
12
Table 1.3 Enclosed Motors Minimum Qualifying Efficiency
1.0
75.5
82.5
80.0
74.0
1.5
62.5
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.
Air Compressors - Rebates are based upon the efficiency
on the installed device. There are two sets of efficiencies for
two different types of air compressors - oil flooded and oil
free. The rebate is $150/kW of reduced demand above the
set standard for new or replacement air compressors. The
following table lists qualifying efficiencies for air
compressors.
13
Table 1.4 Air Compressors Qualifying Efficiencies
Other Equipment - Rebate is based upon $150/kw of
reduced demand or $0.055/annualzed kWh saved,
whichever is greater, for replacement of existing equipment.
Saving is established either through customer metering of
load for the existing and new machines or by the
Department's calculation of savings.
Air Conditioning - All qualifying electric air conditioning
equipment (including heat pumps) that is installed as
replacement equipment qualifies for rebates based on
cooling capacity. Rebates for customers range between $75
to $150 per ton. The following table shows rebate amounts
for the air conditioner replacement program.
14
Table 1.5 Rebates for Air Conditioner Replacement Program
Through the Wall Air
Less than 65,000
8.7 and above
$75
Conditioner
Air -Cooled Central
Less than 65,000
11 -11.9
$75
Package and Split
System
12 —12.9
$100
13 and above
$150
65,000 - 135,000
9.2 - 9.4
$75
9.5 - 9.9
$100
10 and above
$150
135,000 - 760,000
8.7 - 8.9
$75
9.0 - 9.5
$100
9.6 and above
$150
760,000 and greater
8.4 - 8.6
$75
8.7 - 9.2
$100
9.3 and above
$150
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.) earn rebates in the following
manner:
1. $150/kW reduced demand or
2. $0.055 per annualized kWh saved
The greater of the two methods for determining rebates is
applied at the Department's discretion.
The maximum rebate per customer for all measures under
the non -lighting portion of the program is the lesser of
$75,000 or 50% of the investment (material, labor and
taxes).
In addition to cash incentives, the Customer Incentive
Program includes funding for feasibility studies. The
feasibility study is often the first step in determining whether
a particular technology applies to a specific operation or
15
energy -using device. Feasibility studies are limited to a
maximum of $10,000 per project.
1.6.3.1 Activities and Results
The following table is a summary of measures
implemented under the Customer Incentive
Program:
Table 1.6 Implemented Measures
on
Ener.
_
uF
Lighting Retrofit
30.2
306,765
$33,985.16
Air Conditioning
-
13,878
$375
Replacement
Air Compressor
7.17
-
$1,075.50
Replacement
Variable Speed Drive
-
6,087
$2,641.61
Installation
Operational Change
-
4,102
$267.96
(Load Shifting)
YQtI
_37 ..,
1.6.4 Customer -Directed Program
The Customer Directed Program is intended to provide funds
for customer directed projects involving the use of energy
efficient technologies and research, development and
demonstration (RD&D) of energy related technologies. 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.
16
• 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 efforts to develop 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.
The Customer Directed Program offers businesses in
Vernon the opportunity to submit a customized proposal
itemizing energy and cost savings for their facilities. The
program permits customers to self -design energy efficiency
measures that derive a public benefit. 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 applies to facilities
and/or processes.
2. Product Commercialization
Product commercialization consists 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.
The program funds up to $150,000 or 50% of total
project cost for each project selected that
17
demonstrates energy -related an/or future commercial
potential in the are of energy efficiency. The
customer must provide at least twenty-five percent of
the total project cost.
1.6.4.1 Activities and Results
As of June 2001, one customer is participating in the
Customer Directed program. The customer's
project is to demonstrate the economic, quality, and
environmental benefits of a new energy efficient
microwave system for pre -dying fabric entering a
single pass conveyor dryer. This technology
uniformly heats and dries continuously flowing, wide
web materials, thus enabling the economic and
performance benefits of microwave energy to be
successfully applied to the textile industry.
During the reporting period, the customer's project
received City rebates for $50,000.
18
a l -
2. CONSERVATION 20/20 PROGRAM
2.1 Overview
In addition to the Public Benefits Programs, the City of Vernon
successfully implemented a conservation incentive program during
the summer months of 2001.
On March 13, 2001, Governor Gray Davis issued Executive Order
D-30-01 providing for credit to customers (of the three investor
owned utilities) of up to twenty percent (20%) for reducing electricity
usage by at least twenty percent (20%) during the billing period
covering from June 2001 through September 2001.
On May 3, 2001, the City Council of the City of Vernon approved a
similar conservation reward program, Conservation 20/20program,
The program provided credits to any electric customer that reduced
its electric usage at least 10% from the equivalent period in the
summer months of 2000. At this initial level of conservation, the
City provided a credit of 5% on the energy and demand portion of
the customer's bill. To encourage further conservation efforts, the
City provided a credit of 12% for customers achieving a 15%
energy reduction and a credit of 20% if the customer reduced its
energy usage by at least 20%.
The objective of the Conservation 20120 Program was to promote
demand reduction and energy savings. The program extended over
the months of June, July, August and September 2001. The credits
made available to customers through the program provided the
necessary financial incentives for businesses to reduce their energy
usage.
2.2Implementation and Results
2.2.1 Determination of Baseline Power Usage
Historic bills for all participating customers were analyzed in
order to determine the baseline energy usage.
2.3 Methodology for Calculating kW Savings
An analysis of historic billing data was conducted for all
participating customers. The billing system automatically identified
customer usage data. Previous year billing data was compared
against current year billing data to determine energy savings.
19
o
2.4 Customer Participation and Expenditure of Funds
The Vernon Conservation 20120 Program was a success.
As of the conclusion of the Program a total of $1,088,987.62
was issued as credits and an estimated 31,025,598 kWh
was saved since the inception of the program as compared
to last year during the same period. The energy savings
exceeded the program target of 20,000,000 kWh. Following
is a breakdown of energy savings and credits issued by
month.
Table 2.1 Energy Savings and Credits By Month
20
1 � �
3. PUBLIC BENEFITS CHARGE AND EXPENSES
3.1 Public Benefits Charge
* Public
3.2
Pursuant to the mandates of Assembly Bill 1890 and as amended
by Assembly Bill 995, the City of Vernon assesses a charge of
2.85% the total customer's bill before any special fees or charges.
The following table shows the Public Benefits Charge collected by
fiscal year (July 1 through June 30) starting from January 1, 1998
through June 30, 2001.
Table 3.1 Public Benefits Charge By Fiscal Year
Public Benefits Programs Expenses
Up until recently most of the work has been in the area of
assessing and developing public benefits programs. The following
table shows the Public Benefits Programs expenses by fiscal year
(July 1 through June 30) starting from January 1, 1998 through
June 30, 2001.
Table 3.2 Public Benefits Programs Expenses By Fiscal Year
21
4. FUTURE PLANS
4.1 Continuing Programs
As part of its future plans, the Utilities Department will continue
activities to implement existing programs. The Department will
continue to provide energy audits. It will continue to provide Energy
Education and Demonstration Workshops. Great efforts will be
expended on encouraging customers to implement energy audit
recommendations by using funding available through the Customer
Incentive Program and the Customer Directed Program. In
addition, prior year energy audits will be updated to reflect affects of
recent rate increases on payback period and rebate incentives.
4.2 New Programs
Among other things, California Assembly Bill 1890 (AB 1890)
mandates publicly owned utilities to fund public benefit programs in
energy efficiency, renewable technology, low-income, and
research, demonstration, and development (RD&D). As part of its
future plans, the Utilities Department will develop new public
benefits programs in the area of energy efficiency and applications
of renewable technologies.
Currently, the Utilities Department is investigating the possibility of
installing Photovoltaic systems throughout the City. Initial candidate
sites are City -owned facilities.
22