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Resolution No. 2017-038RESOLUTION NO. 2017-38 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND ADOPTING AN AMENDED NATURAL GAS REBATE PROGRAM FOR CUSTOMERS CONNECTED TO THE CITY'S GAS DISTRIBUTION SYSTEM AND REPEALING ALL RESOLUTIONS IN CONFLICT THEREWITH WHEREAS, the city of Vernon (`City") owns and operates a municipal natural gas distribution system for supplying the City's municipal electric system with natural gas and providing natural gas to businesses and industries within the City; and WHEREAS, the California Global Warming Solution Act of 2006, also known as Assembly Bill 32 ("AB 32"), requires that California Greenhouse Gas ("GHG") emissions in 2020 be at the same levels as in 1990; and WHEREAS, on March 17, 2015, the City Council of the City of Vernon adopted Resolution No. 2015-12, approving, establishing, and implementing a natural gas surcharge to fund participation in the California Air Resources Board ("CARB") cap -and -trade allowance program, for gas distributed and supplied by the City within its boundaries; and WHEREAS, on August 4, 2015, the City Council of the City of Vernon adopted Resolution 2015-54, approving and adopting the natural gas rebate program for customers connected to the City's distribution system to support energy efficiency consistent with AB 32; and WHEREAS, by memorandum dated July 18, 2017, the General Manager of Public Utilities has recommended the approval and adoption of an amended natural gas rebate program to include installation of electric vehicle charging stations, electric vehicles, and rebates for boiler efficiency testing; and WHEREAS, the City Council desires to adopt the amended natural gas rebate program. 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 above recitals are true and correct. SECTION 2: The City Council of the City of Vernon finds that this action is exempt under the California Environmental Quality Act(CEQA), because it is an administrative activity that will not result in direct or indirect physical changes in the environment, and therefore does not constitute a "project" as defined by CEQA Guidelines section 15378; and even if it were considered to be a "project," the activity would be categorically exempt from CEQA review under CEQA Guidelines section 15307, because it is an action taken by a regulatory agency, as authorized by state law, to assure the "maintenance, restoration, or enhancement" of natural resources and includes procedures to protect the environment. SECTION 3: The City Council of the City of Vernon hereby approves and adopts the amended Natural Gas Rebate Program ("Program"), a copy of which is attached hereto as Exhibit A. SECTION 4: The City Council of the City of Vernon hereby instructs the City Administrator, or his designee, to take whatever actions are deemed necessary or desirable for the purpose of implementing and carrying out the purposes of this Resolution and the transactions herein approved or authorized, including but not limited to, any non -substantive change to the Program attached hereto. SECTION 5: All resolutions or parts of resolutions, specifically Resolution No. 2015-54, not consistent with or in conflict - 2 - with this resolution are hereby repealed. SECTION 6: The City clerk, or Deputy City Clerk, of the City of Vernon shall certify to the passage, approval and adoption of this Resolution, and the city Clerk, or Deputy City Clerk, of the City of Vernon shall cause this Resolution and the City Clerk's, or Deputy City Clerk's, certification to be entered in the File of Resolutions of the Council of this City. APPROVED AND ADOPTED this 1st day of August, 2017. ATTESTy i Matthew Ceballos -421�� / Deputy City Clerk APPROVED AS TO FORM: M+c Brian Bikin, Deep fftcity Attorney - 3 - Name: Melissa ' A. Ybarra Title: Mayor / STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) Matthew Ceballos I, g-� Deputy City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 2017-38, was duly passed, approved and adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Tuesday, August 1, 2017, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this Y� day of August, 2017, at Vernon, California. (SEAL) - 4 - Matthew Ceballos -may / Deputy City Clerk EXHIBIT A CITY OF VERNON NATURAL GAS REBATE PROGRAM PROGRAM DESCRIPTION: The purpose of this natural gas customer rebate program is to encourage the reduction of greenhouse gas emissions, primarily by reducing natural gas consumption, but also by implementing other measures that are consistent with the goals of Assembly Bill 32 (AB-32). This can be accomplished by upgrading to high efficiency equipment, but also by an operational change that requires some investment. The City shall be open to any project or process change that can reduce greenhouse gases, and may include the City investing in its own natural gas infrastructure. The City shall also engage with customers to promote projects that qualify. The program is administered through Vernon's natural gas and customer service divisions. POLICY STATEMENT: The City of Vernon shall allocate revenues to a natural gas rebate program derived from the CA Greenhouse Gas Surcharge approved in Resolution 2015-12, dated March 17, 2015, and effective April 1, 2015. These revenues are from the sale of "freely allocated greenhouse gas allowances," less the reasonable cost to administer the program. Rebates shall be allocated in a fair and equitable manner, and consistent with AB-32 such that funds provided to customers verifiably reduce greenhouse gas emissions to the atmosphere. PROGRAM FUNDING: Funding for this gas rebate program is exclusively from greenhouse gas allowances sold at each of the California Air Resource Board (CARB) cap -and -trade auctions. However, allowances sold must be replaced to fulfill the City's allowance requirement. Accordingly, the cost of all allowances purchased is covered by Vernon's gas customers through the CA Greenhouse Gas Surcharge on monthly natural gas billing statements effective April 1, 2015. Administrative costs shall remain 15 percent or less, which includes the cost of rebate evaluation to customers, third -party verification when needed, and marketing of the program. PROGRAM OBJECTIVES: The objectives of the gas rebate program are to: • Support the statewide goal of reducing greenhouse gas emissions • Provide proceeds from the sale of freely allocated greenhouse gas allowances to Vernon gas customers for the purpose of reducing greenhouse gas emissions • Actively promote the program to gas customers in an equitable manner • Design rebates such that rebate dollars are in proportion to benefit gained • Provide support to customers to facilitate qualifying projects, including application and verification • Maintain a reasonable cost to administer the program Revised July 2017 1 DRAFT BACKGROUND: The California Global Warming Solution Act of 2006, also known as Assembly Bill 32, requires that California Greenhouse Gas (GHG) emissions in 2020 be at the same levels as that of the year 1990, or an estimated 15% reduction compared to what emissions might otherwise have been in 2020. CARB was authorized to develop regulations to reach this goal, and the cap -and -trade program is one of several tools designed by CARB to do so. Under the terms of the cap -and -trade program, an overall limit was set for GHG emissions from capped sectors of the state's economy, and covered facilities subject to the cap are able to trade permits, also called allowances, to emit GHGs up to the capped amount. CARB's implementation of cap -and -trade program started November 2012. The program was designed to phase in covered entities' participation over three compliance periods. The first period (calendar years 2013 and 2014) included electric distribution companies. At that time, CARB allocated allowances to Vernon for its electric utility. Vernon utilizes the proceeds from the sale of allowances not used to meet its compliance obligation exclusively for the benefit of retail electric ratepayers, and also consistent with the goals of AB-32. The City's gas utility cap -and -trade compliance obligations are distinct from those made for the electric utility. For Vernon's electric system, the Council previously approved Resolution No. 2011-184, dated November 15, 2011, to implement a surcharge for the electric system. In 2015, as the second compliance period began, the scope of the cap -and -trade program expanded such that natural gas suppliers became covered entities with a compliance obligation based on retail gas sales and transportation. As was the case with the electric utility, Vernon was given freely allocated allowances for the gas utility for the purpose of mitigating the cost impact of cap -and -trade to retail customers. A set percentage of those allowances must be sold in the open market, and the total of allowances is insufficient to cover Vernon's obligation to CARB. Consequently, Resolution 2015-12 was passed by City Council March 17, 2015, effective April 1, 2015, implementing Rate Schedule G-CARB, to begin collecting the CA Greenhouse Gas Surcharge from all Vernon gas customers. The purpose of the surcharge is to collect additional funds necessary to cover the cost of allowances sold at auction, and to purchase additional allowances necessary to meet the City's compliance requirement for 2015, and beyond. According to the rules of the CARB Cap and Trade Program, proceeds from all auction sales of Vernon's freely allocated allowances must be used for the benefit of retail gas ratepayers, may not be volumetrically refunded, and must be consistent with the goals of AB-32. The following specific language is from Section 95893, Part (d), of the Final Regulation Order (as of January 2015) issued by the California Air Resources Board. (3) Auction proceeds and allowance value obtained by a natural gas supplier shall be used exclusively for the benefit of retail ratepayers of each natural gas supplier, consistent with the goals of AB-32, and may not be used for the benefit of entities of persons other than such ratepayers. Any revenue returned to ratepayers must be done in a non -volumetric manner. (4) Public utility gas corporations shall ensure equal treatment of their procurement and delivery customer and delivery -only customers. (5) Prohibited Use of Allocated Allowance Value. Use of the value of any allowance allocated to a natural gas supplier, other than for the benefit of retail ratepayers consistent with the goals of AB-32, is prohibited. Revised July 2017 2 DRAFT Beyond the three items in the above -stated criteria, cap and trade program participants have set a precedent, also supported by CARB staff, that auction proceeds may be used for purposes within a utility entity that supports reduction of greenhouse gas emissions, but is not directly given to customers. For example, the Surprise Valley Electrification Corporation (Alturas, CA), has reported to CARB its intent to use allowance value to purchase more efficient service vehicles for its employees. Another example is payment to consultants and attorneys for advisory support associated with cap and trade.' REBATES AVAILABLE TO CUSTOMERS: Pipe Insulation: Minimum pipe diameter must be one-half inch. Pipe must transport hot water or steam directly from gas -fired equipment. A minimum of one inch of insulation must be added to the existing bare pipe. Manufacturer's specifications must be included. Pipe Insulation, Hot Water: $2 /linear foot Pipe Insulation, Steam: $3 /linear foot Tank Insulation: One or two inches of fiberglass or foam insulation must be added to existing bare liquid tanks. One -inch insulation: $2 /square foot Two-inch insulation: $3 /square foot Process Boilers: Boiler must replace an existing boiler. Application must include the manufacturer's name and model name/number for the new boiler. New boilers must have combustion test under full load conditions to document achieving the specified minimum combustion efficiency. The predefined rebates below are only for boilers with input less than or equal to 20,000 MBtuh. Larger boiler improvements may be eligible to receive rebates based on the customized rebate calculation, but must have a professional Flue Gas Analysis before, and then after, to determine the improvement in Combustion Efficiency (CE). Water Boilers: $2 /MBtuh (> 84% CE) Steam Boilers: $2/ MBtuh (> 83% CE) MBtuh = 1,000 Btu per hour. CE = 100% - Stack loss in % Steam Traps: Must replace, on a one -for -one basis, existing steam traps that fail to open. Application must include manufacturer's specification sheet for the steam trap that replaces the existing trap, as well as the invoice for the purchase. Steam Traps: $100 per trap 1 Cap -and -Trade Program, Summary of Vintage 2013 Electrical Distribution Utility Allocated Allowance Value Reports Revised July 2017 3 DRAFT Customized Rebates: Energy savings projects can be customized beyond the predefined rebates. Customized rebates may be used for equipment replacements and improvements of existing processes. The amount of a customized rebate may be the greater of $1 per each annual Therm saved, or three years of rebate contribution paid to City. The rebate contribution is a portion of the total G-CARB Surcharge. Upon request, City shall calculate the three-year contribution amount available to a customer. Customized projects require load history, performance calculations, and a detailed engineering review. City of Vernon may elect to provide technical support for projects that meet the program objectives, depending on funding available. Lease projects may qualify dependent upon the term of the lease. SPECIAL PROVISION FOR OTHER GREENHOUSE -GAS REDUCING REBATES: The first priority of funding associated with this program shall be to qualified projects that result in more efficient combustion of natural gas; however, rebate funds may also be used to support projects that reduce greenhouse gas emissions in other ways that are consistent with AB-32 and CARB guidelines. In the event funding is available and not otherwise being expended to natural gas projects, non -gas projects may be considered. The rebate amount shall be developed based on the merits of the proposed project, and shall be commensurate with surcharge contributions received from gas customers proposing non -gas projects. Beginning in 2017, staff shall promote the use of electric vehicles to its larger natural gas customers. This will be done by offering to install electric vehicle (EV) charging stations at customer locations, either using city personnel or by reimbursing customers for purchase and installation. Additionally, the City shall offer to provide rebates to customers to cover the reasonable cost of electric vehicles purchased by customers; however, as stated above, the amount paid to a customer by City shall be commensurate with portion of the surcharge contributions available for rebates received from that customer. For each electric vehicle requested, the customer must first install a new EV charging station. Additionally, beginning in 2017, customers shall be eligible for reimbursement of costs incurred for recurring boiler efficiency testing required by the South Coast Air Quality Management District (SCAQMD), or other regulatory authority as applicable. USE OF SURCHARGE FUNDS FOR INTERNAL GAS DIVISION PURPOSES CONSISTENT WITH AB-32: Beginning in 2017, the Vernon Natural Gas Division may elect to use a portion of the surcharge funds for the purchase of energy efficient fleet vehicles. These vehicles shall be fueled by natural gas or electricity, and may include charging stations as appropriate. The amount of surcharge funds spent for internal purposes shall not exceed, on average, twenty percent of the annual surcharge funds available for rebates. Revised July 2017 4 DRAFT REBATE CONDITIONS: 1. Applicant must allow City of Vernon to be involved from the beginning of the applicant's process, such that Vernon can inspect and audit the equipment to be replaced prior to it being removed. 2. Rebates are contingent upon applicant being an active customer in good standing connected to the City of Vernon gas system and paying the G-CARB surcharge. 3. Rebates are contingent upon customers obtaining the necessary permits from the City of Vernon for all work done associated with the rebate application. 4. All rebates will be paid directly to the customer of record at a given Vernon location. 5. Natural gas savings must be quantified using reasonable engineering assumptions and calculations, except for the predefined rebate categories. 6. Equipment or systems installed must be expected to operate for at least five years from the date of installation. 7. Projects that receive incentives from other sources (excluding tax -related incentives) are not eligible. 8. The maximum amount of rebate shall not exceed the total project cost. 9. Available rebate funding shall be allocated based on the timing of application acceptance and approval. 10. The maximum rebate amount is three years of rebate contribution paid to City by applicant. The rebate contribution is a portion of the total G-CARB Surcharge. Upon request, City shall calculate the three-year contribution amount available to a customer. However, Vernon may allow higher rebates on a case -by -case basis, subject to the amount of total rebate funding accumulated in the City's rebate balancing account. 11. Rebate program is not for new construction, nor is it for replacement, nor for installation where otherwise required by California Building Code or employee safety laws. PROGRAM APPLICATION AND CONFIRMATION: 1. Pre -Installation Application Applicants must submit a pre -installation application before beginning project work. (For EV charging stations, electric vehicles and boiler testing, special applications are provided). Customer initiated installations prior to City acceptance of the pre -installation application may be rejected. The pre -installation application must contain the information necessary to determine the savings or greenhouse gas benefit otherwise and shall be the basis for the rebate. Subject to availability of funds, the City reserves money for the project, pending timely completion of installation. The pre -installation application shall consist of the following: ■ Customer and project site information ■ A technical description of the project ■ Documentation of the savings estimated or greenhouse gas benefit (including an engineering calculation, as applicable) ■ New/old equipment specification (if applicable) Revised July 2017 5 DRAFT 2. Post -Installation Confirmation The post -installation confirmation shall be coordinated by the applicant after the project is installed. The confirmation shall be the basis for the actual rebate paid, and shall consist of the following. • Any changes from the pre -installation application • Documentation showing actual Therms saved or greenhouse gas benefit • Original, itemized, paid proof of purchase (sales slip or invoice) • Scheduled site visit(s) for City to verify energy efficiency equipment modifications, installations, and overall efficiency impact MARKETING: Upon modification of the program, staff will notify all customers by letter or direct email including the details of the program. Additionally, staff will make personal contact with the largest gas customers. PROGRAM ADMINISTRATION: The Natural Gas Division of Vernon Public Utilities leads program administration. The Natural Gas Division develops and distributes promotional materials, sets appointments with customers to explain the program, follows up with customers, and facilitates the application, construction, and completion process. The Customer Services Division processes the actual paper work and rebate check requests similar to the electric rebate program. Applications are anticipated at a rate of one per month maximum. As -needed rebate evaluation and audit support will be provided by IGService, which is under contract with City of Vernon for natural gas support services. A reasonable proportionate cost for each person/division supporting the program is allocated as administrative cost to the program. Revised July 2017 6 DRAFT CITY OF VERNON Natural Gas Project Rebate Program Pre -Installation Application To be eligible for rebates, this application must be submitted to the City of Vernon and approved by Vernon before beginning project work. Customer Name/Payee: Mailing Address: Installation Address in Vernon: Customer Contact: Phone: Email: I Federal Tax ID: Please describe the energy savings and/or qualifying replacement equipment of your proposed project. For customized projects please provide detailed calculations of expected Therms saved. Include attachments, as needed. ,�. __. Units Installed Rebate Rebate Amount Measure Description or Therms Saved $/Unit $ Total Rebate Requested: AGREEMENT CLAUSE: I/We agree as follows: 1) To begin the project within 90 days of initial Vernon inspection and approval and finish within one year of project commencement; 2) To allow the Vernon Public Utilities Department to conduct scheduled site visits to verify installation of the hardware specified in this application; 3) To provide the original, itemized, paid proof of purchase (sales slip or invoice) and complete a post -installation confirmation form showing actual installed equipment (as applicable); 4) Unless a written exception is provided by City of Vernon, combined gas program rebates shall not exceed three years of the rebate contribution from customer (a portion of the total surcharge, as calculated by City of Vernon) or 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 application; 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. Customer Signature: Title: Print Name: Date: Vernon Public Utilities Department Onl} Date Pre -Inspection: Inspected by: Approved by: CITY OF VERNON Natural Gas Project Rebate Program Post -Installation Confirmation This Post -Installation Confirmation is associated with Pre -Installation Application with Customer dated: Customer Name/Payee: DBA Business Name: Mailing Address: Installation Address in Vernon: Customer Contact: Phone: Email: Please describe any variations from the Pre -Installation Application: Federal Tax ID: Measure Description as Installed Units Installed or Therms Saved Rebate $/Unit Rebate Amount $ Total Rebate Requested: Attachments to be included with this form: A) Installer's statement of actual equipment installation (size and specifications) and/or finalized Therm savings computation B) Copies of manufacturer's specifications and performance data C) Original, itemized, paid proof of purchase (sales slip or invoice) Customer Signature: Title: Print Name: Date: Vernon Public Utilities Department Only Date Post -Inspection: Inspected by: Approved by: CITY OF VERNON NATURAL GAS CUSTOMER REBATE APPLICATION FOR ELECTRIC CHARGING STATIONS AND ELECTRIC VEHICLES (GREENHOUSE GAS REDUCTION CAP -AND -TRADE PROGRAM) Applicant must receive written authorization from City of Vernon before beginning EV charging installation work or purchasing an electric vehicle. In response to submission of this application, representatives from City of Vernon will contact applicant to arrange a site visit and meeting. City of Vernon will also calculate the amount of greenhouse gas surcharge funds available to applicant. Customer Name/Payee: It ' Mailing Address: Installation Address in Vernon: Customer Contact: Phone: Number of EV charging stations requested: Description of preferred location at your facility: Installation preference (circle one): Estimated installation cost, if applicant installs: Electric service preference (circle one): Email: Vernon installs Federal Tax ID: Applicant installs Additional electric service Existing electric service Type of electric vehicle(s) and estimated cost (if applicable): Applicant: Print Name: Title: Date: Please submit this application to Anthony Serrano, Customer Service Supervisor, by email to aserrano e,ci.vernon.ca.us, or by fax to 323-826-1431. CITY OF VERNON NATURAL GAS CUSTOMER REBATE APPROVAL FOR ELECTRIC CHARGING STATIONS AND ELECTRIC VEHICLES (GREENHOUSE GAS REDUCTION CAP -AND -TRADE PROGRAM) Customer Name/Payee: Installation Address in Vernon: Customer Contact: Phone: Number of EV charging stations: Description of location at customer facility: Description of approach to EV charging station installation: Approved rebate amount for EV charging station installation: $ Description of approved electric vehicle(s) (if applicable): Approved rebate amount for electric vehicle(s) (if applicable): $ Conditions: 1. Project/purchase must be complete within 90 days of approval 2. Proof of completion/purchase must be provided to receive rebate (paid invoices/pink slip/registration) 3. Applicant shall be responsible for cost of electricity for EV charging 4. Applicant agrees to install/allow for meter/submeter for EV charging 5. Applicant understands that a construction permit is required for EV charging station 6. One new EV charging station must be installed for each electric vehicle 7. Electric vehicle shall be registered in the name of the Applicant 8. Electric vehicle shall be used for business purposes in/near Vernon 9. For rebate calculations, applicable tax credits shall subtracted from paid invoices for EV 10. Applicant agrees to use vehicle for at least three years 11. Applicant agrees to allow a discreet decaling on chargers and electric vehicles "Sponsored by City of Vernon Greenhouse Gas Reduction Program," or similar Project approved by City of Vernon: Project accepted by Applicant: Date: Date: CITY OF VERNON Rebate Application for Recurring Boiler Efficiency Tests Date Customer Name/Payee: DBA Business Name: Mailing Address: Customer Contact: Federal Tax ID: Phone: Email: Boiler Information Address of Boiler: Make/Model: Btu / Hr Rating: Test Date: Test Company: Test Cost ($): AGREEMENT CLAUSE: I/We agree as follows: 1) The boiler efficiency test associated with this rebate application is required by the South Coast Air Quality Management District or other regulatory authority; 2) To allow the Vernon Public Utilities Department to conduct scheduled site visits to verify location and operating status of the boiler tested; 3) To attach the original, itemized, paid invoice; 4) Unless a written exception is provided by City of Vernon, combined gas rebates awarded customer shall not exceed three years of the rebate contribution from customer (a portion of the total surcharge, as calculated by City of Vernon), or the paid invoice, whichever is less; 5) Rebates are subject to availability of funds; 6) That the City of Vernon may withhold payment of any rebate until satisfaction of any and all of the above listed conditions are met. Customer Signature: Print Name: Vernon Public Utilities Department Only Verified by: Approved by: Title: Date: STAFF REPORT RECEIVED 'JUL 2 7 2017 CITY CLERK'S OFFICE STAFF REPORT RECEIVED JUL 2 4 2017 CITY ADMINISTRATION 0� -� -2.3 - t --7 PUBLIC UTILITIES DEPARTMENT DATE: August 1, 2017 TO: Honorable Mayor and City Council FROM: Kelly Nguyen, General Manager of Public UtilitieW-/ RE: A Resolution Approving and Adopting an Amended Natural Gas Rebate Program for Customers Connected to the City's Gas Distribution System and Repealing all Resolutions in Conflict Therewith Recommendation A. Find that adopting the proposed resolution is exempt under the California Environmental Quality Act ("CEQA"), because it is an administrative activity that will not result in direct or indirect physical changes in the environment, and therefore does not constitute a "project" as defined by CEQA Guidelines section 15378; and even if it were considered to be a "project," the activity would be categorically exempt from CEQA review under CEQA Guidelines section 15307, because it is an action taken by a regulatory agency, as authorized by state law, to assure the "maintenance, restoration, or enhancement" of natural resources and includes procedures to protect the environment; and B. Adopt a resolution approving and adopting an amended natural gas rebate program for customers connected to the City's gas distribution system and repealing all resolutions in conflict therewith. Background The City Council approved the original natural gas rebate program by Resolution 2015-54, effective August 4, 2015. The original program is directed only at improvements in natural gas efficiency. To date, one $100,000 rebate has been issued for a large boiler conversion, whereas by the end of 2017, the natural gas rebate fund balance will exceed $1,000,000, and will continue growing if the rebate program is not amended. Consequently, the program needs to be amended to attract participation. Therefore, staff is requesting the approval and adoption of an amended Page 1 of 2 natural gas rebate program for customers connected to the City's gas distribution system and repealing all resolutions in conflict therewith. Amended Rebate Proeram for Natural Gas Customers After consultation with the California Air Resources Board (CARB) and meeting with a few of Vernon's largest gas customers, staff recommends amending the natural gas customer rebate program to include electric vehicle (EV) charging stations and electric vehicles. Rebates for electric vehicles meet the requirements of CARB regarding greenhouse gas reduction, and the customers express a clear interest in EV charging and electric vehicles too. The proposed EV program will contribute funding for a gas customer up to the amount of surcharge the customer has contributed that is available for energy efficiency over a three-year period. This amount will be calculated for each customer as interest is expressed. Rebates for natural gas projects are proposed to be treated similarly going forward. Previously the rebate limit was $1 per annual therm reduced, up to 50 percent of the project cost. Now the rebate can reach 100 percent of project cost, but not exceed the three-year contribution amount. The amended program will reimburse for the installation of EV charging. Staff is also evaluating using a combination of Vernon and Petrelli personnel to do installations as a service to customers, potentially more cost effectively. Once installed, customers will be responsible for the ongoing electric costs of charging. When adequate funding is available to a customer, the cost of electric vehicles can also be reimbursed by the City; however, one EV charging station must be installed first before funding will be made available for an electric vehicle. Terms and conditions apply, and are shown in the EV Approval Form attached to this report. The amended program also provides for rebates to customers for the recurring cost of boiler efficiency testing, as the result of the efficiency test can result in lower greenhouse gas emissions. Finally, the amended program provides for purchase of clean -air vehicles for use within the City's Gas Division. This, also, was verified with CARB as acceptable to meet program requirements. Language is included limiting department use to 20 percent of annual funds available for the rebate program. Fiscal Impact The fiscal impact of the amended natural gas rebate program will be within the natural gas enterprise only, and specifically, within the accounting for the CARB cap -and -trade program. The intent is to reduce the amount of funds accumulating that are required to be spent in support of the CARB program. Attachment (s) 1. Proposed Resolution 2. Redlined Natural Gas Rebate Program Page 2 of 2 CITY OF VERNON NATURAL GAS REBATE PROGRAM PROGRAM DESCRIPTION: T#+sThe purpose of this natural gas pfejectcustomer rebate' Formatted: Justified program is fnteaded to encourage the reduction of greenhouse gas emissions- primarily by reducing natural pas consumption, but also by implementing other measures that are consistent with the goals of Assembly Bill 32 (AB-32). This can be accomplished by upgrading to high efficiency equipment, but also by an operational change that requires some investment. The City shall be open to any project or process change that can ^^.r o,zasereduce greenhouse gases, and may include the City investing in its own natural gas effisieRa y-infrastructure. The City shall also engage with customers to promote projects that qualify. The program will beis administered through4#e Vernon's natural gas and t#e customer service depaFtmeatsdivisions. POLICY STATEMENT: The City of Vernon shall allocate revenues to a natural gas rebate program derived from the CA Greenhouse Gas Surcharge approved in Resolution 2015-12, dated March 17, 2015, and effective April 1, 2015. These revenues are from the sale of "freely allocated greenhouse gas allowances," less the reasonable cost to administer the program. Rebates shall be allocated in a fair and equitable manner, and consistent with Amy 8101-AB-32 such that funds provided to customers verifiably reduce greenhouse gas emissions to the atmosphere. PROGRAM FUNDING: Funding for this gas rebate program is exclusively from greenhouse gas allowances sold at each of the California Air Resource Board (CARB) cap -and -trade auctions. However, allowances sold must be replaced to fulfill the City's allowance requirement. Accordingly, the cost of all allowances purchased is covered by Vernon's gas customers through the CA Greenhouse Gas Surcharge on monthly natural gas billing statements effective April 1, 2015. $349,000 a#eFthe fiF6t 42 menths. Administrative costs aFe expeGted to h^shall remain 15 percent or less, which will-iasledeincludes the cost of rebate evaluation to customers, third -party verification when needed, and marketing of the program. PROGRAM OBJECTIVES: The objectives of the gas rebate program are to: • Support the statewide goal of reducing greenhouse gas emissions • Provide proceeds from the sale of freely allocated greenhouse gas allowances to Vernon gas customers for the purpose of reducing greenhouse gas emissions • Actively promote the program to gas customers in an equitable manner • Design rebates such that rebate dollars are in proportion to benefit gained • Provide support to customers to facilitate qualifying projects, including application and verification • Maintain a reasonable cost to administer the program Formatted: Font: Arial Formatted: Font: Arial Revised July 2017 1 Formatted: Font: Not Bold Formatted: Font: Arial Formatted: Font: Arial Revised July 2017 DRAFT BACKGROUND: The California Global Warming Solution Act of 2006, also known as Assembly Bill 32, requires that California Greenhouse Gas (GHG) emissions in 2020 be at the same levels as that of the year 1990, or an estimated 15% reduction compared to what emissions might otherwise have been in 2020. CARB was authorized to develop regulations to reach this goal, and the cap -and -trade program is one of several tools designed by CARB to do so. Under the terms of the cap -and -trade program, an overall limit eawas set for GHG emissions from capped sectors of the state's economy set, and covered facilities subject to the cap are able to trade permits, eFalso called allowances, to emit GHGs up to the capped amount. CARB's implementation of cap -and -trade program started November 2012. The program was designed to phase in covered entities' participation over three compliance periods. The first period (calendar years 2013 and 2014) included electric distribution companies. At that time, CARB-has teely allocated allowances to Vernon for its electric utility. Vernon utilizes the proceeds from the sale of af►y-allowances not used to meet its compliance obligation exclusively for the benefit of retail electric ratepayers, and also consistent with the goals of AB _32. The City's gas utility cap -and -trade compliance obligations are distinct from those made for the electric utility. For Vernon's electric system, the Council previously approved Resolution No. 2011-184, dated November 15, 2011, to implement a surcharge for the electric system. In 2015, as the second compliance period has be y4nktgan, the scope of the cap -and -trade program has expanded such that natural gas suppliers have-beeeFAebecame covered entities with a compliance obligation based on retail gas sales and transportation. As was the case with the electric utility, Vernon nas4)eeawas given freely allocated allowances for the gas utility for the purpose of mitigating the cost impact of cap -and -trade to retail customers. A set percentage of those allowances must be sold in the open market, and the total of allowances is insufficient to cover Vernon's obligation to CARB. Consequently, Resolution 2015-12 was passed by City Council March 17, 2015, effective April 1, 2015, implementing Rate Schedule G-CARB, to begin collecting the CA Greenhouse Gas Surcharge from all Vernon gas customers. The purpose of the surcharge is to collect additional funds necessary to cover the cost of allowances sold at auction, and alseto purchase additional allowances necessary to meet the City's compliance requirement for 2015, and beyond. P-FeseedsAccording to the rules of the CARB Cap and Trade Program, proceeds from all auction sales of Vernon's freely allocated allowances must be used for the benefit of retail gas ratepayers, may not be volumetrically refunded, and must be consistent with the goals of AB _32. The following specific language is from Section 95893, Part (d), of the Final Regulation Order (as of January 2015) issued by the California Air Resources Board. (3) Auction proceeds and allowance value obtained by a natural gas supplier shall be used exclusively for the benefit of retail ratepayers of each natural gas supplier, consistent with the goals of AB-32, and may not be used for the benefit of entities of persons other than such ratepayers. Any revenue returned to ratepayers must be done in a non -volumetric manner. (4) Public utility gas corporations shall ensure equal treatment of their procurement and delivery customer and delivery -only customers. Formatted: Font: Arial Formatted: Font: Arial Revised July 2017 3 DRAFT (5) Prohibited Use of Allocated Allowance Value. Use of the value of any allowance allocated to a natural gas supplier, other than for the benefit of retail ratepayers consistent with the goals of AB-_32, is prohibited. Beyond the three items in the above -stated criteria cap and trade program participants have set a precedent also supported by CARB staff, that auction proceeds may be used for purposes within a utility entity that supports reduction of greenhouse gas emissions, but is not directly given to customers. For example the Surprise Valley Electrification Corporation (Alturas, CA), has reported to CARB its intent to use allowance value to purchase more efficient service vehicles for its employees. Another example is payment to consultants and attorneys for advisory support associated with cap and trade.' REBATES AVAILABLE TO CUSTOMERS: Pipe Insulation: Minimum pipe diameter must be one-half inch. Pipe must transport hot water or steam directly from gas -fired equipment. A minimum of one inch of insulation must be added to the existing bare pipe. Manufacturer's specifications must be included. Pipe Insulation, Hot Water: $2 /linear foot Pipe Insulation, Steam: $3 /linear foot Tank Insulation: One or two inches of fiberglass or foam insulation must be added to existing bare liquid tanks. One -inch insulation: $2 /square foot Two-inch insulation: $3 /square foot Process Boilers: Boiler must replace an existing boiler. Application must include the manufacturer's name and model name/number for the new boiler. New boilers must have combustion test under full load conditions to document achieving the specified minimum combustion efficiency. The predefined rebates below are only for boilers with input less than or equal to 20,000 MBtuh. Larger boiler improvements may be eligible to receive rebates based on the customized rebate calculation, but must have a professional Flue Gas Analysis before, and then after, to determine the improvement in Combustion Efficiency (CE). Water Boilers: $2 /MBtuh (> 84% CE) Steam Boilers: $2/ MBtuh (> 83% CE) MBtuh = 1,000 Btu per hour. CE = 100% - Stack loss in % 1 Cap -and -Trade Program Summary of Vintage 2013 Electrical Distribution Utility Allocated Allowance Value Reports Revised July 2017 4 Formatted: Justified Formatted: Font: Arial i Formatted: Font: Arial Steam Traps: Must replace, on a one -for -one basis, existing steam traps that fail to open. Application must include manufacturer's specification sheet for the steam trap that replaces the existing trap, as well as the invoice for the purchase. Steam Traps: $100 per trap Customized Rebates: Energy savings projects can be customized beyond the predefined rebates. Customized rebates may be used for equipment replacements and improvements of existing processes. Customized Rebate� $1 pereaGh annual Therm saved The amount of a- Formatted: Justified, Indent: Left: 0.5", First line: 0" customized rebate may be the greater of $1 per each annual Therm saved, or three years of rebate contribution paid to City. The rebate contribution is a portion of the total G-CARB Surcharge. Upon request. City shall calculate the three-year contribution amount available to a customer. Customized projects require load history, performance calculations, and a detailed Formatted: Justified engineering review. City of Vernon may elect to provide technical support for projects that meet the program objectives, depending on funding available. Lease projects may qualify dependent upon the term of the lease. SPECIAL PROVISION FOR OTHER GREENHOUSE -GAS REDUCING REBATES: The first priority of funding associated with this program shall be to qualified projects that result in - more efficient combustion of natural gas; however, rebate funds may also be used to support projects that reduce greenhouse gas emissions in other ways that are consistent with AB 32and GARB guideliRe& The Rebate GGRd tiGR6 below apply, eXGept the rebate will be based direGtly GARB. 32 and CARB guidelines. In the event funding is available and not otherwise being expended to natural gas projects, non -gas projects may be considered. The rebate amount shall be developed based on the merits of the proposed project, and shall be 4evelcommensurate with Febate levels oth^^vise fGF GHsWR4zea surcharge contributions received from gas customers proposing non -gas projects., Beginning in 2017 staff shall promote the use of electric vehicles to its larger natural gas customers This will be done by offering to install electric vehicle (EV) charging stations at customer locations either using city personnel or by reimbursing customers for purchase and installation. Additionally, the City shall offer to provide rebates to customers to cover the reasonable cost of electric vehicles purchased by customers however, as stated above. the amount paid to a customer by City shall be commensurate with portion of the surcharge contributions available for rebates received from that customer. For each electric vehicle requested the customer must first install a new EV charging station. Additionally, beginning in 2017 customers shall be eligible for reimbursement of costs incurred for recurring boiler efficiency testing required by the South Coast Air Quality Management District (SCAQMD) or other regulatory authority as applicable. Revised July 2017 5 Formatted: Justified, Indent: Left: 0" Formatted: Font: Not Bold Formatted: Justified Formatted: Font: Arial i �j Formatted: Font: Arial USE OF SURCHARGE FUNDS FOR INTERNAL GAS DEPARTME- TDIVISION PURPOSES CONSISTENT WITH AB-32: Beginning in 2017 the Vernon Natural Gas Division may elect to use a portion of the surcharge funds for the purchase of energy efficient fleet vehicles. These vehicles shall be fueled by natural gas or electricity, and may include charging stations as appropriate. The amount of surcharge funds spent for internal purposes shall not exceed. on average, twenty percent of the annual surcharge funds available for rebates. Formatted: Space After: 8 pt Formatted: Font: Not Bold Formatted: Font: Arial Formatted: Font: Arial i� Revised July 2017 6 DRAFT REBATE CONDITIONS: 1. Applicant must allow City of Vernon to be involved from the beginning of the applicant's process, such that Vernon can inspect and audit the equipment to be replaced prior to it being removed. 2. Rebates are contingent upon applicant being an active customer in good standing connected to the City of Vernon gas system and paying the G-CARB surcharge. 3. Rebates are contingent upon customers obtaining the necessary permits from the City of Vernon for all work done associated with the rebate application. 4. All rebates will be paid directly to the customer of record at a given Vernon location. 5. Natural gas savings must be quantified using reasonable engineering assumptions and calculations, except for the predefined rebate categories. 6. Equipment or systems installed must be expected to operate for at least five years from the date of installation. 7. Projects that receive incentives from other sources (excluding tax -related incentives) are not eligible. 8. The maximum amount of rebate shall not exceed fifty Pe;seRt�F the total project cost everall. 9. Available rebate funding shall be allocated based on the timing of application acceptance and approval. 10. The maximum rebate amount is 4eweverthree years of rebate contribution paid to City by applicant. The rebate contribution is a portion of the total G-GARB Surcharge. Upon request City shall calculate the three-year contribution amount available to a customer. However Vernon may allow higher rebates on a case -by -case basis, subject to the amount of total rebate funding accumulated in the City's rebate balancing account. 11. Rebate program is not for new construction, nor is it for replacement, nor for installation where otherwise required by California Building Code or employee safety laws. PROGRAM APPLICATION AND CONFIRMATION: 1. Pre -Installation Application Applicants must submit a pre -installation application before beginning project work. LfLor- EV charging stations electric vehicles and boiler testing special applications are provided). Customer initiated installations prior to City acceptance of the pre -installation application may be rejected. The pre -installation application must contain the information necessary to determine the savings or greenhouse gas benefit otherwise and shall be the basis for the rebate. Subject to availability of funds, the City reserves money for the project, pending timely completion of installation. The pre -installation application shall consist of the following: ■ Customer and project site information ■ A technical description of the project ■ Documentation of the savings estimated (or greenhouse gas benefit (including an engineering calculation, as applicable) ■ New/old equipment specification (if applicable) Revised July 2017 7 Formatted: Justified Formatted: Justified Formatted: Justified, Indent: Left: 0.25" Formatted: Space After: 0 pt Formatted: Left, Indent: Left: 0.75" Formatted: Font: Arial Formatted: Font: Anal 2. Post -Installation Confirmation Formatted: Justified, Indent: Left: 0.25" The post -installation confirmation shall be coordinated by the applicant after the project is4 Formatted: Justified installed. The confirmation shall be the basis for the actual rebate paid, and shall consist of the following. • Any changes from the pre -installation application • Documentation showing actual Therms saved or greenhouse gas benefit • Original, itemized, paid proof of purchase (sales slip or invoice) • Scheduled site visit(s) for City to verify energy efficiency equipment modifications, installations, and overall efficiency impact Formatted: Justified MARKETING: Upon appfaualmodification of the program, staff will notify all customers by letter or direct email including the details of the program. Additionally, staff will make personal contact with the largest gas customers. PROGRAM ADMINISTRATION: , Formatted: Justified The Natural Gas Division of Vernon Public Utilities leads program administration. The Natural Gas Division will be FesPGRGible feF evelops and distr++t+ngdistributes promotional materials, se#fagsets appointments with customers to explain the program, fe#lewiagfollows up with customers, and €asilitat♦agfacilitates the application, construction, and completion process. The Customer Services Division will pFe �assprocesses the actual paper work and rebate check requests similar to the electric rebate program. The c...i of time Feqi by GidstOmor Applications are anticipated at a rate of one per month, FR Gh Iran maximum. As -needed rebate evaluation and audit support will be provided by IGService, a4ea4ywhich is under contract with City of Vernon for natural gas support services. A reasonable proportionate cost for each person/depai ivision supporting the program wlll beis allocated as administrative cost to the program. Formatted: Font: Arial Formatted: Font: Arial Revised July 2017 8 nan�r , CITY OF VERNON Natural Gas Project Rebate Program Pre -Installation Application To be eligible for rebates, this application must be submitted to the City of Vernon and approved by Vernon before beginning aroiect work. Customer Name/Payee: Mailing Address: Installation Address in Vernon: Customer Contact: Phone: Email: Federal Tax ID: Please describe the energy savings and/or qualifying replacement equipment of your proposed project. For customized projects please provide detailed calculations of expected Therms saved. Include attachments, as needed. Measure Description Units Installed or Therms Saved �Rebate $/Unit Rebate Amount $ Total Rebate Requested: AGREEMENT CLAUSE: I/We agree as follows: 1) To begin the project within 90 days of initial Vernon inspection and approval and finish within one year of project commencement; 2) To allow the Vernon Public Utilities Department to conduct scheduled site visits to verify installation of the hardware specified in this application; 3) To provide the original, itemized, paid proof of purchase (sales slip or invoice) and complete a post -installation confirmation form showing actual installed equipment (as applicable); 4) Unless a written exception is provided by City of Vernon, this-FAate skell combined gas program rebates shall not exceed three years of the rebate contribution from customer (a portion of the total surcharge. as calculated by City of Vernon) or 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 application; 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. Customer Signature: Title: Print Name: Date: Vernon Public Utilities Department Only Date Pre -Inspection: Inspected by: Approved by: CITY OF VERNON Natural Gas Project Rebate Program Post -Installation Confirmation This Post -Installation Confirmation is associated with Pre -Installation Application with Customer dated: Customer Name/Payee: DBA Business Name: Mailing Address: Installation Address in Vernon: Customer Contact: Phone: Email: Please describe any variations from the Pre -Installation Application: Federal Tax ID: Measure Description as Installed Units Installed or Therms Saved Rebate $/Unit Rebate Amount $ Total Rebate Requested: Attachments to be included with this form: A) Installer's statement of actual equipment installation (size and specifications) and/or finalized Therm savings computation B) Copies of manufacturer's specifications and performance data C) Original, itemized, paid proof of purchase (sales slip or invoice) Customer Signature: Title: Print Name: Date: Vernon Public Utilities Department Only Date Post -Inspection: Inspected by: Approved by: CITY OF VERNON NATURAL GAS CUSTOMER REBATE APPLICATION FOR ELECTRIC CHARGING STATIONS AND ELECTRIC VEHICLES 4%�Ww (GREENHOUSE GAS REDUCTION CAP -AND -TRADE PROGRAM) Applicant must receive written authorization from City of Vernon before beginning EV chargin i llati work or purchasing an electric vehicle. In response to submission of this application, representatives om Ci Vernon will contact applicant to arrange a site visit and meeting. City of Vernon will also calculate the greenhouse gas surcharge funds available to applicant. Customer Name/Payee: Mailing Address: Installation Addre: Customer Contact; Phone Number of EV chi Description of preferred Installation facility: Estimated instajjgLio%gos# if applicant installs: Electric s^ic1pregIrence (circle one): Applicant: Vernon installs Applicant installs Additional electric service Existing electric service s) and estimated cost (if applicable): Title: Print Name: Date: Please submit this application to Anthony Serrano, Customer Service Supervisor, by email to aserranokci.vernon.ca.us, or by fax to 323-826-1431. CITY OF VERNON NATURAL GAS CUSTOMER REBATE APPROVAL FOR ELECTRIC CHARGING STATIONS AND ELECTRIC VEHICLES (GREENHOUSE GAS REDUCTION CAP -AND -TRADE PROGRAM) Customer Name/Payee: Installation Address in Vernon: Customer Contact: Phone: Number of EV charging stations: Description of location at cust er Description of approach to EV charging station installation: A0 Approved rebate amount for EV charging station installation: $ Description of approved electric vehicle(s) (if applicable): Approved rebate amount for electric vehicle(s f li le): $ Conditions: 1. Project/purchase must be complete wit 90 days of approval 2. Proof of completion/purc se mufbe provided to receive rebate (paid invoices/pink slip/registration) 3. Applicant shall be resp si a for cost of electricity for EV charging 4. Applicant agrees to ' to llo for meter/submeter for EV charging 5. Applicant under s t onstruction permit is required for EV charging station 6. One new EV c g s n must be installed for each electric vehicle 7. Electric vehicle 11 registered in the name of the Applicant 8. Electric cle s a e used for business purposes in/near Vernon 9For re a ions, applicable tax credits shall subtracted from paid invoices for EV 16. Ap ant e s to use vehicle for at least three years 11. lic ees to allow a discreet decaling on chargers and electric vehicles "Sponsored by City of Vernon h se Gas Reduction Program," or similar Pro „ proved by City of Vernon: Date: Project accepted by Applicant: Date: o� Date: Customer Name/Payee: DBA Business Name: Mailing Address: Customer Contact: Phone: CITY OF VERNON Rebate Application for Recurring Boiler Efficiency Tests Email: Federal Tax ID: Boiler Information 1 -40 Address of Boiler: Make/Model: Btu / Hr Rating: Test Date: Test Company: Test Cost ($): AGREEMENT CLAUSE: I/We a foil s: 1) The boiler efficiency test associat wl s rebate application is required by the South Coast Air Quality Management District or other regulatory authority; 2) To allow the V ities Department to conduct scheduled site visits to verify location and operating status of the boiler tested; 3) To attach the original, - ize aid invoice; 4) Unless a written exception is provided by City of Vernon, combined gas rebates awarded customer shall not exceed three years a ate contribution from customer (a portion of the total surcharge, as calculated by City of Vernon), or the paid invoice, whichever ' less; 5 ates are subject to availability of funds; 6) That the City of Vernon may withhold payment of any rebate until satisfaction of an an of above listed conditions are met. Custom ' na Title: m ame: Date: Vernon Public Utilities Department Only Verified by: Approved by: RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND ADOPTING AN AMENDED NATURAL GAS REBATE PROGRAM FOR CUSTOMERS CONNECTED TO THE CITY'S GAS DISTRIBUTION SYSTEM AND REPEALING ALL RESOLUTIONS IN CONFLICT THEREWITH WHEREAS, the city of Vernon ("City") owns and operates a municipal natural gas distribution system for supplying the City's municipal electric system with natural gas and providing natural gas to businesses and industries within the City; and WHEREAS, the California Global Warming Solution Act of 2006, also known as Assembly Bill 32 ("AB 32"), requires that California Greenhouse Gas ("GHG") emissions in 2020 be at the same levels as in 1990; and WHEREAS, on March 17, 2015, the City Council of the City of Vernon adopted Resolution No. 2015-12, approving, establishing, and implementing a natural gas surcharge to fund participation in the California Air Resources Board ("CARB") cap -and -trade allowance program, for gas distributed and supplied by the City within its boundaries; and WHEREAS, on August 4, 2015, the City Council of the City of Vernon adopted Resolution 2015-54, approving and adopting the natural gas rebate program for customers connected to the City's distribution system to support energy efficiency consistent with AB 32; and WHEREAS, by memorandum dated July 18, 2017, the General Manager of Public Utilities has recommended the approval and adoption of an amended natural gas rebate program to include installation of electric vehicle charging stations, electric vehicles, and rebates for boiler efficiency testing; and WHEREAS, the City Council desires to adopt the amended natural gas rebate program. 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 above recitals are true and correct. SECTION 2: The City Council of the City of Vernon finds that this action is exempt under the California Environmental Quality Act(CEQA), because it is an administrative activity that will not result in direct or indirect physical changes in the environment, and therefore does not constitute a "project" as defined by CEQA Guidelines section 15378; and even if it were considered to be a "project," the activity would be categorically exempt from CEQA review under CEQA Guidelines section 15307, because it is an action taken by a regulatory agency, as authorized by state law, to assure the "maintenance, restoration, or enhancement" of natural resources and includes procedures to protect the environment. SECTION 3: The City Council of the City of Vernon hereby approves and adopts the amended Natural Gas Rebate Program ("Program"), a copy of which is attached hereto as Exhibit A. SECTION 4: The City Council of the City of Vernon hereby instructs the City Administrator, or his designee, to take whatever actions are deemed necessary or desirable for the purpose of implementing and carrying out the purposes of this Resolution and the transactions herein approved or authorized, including but not limited to, any non -substantive change to the Program attached hereto. SECTION 5: All resolutions or parts of resolutions, specifically Resolution No. 2015-54, not consistent with or in conflict - 2 - with this resolution are hereby repealed. SECTION 6: The City clerk, or Deputy City Clerk, of the City of Vernon shall certify to the passage, approval and adoption of this Resolution, and the city Clerk, or Deputy City Clerk, of the City of Vernon shall cause this Resolution and the City Clerk's, or Deputy City Clerk's, certification to be entered in the File of Resolutions of the Council of this City. APPROVED AND ADOPTED this ist day of August, 2017. ATTEST: City Clerk / Deputy City Clerk APPROVED AS TO FORM: Brian B n, Deep V City Attorney Name: Title: Mayor / Mayor Pro-Tem - 3 - STATE OF CALIFORNIA COUNTY OF LOS ANGELES I, ss , City Clerk / Deputy City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. , was duly passed, approved and adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Tuesday, August 1, 2017, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this day of August, 2017, at Vernon, California. (SEAL) City Clerk / Deputy City Clerk - 4 - EXHIBIT A CITY OF VERNON NATURAL GAS REBATE PROGRAM PROGRAM DESCRIPTION: The purpose of this natural gas customer rebate program is to encourage the reduction of greenhouse gas emissions, primarily by reducing natural gas consumption, but also by implementing other measures that are consistent with the goals of Assembly Bill 32 (AB-32). This can be accomplished by upgrading to high efficiency equipment, but also by an operational change that requires some investment. The City shall be open to any project or process change that can reduce greenhouse gases, and may include the City investing in its own natural gas infrastructure. The City shall also engage with customers to promote projects that qualify. The program is administered through Vernon's natural gas and customer service divisions. POLICY STATEMENT: The City of Vernon shall allocate revenues to a natural gas rebate program derived from the CA Greenhouse Gas Surcharge approved in Resolution 2015-12, dated March 17, 2015, and effective April 1, 2015. These revenues are from the sale of "freely allocated greenhouse gas allowances," less the reasonable cost to administer the program. Rebates shall be allocated in a fair and equitable manner, and consistent with AB-32 such that funds provided to customers verifiably reduce greenhouse gas emissions to the atmosphere. PROGRAM FUNDING: Funding for this gas rebate program is exclusively from greenhouse gas allowances sold at each of the California Air Resource Board (CARB) cap -and -trade auctions. However, allowances sold must be replaced to fulfill the City's allowance requirement. Accordingly, the cost of all allowances purchased is covered by Vernon's gas customers through the CA Greenhouse Gas Surcharge on monthly natural gas billing statements effective April 1, 2015. Administrative costs shall remain 15 percent or less, which includes the cost of rebate evaluation to customers, third -party verification when needed, and marketing of the program. PROGRAM OBJECTIVES: The objectives of the gas rebate program are to: • Support the statewide goal of reducing greenhouse gas emissions • Provide proceeds from the sale of freely allocated greenhouse gas allowances to Vernon gas customers for the purpose of reducing greenhouse gas emissions • Actively promote the program to gas customers in an equitable manner • Design rebates such that rebate dollars are in proportion to benefit gained • Provide support to customers to facilitate qualifying projects, including application and verification • Maintain a reasonable cost to administer the program Revised July 2017 1 DRAFT BACKGROUND: The California Global Warming Solution Act of 2006, also known as Assembly Bill 32, requires that California Greenhouse Gas (GHG) emissions in 2020 be at the same levels as that of the year 1990, or an estimated 15% reduction compared to what emissions might otherwise have been in 2020. CARB was authorized to develop regulations to reach this goal, and the cap -and -trade program is one of several tools designed by CARB to do so. Under the terms of the cap -and -trade program, an overall limit was set for GHG emissions from capped sectors of the state's economy, and covered facilities subject to the cap are able to trade permits, also called allowances, to emit GHGs up to the capped amount. CARB's implementation of cap -and -trade program started November 2012. The program was designed to phase in covered entities' participation over three compliance periods. The first period (calendar years 2013 and 2014) included electric distribution companies. At that time, CARB allocated allowances to Vernon for its electric utility. Vernon utilizes the proceeds from the sale of allowances not used to meet its compliance obligation exclusively for the benefit of retail electric ratepayers, and also consistent with the goals of AB-32. The City's gas utility cap -and -trade compliance obligations are distinct from those made for the electric utility. For Vernon's electric system, the Council previously approved Resolution No. 2011-184, dated November 15, 2011. to implement a surcharge for the electric system. In 2015, as the second compliance period began, the scope of the cap -and -trade program expanded such that natural gas suppliers became covered entities with a compliance obligation based on retail gas sales and transportation. As was the case with the electric utility, Vernon was given freely allocated allowances for the gas utility for the purpose of mitigating the cost impact of cap -and -trade to retail customers. A set percentage of those allowances must be sold in the open market, and the total of allowances is insufficient to cover Vernon's obligation to CARB. Consequently, Resolution 2015-12 was passed by City Council March 17, 2015, effective April 1, 2015, implementing Rate Schedule G-CARB, to begin collecting the CA Greenhouse Gas Surcharge from all Vernon gas customers. The purpose of the surcharge is to collect additional funds necessary to cover the cost of allowances sold at auction, and to purchase additional allowances necessary to meet the City's compliance requirement for 2015, and beyond. According to the rules of the CARB Cap and Trade Program, proceeds from all auction sales of Vernon's freely allocated allowances must be used for the benefit of retail gas ratepayers, may not be volumetrically refunded, and must be consistent with the goals of AB-32. The following specific language is from Section 95893, Part (d), of the Final Regulation Order (as of January 2015) issued by the California Air Resources Board. (3) Auction proceeds and allowance value obtained by a natural gas supplier shall be used exclusively for the benefit of retail ratepayers of each natural gas supplier, consistent with the goals of AB-32, and may not be used for the benefit of entities of persons other than such ratepayers. Any revenue returned to ratepayers must be done in a non -volumetric manner. (4) Public utility gas corporations shall ensure equal treatment of their procurement and delivery customer and delivery -only customers. (5) Prohibited Use of Allocated Allowance Value. Use of the value of any allowance allocated to a natural gas supplier, other than for the benefit of retail ratepayers consistent with the goals of AB-32, is prohibited. Revised July 2017 2 DRAFT Beyond the three items in the above -stated criteria, cap and trade program participants have set a precedent, also supported by CARB staff, that auction proceeds may be used for purposes within a utility entity that supports reduction of greenhouse gas emissions, but is not directly given to customers. For example, the Surprise Valley Electrification Corporation (Alturas, CA), has reported to CARB its intent to use allowance value to purchase more efficient service vehicles for its employees. Another example is payment to consultants and attorneys for advisory support associated with cap and trade.' REBATES AVAILABLE TO CUSTOMERS: Pipe Insulation: Minimum pipe diameter must be one-half inch. Pipe must transport hot water or steam directly from gas -fired equipment. A minimum of one inch of insulation must be added to the existing bare pipe. Manufacturer's specifications must be included. Pipe Insulation, Hot Water: $2 /linear foot Pipe Insulation, Steam: $3 /linear foot Tank Insulation: One or two inches of fiberglass or foam insulation must be added to existing bare liquid tanks. One -inch insulation: $2 /square foot Two-inch insulation: $3 /square foot Process Boilers: Boiler must replace an existing boiler. Application must include the manufacturer's name and model name/number for the new boiler. New boilers must have combustion test under full load conditions to document achieving the specified minimum combustion efficiency. The predefined rebates below are only for boilers with input less than or equal to 20,000 MBtuh. Larger boiler improvements may be eligible to receive rebates based on the customized rebate calculation, but must have a professional Flue Gas Analysis before, and then after, to determine the improvement in Combustion Efficiency (CE). Water Boilers: $2 /MBtuh (> 84% CE) Steam Boilers: $2/ MBtuh (> 83% CE) MBtuh = 1,000 Btu per hour. CE = 100% - Stack loss in % Steam Traps: Must replace, on a one -for -one basis, existing steam traps that fail to open. Application must include manufacturer's specification sheet for the steam trap that replaces the existing trap, as well as the invoice for the purchase. Steam Traps: $100 per trap ' Cap -and -Trade Program, Summary of Vintage 2013 Electrical Distribution Utility Allocated Allowance Value Reports Revised July 2017 3 DRAFT Customized Rebates: Energy savings projects can be customized beyond the predefined rebates. Customized rebates may be used for equipment replacements and improvements of existing processes. The amount of a customized rebate may be the greater of $1 per each annual Therm saved, or three years of rebate contribution paid to City. The rebate contribution is a portion of the total G-CARB Surcharge. Upon request, City shall calculate the three-year contribution amount available to a customer. Customized projects require load history, performance calculations, and a detailed engineering review. City of Vernon may elect to provide technical support for projects that meet the program objectives, depending on funding available. Lease projects may qualify dependent upon the term of the lease. SPECIAL PROVISION FOR OTHER GREENHOUSE -GAS REDUCING REBATES: The first priority of funding associated with this program shall be to qualified projects that result in more efficient combustion of natural gas; however, rebate funds may also be used to support projects that reduce greenhouse gas emissions in other ways that are consistent with AB-32 and CARB guidelines. In the event funding is available and not otherwise being expended to natural gas projects, non -gas projects may be considered. The rebate amount shall be developed based on the merits of the proposed project, and shall be commensurate with surcharge contributions received from gas customers proposing non -gas projects. Beginning in 2017, staff shall promote the use of electric vehicles to its larger natural gas customers. This will be done by offering to install electric vehicle (EV) charging stations at customer locations, either using city personnel or by reimbursing customers for purchase and installation. Additionally, the City shall offer to provide rebates to customers to cover the reasonable cost of electric vehicles purchased by customers; however, as stated above, the amount paid to a customer by City shall be commensurate with portion of the surcharge contributions available for rebates received from that customer. For each electric vehicle requested, the customer must first install a new EV charging station. Additionally, beginning in 2017, customers shall be eligible for reimbursement of costs incurred for recurring boiler efficiency testing required by the South Coast Air Quality Management District (SCAQMD), or other regulatory authority as applicable. USE OF SURCHARGE FUNDS FOR INTERNAL GAS DIVISION PURPOSES CONSISTENT WITH AB-32: Beginning in 2017, the Vernon Natural Gas Division may elect to use a portion of the surcharge funds for the purchase of energy efficient fleet vehicles. These vehicles shall be fueled by natural gas or electricity, and may include charging stations as appropriate. The amount of surcharge funds spent for internal purposes shall not exceed, on average, twenty percent of the annual surcharge funds available for rebates. Revised July 2017 4 DRAFT REBATE CONDITIONS: 1. Applicant must allow City of Vernon to be involved from the beginning of the applicant's process, such that Vernon can inspect and audit the equipment to be replaced prior to it being removed. 2. Rebates are contingent upon applicant being an active customer in good standing connected to the City of Vernon gas system and paying the G-CARB surcharge. 3. Rebates are contingent upon customers obtaining the necessary permits from the City of Vernon for all work done associated with the rebate application. 4. All rebates will be paid directly to the customer of record at a given Vernon location. 5. Natural gas savings must be quantified using reasonable engineering assumptions and calculations, except for the predefined rebate categories. 6. Equipment or systems installed must be expected to operate for at least five years from the date of installation. 7. Projects that receive incentives from other sources (excluding tax -related incentives) are not eligible. 8. The maximum amount of rebate shall not exceed the total project cost. 9. Available rebate funding shall be allocated based on the timing of application acceptance and approval. 10. The maximum rebate amount is three years of rebate contribution paid to City by applicant. The rebate contribution is a portion of the total G-CARB Surcharge. Upon request, City shall calculate the three-year contribution amount available to a customer. However, Vernon may allow higher rebates on a case -by -case basis, subject to the amount of total rebate funding accumulated in the City's rebate balancing account. 11. Rebate program is not for new construction, nor is it for replacement, nor for installation where otherwise required by California Building Code or employee safety laws. PROGRAM APPLICATION AND CONFIRMATION: 1. Pre -Installation Application Applicants must submit a pre -installation application before beginning project work. (For EV charging stations, electric vehicles and boiler testing, special applications are provided). Customer initiated installations prior to City acceptance of the pre -installation application may be rejected. The pre -installation application must contain the information necessary to determine the savings or greenhouse gas benefit otherwise and shall be the basis for the rebate. Subject to availability of funds, the City reserves money for the project, pending timely completion of installation. The pre -installation application shall consist of the following: ■ Customer and project site information ■ A technical description of the project ■ Documentation of the savings estimated or greenhouse gas benefit (including an engineering calculation, as applicable) ■ New/old equipment specification (if applicable) Revised July 2017 5 DRAFT 2. Post -Installation Confirmation The post -installation confirmation shall be coordinated by the applicant after the project is installed. The confirmation shall be the basis for the actual rebate paid, and shall consist of the following. • Any changes from the pre -installation application • Documentation showing actual Therms saved or greenhouse gas benefit • Original, itemized, paid proof of purchase (sales slip or invoice) • Scheduled site visit(s) for City to verify energy efficiency equipment modifications, installations, and overall efficiency impact MARKETING: Upon modification of the program, staff will notify all customers by letter or direct email including the details of the program. Additionally, staff will make personal contact with the largest gas customers. PROGRAM ADMINISTRATION: The Natural Gas Division of Vernon Public Utilities leads program administration. The Natural Gas Division develops and distributes promotional materials, sets appointments with customers to explain the program, follows up with customers, and facilitates the application, construction, and completion process. The Customer Services Division processes the actual paper work and rebate check requests similar to the electric rebate program. Applications are anticipated at a rate of one per month maximum. As -needed rebate evaluation and audit support will be provided by IGService, which is under contract with City of Vernon for natural gas support services. A reasonable proportionate cost for each person/division supporting the program is allocated as administrative cost to the program. Revised July 2017 6 DRAFT CITY OF VERNON Natural Gas Project Rebate Program Pre -Installation Application To be eligible for rebates, this application must be submitted to the City of Vernon and approved by Vernon before beginning aroiect work. Customer Name/Payee: Mailing Address: Installation Address in Vernon: Customer Contact: Phone: Email: Federal Tax ID: Please describe the energy savings and/or qualifying replacement equipment of your proposed project. For customized projects please provide detailed calculations of expected Therms saved. Include attachments, as needed. Measure Description Units Installed or Therms Saved Rebate S/U nit Rebate Amount $ Total Rebate Requested: AGREEMENT CLAUSE: I/We agree as follows: 1) To begin the project within 90 days of initial Vernon inspection and approval and finish within one year of project commencement; 2) To allow the Vernon Public Utilities Department to conduct scheduled site visits to verify installation of the hardware specified in this application; 3) To provide the original, itemized, paid proof of purchase (sales slip or invoice) and complete a post -installation confirmation form showing actual installed equipment (as applicable); 4) Unless a written exception is provided by City of Vernon, combined gas program rebates shall not exceed three years of the rebate contribution from customer (a portion of the total surcharge, as calculated by City of Vernon) or 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 application; 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. Customer Signature: Print Name: Title: Date: Vernon Public Utilities Department Only Date Pre -Inspection: Inspected by: Approved by: CITY OF VERNON Natural Gas Project Rebate Program Post -Installation Confirmation This Post -Installation Confirmation is associated with Pre -Installation Application with Customer dated: Customer Name/Payee: DBA Business Name: Mailing Address: Installation Address in Vernon: Customer Contact: Phone: Email: Please describe any variations from the Pre -Installation Application: Federal Tax ID: Measure Description as Installed Units Installed or Therms Saved Rebate $/Unit Rebate Amount $ Total Rebate Requested: Attachments to be included with this form: A) Installer's statement of actual equipment installation (size and specifications) and/or finalized Therm savings computation B) Copies of manufacturer's specifications and performance data C) Original, itemized, paid proof of purchase (sales slip or invoice) Customer Signature: Title: Print Name: Date: Vernon Public Utilities Department Only Date Post -Inspection: Inspected by: Approved by: CITY OF VERNON NATURAL GAS CUSTOMER REBATE APPLICATION FOR ELECTRIC CHARGING STATIONS AND ELECTRIC VEHICLES (GREENHOUSE GAS REDUCTION CAP -AND -TRADE PROGRAM) Applicant must receive written authorization from City of Vernon before beginning EV charging installation work or purchasing an electric vehicle. In response to submission of this application, representatives from City of Vernon will contact applicant to arrange a site visit and meeting. City of Vernon will also calculate the amount of greenhouse gas surcharge funds available to applicant. Customer Name/Payee: Mailing Address: Installation Address in Vernon: Customer Contact: Phone: Number of EV charging stations requested: Description of preferred location at your facility: Installation preference (circle one): Estimated installation cost, if applicant installs: Electric service preference (circle one) Email: Vernon installs Federal Tax ID: Applicant installs Additional electric service Existing electric service Type of electric vehicle(s) and estimated cost (if applicable): Applicant: Title: Print Name: Date: Please submit this application to Anthony Serrano, Customer Service Supervisor, by email to aserranogci.vernon.ca.us, or by fax to 323-826-1431. CITY OF VERNON NATURAL GAS CUSTOMER REBATE APPROVAL FOR ELECTRIC CHARGING STATIONS AND ELECTRIC VEHICLES (GREENHOUSE GAS REDUCTION CAP -AND -TRADE PROGRAM) Customer Name/Payee: Installation Address in Vernon: Customer Contact: Phone: Number of EV charging stations: Description of location at customer facility: Description of approach to EV charging station installation: Approved rebate amount for EV charging station installation: Description of approved electric vehicle(s) (if applicable): Approved rebate amount for electric vehicle(s) (if applicable): $ Conditions: 1. Project/purchase must be complete within 90 days of approval 2. Proof of completion/purchase must be provided to receive rebate (paid invoices/pink slip/registration) 3. Applicant shall be responsible for cost of electricity for EV charging 4. Applicant agrees to install/allow for meter/submeter for EV charging 5. Applicant understands that a construction permit is required for EV charging station 6. One new EV charging station must be installed for each electric vehicle 7. Electric vehicle shall be registered in the name of the Applicant 8. Electric vehicle shall be used for business purposes in/near Vernon 9. For rebate calculations, applicable tax credits shall subtracted from paid invoices for EV 10. Applicant agrees to use vehicle for at least three years 11. Applicant agrees to allow a discreet decaling on chargers and electric vehicles "Sponsored by City of Vernon Greenhouse Gas Reduction Program," or similar Project approved by City of Vernon: Project accepted by Applicant: Date: Date: Date: Customer Name/Payee: DBA Business Name: Mailing Address: Customer Contact: Phone: Boiler Information Address of Boiler: Make/Model: Btu / Hr Rating: Test Date: Test Company: Test Cost ($): CITY OF VERNON Rebate Application for Recurring Boiler Efficiency Tests Email: Federal Tax ID: AGREEMENT CLAUSE: I/We agree as follows: 1) The boiler efficiency test associated with this rebate application is required by the South Coast Air Quality Management District or other regulatory authority; 2) To allow the Vernon Public Utilities Department to conduct scheduled site visits to verify location and operating status of the boiler tested; 3) To attach the original, itemized, paid invoice; 4) Unless a written exception is provided by City of Vernon, combined gas rebates awarded customer shall not exceed three years of the rebate contribution from customer (a portion of the total surcharge, as calculated by City of Vernon), or the paid invoice, whichever is less; 5) Rebates are subject to availability of funds; 6) That the City of Vernon may withhold payment of any rebate until satisfaction of any and all of the above listed conditions are met. Customer Signature: Print Name: Vernon Public Utilities Department Only Verified by: Approved by: Title: Date: