TITLE
Recommendation to authorize City Manager, or designee, to execute all documents necessary to enter into on-bill financing agreements with Southern California Edison, to fund the conversion of the City’s remaining streetlights, including the historic and decorative types, and the City’s park lighting at six regional parks, to light emitting diode fixtures;
Increase appropriations in the Gas Fund (EF 330) in the Long Beach Gas and Oil Department (GO) by $1,136,541, offset by funds available;
Increase appropriations in the General Capital Project Fund (CP) in the Public Works Department (PW) by $2,327,557, offset by SCE incentives, SCE on-bill financing, and a transfer of funds from the Long Beach Gas and Oil Department (GO); and
Accept Categorical Exemption Nos. CE-17-123 and CE-17-140. (Districts 1,5,6,7,9)
DISCUSSION
City Council approval is requested to enter into agreements with Southern California Edison (SCE) for on-bill financing (OBF) to help fund the installation of light emitting diode (LED) fixtures for the City’s remaining streetlights, including the historic and decorative types, and at six City parks. OBF is a financial mechanism that enables SCE customers to finance qualified energy efficiency projects. SCE's OBF program provides zero-interest, no-fee loans that can be conveniently repaid through the City's monthly energy bills. This project is also eligible to receive financial incentives from SCE that will lower monthly electricity costs. The City Council last approved the use of this financial mechanism for converting the City’s streetlight system to LED on December 1, 2015.
The City’s contractor, City Light & Power (CLP), completed the LED retrofit of traffic safety intersection lights (Phase 1) and is making significant progress in converting nearly 24,000 of the City’s streetlights to LED (Phase 2), which is anticipated to be completed by the end of 2017.
This project consists of Phases 3 and 4. Phase 3 will retrofit approximately 4,400 streetlights to LED, half of which are historic and decorative types. The majority of these streetlights require customized SCE incentive applications, which were not included under Phase 2. The estimated project cost of Phase 3 is $2,006,758.
Phase 4 will retrofit approximately 502 lights with LED fixtures at all six regional parks within the City: Silverado, Houghton, McBride, El Dorado West, El Dorado East, and Cesar Chavez. The estimated project cost of Phase 4 is $320,798.
Incentives and OBF are provided through SCE by the California Public Utilities Commission’s (CPUC) set-aside of ratepayer money. Staff is working with The Energy Network, a program fully funded by utility ratepayer funds, overseen by the County of Los Angeles, and operated under the auspices of the CPUC, to apply for incentives and OBF. For Phase 3 specifically, the City will apply for $384,305 in incentives and the ability to finance $634,120 of project costs through the OBF program. For Phase 4, the City will apply for $34,384 in incentives to retrofit the park fixtures and the ability to finance $138,207 of the project costs.
While incentives and OBF fund a portion of the project costs, they do not cover project-related expenses such as project oversight and inspections. However, staff conservatively estimates $178,520 and $27,061 in total energy and maintenance cost savings the first year for Phase 3 and Phase 4, respectively, with savings projected to rise with utility rate increases and inflation. Staff expects an 8.8-year payback for Phase 3 considering an estimated loan amount of $634,120 and out-of-pocket expenses totaling $988,333. Staff expects a 10.3-year payback for Phase 4 considering an estimated loan amount of $138,207 and out-of-pocket expenses totaling $148,207.
The City’s out-of-pocket expenses totaling $1,136,541, will be supported by funds available from the Long Beach Gas and Oil Department’s (GO) auction proceeds related to the sale of greenhouse gas (GHG) allowances under the State’s Cap-and-Trade Program as established by the California Global Warming Solutions Act of 2006 (AB 32). Revenues received from the Cap-and-Trade Program must be invested in projects that benefit the ratepayers, reducing greenhouse gas emissions and improving the environment.
In conformance with the California Environmental Quality Act, Categorical Exemption Nos. CE-17-123 and CE-17-140 were issued on May 9, 2017 and May 30, 2017, respectively, for this project (Exhibits A and B).
This matter was reviewed by Deputy City Attorney Linda T. Vu on May 30, 2017 and by Budget Analysis Officer Julissa Jose-Murray on June 9, 2017.
TIMING CONSIDERATIONS
City Council action is requested on June 20, 2017, to execute the necessary agreements with SCE to finance Phases 3 and 4 LED conversions and begin work in Fall 2017.
FISCAL IMPACT
Total project costs are estimated at $2,327,557 and include management, construction, inspections, and contingency for Phases 3 and 4. The project will be funded, as currently estimated, through a combination of sources as follows:
|
Source |
Amount |
|
SCE Incentives |
$ 418,689 |
|
SCE On-Bill Financing |
$ 772,327 |
|
Cap-and-Trade Proceeds |
$ 1,136,541 |
|
Total |
$---- 2,327,557 |
An appropriation increase in the amount of $2,327,557 is requested in the Capital Projects Fund (CP) in the Public Works Department (PW) to implement the project, offset by SCE incentives, SCE on-bill financing, and Cap-and-Trade proceeds. An appropriation increase in the amount of $1,136,541 is requested in the Gas Fund (EF 301) in the Long Beach Gas and Oil Department (GO) to facilitate the transfer of Cap-and-Trade auction proceeds in support of the project. There is no local job impact associated with the recommended action.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
CRAIG A. BECK
DIRECTOR OF PUBLIC WORKS
MARIE KNIGHT
DIRECTOR OF PARKS, RECREATION AND MARINE
ROBERT DOWELL
DIRECTOR OF LONG BEACH GAS AND OIL
APPROVED:
PATRICK H. WEST
CITY MANAGER