TITLE
Recommendation to authorize City Manager to execute all documents necessary to enter into On-Bill Financing agreements with Southern California Edison to fund municipal energy efficiency projects, and to execute all necessary documents thereto. (Citywide)
DISCUSSION
Southern California Edison (SCE) is offering a new On-Bill Financing Program (Program) for qualifying municipal energy efficiency projects. On-Bill Financing is a financial mechanism that enables local governments to finance qualified energy efficiency projects. SCE's Program provides zero-interest, no-fee loans that can be conveniently repaid through the City's monthly SCE bills. In addition, projects that result from this Program provide additional financial incentives for installing qualified energy-efficient equipment, lower monthly electricity costs and produce long-term energy savings.
The City has been working with SCE to identify municipal energy efficiency projects that qualify for this Program. Potential projects, which include electrical, mechanical and energy efficient equipment (attached), will be submitted to the Program for evaluation. Upon SCE's acceptance of the project's effectiveness, On-Bill Financing loan funds will be reserved for the project, provided the funds are available. The City can then make a decision to enter into the On-Bill Financing Program loan agreement. A pre-inspection of the existing energy equipment will occur and the installation of the energy efficiency equipment will take place. The installation will receive a post inspection by SCE, and On-Bill Financing loan proceeds will be delivered. The City's first monthly zero-interest loan payment will appear on the next scheduled SCE bill for that specific municipal facility.
This letter was reviewed by Deputy City Attorney Linda Trang on December 13, 2010 and by Budget Officer Victoria Bell on December 30, 2010.
SUSTAINABILITY
Participating in this program supports the energy efficiency and greenhouse gas emission reduction goals of the Sustainable City Action Plan, which was approved by the City Council on February 2, 2010. With buildings being the largest contributor to greenhouse gas emissions, this Program will help Long Beach reduce its carbon footprint, reduce energy consumption and implement energy efficiency strategies to meet or exceed CO2 reduction requirements from AB32.
TIMING CONSIDERATIONS
This Program is offered on a first-come, first-served basis, and is effective until funding is expended or the Program is discontinued by the California Public Utilities Commission. City Council action is requested on January 18, 2011 to take advantage of this financial mechanism and enable the City to realize energy and cost savings in City facilities.
FISCAL IMPACT
This Program is funded by California utility ratepayers and administered by SCE under the auspices of the California Public Utilities Commission. Financing mechanisms like this Program provide opportunities to complete energy efficiency projects that the City otherwise would be unable to fund. The savings derived from energy efficiency retrofit projects will help lower the City's energy bills and help offset energy costs in the General Fund and other funds.
The On-Bill Financing loan amount is calculated based on the calculated energy savings for each municipal energy efficiency project. The maximum loan amount is the difference between the total project cost of the installed eligible energy efficiency equipment and the incentives/rebates paid on the project by SCE. Loan funds must be used for the purchase and installation of qualified energy efficiency equipment. The Program includes loan limits of $1 million for each City facility while supplies last. All municipal energy efficiency projects funded through this program will provide guaranteed energy savings, which act as the payback mechanism for the On-Bill Financing loan. All energy efficiency projects funded through this program will have a 10 year payback or less.
Participating in this program supports local green jobs, which will be responsible for the installation of energy-efficient equipment at City facilities.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
PATRICK H. WEST
CITY MANAGER