The URL can be used to link to this page

Home My WebLink About04. Set a public hearing for September 5, 2024 for contract with Ecogreen solutions and PG&E on-bill financing for lighting upgradesPage 1 of 4 Item 4. DCENTRALSAN MEETING DATE: JULY25, 2024 BOARD OF DIRECTORS POSITION PAPER SUBJECT: SETA PUBLIC HEARING FOR SEPTEMBER 5, 2024 AT 2:30 P.M. TO CONSIDER ADOPTING A RESOLUTION MAKING FINDINGS REQUIRED BY GOVERNMENT CODE SECTION 4217.12; AND AUTHORIZING THE GENERAL MANAGER TO ENTER I NTO AN ENERGY SERVICES CONTRACT WITH ECOGREEN SOLUTIONS, INC. (ECOGREEN) USING PACIFIC GAS & ELECTRIC (PG&E) ON -BILL FINANCING (OBF) INAN AMOUNT NOT TO EXCEED $984,000 FOR LIGHT EMITTING DIODE (LED) LIGHTING UPGRADESATTHE MARTINEZ CAMPUS;AND FIND THATTHE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITYACT (CEQA) SUBMITTED BY: INITIATING DEPARTMENT: CLINTSHIMA, SENIOR ENGINEER OPERATIONS-RELIABILITYENGINEERING REVIEWED BY: NEIL MEYER, PLANT MAINTENANCE DIVISION MANAGER GREG NORBY, DEPUTY GM - ENGINEERING & OPERATIONS Roger S. Bailey General Manager ISSUE Board of Directors (Board) approval is requested to enter into an energy services contract with EcoGreen using PG&E OBF. In accordance with California Government Code Section 4217.12, the Board may forego its standard low -bid public procurement process to implement this energy service project, so long as the cost to Central San to implement the energy related improvements will be less than the anticipated marginal cost to Central San of electrical energy that would have been consumed by Central San in the absence of purchasing the energy improvements. BACKGROUND Central San's wastewater treatment facility in Martinez consumes an average of 3 megawatts (MW) of July 25, 2024 Special Board Meeting Agenda Packet - Page 18 of 188 Page 2 of 4 electricity to process wastewater and operate the treatment plant (plant), Headquarters Office Building, and laboratory. A fraction of this load is composed of over 4,100 light fixtures used throughout the campus. Over the past decade, Central San has been upgrading lighting to LED technology to reduce energy consumption. These upgrades have been implemented through both capital projects and ongoing plant optimization efforts by the Electric Shop Maintenance staff. To date, approximately 22 percent of the Martinez campus lighting has been upgraded to LED lighting, which has proven to be both efficient and reliable. Plant Maintenance Division staff actively collaborates with PG&E on various energy -saving measures. Central San applied for and was selected to PG&E's 2021 Risk Assessment, Process Improvement, and Decision Support Wastewater Treatment Optimization Program. This program was designed and implemented by Alternative Energy Systems Consultants, Inc. In 2022, Alternative Energy Systems Consultants, I nc. partnered with EcoGreen to conduct a thorough lighting audit at the Martinez campus, including the Headquarters Office Building, Plant Operations Building, Pump & Blower Building, Solids Conditioning Building, laboratory, filter plant, and substations, but does not include the Household Hazardous Waste Collection Facility, 4737 Imhoff Place, or the Annex Buildings. A payback analysis was completed in 2023, estimating an energy savings of approximately 590,000 kilowatt hours annually, with a payback period of 59 months, or just under five years. This payback period aligns with Government Code Section 4217 et seq., which requires findings of marginal energy cost savings and Board Policy 27, which requires energy service projects to provide a positive cash flow within five years and strive towards Net Zero Energy. PG&E has reviewed and approved the analysis, recognizing the opportunity for significant energy savings. PG&E electricity rates have increased by about 20 percent in 2024, which may result in an even faster payback period than initially calculated. The recently installed 1.7 MW Largiss solar panels could extend the payback period since it provides better rates than PG&E rates, but it is difficult to quantify the effects without data. An OBF loan through PG&E will be utilized for this effort, resulting in no out-of-pocket costs to Central San and zero percent interest rate. The loan principal will equal the cost of the lighting retrofit project estimated to be about $984,000. Repayment of that loan principal will be through a monthly "on utility bill" charge associated with the predicted energy savings estimated to be about $16,900 per month. This amount is in lieu of electricity costs that would otherwise be paid to PG&E. This amount also represents the approximate savings realized following the payback period. I n other words, the "on utility bill" charge will offset the energy savings until such time as the loan principal is paid off. Central San's electricity invoice amounts will be the same whether the Board decides to proceed with this upgrade effort or not. As an example, if a typical PG&E bill is currently $100,000 per month, Central San will pay PG&E the $100,000 per month for the next 59 months, which is the project payback duration for this lighting upgrade project. From month 60 and into the future, Central San will save energy and costs of approximately $16,900 per month for the life of the new LED fixtures. For the first 59 months, about $16,900 will be set aside each month by PG&E to fund the project. PG&E will pay EcoGreen directly for the project after the installation is complete, which is estimated at 6 weeks. If Central San decides not to proceed with this project, then all $100,000 will be paid to PG&E, with no future energy and cost savings. The cost to Central San remains the same either way. Since the audit was performed about two years ago, additional lighting fixtures have been upgraded, reducing the overall scope and cost of the project. This true -up process will occur after completion of the project and reviewed by PG&E before the OBF loan is finalized and EcoGreen receives payment. EcoGreen has successfully completed similar projects at other agencies including Oro Loma Sanitary District, Sewerage Commission - Oroville Region, City of Davis, and City of Pacifica. They are currently working on a project with Silicon Valley Clean Water. July 25, 2024 Special Board Meeting Agenda Packet - Page 19 of 188 Page 3 of 4 Another consideration is California Assembly Bill 2208, which prohibits the sale of fluorescent lights in California. Opting for EcoGreen's upgrade at this time will benefit Central San by phasing out fluorescent bulbs. Once the ban is enforced, replacing a burned -out fluorescent bulb will require a more extensive retrofit of a new lighting fixture for Maintenance staff. Moreover, the absence of lighting can pose safety hazards. EcoGreen will also pay the cost for disposing of existing lighting fixtures that they remove, which is an additional benefit. Furthermore, upgrading to LED lighting will lower the baseline electrical load, thereby ensuring the uninterrupted operation of essential equipment during a load -shedding event. In accordance with California Government Code Section 4217.12, the Board may forego its standard low - bid public procurement process to implement energy service projects, so long as the cost to Central San to implement the energy related improvements will be less than the anticipated marginal cost to Central San of electrical energy that would have been consumed by Central San in the absence of purchasing the energy improvements. Therefore, competitive pricing was not solicited for this project, however the unit cost is comparable with what Central San Maintenance staff would spend to carry out this work and the ultimate cost is anticipated to be less than what Central San would have otherwise spent. To initiate a formal bidding process for the same upgrade project, Capital Projects would need to allocate substantial resources toward staffing, consultants, and the development of plans and specifications. Opting for EcoGreen to perform the LED upgrades will result in financial savings for Central San and reduce staff time and consultant fees typically associated with drafting plans and specifications. Based on this analysis, staff recommends proceeding with the work. Staff is seeking the Board's approval to enter into an energy services contract with EcoGreen for LED lighting upgrades. CEQA: Staff has concluded that this contract is exempt from CEQA under Central San CEQA Guidelines Section 15301, since it involves replacement of existing sewer facilities at substantially the same locations and with the same purpose and level of activity as the facilities being replaced. Approval of this project will establish the Board's independent finding that this project is exempt from CEQA. ALTERNATIVES/CONSIDERATIONS Central San could set a different date for the public hearing. Central San could continue upgrading lighting to LED technology through typical means: • Central San could choose to change lighting as they fail, but reactive repairs are significantly more disruptive and cost more than proactively replacing lights. • Central San Electrical Shop Maintenance staff could continue LED retrofits, but this will take many more years to complete the rest of the campus. • Capital Projects could select a consultant through a Request for Proposal process to prepare design drawings and specifications to bid a LED upgrade project. This option would be more costly and require another one to two years to implement. FINANCIAL IMPACTS Central San will not incur out-of-pocket costs as the proposed work will be financed through a zero percent interest OBF loan with PG&E and paid through the standard invoicing process. The proposed contract amount is not to exceed $984,000, to be paid back over 59 months through energy savings using OBF. July 25, 2024 Special Board Meeting Agenda Packet - Page 20 of 188 Page 4 of 4 COMMITTEE RECOMMENDATION This item was reviewed bythe Engineering & Operations Committee at its special meeting on July 15, 2024, which recommended Central San proceed to set a public hearing for September 5, 2024. RECOMMENDED BOARD ACTION Set a public hearing on September 5, 2024 at 2:30 p.m. to consider: 1. Adopting a resolution making findings required by Government Code Section 4217.12; 2. Authorizing the General Manager to enter into an energy services contract with EcoGreen Solutions, Inc. using PG&E On -Bill Financing in an amount not to exceed $984,000 for LED lighting upgrades at the Martinez campus; and 3. Find that the energy service project is exempt from CEQA. Strategic Plan re -In GOAL TWO: Environmental Stewardship Strategy 4 - Identify and advance sustainability initiatives, including reducing energy usage and emissions GOAL SIX: Infrastructure Reliability Strategy 1 - Manage assets optimally July 25, 2024 Special Board Meeting Agenda Packet - Page 21 of 188