HomeMy WebLinkAboutStaff Report 239_09TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: UTILITIES
DATE: May 18,2009 CMR: 239:09
REPORT TYPE: CONSENT
SUBJECT: Request for Authorization to Apply for an Energy Efficiency
Conservation Block Grant (EECBG) in a Total Amount Up to
$663,000 Under the American Recovery and Reinvestment Act
(ARRA)
RECOMMENDATION
Staff recommends that Council authorize the City Manager, or his designee, to complete and sign
an application for Energy Efficiency Conservation Block Grant (EECBG) funds authorized
through the American Recovery and Reinvestment Act of 2009 (ARRA) to be used for energy
reduction and efficiency projects.
BACKGROUND
The EECBG program was created by Congress in 2007 and was funded for the first time by
ARRA with an appropriation of $3.2 billion. The Program provides federal grants to units of
local government, Indian tribes, states and territories to reduce energy use and fossil fuel
emissions, and for improvements in energy efficiency. The EECBG Program is administered by
the Office of Energy Efficiency and Renewable Energy of the U.S. Department of Energy
(DOE).
On March 26, 2009, DOE announced the EECBG formula grant allocations, and the City of Palo
Alto was determined to be eligible to receive up to $663,000. The deadline to apply for this
formula grant is June 25, 2009. The DOE will review each application to ensure that the grantee
has an appropriate strategy to fund activities eligible under the Program and that the proposed
budgets are acceptable. After receipt of Program funds, grantees will be required to report
regularly to the DOE.
DISCUSSION
The DOE encourages program applicants to pursue activities that result in maximum energy
efficiency improvements, fossil-fuel emission reductions, economic benefits and total energy use
reduction. There is a broad list of eligible activities under the EECBG program. However, many
of these eligible activities will require federal environmental review and/or have limitations on
the amount of funding that could be available from the EECBG. In addition, the grant
application requires detailed information, including budget justification, for each activity that the
CMR: 239:09 Page 1 of3
applicant plans to undertake using the allocated EECBO funds. Finally, the EECBO funds need
to be obligated within 18 months and expended within 36 months from the time of the
application.
Staff has reviewed a number of programs for inclusion in the grant application, including: a
utility-financed revolving loan program to help businesses implement energy efficiency projects;
a program to provide sub-grants to local schools, City facilities and community agencies to
implement energy efficient projects; and the expansion of current residential energy efficiency
program offerings such as weatherization, energy audits and appliance exchange. These
programs were not selected for inclusion in the application for funding due to their current stage
of development.
Due to the EECBG timing constraints and limitations, the staff review team recommends that
only those new technology demonstration projects that are already of interest to the community,
and which have received preliminary City approvals, be included in the application. The two
demonstration projects being developed for the EECBG application include the early
replacement of High Pressure Sodium (HPS) street lights on selected streets with Light Emitting
Diode (LED) streetlights, and the implementation of a Home Energy Report for residential
customers. The estimated EECBG funds to be allocated to the LED Streetlight Project and the
Home Energy Report project are $450,000 and $213,000 respectively.
LED Streetlight Project
On September 15, 2008, the City Council received an informational report regarding LED street
lighting. At that time, Council was advised that staff was developing a pilot project to review the
technology. That pilot project is currently in the early stages of implementation, but early
research and review of similar pilots in other cities is positive. The report discussed replacing a
majority of the City's existing street light inventory using LED lighting in the time-frame of
2015. The estimated OHG reduction per fixture per year is 49 metric tons of C02 (C02
equivalent). With the stimulus funds provided through the EECBG, the City can undertake an
early replacement of existing HPS street lights on selected streets and could accelerate full
deployment at an earlier date. This helps to accelerate the reduction of energy and greenhouse
gas emissions associated with the City's street lighting.
Home Energy Report
The second project being prepared for the grant application is to implement a Home Energy
Report for residential customers to help them reduce their energy usage. Upon approval of the
grant application by the DOE, staff would prepare a Request for Proposals. The winning vendor
would provide paper and/or online reports to residents to benchmark and compare their energy
usage against other households with similar square footage in their neighborhood, and offer tips
for reducing electric and natural gas usage. The rationale for adopting such a tool is based on
sociological research showing that people change their behaviors to match those of others. This
reporting tool is in use by the Sacramento Municipal Utility District (SMUD) and Puget Sound
Energy. SMUD has demonstrated energy usage reductions among the participating residential
customers. SMUD set a target energy reduction of 2% for the test group compared to the control
group. Evaluation of customer energy usage shows that the test group saved 1.75% more than the
control group in the first six months.
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POLICY IMPLICATIONS
Both of the proposed projects help to meet one of the City Council's top three priorities of
environmental protection as well as the goals identified in the Palo Alto Climate Protection Plan
and in the California Global Warming Solutions Act of 2006 (AB 32). The proposed projects
also support the Council-approved Ten-year Energy Efficiency Portfolio Plan.
ENVIRONMENTAL REVIEW
The completion of this application is categorically exempt from the California Environmental
Quality Act (CEQA) pursuant to Section 15308 of the CEQA Guidelines (Actions by Regulatory
Agencies for protection of the environment.)
ATTACHMENT
None
PREPARED BY:
DEPARTMENT APPROVAL:
CITY MANAGER APPROVAL:
JOYCE KINNEAR ~.¥--
Utility Marketing Services Manager
CHRISTINE TAM ~.
Resource Planner
TOM AUZENNE ~ ()')) /
Assistant Director, ~
JANE RATCHYE\~V
Assistant Director, UtThlies
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