|Cotati approves performance contract with Siemens
Deal calls for energy efficiency upgrades to facilities
The Cotati City Council at its Tuesday, June 24, meeting, unanimously approved a resolution to enter into a performance contracting agreement with Siemens Industry, Inc. for energy efficiency upgrades to various facilities throughout the city.
The proposed project consists of energy efficiency upgrades to reduce energy usage in buildings, streetlights and the city’s water distribution system. The project comes with an estimated price tag of $2,037,163, with expenses attributable to the General Fund and Water Enterprise Fund.
HVAC retrofit work and lighting costs, which will be funded by General Fund revenues currently used to pay utility costs, estimate out to $303,746. Water meter upgrades will take up most of the costs at $1,733,417. The draft financing plan for this proposed project consists of $761,945 in payments over the first five years.
However, this will be reviewed upon receipt of the financing request for proposal (RFP), and brought back to City Council to reflect the most advantageous blend of cash and financing. The water meter portion of the project is expected to pay itself off over the term of the project through enhanced revenues achieved with the new metering technology.
According to a city staff report, annual costs do not exceed the projected energy savings in any year, which should result in no net increases to the Cotati General Fund.
Should the city become less than enamored with the financing and decides not to proceed with the project, the performance contract will no longer be binding, and the city will pay Siemens the cost of the investment grade audit ($72,000), terms which were previously agreed upon. Siemens specializes in electronics and electrical engineering, operating in the industry, energy, healthcare, infrastructure and cities sectors.
“The fact that we’ll be seeing savings right away is great because it means we’re running things more efficiently and cost effectively,” Councilwoman Wendy Skillman said. “If, for some reason, we don’t see savings, Siemens has the option of paying to correct the shortfall. It’s a win-win for the city, so our bases are all covered.”
During the IGA, representatives from Siemens evaluated many potential cost-efficient measure, but it was found in many areas that Cotati is already so efficient there were no new cost effective measures. For example, a typical project is to change out irrigation controllers at parks with weather-based controllers. However, during the audit, it was found the weather-based controllers would actually increase the water usage, so they were removed from the list of potential measures.
During his presentation to the council, City Engineer and Director of Public Works Damien O’Bid presented what city staff said is a conservative model with several factors built in, including the city’s switch from using PG&E power to that of Sonoma Clean Power, the new power agency in the county of which the city signed an agreement to join.
First, there is an assumed annual escalation in electricity costs of 2.2 percent, which is below PG&E’s eight-year average of 9.4 percent for streetlights; and 3 percent for commercial/general service. Second, assumed natural gas rates were similarly escalated at 3.2 percent. As a side note, the staff report said 93.4 percent of the utility cost savings in this project will come from electricity savings.
The model also takes into account the assumption that the new water meters will only be 98.5 percent accurate, although they are guaranteed to be 100 percent accurate through the 20-year life of the meter.
Former council member George Barich, a consistent critic of the council, disputed the claim this was a conservative model. He said if the model truly was conservative, it would have used the PG&E numbers and accounted for the worst-case scenarios. He said all the bugs that come with a new project should have been considered.
Councilman Mark Landman disagreed with Barich.
“I didn’t hear anything about best-case scenario,” Landman said. “Actually, I was taken by the fact that city staff very prudently and carefully went the opposite way with concern to the people of Cotati’s money. Everything I saw was incredibly careful in terms of being as cautious as you can be. We have a good margin of error.”