ADMINISTRATIVE REPORT

Date: June 7^th, 2002
Author/Local: R.Pistone/6739

RTS NO. 02780

CC File No. 5806

Council: June 25, 2002

TO:	Vancouver City Council
FROM:	City Manager General Manager, Corporate Services, Director of Finance General Manager, Engineering Services
SUBJECT:	BC Hydro Power Smart Program

INFORMATION

The City Manager submits this report for INFORMATION.

CITY MANAGER'S COMMENTS

The City Manager notes this initiative is entirely consistent with the City's sustainability strategy and provides a good business case with an economic return to the City.

COUNCIL POLICY

The City of Vancouver has many policies that encourage sustainability practices such as energy efficiencies and improved building performance.

The Framework for a Vancouver Energy Strategy (1979) identified energy conservation ideas to be investigated for their feasibility and cost effectiveness. Council has approved initiatives between the City of Vancouver and BC Hydro for energy conservation:

On July 12^th, 1990, Council approved in principle that the policy, principles and performance standards put forth by BC Hydro toward more efficient energy utilization in buildings be approved in principle, and that the City participate in the Power Smart Program within the limits of existing funding sources.
On November 8^th, 1990, Council approved financing of $7.5 million from the Property Endowment Fund to provide for the City's participation in the BC Hydro Power Smart Street Lighting Conversion Project. This project was completed and the financing repaid from subsequent energy savings.

On September 23^rd, 1992, Council approved energy saving projects for twenty-three civic facilities under the Power- Smart Program, with financing of $1.4 million provided from the PEF.

In July, 1999, the City of Vancouver participated in BC Hydro Time-of-Use pilot projects. By shifting the electrical load during peak hours, the City achieved substantial energy cost avoidance during a 12-month period.

In September 2001, the City of Vancouver joined BC Hydro's e.Point Program to promote energy conservation in City's facilities.

Council has also approved a number of policies that address concerns about the negative effects of municipal building facilities on the environment and global warming.

Recent examples of such policies include:

· Creating a Sustainable City (2002)
· Council Endorsement of the Ratification of the Kyoto Protocol (2002)

PURPOSE

The purpose of this report is to inform council of the proposed Agreement between BC Hydro and the City of Vancouver for Participation in the Power Smart Partner Program.

SUMMARY

BC Hydro has extended to the City of Vancouver an offer to participate in the Power Smart Partner Program. The program consists of financial incentives toward making municipal facilities more energy efficient to reduce greenhouse gas (GHG) emissions and operating costs.

The BC Hydro energy efficiency initiative is consistent with principles in the 2002 "Creating a Sustainable City" agenda.

BACKGROUND

The City of Vancouver's past success in energy conservation was recognized by BC Hydro with the 1994 Municipal Energy Efficiency Award for energy conservation initiatives from 1989 to 1994. In 1998, the City was a recipient of the BC Hydro Power Smart Excellence Award for outstanding achievement in energy efficiency.

The City has benefitted from past energy audits that were financed from the Property Endowment Fund in 1990. The savings that resulted from these conservation activities reduced electrical and natural gas consumption costs at these sites by more than $124,000 annually, when calculated in 1995.

Prior to the proposed Power Smart Partner Program, the City joined the pilot project e.Points Program in September 2001.

DISCUSSION

The City has been identified by BC Hydro as one of their highest consumers, using $6M in electricity annually. Based on this consumption pattern, BC Hydro has extended an offer to join the Power Smart Partner Program to receive funding toward realizing cost-effective reductions in local greenhouse gas emissions.

BC Hydro has allocated $91M toward Power Smart initiatives, with 80% ($72M) reserved exclusively for the financial incentives offered through the Power Smart Partner Program. The comprehensive program is also a commitment from BC Hydro to consult with the City when establishing benchmarks and achieving targets in improving overall electrical energy efficiency. Benchmarks and targets are determined in conjunction with BC Hydro to ascertain that the targets are set using the appropriate metric data for City operations.

BC Hydro will match funding in the amount of up to $67,500 for the acquisition of Energy Saving Opportunity (ESO) resources to identify energy saving opportunities in City facilities. At this point in time, it is difficult to estimate implementation costs before completing the energy audit. In addition, if the City is one of the first hundred clients to commit to the partnership, BC Hydro will fully fund an energy audit of one facility. The Manager of Environmental Services, in Corporate Services has already identified the Museum, Archives and Planetarium Complex as a priority for the fully funded audit.

As a Power Smart Partner, the City of Vancouver is eligible to submit proposals to BC Hydro for potential financial assistance from BC Hydro's Incentive Program. BC Hydro offers incremental financial assistance to implement electricity efficient projects that present a good business case.

The Power Smart Partner Program allows for more than one City project to be funded by BC Hydro. Proposals will be competitively evaluated against those projects submitted by other BC Hydro Power Smart Partners. At this stage of the Program, there is less competition for funding. BC Hydro will not share costs for projects where efficiency gains can be realized in two years or less. The rationale is that the project should have already been undertaken independently of BC Hydro.

After providing metric data to BC Hydro and signing the e.Points Agreement the City will receive e.Points upon successful achievement of a 5% improvement in electrical efficiency. The City would be eligible for e.Points of approximately $180,000 toward the implementation of electrical efficiency measures. There are no penalties for failing to achieve the 5% reduction.

ENVIRONMENTAL IMPLICATIONS

Canadian municipalities control, both directly and indirectly, more than half of the total GHG emissions that are released in Canada. One objective of participation in the BC Hydro Power Smart Partner Program is to reduce the City's contributions to GHG levels. FCM believes that municipal governments could make a significant contribution by pursuing up to 50 million tonnes of reductions through investment in sustainable community development. Generally, emissions that are directly controlled by municipalities come from municipal buildings and operations, and from providing basic services such as transportation, water, and waste management for local residents.1 Therefore, energy efficiency initiatives would have a positive impact on the environment through the direct reduction of emissions from municipal facilities.

IMPLEMENTATION PLAN

Within three months of the date of signing a Letter of Commitment, the City should have:

· Appointed a representative to liaise with BC Hydro and to oversee implementation of the Power Smart Partner Program;
· Developed a long term corporate Power Smart Strategy that identifies organizational strategies and action plans to be undertaken; and,
· Set goals to improve energy efficiency by a minimum 5% and monitor progress toward achieving them..

The last two items are developed with a BC Hydro representative.

The BC Hydro Power Smart Program is a city-wide initiative, to find energy efficiency opportunities in all departments. The program will be administered through Building Management, Corporate Services by the Manager of Environmental Services.

FINANCIAL IMPLICATIONS

The BC Hydro Power Smart Program is a one-time offer available to the City. As mentioned previously, BC Hydro has extended a limited time offer of a fully funded energy audit for one facility for the first 100 customers to join the Power Smart Partner Program.

Within 90 days of signing the agreement, the City must also indicate the amount of matching dollars, to a maximum of $67,500. The City Manager has approved funding from the Strategic Initiative Fund. The Strategic Initiative Fund was approved by Council as part of the Better City Government Financial Strategy to authorize the City Manager to approve projects and/or consultant contracts up to $100,000 to support review and redesign of identified major processes that include Facility and Building Management.

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(c) 1998 City of Vancouver

1 Municipalities Issue Table of Canada's National Climate Change Process. 1998. Foundation Paper. National Climate Change Secretariat: Ottawa. November, p.V