ADMINISTRATIVE REPORT

Date: November 12, 2002
Author/Local: Kevin Kwok/7165

RTS No. 03061

CC File No. 5806

Council: November 26, 2002

TO:	City Council
FROM:	The Manager of Environmental Services in consultation with the General Manager of Engineering Services and Director of Civic Theatres
SUBJECT:	2002 Power Smart Projects

RECOMMENDATION

THAT Council approve the Power Smart projects outlined in this report at a cost of $289,000; source of funding to be a loan from the Service Improvement Reserve on terms acceptable to the Director of Finance, to be repaid with funds from the BC Hydro Power Smart initiative, estimated at $158,000 and the remainder amount of $131,000 from operating savings in energy costs over approximately a two-year period.

GENERAL MANAGER'S COMMENTS

The General Manager of Corporate Services RECOMMENDS approval of the above, noting that the projects are consistent with the City's sustainability strategy and provide a good business case with an economic return to the City.

POLICY

In 1990, Council approved in principle the policy, principles and performance standards put forth by BC Hydro toward more efficient energy use in buildings, and committed to participate in BC Hydro's Power Smart Program within the limit of existing funding resources.

Council has also approved a number of environmental policies that encourage improvement in the operations of City buildings and facilities so as to address environmental and global warming concerns.

PURPOSE

The purpose of this report is to seek approval of interim funding to finance 2002 Power Smart Projects in Queen Elizabeth Theatre and Manitoba Yards and other civic facilities.

BACKGROUND

The City of Vancouver's past successes in energy conservation have been recognized by BC Hydro with the 1994 Municipal Energy Efficiency Award and the 1998 Power Smart Excellence Award.

The City has benefitted from past energy audits which have reduced electrical and natural gas consumption costs by more than $124,000 annually in civic facilities. Savings have been achieved in other areas as well. Under a Power Smart program in the 1990's, street lights were converted from mercury vapour to high pressure sodium, resulting in ongoing savings of $600,000 per year. Similarly, a program to replace incandescent traffic lights with light emitting diodes (LED's) was approved by Council in June 2002 and will result in a reduction in the electrical power costs for traffic signals from $322,500 per year to about $75,000. As with the street lighting conversions, these savings are ongoing.

BC Hydro has allocated $91.0 million towards Power Smart initiatives with 80 percent ($72.0 million) reserved exclusively for the financial incentives. In June 2002, the City agreed to participate in the Power Smart Program. As a Partner in the program, the City is eligible to submit proposals requesting incremental financial assistance for implementing electricity efficient projects with a good business case. Benchmarks and targets in improving overall electrical energy efficiencies are determined in consultation with BC Hydro to ascertain that targets are set using the appropriate metric data for City operations.

The Power Smart Program allows for more than one City project to be funded by BC Hydro. Proposals will be competitively evaluated against projects submitted by other BC Hydro Power Smart Partners. In general, BC Hydro will not share costs for projects where efficiency gains can be realized in less than two years. The rationale is that the project should have been already undertaken independently of BC Hydro. The potential electrical energy consumption savings determines the incentive.

DISCUSSION

Recommendations from the 2002 "Creating a Sustainable City" report identified Energy Efficiency and Civic Buildings as an example of sustainable development in Vancouver. The BC Hydro Power Smart Program provides the City with BC Hydro funding and resources to help integrate energy efficiency into ongoing operations and realize operations, financial, environmental and other benefits. Council has already mandated City participation in the Power Smart Program.

During the last several months, the City submitted three projects under the Power Smart Partner Program for financial assistance from BC Hydro which summarize as follows:

1. LED Exit Signs Replacement

The City has been replacing conventional incandescent exit signs with energy-efficient compact fluorescent signs over the past 10 years. Currently 70 percent of the exit signs in Civic Facilities now use compact fluorescent lamps while the remaining facilities still use incandescent bulbs. Recently, both types of lighting systems have become obsolete. The most cost-effective method used today, uses light-emitting diodes (LED's) made out of gallium arsenide semiconductors. These LED's emit light when a small electrical current flows through them. Energy costs are substantially reduced because LED's use only 1 to 5 watts of power per surface, which is substantially less than compact fluorescent lamps. The life cycle savings are dramatic because LED's last considerably longer than incandescent lamps.

There are approximately 3,000 Exit signs in civic facilities including Parks, Libraries, and Fire Halls. The replacement project is estimated to cost $150,000. The potential energy savings for this project is estimated at $26,595 or 484,000 KWH. With this savings the project will be repaid in 5.63 years, even if there is no incentives from BC Hydro.

2. Manitoba Yard Lighting Retrofit

A lighting energy audit was conducted by BC Hydro in March of 2002. BC Hydro recommended the City replace the existing T12 fluorescent and Mercury Vapour lighting systems with the efficient T8 fluorescent and Metal Halide technologies. This again will reduce the energy cost for the City.

3. Queen Elizabeth Theatre

In July 2002 City Staff conducted a lighting audit and determined areas of energy savings. The report recommended that we could reduce our lighting operating cost substantially by retrofitting to more efficient lighting technology. This will benefit the theatre with better light quality and will reduce the electrical load and energy consumption. BC Hydro lighting experts supported this audit.

All three projects received are approved for the BC Hydro incentive program during the period of July to October 2002, the chart below summarizes the potential savings:

Project	Costs	BC Hydro Incentive	Net Cost	Savings identified by BC Hydro	Payback period in years after Rebate
LED exit signs for City facilities	150,000	90,000	60,000	26,595	2.3
Manitoba Yard Light Retrofit	116,000	57,000	59,000	24,035	2.5
QET - Lighting Retrofit	23,000	11,000	12,000	10,758	1.1
Total	$289,000	$158,000	$131,000	$61,388	2.1

BC Hydro will reimburse City as follows:

(a) 25 percent when a copy is received of a signed contract for project construction or a purchase order for substantially all of the equipment needed to complete the project.

(b) 50 percent within 15 days of receiving acceptable evidence of installation.

(c) 25 percent on completion of a Measuring and Verification Report prepared by BC Hydro.

Note : The actual BC Hydro Incentive will be determined by electrical energy savings, if the applicant's aggregate electrical energy savings for the project are less than the expected electrical savings described in the application, the final payment of the Incentive Total to the Applicant will be adjusted by BC Hydro at its sole discretion.

BC Hydro requires that all project be completed within a year of approval. We expect to complete all the projects by October 2003.

FINANCIAL IMPLICATIONS

Many of the Power Smart projects undertaken by the City in the past have been financed internally with repayment of the loans being available through energy costs savings in the Operating Budget. It is recommended that these initiatives be financed by a loan from the Service Improvement Reserve. The loan will be repaid from a Power Smart grant of $158,000 from BC Hydro, with the balance to come from energy savings within two years. The total amount of financing being requested is $289,000.

CONCLUSION

The Staff recommend that City Council approve the total Power Smart Retrofit Projects outlined in this report. The initiative is consistent with the City's sustainability strategy and will provide a beneficial economic return to the City.

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(c) 1998 City of Vancouver