PURPOSE

To recommend to the Burbank City Council the adoption of two new energy-efficiency and demand reduction programs as well as modifications to an existing energy-efficiency program.

BACKGROUND

An important and ongoing goal of the utility is to help our residential and business customers more efficiently use electricity.  In recent years, this goal has become ever more urgent.  Responding to this, BWP over the past 12 months alone has implemented nine new energy programs and modified three existing programs, all with the purpose of helping our customers use less energy.  And, the programs succeed, as the nearly five million kilowatt-hours saved annually -- enough to power 810 Burbank homes for a full year � attest to.  Yet, there is more that we can do; hence, the additional energy-saving programs BWP is proposing here. 

Additionally, BWP staff reviews and modifies as needed all programs on an ongoing basis to ensure that they are operating cost-effectively and with the intended results.  We are proposing some changes to an existing residential energy-saving program. 

I.  Proposed Ice Bear Program

In addition to seeking out programs that help reduce energy consumption, Burbank is also very interested in exploring technologies that can reduce peak energy demand.  On any given day, air conditioning (AC) accounts for one-third of the total electricity demands on the nation�s strained power grid.  On hotter than normal days, demand for electricity to power our AC units soars, with up to 70% of California�s peak electricity demand coming from air conditioners.  Anything that can reasonably be done to reduce this demand is worth exploring.  With this in mind, in 2005 BWP installed an �Ice Bear� at Fire Station 16 to field test this peak demand reduction technology. 

Ice Bears use ice to provide for space cooling.  During the evening when demand for electricity is lower, the Ice Bear unit freezes the water in its tank.  During the day, when both electricity demand and power procurement costs are high, the condensing unit of the conventional air conditioner is turned off and the ice in the Ice Bear unit is used for cooling. 

The results of our test have been impressive.  The Ice Bear unit reliably reduces peak electrical demand by over 95%.  On a daily basis, demand drops about seven kilowatts (kW) to usage of just one-third of a kW. 

Taken by itself, this reduction in peak demand is just a drop in the bucket, hardly noticeable.  But this award-winning technology � Ice Bears were awarded a 2007 California �Flex Your Power� winner in the Demand Response category � has proved itself to be a tool capable of dramatically impacting peak demand requirements when employed on a mass scale. 

As such, in December 2006 BWP modified its business rebate program to include incentives for Ice Storage Air Conditioning units like the Ice Bear.  Rebate amounts are determined by the air conditioning tonnage and age of the system.  Larger units that are older and less efficient units could get a rebate as high as $8,500.  Small units that are fairly efficient could receive rebates approaching $5,000.  These are excellent rebates, supporting about 20% of the total cost of an installed Ice Bear unit. 

However, new technologies often require an extra push to get them on the road to full adoption.  Staff is recommending a push for the Ice Bear technology.  We propose an expanded pilot program whereby we would install a total of 20 Ice Bear units at City, commercial, and non-profit facilities.  Tracking of the Ice Bear�s performance in the variety of uses would take place and the collected information shared with other prospective users. 

The timing of this large-scale demonstration endeavor is important.  In January 2008, BWP will be implementing Time-of-Use (TOU) rates for the large commercial sector, followed by phase two TOU implementation to a larger segment of the commercial market in January 2009.  TOU rate structures have different electricity costs for different seasons and daily time periods, reflecting the varied cost of energy throughout the day and the year.  A TOU rate design sends pricing signals to energy users such that when energy is most costly for the utility to procure, the rate mirrors this increased cost.  Likewise, when electricity is in greater supply due to reduced demand, the TOU rate for that time period is lower.  Not surprising, the TOU rate is highest during summer afternoons when electrical demand skyrockets on the heels of air conditioning use. 

Installation of Ice Bear units would allow customers the opportunity to avoid some of these highest energy costs by shifting air conditioning energy usage from high cost on-peak periods to the lower cost off-peak times.  Data from the proposed 20 Ice Bear installations would be an important element in showcasing actual cost-reducing results that other Burbank businesses could expect. 

On the utility side, peak demand reductions help BWP avoid some of the most expensive on-peak energy costs.  Reduced electrical demand also means less stress is placed on Burbank�s electric distribution system, resulting in higher electric reliability.  And, by containing the very highest energy procurement costs, the utility is better able to reduce operating costs, resulting in an enhanced ability to contain electric rates. 

We anticipate a time in the not-too-distant future when ice storage air conditioning units like the Ice Bear could be installed at all homes and businesses.  However, market transformations do take time and decided efforts to make them stick.  BWP is interested in being a player in this market transformation.  To this end, staff earmarked $500,000 in the approved Fiscal Year 2007-08 Public Benefits budget for this proposed program, enough to cover 20 Ice Bear installations. 

II.  Proposed Air Conditioning Tune-Up Program

According to the U.S. Environmental Protection Agency, about 14% of all the electricity generated in the United States is used to air condition buildings.  BWP has for many years provided rebate incentives to residential and commercial customers who install high-efficiency air conditioning units.  While installing higher rated equipment is obviously a step in the right direction, a study revealed that 95% of all operating air conditioners provided cooling at less than their rated efficiency � even new equipment!  This is due primarily to incorrect refrigerant charge, low evaporative coil airflow, and leaky duct systems.  The reality is that regardless of how high the Seasonal Energy Efficiency Ratio (SEER) rating is (the higher the SEER number, the more energy efficient the air conditioning unit), equipment will not operate efficiently if it is not charged correctly or if the air delivery system is leaking.  In California, the problematic summertime burden on our electrical grid is directly linked to air conditioning.  Efforts to reduce both the energy use and electrical demand of air conditioning units must be made in order to keep our electrical system sound. 

To this end, BWP staff is proposing a new program for residents and businesses that addresses air conditioning. 

BWP would contract with a company called Proctor Engineering Group to utilize their proprietary CheckMe! computer diagnostic system and engineering services.  Proctor has been offering their services for several years to utilities in California, including Glendale Water and Power, the Imperial Irrigation District, Southern California Edison, and Pacific Gas & Electric. 

Proctor Engineering offers three CheckMe! programs, each targeting different elements related to maximizing air conditioning performance and efficiency:

1. Residential and Small Commercial Retro-Commissioning

2. Residential Duct Testing and Sealing

3. Residential and Small Commercial Extended Fan Time Delay Relay

A Brief Description of Each Option

Retro-commissioning refers here to correcting the refrigerant charge level and evaporator coil airflow, elements that were likely not addressed properly at the time of equipment installation.  Retro-commissioning allows the equipment to operate as efficiently as it was originally intended to operate.  An estimated 65% of all air conditioners, including newly installed units, would benefit from refrigerant charge and/or airflow alterations.  This program element is open to residential and small commercial customers (generally speaking, those with air conditioning units of less than 20 tons) with new installations, replacement installations, and existing systems. 

When properly implemented, duct testing and sealing provides cost-effective electrical peak reduction and energy savings lasting in excess of 20 years.  An estimated 65% of all units have leaking ducts.  In the Proctor program, a duct blaster is used to measure leakage.  Minimum leakage reduction standards are set by Proctor.  This program element is currently only open to residential customers.  While the potential for significant energy savings from duct sealing exists with commercial enterprises, businesses tend to have specific barriers that limit program success.  Staff can continue to work with Proctor to see what can be done to surmount those barriers. 

As with retro-commissioning, the third Proctor air conditioning service, extended fan time delay relay, is open to residential and small commercial customers with new installations, replacement installations, and existing systems.  As air conditioners operate, moisture condenses on the evaporator coil.  This condensate typically just ends up spilling down the drain.  However, this water can be easily put to work to extend the cooling opportunity of the air conditioning unit.  With the installation of a small time delay relay (a $13 device installed into the furnace of the unit), the air conditioner�s fan continues running after the compressor turns off.  The fan�s action evaporates the water on the coil, providing additional cooling.  In this way, the evaporator coil essentially functions as an evaporative cooler.  The energy cost is low since the fan pulls less power than the compressor and the fan only runs for the amount of time that moisture is stored on the coil.  This elegant solution is open to the over 75% of air conditioners operating without a fan time delay. 

How the Program would Work

BWP staff is interested in offering all three Proctor services to eligible Burbank customers.  All three Proctor elements work in the same fashion.  Interested and appropriate local contractors and technicians are trained by Procter on how to properly measure refrigerant charge and airflow levels; and/or measure and fix duct system leakage; and/or install and test the fan delay relay.  In all cases, as technicians are on-site with customers, they call in the measurements to Proctor�s call center, where the measurement results are analyzed and repair recommendations are made to the technician.  This process takes just a few minutes.  Once the work for customer-approved repairs have been made, the technician calls in the new measurements to Proctor for final testing and verification.  In this way, the CheckMe! program provides initial diagnostic recommendations followed by verified savings.  Should the technician have any questions or concerns, they are immediately connected with a Proctor engineer who works through the analysis with the technician.  By providing this immediate feedback, CheckMe! ensures that the technician doesn�t leave the air conditioner until it is brought to its most favorable efficiency given the work that is being conducted.  

The foundation of the CheckMe! program is contractor/technician training and on-going technician assessment.  Proctor recruits local Heating, Ventilation and Air Conditioning contractors into the CheckMe! program, offering them training at no cost.  For the retro-commissioning service, Proctor provides the in-field eight-hour CheckMe! training in groups of no more than four, certifying the contractor�s technicians on the service at no cost to contractors.  The similarly run duct testing and sealing training takes place over two days.  The training for the fan delay relay service is quick, typically done in conjuction with one of the other training sessions.  Every test done by every participating technician is monitored by Proctor with measurement results fed into Proctor�s statistical analysis software to ensure that technicians are not �fudging� the numbers or trying to �game the system.�  If this occurs, offending technicians are permanently removed from the program.

Following all work conducted, Proctor sends a packet to each participating customer that contains verification of the work done on the air conditioner and a postage-paid customer satisfaction mail-back card.  The returns show 95% good or excellent ratings.  Cards received by Proctor with less than a �good� rating result in a call to both the customer and contractor. 

Energy Savings

On average, 13% energy savings result from both retro-commissioning and duct sealing activities.  Air conditioners that have an extended fan time delay relay installed see an average reduction in energy use of 10%.  When the Proctor services are combined, the following energy savings result:

• Both retro-commissioning and duct sealing conducted: 24% energy savings

• All three Proctor services conducted: 30-33% energy savings

In all cases, the CheckMe! services have been vetted by the California Energy Commission as cost-effective energy efficiency and demand reduction options. 

Per the state�s Residential Appliance Saturation Survey, the annual average energy used by air conditioners in homes in Climate Zone 9, of which Burbank is a part, is 1,269 kilowatt-hours.  The CheckMe! services range of 10% to 33% energy reductions would offer energy savings of 127 to 419 kilowatt-hours annually per improved air conditioning unit.  Given the 95% rate of sub-optimal air conditioning performance, it is easy to see what a huge opportunity exists for energy savings. 

Program Costs

The CheckMe! program is a turn-key service provided by Proctor Engineering.  Proctor is responsible for recruitment of local contractors, training and certification of technicians, validation of all data, weekly tracking of each participating technician for statistical anomolies,  reporting to BWP, and payment of incentives to participating contractors. 

Contractor incentives, provided by BWP and administered by Proctor, are necessary to encourage participation in the CheckMe! program.  The incentives give contractors the ability to reach a large segment of the population that would not normally pay to have their equipment evaluated or serviced.  The contractors can use their discretion in passing along the savings to Burbank residents and businesses.  Staff�s understanding is that some contractors will do just this as a way to grow their business and create customer goodwill.  While this would be preferred by BWP, we will not require it as a condition of participation as it could substantially limit contractor participation.  However, we will require that the contractor�s customer invoicing includes language showing BWP�s incentive provided for the service.  Additionally, staff will write a letter informing customers of BWP�s financial support of the CheckMe! program and the goals therein.  This letter will be included in the packet that Proctor sends to all CheckMe! customers. 

In August, the Southern California Public Power Authority (SCPPA), a joint powers agency of which Burbank is a member, received the requested proposal from Proctor Engineering Group for SCPPA-wide pricing for their complement of air conditioning improvement services.  By going through SCPPA, Burbank and other members receive the most competitive pricing possible. 

SCPPA Pricing for Retro-Commissioning Service

Single Family and Multi Family
Proctor Engineering Group full turnkey charge                     $70 per AC
Contractor incentive for Initial                                             $35 per AC
Contractor incentive for Successful Repair                           $65 per AC

Commercial Units 5 tons or less
Proctor Engineering Group full turnkey charge                     $70 per AC
Contractor incentive for Initial                                             $35 per AC
Contractor incentive for Successful Repair                           $65 per AC

Commercial Units greater than 5 tons
Proctor Engineering Group full turnkey charge                     $70 per AC
Contractor incentive for Initial                                             $35 per AC
Contractor incentive for Successful Repair                           $120 per AC

SCPPA Pricing for Residential Duct Testing and Sealing Service

Single Family
Proctor Engineering Group full turnkey charge                     $70 per AC
Contractor incentive for Initial Test                                      $50 per AC
Contractor incentive for Repair (14% or better)                   $125 per AC
Contractor Incentive for Bonus Sealing (>23%)                   +$150 per AC

SCPPA Pricing for Extended Fan Time Delay Relay Service

Single Family, Multi Family, and Commercial Units                   
Proctor Engineering Group full turnkey charge                     $55 per AC
Contractor incentive for Installation                                     $50 per AC
 

Staff has allocated $125,000 in the approved Fiscal Year 2007-08 Public Benefits budget for this proposed program.  

III.    Revisions to the Home Rewards Program

Home Rewards is BWP�s residential appliance rebate program.  Since its introduction in 1998 when just two appliances were eligible for rebate, Home Rewards has grown to include a dozen household appliances.  The program provides cash incentives to Burbank residents who purchase and install high-efficiency equipment.  Home Rewards has consistently been a high performing program.  During Fiscal Year 2006-07, BWP issued 2,000  rebates on equipment that will save over 300,000 kilowatt-hours annually � enough to power the energy needs of 50 Burbank homes for a full year.  Considering that the energy savings from these efficient refrigerators, washing machines, dishwashers, air conditioning units, low-E windows and so on are durable � these pieces of equipment have expected lifespans of 15 years plus � BWP�s annual investment in our community of about $340,000 is sound. 

However, we think we can make a good program even better.  To this end, staff is recommending adding wall and attic insulation to the program and modifing how rebate amounts are determined for several appliances. 

Wall and Attic Insulation

The application of wall and attic insulation can dramatically reduce the loss of conditioned air from a structure.  In fact, according to the state-sponsored Database for Energy-Efficient Resources, attic insulation can reduce heat loss through the roof by 80% or more.  Energy savings for wall insulation at R-13 levels are about 300 kilowatt-hours/year for every 1,000 square feet of insulation added and over 500 kilowatt-hours/year for every 1,000 square feet of attic/ceiling insulation to R-30 levels. 

The municipal electric utilities of Glendale, Azusa, and Riverside, as well as the Southern California Gas Company, offer energy-saving rebate incentives to their residents who install wall and/or attic insulation. 

BWP staff recommends providing rebates of $0.15 per square foot of installed wall or attic insulation for insulation services provided by a Burbank retailer or contractor and rebates of $0.10 per square foot of installed wall or attic insulation for insulation provided by a non-Burbank retailer or contractor.  The insulation rebates would be added as part of the Home Rewards residential rebate program. 

Wall insulation will be eligible for incentive provided existing walls are not currently insulated and are between conditioned living area and unconditioned area.  Garages and other non-living areas do not qualify.  The installed insulation must achieve a minimum of R-13.  Rebate will be based on the amount of installed insulation. 

Attic insulation will be rebate-eligible as long as the pre-retrofit insulation level is R-11 or less.  The final attic insulation level must be at least R-30 unless there is insufficient space in the attic crawl area to provide for a minimum of 24� clearance between the top of the ceiling joist and the bottom of the ridge board.  If R-30 cannot be met due to space constraints, a minimum of R-19 will be accepted.  Garages and other non-living areas do not qualify and the rebate will be based on the amount of installed insulation. 

How Home Reward Rebates are Determined

Home Rewards is a two-tier rebate system for all items included in the program.  This means that  appliances purchased from Burbank retailers receive higher rebates than those purchased outside of Burbank.  Currently, Home Rewards provides a set rebate amount for solar attic fans.  The rebate amount for all other items are now determined by how much the customer spends on the item and if it was purchased from a Burbank retailer or not.  In total, residents can receive up to $500 annually in Home Rewards rebates. 

Our recommendation is to no longer tie rebate amounts to expenditure levels, but rather to set specific rebate amounts for equipment meeting the required efficiency standards.  In addition to being considerably more understandable to customers, this method of establishing rebate amounts is also more equitable.  Let�s say a resident is willing to spend much more for a chrome plated refrigerator with French doors.  While the energy savings may be equal to more standard refrigerator models, the price tag is not.  Under the current methodology, the BWP rebate would likely be $100 greater for the fancy unit.  Those additional rebate dollars would not have contributed toward any additional energy savings.  For central air conditioning units, staff proposes a sliding scale rebate system based upon the Seasonal Energy Efficiency Ratio (SEER) of the air conditioning unit.  The higher the SEER rating, the more efficient the unit and, therefore, the higher the rebate paid.  The recommended rebate amounts below pass a state-sanctioned cost-effectiveness test for energy efficiency and are in line with rebates offered by other local utilities. 

Additionally, staff recommends removing the annual $500 rebate cap.  In most cases, this cap is not an issue for our residents.  However, it has presented a problem for some customers undergoing a kitchen remodel or replacing multiple windows.  We don�t want to discourage residents who are willing to upgrade their equipment by placing an annual cap on the financial incentive they can receive. 

FISCAL IMPACT

The Fiscal Year 2007-08 Public Benefits budget has sufficient funds to cover the proposed new programs and modifications to the existing Home Rewards program detailed in this report.

RECOMMENDATION

Staff respectfully requests that the Council adopt the Ice Bear and Air Conditioning Tune-Up programs as proposed, along with the changes to the Home Rewards residential rebate program as discussed in this report. 

If the Council concurs, the appropriate action would be a motion to adopt the resolution entitled �A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK APPROVING AND AUTHORIZING IMPLEMENTATION OF NEW AND REVISED ENERGY EFFICIENCY AND DEMAND REDUCTION PROGRAMS OF BURBANK WATER AND POWER.�

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