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Home My WebLink AboutCOM 0216.002 1998-2000 000,~1Y OF /FgFF'i AARON S.Y. CHUNG ~y,~,,,;,., Phone: (808) 961-8396 Cnuncilmrn~ber FAX: (808) 969-3291 f OF H~. COUNTY COUNCIL County of Nawaii Hawaii Calinty Buildin; 25 Aupuni Street Hifo, Hawaii 96720 - Apri18, 1999 TO: Council Chair James Y. Arakaki Hawaii County Council FROM: Aaron S.Y. Chung, Chair Committee on Finance RE: Resolution authorizing the Office of the Mayor to enter into amulti-year Master Municipal Lease and Purchase Agreement to finance energy efficiency measures in various County facilities. At the Committee on Finance meeting held on Apri17, 1999, Your Committee closed file on Resolution No. 68-99 which authorized the Office of the Mayor to enter into a Master Municipal Lease and Purchase Agreement. Said Resolution was filed in order to allow the Department of Research and Development the opportunity to produce a new resolution that cites the Charter provision requiring such a measure be submitted for Council approval and an amended title to reflect the same. Attached you will find the new resolution incorporating recommended amendments. As this matter has already been discussed at length by Your Committee~I am also requesting this matter be waived to full Council. Should you have any questions please feel free to call. Att. lci R,ea. 7~-99 t7e.e., xw 21(o.OQ2 F1N ]ilk ~ t?Ot.c N C ~ L ~ APR 1 3 1999 ~ Memo To: Nancy Cn3wford, Business Manager Fnxn: Raymond Can-, Energy Coordinator Dace: 07/15/98 Re: Courrty Building Retrofit Anaysis This is in response to your memo of Juy 8 oonosming savings resulfing from the retrofit to the County Building. Your analysis showed savings totaling ony 38,112.54 when comparing the 12-month periods April 97-Marr,h 98 versus April 96-Marr;h 97. This compares very unfavorably with the savings chimed by Honeywell totaling $80,543 for the firstyear ofpost-retrofit open~tion from Aprii 97 to Mangy 98. The measurement and verification of cost savings from an energy retrofit is not as simple and straightforward as one would ideally Ike. Attached is a briefing of the rationale behind the savings claimed for the project that - I hope it provides you with an adequate explanation of how the savings from the retrofit have been cakxrlated. The are some poirrts that I would Ike to make upfront 1. Savings (i pnsfer to use the tens "avoidance oosts'~ are based on what we are currently spending relative b what we w~nuld have anent if we had not carried out the retrofit The costs avoided are not ony costs but also mairrtenanoe costs because Honeywell is now responsible for maintenance (Preventive and repairs) of the new equipment overtheten-year contract period. 2. In recent years, HELCO's utility rates have been rapidy increasing and this has to be taken into account when dating avoided electricity This is shown in the attachmerrt, but an example here might help illustrate the impact of increasing rates on apparent savings: • Page 1 Lets say a facility uses a 100,000 kWh of eler~ricity a month before a retrofit at a rate of $0.10/kWh, and, after the retrofit, urea any 80.000 kWh, a reduction in usage of 20%. At a constant uh'lity rate, the dollar savings would be $2000 (20,000kWh x $0.10AcWh). However, if utility rates increased immediately after the retrofit by 2090 from $o.loncwh ~ $0.12AdIVh, the new bill would be [eo,ooo x $o.12J = $9,BOO. R would appear that the savings at 40Q were ony 25gf, of the expected $2,0001 Clearly, an adjustment has to be made in order to calculate a coned value for the avoided electricity costs in this case. In pn3ctice, Honeywell (and myself as a check) use computer software that allows for utlfiy rate changes as well as other adjustmerrts for weather and billing periods. In the case above, the computer would cakx~la~ that, had no retrofit been canied ~i ,the bill would have risen from $10,000/month to $12,000Vmontl~. Due to the retrofit, the actual bill would be $9,600. The avoided electricity costs then become 400, appreciaby more than in the Case where utility rates remain constant. I hope that the attachment is useful in showing the retionale used in cakxrlating avoided costs. Please let me know if you need further discussion on this matter as it is important you are comfortable with the results from the County Building project before we proceed witty the larger project rxrw being developed with Honeywell. • Pape 2 COST SAVINGS FROM ENERGY RETROFIT TO HAWAII COUNTY BUII.DING Introduction An important feature of an energy efficiency retrofit by performance contract is that the cost savings realized aze guaranteed to be sufficient to cover the payments to be made under the contract. There are two sources of savings: 1. Energy cost savings (these include reductions in electricity consumption (kWh) and in demand (kW) 2. Maintenance cost savings (the contractor provides turnkey maintenance services for new equipment installed) Enerev Cost Savines Energy savings have to be based on a reference or baseline' period. In the fall of 1996, prior to the actual start of the retrofit, Honeywell and the County mutually decided that the baseline' period would be FY1995-96. This was felt to be a recent and representative yeaz of building operation based on the sffible history of electricity use as follows: FY92-93: 1,082,560 kWh FY93-94: 1,073,600 kWh FY94-95: 1,066,240 kWh FY95-96: 1,118,720 kWh [It should be noted that selecting the period April 1, 1996 through March 31, 1997 (the yeaz immediately preceding the first post-retrofit yeaz) as the reference year is not appropriate because installation of retrofit measures started in late January 1997. Hence, energy savings started to accrue from then through to March 31, 1997, invalidating this as a reference baseline' year.] Since installation of retrofit measures was completed by Mazch 31, 1997, the first complete yeaz of post-retrofit operation was April 1 1997 to March 31, 1998. The following results were obtained: BASELINE ADJUSTED FIRST ITEM YEAR BASELINE POST-RETROFTI' FY95-96 YEAR YEAR Electrici Consum tion 1,118,720 kWh 756,001 kWh Electrici Cost $183884 $211947 $144039 Electrici Cost Savin $ 67 908 The column headed "Adjusted Baseline Year" is included to account for adjustments that need to be made to the values obtained in the baseline year. The main adjustment results from the fact that electricity rates increased appreciably from the baseline year FY1995- 96 to the post retrofit year. IF THE RETROFIT HAD NOT BEEN CARRIED OUT, and the building had continued to use the same amount of electricity as was used in the baseline year, the electricity costs in the first post-retrofit year would have been as follows: LiQJttine and Plu¢ Loads [Meter #58636 on HELCO Schedule J]: 602,880 kWh @ $0.183/kWh` _ $110,327 HVAC [Meter #58640 on HELCO Schedule K]: 515,840 kWh @ $0.197/kWh" _ $101,620 TOTAL: 1.118.720 kWh (a7 $0.189/kWh = $211,947 Thus the savings (better to say avoided energy costs) realized are the difference between the'Adjusted Baseline Year' costs, $211,947 and the actual costs of $144,039, a savings of $67,908. Maintenance Cost Savings The contractor, Honeywell Inc. undertakes to provide complete maintenance services for all new HVAC and lighting equipment installed for the contract period of 10 years. [For the Lighting contractor provides materials/supplies but County continues to provide the (union) labor for installing failed lamps and ballasts.] a. The actual rate charged in the first post retrofit year for usage under meter #58636 was $0.183/kwh. In the baseline year, FY95-96, this rate was $0.158/kWh. b. The actual rate charged in the first post-retrofit year for usage under meter #58640 was $0.197/kWh. In the baseline year, FY95-96, this rate was $0.171/kWh. During contract negotiations, it was agreed to pay Honeywell $5,041.92 in the first post- . retrofit yeaz for these maintenance services. The savings resulting from these services were estimated at $12,777 (based on historical costs of maintaining the a/c chillers and an estimate for the lighting maintenance costs). Some historical costs for maintaining the a/c chillers and related equipment aze as follows: TOTAL HVAC SYSTEM CHII,LER EQUIPMENT YEAR MAINTENANCE COSTS MAINTENANCE COSTS FY 92-93 $26,922 $ 6,906 FY 93-94 $I 1 901 $ 8,087 FY 94-95 $20 312 $14 734 An important point here is that the cost avoidance by the County for maintenance of the a/c chillers and associated new equipment as well as the lighting has to be accounted for. Prior to the retrofit, these costs were increasing for the chillers as they aged and experienced more problems. These savings offset the payments to Honeywell for their maintenance services which cover in full any chiller equipment failures as well as the routine inspections and preventative maintenance services. Conclusion For the first yeaz ofpost-retrofit operation of the Couny Building, the costs avoided and payments made are summarized as follows: AVOIDED COSTS PAYMENTS Electricity: $67,908 Lease Payments: $64,249 HVAC Maintenance: $ 7,958 Maintenance Fees: $ 5,042 Lighting Maintenance: $ 5,334 TOTAL: $81,200 569,291 On this basis, avoided costs have been reported as exceeding total payments by 16%. JAMES Y. ARAKAKI AARON S.Y. CHUNG Chairman & PresidingOfficer ''4 BOBBY JEAN LEITHEAD-TODD LENINGRAD ELARIONOFF AL SMITH JULIE JACOBSON Vice Chairman :j,.,, NANCYPISICCH[O ~ J. CURTIS TYLER, III DOMINIC YAGONG COUNTY COUNCIL County ofHawai'i Hawaii County Building 25 Aupuni S[reet Hilo, Hawaii 96720 Res. 74-99 Apri18, 1999 James Y. Arakaki, Chair Hawaii County Council 25 Aupuni Street Hilo, Hawaii 96720 RE: Resolution authorizing the Office of the Mayor to enter into amulti-year Municipal Lease and Purchase Agreement to finance energy efficiency measures in vazious County facilities. Pursuant to Section 1(e) of Rule 4 of the Rules of Procedure of the Council of the County of Hawaii, this written request is submitted with my approval that the above-referenced matter be waived from the Committee on Finance to the full Council for immediate action. In reviewing this matter, timely approval is crucial. It is therefore advantageous that approval is granted and the matter placed onto the next Council agenda for review. However, in the event this request is denied, for whatever reason, I understand the matter shall be referred to the Committee on Finance for placement on its future agenda. Sincerely, Aazon S.Y. Chung, Chair Committee on Finance A •oved/Date/W ' e t o a efer t e . Ar aki, Chair J s Y. Arakaki, Chair ~ Ha ai'i County Council Ha ai'i County Council