REPORT TO THE CITY COUNCIL Date: December 11, 2014 FROM: JENNIFER CLARK, Director Development and Resource Management THROUGH: DANIEL ZACK, Assistant Director Development and Resource Management By: JOSE R GONZALEZ, Energy Program Administrator Sustainable Fresno Division, Development and Resource Management SUBJECT ..Title Actions pertaining to the energy efficiency programs under the Local Government Partnership Program for 2015 1. Authorize the Director of the Development and Resource Management Department to extend the master service agreement between the City of Fresno and Pacific Gas and Electric Company until December 31, 2015 and receive $2,847,000 in funding from the California Public Utilities Commission for energy efficiency programs 2. Authorize the Director of Development and Resource Management Department to amend the current Consulting Services Contract with ConSol to December 31, 2015 and provide funding for the extended year of $2,200,000 for the Fresno Home Energy Tune-Up program ..Body RECOMMENDATION Staff recommends that the City Council authorize the Director of the Development and Resource Management Department to: 1) Extend the current master service agreement (Attachments 1 & 2) between the City of Fresno and Pacific Gas and Electric Company ("PG&E") until December 31, 2015 and receive $2,847,000 in funding from the California Public Utilities Commission ("CPUC") for energy efficiency programs, and 2) To execute Amendment #1 to the current Consulting Services Contract (Attachment 3) with ConSol of Stockton. EXECUTIVE SUMMARY The current Master Service Agreement ("MSA") with PG&E, which provides funding from the CPUC for the City of Fresno's energy efficiency programs under the Local Government Partnership ("LGP") Program expires on December 31, 2014. PG&E is proposing to extend the MSA contract until December 31, 2015 (Attachments 4 & 5) and to provide $2,847,000 in funding to the City for calendar year 2015 to continue implementation of its energy efficiency programs (any unexpended monies from the current MSA will no longer be available upon the December 31, 2014 expiration date). This agreement provides funding for the City's administration of Energy Programs as well as for the City's professional services agreements to provide Home Energy and Business Energy Tune-Up audit services. In accordance with the PG&E Master Service Agreement's timeframe, the City's Energy Tune-Up audit services agreement with ConSol also expires December 31, 2014. PG&E and DARM staff are proposing Amendment #1 (Attachment 6), to extend the City's agreement with ConSol through December 31, 2015 and to provide funding for those services for calendar year 2015 in the amount of $2,200,000. 2015 is the third year of a three-year funding and deliverables review period in which PG&E and CPUC will evaluate energy programs for potential subsequent 10-year funding (with some adjustments), and ConSol is in the best position to provide results in these program areas. BACKGROUND Master Services Agreement (Funding from PG&E) On January 14, 2010, the City Council authorized the Director of the DARM to enter into a service provider agreement with PG&E to administer the LGP program within the City of Fresno using funding from the CPUC. This original MSA between the City of Fresno and PG&E, provided $360,000 ($120,000 for each of three years) in funding to the City to provide administration of the LGP program, marketing, and coordination with other energy efficiency programs through the end of December 2012. PG&E had been very impressed with the City of Fresno's success in implementing energy efficiency programs on a regional scale (Fresno, Madera, Tulare, Kings, and Kern Counties) utilizing funding from the U.S. Department of Energy and the California Energy Commission. Therefore, PG&E offered increased funding to the City to continue operation of the Home Energy Tune-up Program that provides no-cost, in-home energy surveys for homeowners in the (then) Fresno and Madera Counties. On June 28, 2012, City Council approved PG&E's increased funding to the City of $575,000 via the MSA through December 31, 2012. During the last quarter of calendar year 2012 PG&E worked with Sustainable Fresno Division staff to develop a scope of work and budget to support the City's energy efficiency programs on a regional basis to be funded as part of their new energy efficiency portfolio for submission to the CPUC in the 2013-2014 funding cycle. The expanded services developed for 2013-2014 included continuation and expansion of the Home Energy Tune-Up Program to PG&E service territories in Madera, Fresno, Tulare, Kings, and Kern Counties, expanded commercial business energy assessment services, expansion of Property Assessed Clean Energy ("PACE") financing availability, commercial property energy benchmarking services, and increased education and outreach to real estate professionals regarding building energy efficiency impacts on property valuation. The budget for these services was $5,600,000 for calendar years 2013 and 2014. On November 1, 2012, the City Council approved the extension of the MSA agreement with PG&E for $5,600,000 through December 31, 2014. On October 16, 2014, the CPUC voted and approved the proposed decision Rulemaking (R) 13-11-005, providing instructions for utility companies to continue funding and implementation of energy efficiency programs into 2015. The CPUC desires to avoid stopping and starting programs as it prepares to move into a 10-year rolling energy efficiency portfolio. 2015 is to be considered the third year of a three-year energy efficiency portfolio for funding provided and deliverables required covering calendar years 2013, 2014 and 2015. 2015 will also be considered year zero of a 10-year rolling energy efficiency portfolio from 2016 through 2025. Subsequent to 2015, the CPUC intends to review portfolios for funding levels, efficiency, and deliverable results on a 10-year continuing rolling basis (with some adjustments), which can allow for longer term funding provided the programs show proper effectiveness/efficiencies. Professional Services Agreement - Energy Efficiency Audit Services In May 2011, the Sustainable Fresno Division of the Development and Resource Management Department, developed specifications for in-home testing and reporting services and issued an RFP for Home Energy Rating System ("HERS") II Whole House Rater and Reporting Services for the home energy tune-up program, then known as Fresno Regional Comprehensive Residential Retrofit Program. Three proposals were submitted and evaluated by a committee made up of City staff and a PG&E representative, and they determined that the ConSol proposal offered the best value for the City of Fresno. Funding was provided for this agreement by the California Energy Commission and the U.S. Department of Energy, Energy Efficiency and Conservation Block Grant. Local preference is not a factor due to the source of funding. In May 2011, City Council approved a $450,000 professional services agreement with ConSol of Stockton, California for Whole House rater and Reporting Services (primarily equivalent to the current Home Energy Tune-Up Program services). Council approved subsequent amendments to this agreement providing for additional like services in the amounts of $350,000 in November 2011, $400,000 in May 2012, and $500,000 in July 2012, respectively. In October 2012, Sustainable Fresno developed specifications for the residential and commercial energy audit testing and reporting services and issued an advertised, competitive Request for Proposal ("RFP") for the Residential and Commercial Energy Audit Testing and Reporting Services for the Fresno Home Energy Tune-up Program. Eleven (11) proposals were submitted for review and evaluation. An evaluation committee, made up of staff from the City of Fresno and a PG&E representative, determined that the ConSol proposal continued to offer the best value for the City of Fresno. On December 20, 2012, the City Council approved a professional services agreement with ConSol of Stockton, California for residential and commercial energy audit testing and reporting services for the Fresno Home Energy Tune-up Program. The contract term was from January 1, 2013 through December 31, 2014 with a contract amount of $3,600,000. October 16, 2014 was the first moment that the CPUC provided approval indicating the funding would continue to be provided to support the City's energy efficiency programs. Given this short timeframe, all resources were focused on the MSA contract amendment needs between the City and PG&E. Because ConSol continues to refine and support the Audit and Reporting Services as determined by the City, PG&E, homeowners, and businesses, PG&E and DARM staff recommend continuing with ConSol throughout the 2015 Calendar year. Additionally, 2015 is the third year of a three-year funding and deliverables review period in which PG&E and CPUC will evaluate energy programs for potential 10-year funding, and ConSol is in the best position to provide results in these program areas. ENVIRONMENTAL FINDINGS By the definition provided in the California Environmental Quality Act ("CEQA") Guidelines Section 15378, this item does not qualify as a "project" for the purposes of CEQA. LOCAL PREFERENCE Local preference was not implemented because the amendment of an agreement does not include a competitive bid. FISCAL IMPACT The costs associated with these agreements were included in the Department's FY15 budget and will be paid for with funding from Pacific Gas and Electric Company and the California Public Utilities Commission. ATTACHMENTS 1. PG&E Contract Work Authorization Part 1 (2013-2014) 2. PG&E Contract Work Authorization Part 2 (2013-2014) 3. ConSol Contract (2013-2014) 4. PG&E Change order No 1 to CWA 2015 5. PG&E No 2 contract change order 2015 6. First Amendment ConSol Final 1