Water Conservation Incentives Update. Finance Committee April 28, 2015

Transcription

1 Water Conservation Incentives Update Finance Committee April 28, 2015

2 Presentation Overview Rebate Design Criteria and Trends Summary Rebate Program Statistics FY15-16 Incentive Amounts Pilot Research & Development Programs PAYS on-bill financing Graywater Artificial turf Next Steps 2

3 Rebate Design Criteria Rebates based on reduced demand and District/customer cost savings Ensure consistent and fair eligibility requirements Promote independently tested/proven technologies Leverage partnerships and grant funding Minimize free ridership (i.e. customers who would have installed the product without incentive) Streamline application/program administration Sunset rebates on technology required by codes 3

4 Rebate Financial Incentive Criteria Research product availability and cost Determine estimated water savings and measure life Target lowest market rebate to entice participation Achieve lowest District/ratepayer investment payback period Incentive amount should exceed cost of implementation (i.e. $50 rebate w/<$25 admin. costs) 4

5 Conservation Incentive Trends: EBMUD Market Saturation Levels Showerheads >80% Toilets >65% Clotheswashers >40% Innovators 2.5% Early Adopters 13.5% Early Majority 34% Late Majority 34% Late Adopters 16% 5

6 Conservation Rebate Trends Rebates Distributed (FY *) * Projected 6

7 Conservation Rebate Trends Rebate Dollars ( *) * Projected 7

8 Conservation Rebate Trends Estimated Water Savings ( *) * Projected 8

9 Free Water-Efficient Device Distribution Showerheads (2.0 gpm saves 20%) Shower diverter valves (saves up to 40%) Bathroom faucet aerators (0.5 gpm saves 30-60%) Kitchen faucet aerators (saves 20%) Hose shutoff nozzles (saves ~30%) Pre-rinse dishwashing spray valves (saves >30%) 9

10 FY15-16 Conservation Rebates Laundry-to-landscape graywater diverter $50 High-efficiency toilets and urinals $50 and $100 Residential high-efficiency clotheswashers $150 (EBMUD + PG&E) Bundled Outdoor Program - Up to $2,500/resid. & 20,000/comm. Weather-based irrigation controllers $75 - $300 $0.50/sq.ft. Lawn, pool & artificial turf* conversions (*$1,500 max) Drip irrigation $0.25/sq.ft. Pressure regulators, submeters High-efficiency sprinklers Case-by-case for select technologies (i.e. cooling, process equipment, graywater, etc.) $75, $150, $250 $2 - $5/nozzle $0.50/CCF $0.75/CCF in FY16 10

11 Expanded Focus on Outdoor Irrigation Demand Residential ~40 MGD Irrigation Accts ~11MGD Lawn Removal Rebate Program Growth CY ,000 ft 2 CY2015 (thru March) 350,000 ft 2 CY2015 in-progress 340,000 ft 2 Projected April-Dec ,000 ft 2 Projected Total- Dec. 15 2,020,000 ft 2 11

12 Commercial, Industrial & Institutional Customized Incentive Program Up to 50% of the installed equipment cost (no labor) and customer payback > 2 Yrs. Rebate up to $0.50 per CCF saved ($0.75/CCF in FY16) Rebate issued after implementation; 50% upfront; 50% after 6-12 mos. Water Using Technologies Plumbing fixtures Landscaping Pools, spas & fountains Water treatment Alternate water sources Thermodynamic processes Food service Wash down & sanitation Laundry Submetering Process water Photo & film processing Medical & laboratory Vehicle wash 12

13 WaterSmart Irrigation Controller/AMI Research Project Combines advanced metering infrastructure with smart irrigation controllers in Blackhawk Project area Up to 400 installations (~10%) of 4,000 smart meters in Blackhawk (>500 gpd outdoor use) $270,000 USBR conservation grant Estimated water savings = >100 AFY RFP for contractor installations issued April 20,

14 EBMUD WaterSmart Pay As You Save (PAYS) Pilot A customer-funded on-bill financing program Customers get immediate savings from direct-installed measures Efficiency with no up-front cost and no new debt Payment obligation ends: if customer moves if measure fails and is not repaired

15 How the PAYS Offer is Delivered

16 Proposed EBMUD WaterSmart PAYS Pilot (approx. 20 Accts.) Market Sector Business Classification Candidate Water-Efficient Products MF Residential (6) Accts (60) units Landscape (12) SF Resid. (4) Comm. Food Service (1) General (1) Franchise (1) Institution 5 or more units on one meter, and mobile home parks planter strips, median strips, golf and country clubs, botanical gardens, aquariums commercial eating places, restaurants; commercial eating places, fast food; commercial food sales high-efficiency toilets high-efficiency washers faucets turf conversion drip irrigation submetering sprinkler retrofit weather-based controller graywater systems boilerless steamers waterless wok ranges air-cooled ice machines pre-rinse spray valves commercial dish machines 16

17 EBMUD WaterSmart PAYS Customer Outreach Multi-Family Residential: Collected 26 (property) questionnaires: (22) Oakland, (2) Emeryville, (1) San Pablo, (1) Richmond Data on number of units, occupants, bathroom fixtures, and irrigation (est. of gpcd) 19 are managed by East Bay Asian Local Development Corporation ( units per property) Single-Family Residential: HOA in Danville is very interested in PAYS for financing lawn conversion of the common areas Food Services: Working with Food Service Technology Center (San Ramon) on potential business leads and development of a restaurant guide 17

18 Graywater Custom Incentives District has long history with graywater dating back to 1990 s Joint study w/dwr and Santa Barbara (2) SFR systems installed in Castro Valley, Danville Avg. graywater yield: lavatory, bath, shower = 20 gpcd Est.15-year total production: = >1.0 acrefoot Net unit cost approx. $3,500/acre-foot Have offered a customized graywater rebate since 1990 s 18

19 Graywater Incentives Since 1990 s Joint study w/dwr & Santa Barbara: (2) SFR systems in Castro Valley, Danville Avg. graywater yield = 20 gpcd Net Unit cost approx. $3,500/acre-foot Since 2013: Approx. 50 gray water inquiries; 90 percent for residential systems; (14) applications; (7) rebates All rebates for laundry-to-landscape systems A factor in non-participation: high cost of plumber-installed system ($1,000-$3,000) Many reconsidered based on long payback 19

20 Graywater Laundry-to-Landscape Example Model Gal/ Load Loads/ Wk Gal/ Wk CCF/ Yr $Value of Saved Water 1/ Payback (Yrs) 2/ Std. Toploader HE Front Loader $ $ / Assumes $5/CCF water and wastewater cost 2/ Based on $150 simple Laundry-to-Landscape system 20

21 Single-Family Residential Artificial Turf Pilot Program EBMUD pilot study intended to collect research data on overall life cycle cost/benefits Installation and maintenance costs Water savings Soil and environmental impacts Consumer satisfaction Eligibility $0.50 per square foot, up to $1,500 per account over 24 months Effective on or after June 1, 2015 Staff has contacted DWR and CalRecycle to inquire about grant funding or interest in study 21

22 Artificial Turf Challenges w/sustainable Landscaping Principles District a Charter Signatory to Bay Friendly Landscape Principles Landscape Locally Landscape for Less to the Landfill Nurture the Soil Conserve Water Conserve Energy Protect Water and Air Quality Create Wildlife Habitat 22

23 Next Steps June 2015: Target launch for artificial turf and PAYS pilots July 1, 2015: Update rebate levels/add new rebates FY16: Continue implementation of >$1M in Prop. 84 and USBR rebate/direct installation grantfunding 23

24 FY2015 Financing Plan Update Finance/Administration Committee April 28, 2015

25 Agenda FY 2015 Financing Plan Today s Finance Committee Agenda 4. Green Bond Guidance 5. Authorize additional Water Revenue Bond issuance 6. Extend authorization of short-term indebtedness 7. Renew U.S. Bank as liquidity provider for Water Series 2008 A-2 and A-3 8. Issue new money Water Revenue Bonds 1

26 Proposed Financings for FY15 Category Description Issue/ Approximate Size Date of Board Action Pricing or Issuance Date Potential Market Opportunities Authorization for opportunistic Water and Wastewater restructurings for derisking and fixed rate refundings W 2015A: $429.4 million WW 2015A-1: $54.8 million WW 2015A-2: $13.6 million WW 2015B: $2.8 million 10/28/2014 W: 1/2015 WW: 2/2015 Renew or replace US Bank as liquidity provider for Water Series 2008A-2 and A-3 W 2008A-2: $24.3 million W 2008A-3: $24.3 million 4/28/2015 5/2015 Administration of Existing Debt Portfolio * Green Bond Guidance W: $60 million 4/28/2015 5/2015 * Authorize Additional Water System Revenue Bond Issuance * Extend Authorization for Short- Term Indebtedness Remarket Wastewater Series 2011A Securities Industry and Financial Markets Association (SIFMA) Index Bonds to establish a new interest rate period or refund with extendable CP W: $653 million Maximum permitted per MUD Act 4/28/ /28/ WW 2011A: $16.4 million -- Not necessary refunded New Money Needs Issue additional new money Water Revenue Bonds W: $100.0 million 4/28/2015 6/2015 Note: Dates are subject to change. Highlighted rows are completed.; Iialics are changes and * are new compared with the original schedule. 2

27 Item 4: Green Bond Guidance District has promoted principles of sustainability for over 20 years Sustainability Policy 7.05 establishes the District s commitment to leadership in developing sustainable environmental guidelines District has also been a leader in the bond finance community District can combine these strengths to help development of the Green Bond market Requesting approval of proposed Guidance for Issuing Green Bonds 3

28 Item 4: Green Bond Guidance (contd.) What are Green Bonds? Emerging market for debt used to fund sustainable infrastructure Bonds bought by investors interested in promoting green projects No legal distinction between Green Bonds and traditional municipal bonds Distinction is issuer driven reflects choice of projects being financed 4

29 Item 4: Green Bond Guidance (contd.) Guidance for Issuing Green Bonds is consistent with: Sustainability Policy 7.05 Voluntary Green Bond Principles developed by banks and other stakeholders Guidance will: Help shape project selection internally Potentially guide other water and wastewater agencies interested in issuing Green Bonds 5

30 Item 4: Green Bond Guidance (contd.) Guidance for Issuing Green Bonds Green Bond projects should: Criteria fully meet some or all criteria, and be free of sustainability issues not yet resolved 1. Maintain water quality 2. Improve water use efficiency, including conservation through reduced water loss 3. Improve biodiversity and ecosystem quality 4. Protect against flooding 5. Reduce pollution 6. Improve resilience (adaptation) to climate change 7. Reduce the combustion of fossil fuels 8. Reduce greenhouse gas emissions 9. Implement reduce, reuse, recycle practices in preference to raw materials 10. Adhere to sustainable purchasing guidelines 6

31 Item 4: Green Bond Guidance (contd.) Approximately $80 million projects selected for funding with first Green Bond issue Selected by staff representing Sustainability Committee, key Project Managers and Directors, Accounting, Treasury Reimbursing District for funds spent in FY15: simplify compliance with best practices 7

32 Item 4: Green Bond Guidance (contd.) Project Description Primary Green Category Bond Funding Pipeline Infrastructure Renewals #2 - improve water use efficiency $22,301,506 Large Diameter Pipelines #2 - improve water use efficiency 18,439,743 Pumping Plant Rehabilitation #7 - reduce combustion of fossil fuels 14,600,276 Service Lateral Repl Polybutylene #2 - improve water use efficiency 6,549,557 Treatment Plant Upgrades #1 - maintain water quality 5,658,137 Reservoir Rehab/Maintenance #1 - maintain water quality 5,430,277 Water Conservation Project #2 - improve water use efficiency 2,937,697 Open Cut Reservoir Rehab #1 - maintain water quality 1,466,756 Pipeline System Improvements #2 - improve water use efficiency 1,372,299 West of Hills Transmission #2 - improve water use efficiency 780,152 Dam Seismic Upgrades #4 - Protect against flooding 757,128 Summit Pressure Zone Improve #7 - reduce combustion of fossil fuels 694,064 Mok Aqu No 2 & 3 Relining Proj #2 - improve water use efficiency 589,089 SRV Recycled Water Program #2 - improve water use efficiency 245,988 San Pablo Dam Seismic Mods #4 - Protect against flooding 245,956 WTTIP Distribution Improvs #2 - improve water use efficiency 227,128 WTTIP WTP Improvements #1 - maintain water quality 191,930 Cent Oakland Hills Cascade PZI #2 - improve water use efficiency 131,705 East Bayshore #2 - improve water use efficiency 100,898 F&W Projects and Mok Hatchery #3 - improve biodiversity and ecosystem 73,742 TOTAL $82,794,027 8

33 Item 5: Authorize Additional Water Revenue Bond Issuance MUD Act requires Board to adopt resolution declaring its intention to issue debt Board then approves each individual issuance Current resolution declares intention to issue $653 million Sufficient to cover planned debt funding of 5-year CIP (FY16 FY20) 9

34 Item 6: Extend Authorization of Short-Term Indebtedness Commercial Paper is the District s short-term indebtedness ($375 million) providing very attractive cost of funds MUD Act requires that the Board authorize issuance of shortterm indebtedness every 7 years Board authorized such issuance regularly since at least 1988 Most recent authorization 2008 Authorization is lesser of: (1) average total annual revenue for 3 preceding years ($525 million*) or (2) 25% of District s total outstanding bonds ($691 million*) * as of 12/30/14, most recent date for which there is definitive data 10

35 Item 7: Renew U.S. Bank as liquidity provider Planned administrative transaction U.S. Bank provides liquidity for variable rate Water System bonds Series 2008A-2 and A-3 Amended agreement would lower fee to 0.35% and extend expiration by 3 years New fee lower than US Bank currently charges (0.445%) and lower than proposed by liquidity provider for other District variable rate debt Fee consistent with current market, per District s Financial Advisor Substantial savings compared to switching liquidity providers new provider means new ratings and publishing new Official Statement 11

36 Item 8: Authorize New Money Bond Issue Planned new money financing Series 2015B and 2015C Green Bonds series to fund selected projects in FY15 CIP Traditional series to fund additional FY15 projects plus FY16 CIP Advantages of issuing today for both FY15 and FY16 Take advantage of current low rates Provide certainty that future debt service will be consistent with budget Competitive bond sale 12

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