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Water Conservation Incentives Update
Water Conservation Incentives Update
Finance CommitteeApril 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
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
Rebate Financial Incentive Criteria
4
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)
Conservation Incentive Trends:EBMUD Market Saturation Levels
Toilets >65%
Showerheads >80%
Late Adopters16%
Clotheswashers >40%
Early Majority34%
Late Majority34%
Early Adopters13.5%
Innovators2.5%
5
6
Conservation Rebate Trends –Rebates Distributed (FY2008-15*)
* Projected
7
Conservation Rebate Trends –Rebate Dollars (2008-15*)
* Projected
8
Conservation Rebate Trends –Estimated Water Savings (2008-15*)
* Projected
Free Water-Efficient Device Distribution
9
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%)
10
FY15-16 Conservation Rebates
$50Laundry-to-landscape graywater diverter
$0.50/CCF $0.75/CCF in FY16
Case-by-case for select technologies (i.e. cooling, process equipment, graywater, etc.)
$75, $150, $250
$2 - $5/nozzle
Pressure regulators, submeters
High-efficiency sprinklers
$0.50/sq.ft.(*$1,500 max) Lawn, pool & artificial turf* conversions
Drip irrigation
$75 - $300Weather-based irrigation controllers
$150 (EBMUD + PG&E)Residential high-efficiency clotheswashers
$50 and $100High-efficiency toilets and urinals
Bundled Outdoor Program - Up to $2,500/resid. & 20,000/comm.
$0.25/sq.ft.
11
Expanded Focus on Outdoor Irrigation Demand
• Residential ~40 MGD
• Irrigation Accts ~11MGD
Lawn Removal Rebate Program GrowthCY2014 530,000 ft2
CY2015 (thru March) 350,000 ft2
CY2015 in-progress 340,000 ft2
Projected April-Dec. 2015 800,000 ft2
Projected Total- Dec. ’15 2,020,000 ft2
Commercial, Industrial & Institutional Customized Incentive Program
12
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
WaterSmart Irrigation Controller/AMI Research Project
13
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, 2015
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
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
5 or more units on one meter, and mobile home parks
• 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
Landscape(12) SF Resid.
(4) Comm.
planter strips, median strips, golf and country clubs, botanical gardens, aquariums
Food Service(1) General(1) Franchise
(1) Institution
commercial eating places, restaurants; commercial eating places, fast food; commercial food sales
EBMUD WaterSmart PAYS Customer Outreach
17
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 (18 – 144 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
Graywater Custom Incentives
18
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 acre-foot
– Net unit cost approx. $3,500/acre-foot
Have offered a customized graywater rebate since 1990’s
Graywater Incentives Since 1990’s
19
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
Graywater Laundry-to-Landscape Example
20
ModelGal/ Load
Loads/ Wk
Gal/ Wk
CCF/ Yr
$ Value of Saved Water1/
Payback(Yrs)2/
Std. Top-
loader40 7 280 15 $75 2
HE Front
Loader15 7 105 5.6 $28 5.4
1/ Assumes $5/CCF water and wastewater cost2/ Based on $150 simple Laundry-to-Landscape system
Single-Family Residential Artificial Turf Pilot Program
21
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
Artificial Turf Challenges w/Sustainable Landscaping Principles
22
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
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 grant-funding
FY2015 Financing Plan Update
Finance/Administration Committee
April 28, 2015
1 1 1
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
2
Proposed Financings for FY15
Note: Dates are subject to change. Highlighted rows are completed.; Iialics are changes and * are new compared with the original schedule.
Category Description Issue/
Approximate Size
Date of Board Action
Pricing or Issuance
Date
Authorization for opportunistic Water and Wastewater restructurings for de-risking 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
* Green Bond Guidance • W: $60 million 4/28/2015 5/2015
* Authorize Additional Water System Revenue Bond Issuance
• W: $653 million 4/28/2015
--
* Extend Authorization for Short-Term Indebtedness
• Maximum permitted per MUD Act
4/28/2015 --
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
• WW 2011A: $16.4 million
--
Not necessary –refunded
Issue additional “new money” Water Revenue Bonds
• W: $100.0 million 4/28/2015 6/2015
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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
4
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
5
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
6
Item 4: Green Bond Guidance (contd.)
Guidance for Issuing Green Bonds
Green Bond projects should: – fully meet some or all criteria, and
– be free of sustainability issues not yet resolved
Criteria
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
7
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
8
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
9 9
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)
10 10
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 short-term 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
11 11
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”
12 12
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