HomeMy WebLinkAbout09 APPROVE AGREEMENT WITH NRG BUSINESS SERVICESMEETING DATE: AUGUST 16, 2016
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: DOUGLAS S. STACK, DIRECTOR OF PUBLIC WORKS/CITY ENGINEER
SUBJECT: APPROVE AGREEMENT WITH NRG BUSINESS SERVICES
SUMMARY
Staff is requesting the City Council authorize an agreement between the City of Tustin and NRG
Business Services LLC (NRG) allowing the City to participate in a Southern California Edison (SCE)
sponsored program to install air conditioning components known as Ice Bear on its facilities.
Program availability is based upon facility location. Some of the facilities proposed as part of this
project can be completed at no cost and others will receive a significant discount on currently
planned HVAC replacements, when installed in conjunction with an Ice Bear unit.
RECOMMENDATION
It is recommended that the City Council approve the agreement with NRG Business Services LLC
and Ice Energy Holdings, Inc. and authorize the City Manager to execute the agreement on behalf
of the City.
FISCAL IMPACT
Sufficient funds have been appropriated in the Fiscal Year 2016/17 Public Works Department
Capital Improvement Budget. The purchase price of all components for this HVAC upgrade is
$89,908, of which $18,405 would be returned to the City after installation is complete and rebate
applications have been submitted through SCE's Self Generation Incentive Program.
CORRELATION TO THE STRATEGIC PLAN
The recommendation relates to the City's Strategic Plan by implementing Goal B (3), by way of
maintenance and improvement of public facilities.
BACKGROUND
Assembly Bill 2514 mandated that the California Public Utilities Commission (CPUC) determine
targets for Energy Storage Systems for investor owned utilities such as SCE. The CPUC required
SCE to create storage for 580 MW before the end of the calendar year of 2020.
Additionally, the CPUC required that SCE start by purchasing capacity in the form of "Preferred
Resources" (renewables, energy efficiency, demand response, and energy storage). This local
initiative is offered to Central Orange County commercial customers with significant subsidies in an
effort to deploy innovative energy-efficient solutions while minimizing capital investments made by
customers. In response, Southern California Edison (SCE) partnered with NRG to provide these
Preferred Resources.
NRG Business Services Agreement
August 16, 2016
Page 2
Separate from the CPUC requirements, the closure of the San Onofre Nuclear Generating Station
(SONGS) and the retirement of other ocean -cooled power plants have stimulated demand for clean,
affordable energy -efficiency options in Southern California. In 201312014, SCE initiated a request
for proposals to make significant long-term purchases of 1,892 MW to meet Local Capacity
Requirements (LCR) and replace capacity lost from the San Onofre shutdown.
NRG was awarded the contract and serves as the financial component of this effort by fronting the
capital for the program. NRG's roll is to provide and install the Ice Bear equipment, as well as
provide maintenance for twenty years at no cost to the City. NRG owns and maintains the Ice Bear
equipment installed on the City's facilities, SCE then compensates NRG for the energy storage
capacity provided by the Ice Bear in the form of a monthly payment, and the City benefits by way of
energy savings. Ice Energy serves as NRG's contractor to provide the equipment and services.
Ice Energy is the manufacturer of the Ice Bear which is an ice battery for 3 ton — 20 ton commercial
air conditioning units. During off-peak hours, it freezes water in an insulated storage tank. Then,
during peak hours, ice -chilled refrigerant circulates from the unit to the air conditioning system,
eliminating the need for energy -intensive compressors and reducing peak air conditioning electricity
consumption by 95%.
Ice Bear Local Capacity Requirements Program benefits include:
• Ice Bear equipment provided and installed at no cost.
• Service and maintenance on the Ice Bear systems is provided for 20 years at no cost.
• Up to 40% off new Ice Bear -compatible HVAC units.
• Up to 30% savings on cooling bills.
• Up to 40% lower CO2 emissions.
Four City buildings can benefit from the LCR Program: Clifton C. Miller Community Center, Council
Chamber, Tustin Area Senior Center, Tustin Family Youth Center (all within SONGS area). The
total estimated annual energy savings is $12,503.
As an added value to the agreement, Ice Energy will pass along their pricing for replacement of
aged HVAC units at a significant discount. For instance, the units needing replacement at the
Tustin Area Senior Center and Tustin Family Youth Center would normally cost the City $84,500,
but Ice Energy will replace them for $39,000. The table below shows the cost breakdown for the
LCR Program.
Quantity
Description
Typical Cost
Program
Savings
Cost
11
Ice Bear — Ice Battery Systems
$275,000
NRG Funded
$275,000
Carrier High Efficiency Ice Ready 7.5
1
Ton Package Unit
$19,500
$9,000
$10,500
Carrier High Efficiency Ice Ready 10 Ton
2
Package Units
$52,000
$24,000
$28,000
Carrier High Efficiency Ice Ready 5 Ton
1
Package Unit
$13,000
$6,000
$7,000
Total
$359,500
$39,000
$320,500
NRG Business Services Agreement
August 16, 2016
Page 3
Another program that staff would take advantage of is the Self Generation Incentive Program
(SGIP). SGIP is a rate -payer funded rebate program that is overseen by the CPUC. This program
is available to SCE customers through 2019. Seventy five percent (75%) of the funding available
through this program is dedicated to renewables and emerging technologies, for which Ice Bear
qualifies. Upgrades to the HVAC system at the Columbus Tustin Gymnasium are not eligible for
the LCR program due to the gym being outside of the SONGS area, but does qualify for rebates
through the SGIP program. It is estimated the SGIP rebate will be approximately $18,000 and the
total estimated annual energy savings for the Columbus Tustin Gymnasium is $1,897.
The following table reflects the savings associated with the SGIP program at Columbus Tustin
Gymnasium.
The total upfront savings to the City for both programs is estimated at $332,451 with an ongoing
annual savings of $14,400.
It is recommended that the City Council approve the agreement with NRG Business Services LLC
and Ice Energy Holdings, Inc. and authorize the City Manager to execute the agreement on behalf
of the City. The agreement has been reviewed and approved as -to -form by the City Attorney.
Attachment:
Stack, P. E.
Public Works/City Engineer
1. Agreement with NRG Business Services LLC & Ice Energy Holdings, Inc.
Cod
Siolkiiii
1
Ice Bear — Ice Battery Systems
$14,396
$14,396
N/A
1
Carrier High Efficiency Ice Ready 4 Ton
Package Unit
$10,400
$5,088
$5,312
1
Carrier High Efficiency Ice Ready 5 Ton
Package Units
$13,000
$6,361
$6,639
1
Engineering, Electrical and Mechanical
Labor
$11,838
$11,838
N/A
2
HVAC Installation up to 10 tons
$2,475
$2,475
N/A
1
Extended Ice Bear Warranty (program
requirement)
$1,330
$1,330
N/A
1
Structural additions for Ice Bear Roof
Installation
$4,232
$4,232
N/A
Rebate
-$18,000
$18,000
Total
$57,671
1 $27,720
1 $29,951
The total upfront savings to the City for both programs is estimated at $332,451 with an ongoing
annual savings of $14,400.
It is recommended that the City Council approve the agreement with NRG Business Services LLC
and Ice Energy Holdings, Inc. and authorize the City Manager to execute the agreement on behalf
of the City. The agreement has been reviewed and approved as -to -form by the City Attorney.
Attachment:
Stack, P. E.
Public Works/City Engineer
1. Agreement with NRG Business Services LLC & Ice Energy Holdings, Inc.
ATTACHMENT 1
Ice Bear Agreement
City of Tustin and NRG Business Services LLC
Ice Bear Agreement
City of Tustin and NRG Business Services LLC
This Ice Bear Agreement is between the City of Tustin 4. Project Management and Account Management:
("Customer") and NRG Business Services LLC ("NRG"). This Agreement
will become effective when both parties have signed it. The date of this NRG and Customer will provide Project Managers who will serve as the
Agreement will be the date this Agreement is signed by the last party to sign primary liaison between the parties and will be the single point of contact for
it (as indicated by the date associated with that party's signature) ("Effective each for all project related issues.
Date").
DEFINITIONS
"Connected Equipment" means the Customer's HVAC Equipment that is to
be connected to the thermal energy storage equipment system.
"Property" means the Customer's premises where the System will be
installed, as described in Exhibit A.
"System" means thermal energy storage equipment to be connected to
Customer's HVAC equipment at the Property, as described in Exhibit A.
A. WORK:
1. NRG Responsibilities:
a) NRG will or will cause others to design, construct, and install the
System;
b) NRG will own the System during the Term of the Agreement; and
c) NRG agrees that all energy and demand bill saving benefits that
result from use of the System belong to the Customer.
2. Customer Responsibilities:
a) Customer will be responsible for providing the water required for
the filling of the Ice Bear tank;
b) Customer will allow NRG to operate the System during the term of
the Agreement;
c) Customer will be responsible for any conditions at the Property
that affect the installation (e.g., blocking access to the roof);
d) Customer will not remove the System from service, except for
safety reasons or to perform necessary maintenance on the
Connected Equipment for not more than a reasonable period;
e) Customer will not do anything, permit or allow to exist any
condition or circumstance that would prevent the System from
operating as intended at the Property;
f) Customer will not remove any markings or identification tags on
the System; and
g) Customer will notify NRG if the System appears damaged or
unsafe or if the System is stolen.
3. Conditions Prior to Installation of the System.
NRG's obligation to install the System is conditioned on the following items
having been completed to its and Customer's reasonable satisfaction:
a) completion of (1) the site audit (a thorough physical inspection of
the Connected Equipment) and (2) the final System design;
b) final approval by the CPUC of the contract between SCE and
NRG;
c) written acceptance and acknowledgement by SCE that the
Connected Equipment qualifies for the project;
d) installation of the Connected Equipment; and
e) issuance of all applicable permits required by the applicable
jurisdiction.
5. Access to the System
a) Customer grants to NRG and its employees, agents, and
independent contractors the right to reasonably access the
System as necessary for the purposes of examining, testing,
evaluating, measuring, inspecting, designing, constructing,
installing, operating, maintaining, repairing, monitoring, replacing,
upgrading, or making any additions to the System, and take any
other action reasonably necessary or required in connection with
those purposes. This access right shall continue for up to ninety
(90) days after this Agreement expires.
b) NRG agrees to provide Customer reasonable notice before
accessing the System.
c) During the time that NRG has access rights Customer shall
ensure that its access rights are preserved and shall not interfere
with or permit any third party to interfere with such rights or
access.
d) Each employee to be used by contractor on city property or
facilities may not work until the mandated documentation for
eligibility to work has been received by the city and approved
before the contractor's employee starts work. This includes
Department of Justice (DOJ) fingerprinting and clearance. The
cost associated with the fingerprinting, background checks, and
DOJ clearance will be paid for by the City of Tustin. All
Contractor's employees shall fill the required forms and submit to
the fingerprinting. Cost associated with this process will be bome
by the servicing contractor.
6. No Alterations to System/ Replacement of Connected Equipment
Customer agrees not to make any modifications, improvements, revisions or
additions to the System or take any other action that could void NRG's
warranty on the System without NRG's prior written consent. To the extent
NRG permits any modifications, improvements, revisions or additions to the
System by Customer, they will become part of the System and shall be
NRG's property.
If Customer replaces the Connected Equipment at any time during the Term,
NRG will work with Customer to find the best solution to bring the System
back online. NRG agrees to make available and Customer agrees to buy
Ice -Bear -ready replacement HVAC equipment.
B. TERM/TERMINATION:
1. Term.
A. Term, The Term of this Agreement will commence on
the date the System is installed and operational at the Property and will
continue until 20 years after the project approval date from Southern
California Edison (the "Term").
B. End Of Term. At end of Term, Customer may:
i. Enter into a mutually acceptable lease agreement;
100145377.1 /}
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Ice Bear Agreement
Ice Bear Agreement
City of Tustin and NRG Business Services LLC
ii. purchase the System from NRG for its fair market value 2. Loss or Damage.
("FMV") at the end of the Term; or
iii. have the System removed at Customers cost. (a) Unless Customer is grossly negligent or intentionally damages the
System, NRG will bear all of the risk of loss, damage, theft,
If Customer chooses to lease the System from NRG, the lease price will destruction or similar occurrence to any or all of the System.
include maintenance services. If Customer chooses to purchase the Except as expressly provided in this Agreement, no loss, damage,
System, NRG may offer continuing maintenance services. If Customer theft or destruction will excuse Customer from Customer's
chooses to purchase the System, NRG will retain a third party independent obligations under this Agreement.
appraiser to compute the System's FMV.
2. Early Termination/Default
Except as otherwise set forth herein, either Party has the right to terminate
this Agreement immediately by written notice upon an Event of Default by the
other Party.
If Customer terminates this Agreement due to an Event of Default by NRG,
Customer may elect, at the time it provides written notice of such termination,
to:
require NRG to remove the System from the Property at NRG's
expense within forty-five (45) days of such termination, or
purchase the System from NRG for its fair market value ("FMV")
on the date of termination; NRG will retain a third party
independent appraiser to compute the System's FMV.
If NRG terminates this Agreement due to an Event of Default by Customer,
NRG may elect:
to take any reasonable action to correct Customer's default or to
prevent NRG's loss;
to recover any monetary loss suffered by NRG resulting from
withdrawal of the Property from SCE's project; and
to exercise any other or additional right or remedy available to
NRG under applicable law.
3. Sale of the ProWdy. If Customers Property is sold before the end of the
Term, Customer agrees to give NRG at least 30 days prior written notice of
the sale, and:
(a) if the buyer of the Property wishes to assume all rights and
obligations under this Agreement, Customer, the approved buyer,
and NRG shall execute a written transfer of this Agreement; or
(b) Customer may choose to have the System removed from the
Property at the Customers cost.
C. TITLE; RISK OF LOSS; WARRANTY
1. Ownership.
Customer agrees that the System is NRG's personal property. NRG
owns the System for all purposes. Customer shall at all times keep
the System free and clear of all liens, claims, levies and legal
processes not created by NRG, and shall indemnify and defend NRG
against such encroachments to its title to the System. Customer
agrees that the System is not a fixture.
{00145377.1 /}
(b) If there is loss, damage, theft, destruction or a similar occurrence
affecting the System, and Customer is not in default of this
Agreement, Customer shall cooperate with NRG, at NRG's sole
cost and expense, to have the System repaired pursuant to any
warranties from the System manufacturer.
3. Warranly.
Customer understands that as owner of the System, NRG has the sole
right to enforce any warranties provided by the manufacturer or seller of
the System. NRG agrees that its obligation to maintain and repairthe
System requires it to pursue its rights under its agreement with the
System manufacturer, Ice Energy, on behalf of Customer. There are no
other representations or warranties, express or implied, as to the
merchantability, fitness for any purpose, condition, design, capacity,
suitability or performance of the System or its installation.
Because energy and demand savings vary depending on weather conditions,
customer utility tariffs, customer operations, and operational hours of the
HVAC units, NRG does not guarantee the amount of energy savings
Customer will realize from use of the System.
D. FORCE MAJEURE; CHANGE IN LAW; LIMITATION OF LIABILITY.
1. Force Majeure:
a) If a Party is unable to perform all or some of its obligations under this
Agreement because of a Force Majeure Event, that Party will be
excused from whatever performance is affected by the Force
Majeure Event. The party affected by the Force Majeure Event
must provide notice to the other Party as soon as is reasonably
practical, describing the Force Majeure Event;
b) A Party's suspension of its obligations is of no greater
scope and of no longer duration than is required by the
Force Majeure Event; and
c) No obligation that arose before the Force Majeure Event that could
and should have been fully performed before such Force Majeure
Event is excused as a result of such Force Majeure Event.
"Force Majeure" means any act, event or condition that causes delay in or
failure of performance of obligations under this Agreement, if that act, event
or condition (i) is beyond the reasonable control of the Party claiming
suspension ("Claiming Party"), (ii) is not the result of any acts, omissions or
delays of the Claiming Party (or any third person over whom Claiming Party
has control including, without limitation, any subcontractor), and (iii) cannot
be cured, remedied, avoided, offset, negotiated or otherwise overcome by
the prompt exercise of due diligence of the Claiming Party (or any third
person over whom Claiming Party has control including any subcontractor).
Force Majeure includes the following (if the requirements described in
clauses (i) through (iii) are satisfied): hurricane, fire, tomado, landslide,
earthquakes, acts of the public enemy, war, insurrection, riot or civil
disturbance, strikes or labor stoppages (excluding those involving the Parties
or any employee of either of them). Force Majeure will not include any delay,
page 2 of 5
Ice Bear Agreement
City of Tustin and NRG Business Services LLC
default or failure to make payments when due.
2. Change In Law:
If a Change in Law is enacted that terminates or adversely affects NRG's
contract with SCE, NRG may terminate this Agreement upon the earlier of 30
days after notice to Customer or the date that the of Change in Law becomes
effective and NRG will remove the System from the Property within ninety
(90) days of such termination.
3. Limitation of Liability. Damages or other liabilities of each Party
under this Agreement are limited to direct actual damages as the sole
and exclusive remedy. Neither Party is otherwise liable for
consequential, incidental, punitive, exemplary, or indirect damages, or
other business interruption damages, by statute, in tort or contract,
under any indemnity provision, or otherwise, including any inability of
Customer to use the work even if the other Party has been notified of
the possibility or likelihood of those damages occurring. Each party's
total liability to the other party and its affiliates and agents on an
aggregate basis arising out of or in connection with the Agreement,
whether in contract or in tort, shall not exceed $1,000,000.
4. Assignment, Except as otherwise provided, neither Party may assign this
Agreement without the other Party's prior written consent, not to be
unreasonably withheld. NRG may without Customers consent, (i) as part of
any financing or other financial arrangements, assign, sell or pledge this
Agreement or its accounts, revenues, or proceeds, or (ii) assign this
Agreement to an Affiliate or to any other person or entity succeeding to all or
a substantial portion of the assets of NRG.
E. INSURANCE:
1. NRG Insurance. During the Term, NRG shall maintain the following
insurance:
(a) Commercial General Liability insurance coverage against third -
party claims, for bodily injury (including death) and/or damage to
property resulting from or caused by the operation, handling and
transportation of the System during the Term, with minimum limits
of $1,000,000 per occurrence/$2,000,000 aggregate.
(b) Property insurance on the System, with limits of not less than the
full replacement value of the equipment, which coverage shall
include losses caused by fire, theft, vandalism, acts or omissions
of NRG, its employees and agents or third parties, or other risk of
loss customarily insured against in a commercial property loss
policy. Waiver of subrogation will be granted in favor of Customer
under NRG's property insurance policy.
(c) Workers compensation insurance for NRG's employees in
amounts required by the laws of the state(s) where the work will
be performed.
(d) To the extent that any subcontractors or agents of NRG are not
covered by NRG's insurance in Sections E.1. (a), (b) and (c)
above, NRG shall require any subcontractors or agents to carry
the same insurance and limits as required of Company.
(e) Customer is to be included as an additional insured on the policy
or policies required in paragraph (a) of this Section E.1.
2. Customer Insurance. During the Term, Customer shall maintain the
following insurance:
(a) Commercial General Liability insurance coverage against third -
party claims, for bodily injury (including death) and/or damage to
property resulting from or caused by acts or omissions of
Customer or its employees, contractors, agents or
(00145377.1 /)
representatives, with minimum limits of $1,000,000 per
occurrence/$2,000,000 aggregate;
(b) Property insurance on the Customers Property, buildings,
personal property, tools and equipment, with limits of not less
than the full replacement value, which coverage shall include
losses caused by fire, theft, vandalism, acts or omissions of NRG,
Customer, their respective employees and agents or third parties,
or other risk of loss customarily insured against in a commercial
property loss policy. Waiver of subrogation will be granted in favor
of NRG, its affiliates and agents under the Customer's Property
insurance policy.
(c) To the extent Customer has employees, workers compensation
insurance for Customers employees in amounts required by the
laws of the state(s) in which the Site is located.
(d) NRG is to be included as an additional insured on the policy or
policies required in paragraph (a) of this Section E.2.
3. Evidence of Insurance. On the Effective Date and on each renewal date,
if any, NRG shall furnish certificates to Customer evidencing the foregoing
required insurance is in full force and effect and Customer shall furnish
certificate(s) to NRG evidencing the required insurance set forth herein is in
full force and effect,
F. NOTICE:
For a notice or other communication under this Agreement to be valid,
it must be in writing and delivered by (1) hand, (2) by registered or certified
mail, return receipt requested and postage prepaid, or (3) by a national
delivery company, with all fees prepaid, or (4) by email. A valid notice or
other communication under this Agreement will be effective when received
by the Party to which it is addressed.
For a notice or other communication to a Party under this Agreement to be
valid, it must be addressed using the information for that Party specified
below or any other information specified by that Party on 10 Days poor
written notice in accordance with this Section. If a notice or other
communication addressed to a Party is received after 5:00 p.m. on a
Business Day at the location specified in the address for that Party, or on a
Day that is not a Business Day, then the notice will be deemed received at
9:00 a.m. of the time zone for the receiving Party, on the next Business Day.
LEGAL NOTICES TO NRG:
TO NRG Business Services LLC
NRG Business Services LLC
Attention: Vice President
Robert Ott
1201 Fannin Street
Houston, TX 77002
713-537-5528
Robert.ottftnrg.com
With a copy to: Deputy General Counsel
TO CUSTOMER:
[Name]
Attention: Public Works Director
Douglas S. Stack
300 Centennial Way
Tustin, CA 92780
Email: dstack@tustinca.org
With a copy to: City Attorney
[Signature Block is on the next page]
page 3 of 5
Ice Bear Agreement
City of Tustin and NRG Business Services LLC
Agreed to
NRG BUSINESS SERVICES LLC [CUSTOMER]
By:
By:
Authorized Signature
Authorized Signature
Name:
Name: Jeffrey C. Parker
Title:
Title: City Manager
Date:
Date:
{00145377.1 /}
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Ice Bear Agreement
City of Tustin and NRG Business Services LLC
Exhibit A
Customer Property and Description of the System
City of Tustin
Southern California Edison Customer Service Account Number(s): TBD
Facility Description
HVAC ff
Community Center 1(LCR)
Make
Trane
Model
WCH120B400BA
Serial # Vintage
H041436660 1992-2005
Nominal
Tons
10
Apply Ice
Bear?
Yes
Ice Sears
Install
Setup
Single
Community Center 2 (LCR)
Trane
WCH12064005A
H05142650D 1992 - 2005
10
Yes
Single
Council Chambers 1(LCR)
Trane
WCD120B4005A
1992-2005
10
Yes
Single
Council Chambers 2 (LCR)
Trane
WCD120B40DBA
1992-2005
10
Yes
Single
Council Chambers 3 (LCR)
Trane
WC012084008A
1992-2005
10
Yes
Single
Senior Center4(LCR)
York
ZH120K15N2AAAS
2010-2014
10
Yes
Single
Senior Center 8 (LCR)
York
ZH120N15N2AAA5
2010-2014
10
Yes
Single
Senior Center 9 (LCR)
York
DZNY060ND6525NX
2010-2014
5
Yes
Split
Senior Center 10 (LCR)
Carrier
5ORK1006-311–
1992-2005
5
Yes
Split
Youth Center 1(LCR)
Carrier
48HIDOD8-531
1992-2005
7.5
Yes
Single
Youth Center 2 (LCR)
Carrier
48WD012-531
1992-2005
30
Yes
Single
Youth Center 3 (LCR)
Total
Carrier
48MD012-531
1992-2005
10
107.5
Yes
HVACs: 12
Single
IBs: 11
The above "OsedeWpmeay ca 4 ration and pricing is ront?Went spm final enoneerhg review and apprawi by SCE and NRG.
Ice Bears Installed
Serial # • TSD
100145377.1 /}
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