water conservation incentives update

Water Conservation Incentives Update

Water Conservation Incentives Update

Finance CommitteeApril 28, 2015

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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

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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

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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%

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Conservation Rebate Trends –Rebates Distributed (FY2008-15*)

* Projected

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Conservation Rebate Trends –Rebate Dollars (2008-15*)

* Projected

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Conservation Rebate Trends –Estimated Water Savings (2008-15*)

* Projected

Free Water-Efficient Device Distribution

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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%)

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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.

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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• 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

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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

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• 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

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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

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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)

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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

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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”

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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

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