Navigating the Prop 39 Maze

Part 2
February 6, 2014
Presented by:
Rick Brown, President
TerraVerde Renewable Partners, LLC
Tyler B. Dockins, Attorney at Law
Lozano Smith

Table of Contents
1. Proposition 39: Current Status
2. Energy Project Scoping Issues
3. Prop 39 Sole Source Prohibition
4. Q & A

Proposition 39 Update
Funding

Allocation of funding the 2013-14 State Budget allocated $381 M in Prop 39 funds to K-12
School Districts. Funds are being distributed to Districts on a per-student basis plus a
weighting for Free and Reduced Price Meals ADA, with small school minimum guarantees.
Annual allocations through FY 2018-19 are yet to be determined; Prop 39 funds count towards
the States Prop 98 requirement.
Rollover Schools will be able to roll over their allocation year to year in order to pay for larger
projects.The smallest LEAs will be able to bundle funding in years one and two.
Planning Allocations-Districts were eligible to apply for planning dollars as of November 1;
second round in January 31st; third round later in the spring.
Energy Project Loans--Allocates $28 million to State Energy Conservation Account at CEC for
low interest and no-interest loans for eligible projects and technical assistance.
Workforce Development--Provides $3 million for competitive grants to community based
organizations for job training and workforce development.
Energy Audit--Allocates $5 million to Conservation Corps for workforce training and
development.

Entitlements: http://www.cde.ca.gov/fg/fo/r14/prop39cceja13result.asp

Proposition 39 Update
Process

Application Guidelines--Required California Energy Commission (CEC), in consultation with the California
Dept. of Education (CDE) and the California Public Utilities Commission (CPUC), to develop guidelines
for project expenditures and applications, including energy benefit estimates, energy savings cost
assumptions, benchmarks, energy surveys and audits, and cost-effectiveness determination.
Draft Guidelines were released Sept 28 th
Final Guidelines were released Nov. 19 th
CEC approved final guidelines Dec. 19 th
Application Materials released Jan. 31st

Accountability Schools will be subject to front-end project verification and back-end reporting.

Required Prop 39 Deliverables

Expenditure Plan and Application

Expenditure Plan General Form A: a financial summary of how the District intends to spend its Proposition 39 award funds
Expenditure Plan Project Summary Form B(s): the eligible energy project(s) proposed at each of the Districts schools or
sites
Utility Data Release Authorization form(s)
Back-up documentation: additional information providing justification for the Expenditure Plan

Project Expenditures Report

Prop 39 Funding and Project

Development Process
Project Scoping: TerraVerde Energy Report Card
Conduct on all sites and systems: energy benchmarking, usage, and cost analyses
Determine the highest potential energy and cost savings opportunities

Prop 39 Project Development

Planning

Construction

Targeted Investment Grade Audit

Competitive Bid

Present a detailed cost-benefit analysis for each of the

highest potential energy savings opportunities

Application & Project Verification

Develop Prop 39 Expenditure Plan and Application based
on a prioritization of projects that meet the Districts objectives
and requirements and conform with the Prop 39 guidelines

Project Asset Management

Monitor and analyze performance data
Conduct necessary O&M and warranty
management
5 Report
Complete Prop 39 Project Expenditures

Conduct a competitive bid process

Identify best options for project
installation, procurement, and
financing; support contracting

Installation
Oversee on-site installation and
commissioning of the projects

Prop 39 Eligible Project Examples

Lighting Energy Efficiency Measures:

Replace incandescent light with compact

fluorescent (CFL)
Replace incandescent/down light/flood with
lightemitting diode (LED) light
Replace incandescent Exit Sign to LED Exit
sign

HVAC/Mechanical Efficiency Measures:

Replace incandescent light with compact fluorescent (CFL)
Replace old packaged/split HVAC unit with highefficiency
HVAC
Replace old heat pump with highefficiency heat pump
Replace boiler or furnace with high efficiency condensing type

Replace CFL Exit Sign to LED Exit sign

Seal existing leaky duct

Convert T12 fluorescent lamps to T8 with

electronic ballast

Install premium efficiency motors

Convert T12 or T8 fluorescent lights to linear

LED lamps

Install new programmable/set back thermostat

Replace 32 Watt T8 lamps with 28 Watt T8

Lamps
Replace exterior mercury vapor lights with
induction or LED lights
Replace exterior high pressure sodium lights
with induction or LED lights
Install occupancy control for intermittently
occupied rooms

Install variable speed drive for pumps and fans

Replace storage water heater with instantaneous water heater
PlugLoad Efficiency Measures:
Install smart strip/PC management to control
computers/printers
Install vending machine occupancy control.
Simple PV SelfGeneration Project:
Schoolowned Solar PV system
Solar PPA

Application and Expenditure Plan

There were no big surprises; the application requirements did
not vary in an meaningful way from what was described in the
Guidelines adopted by the CEC in December.
However, the application requirements are sufficiently detailed
that completion will take a good bit of focused effort.
Good news: there are more online calculators provided than
were anticipated, narrowing the scope of what is needed from an
energy audit to get your application approved.
More good news: one important new clarification included in the
materials is that Bond proceeds or any local capital funds (e.g.
developer fees) that dont require some form of payback can be
considered grant funding for the purposes of reducing the
denominator in the Savings to Investment Ratio. This could help
bring up the SIR of energy conservation measures that might
otherwise not meet the required 1.05 threshold.

Benchmarking
Measuring and comparing the energy use intensity
of buildings per square foot
kBTU = Thousand British Thermal Units
Combination of
kWH: thousand watt hours of electricity and
Therms: units of energy for natural gas, propane, fuel oil.

Benchmarking Example

Strategic Audit Scoping

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Online Calculators
LightingEnergyEfficiencyMeasures:
ECM1 Replaceincandescentlightwithcompactfluorescent
ECM2 Replaceincandescentlightwithlightemittingdiode(LED)light
ECM3&4 Convertincandescent/CFLexitsigntoLEDexitsign
ECM5&6 ConvertT12fluorescenttoT8withelectronicballastorLEDlamps
ECM7 Replace32wattT8lampswith28wattT8lamps
ECM8&9 Replaceexteriormercuryvapor/HPSwithLED/inductionlights
ECM10 Installoccupancycontrolforintermittentlyoccupiedrooms

HVAC/MechanicalEfficiencyMeasures:
ECM11 Replaceoldpackaged/splitHVACunit(upto65 kBTU)withhighefficiency
HVAC
ECM12 Replaceoldheatpump(upto65kBTU)withhighefficiencyheatpump
ECM13A Replaceboilerwithhighefficiencycondensingboiler
ECM13B Replace furnace with highefficiency condensing furnace
ECM14 Sealexistingleakyduct
ECM15 Installvariablespeeddriveforpumpsandfans
ECM16 Replacemanualthermostatwithprogrammablethermostat
ECM17 Replaceoldmotorwithpremiumefficiencymotor
ECM18 Replacestoragewaterheaterwithgasfiredtanklesswaterheater
PlugLoadEfficiencyMeasures:
ECM19 Installsmartstrip/PCmanagementtocontrolcomputers/printers
ECM20 Installvendingmachineoccupancycontrol

SimplePhotovoltaic(PV)SelfGenerationProject
ECM21 InstallPVSystem

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Prop 39 S.I.R. Formula

SIR (Savings to Investment Ratio) is defined as follows:
SIR=

EnergyCostSavings+MaintenanceSavings
(ProjectCost)(Rebates)(OtherGrants)(NonEnergyBenefits)

Non Energy Benefits are to be calculated as 5% of project cost.

Rebates and other grants will vary by utility company and technology.
This calculation will need to be done for each individual Energy
Conservation or Clean Energy Measure and again for the combined
Project or Portfolio.
An SIR of 1.05 is the threshold a project or portfolio must meet to
receive approve in your Expenditure Plan

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S.I.R. Portfolio Estimate Example

Energy Conservation
Measure
Upgrade existing Energy
Management System
Upgrade T8 light
fixtures/lamps from 32W to
28W
Install Occupancy Sensors
Replace HVAC units

Totals / Weighted Average

SIR

Less
Less
Grants Non
&
Energy
Energy Maint. Numerat Project Rebate Benefit Denomina
Savings Savings
or
Cost
s
s
tor
$269,58
($20,25
$238,484 $31,098
2 $103,661
1) ($3,110) $80,301

S.I.R
3.36

$383,82
($12,57
$362,733 $21,087
0 $210,870
0) ($6,326) $191,974
2.00
($4,087
$78,797 $11,643 $90,440
$72,770
) ($2,183) $66,499
1.36
Economic/Effective
Useful
$1,762,6 $2,641,80
($79,25 $2,562,54
Years
$970,146 $792,540
86 Life
0
$0
4)
6
0.69
Energy
Management
System

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Interior
Fixture

15
$1,650,1
$2,506,5 $3,029,10 ($36,90 ($90,87 $2,901,32
40
60 $856,369
28 Interior Lamps
1
8)
3)
0.86
Occupancy Sensors
HVAC Units (packaged/split)

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8
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The Energy Project Challenge

How does a School District
Achieve actual cost savings results that match
expectations?
Conduct a transparent procurement process that
gets the benefits of competitive bidding without a lot
of administrative hassle?
Achieve net positive cash flow savings without
upfront expense; minimize balance sheet impact?

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Q&A
If you have any questions, please ask using the
Questions pane as shown below.

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Contact Information
Rick Brown, President
TerraVerde Renewable Partners, LLC
1100 Larkspur Landing Circle, Suite155
Larkspur, CA 94939
T: 707.953.2885
Rick.Brown@TVRPLLC.com
www.TVRPLLC.com
Tyler B. Dockins, Attorney at Law
Lozano Smith
4 Lower Ragsdale Drive, Ste. 200
Monterey,CA93940
T:831.646.1501| F: 831.646.1801
TDockins@lozanosmith.com
www.lozanosmith.com

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