Agenda and Attachments - 02/16/10 CC/EWEB JEO

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Agenda Item #2: Steam Transition Project Update Background The closure of the steam utility is an unprecedented activity for EWEB. After extensive study, it was determined that there are no economically viable means to sustain steam operations beyond the next few years. An eroding customer base, coupled with fuel-cost volatility and an aging infrastructure, shifts costs and service interruption risks to the remaining downtown steam customers. With distribution losses of more than 30%, retail steam costs are simply not cost- effective. From a carbon standpoint, the steam plant is EWEB’s largest operational source of emissions, generating over 18,000 metric tons of CO2 per year. Today, six employees operate the steam plant while maintaining the aging distribution lines serving 58 buildings. In December 2008, EWEB adopted a transition plan to discontinue steam operations while mitigating impacts to steam customers. Some critical considerations included: ? Customer awareness and involvement ? Financial assistance ? Reasonable transition period ? Sustainability considerations (energy efficiency, community impacts, etc.) ? Financial impacts to electric utility and ratepayers Discussion As EWEB has put this plan into action, staff has aggressively sought opportunities to leverage additional resources to offset the financial impact to customers. The Board has made funding available to hire energy consulting firm McKinstry to conduct building assessments and prepare reports and loan applications for each downtown customer. A significant milestone in the project was when the Oregon Department of Energy (ODOE) agreed to make its Energy Loan Program available to all steam customers, if eligibility requirements could be satisfied. Where possible, loans will be structured so that repayment costs are offset by operational efficiencies gained from the transition off steam. While this partnership is welcome news, there is a class of customers who will be ineligible for ODOE loans due to building type (churches for instance) or financial status. City of Eugene and EWEB staff developed a federal Department of Energy grant proposal in coordination with the City of Portland that, if funded, will help bridge the financial assistance eligibility gap and make available resources for energy-efficiency retrofits to building owners within the 600 building project area. This agenda item will include an overview of the grant proposal, its objectives and mutual benefits to the City and EWEB. Staff also will provide a status update on EWEB’s work with individual steam customers and the latest transition timeline. It should be noted that no one solution will work for all buildings, and it is ultimately up to individual customers to decide what system makes sense given heating needs, overall cost, and efficiencies. For smaller buildings, ductless heat pumps may be a viable solution, whereas high-efficiency on-site natural gas boilers are more likely for larger users. Either way, we believe the transition can be a catalyst for reinvestment in a number of downtown buildings, and will help shrink our energy consumption and carbon footprint in a meaningful way. For more information, please contact Mike Logan (685-7108) or Ethan Nelson (682-5224).