Committee of the Whole

 

 

 

 

 

TO:

Mayor and Members of Council

 

 

 

 

FROM:

John Livey, CAO

Jim Sales, Commissioner of Community and Fire Services

 

 

 

 

PREPARED BY:

Stuart Taylor, Director, Strategic Services

Anne Pozywiak, Director, Strategic Initiatives

 

 

 

 

DATE OF MEETING:

2005-Jun-14

 

 

 

 

SUBJECT:

The Markham Energy Conservation Office

 

 

 

 

RECOMMENDATION:

THAT the staff report entitled “The Markham Energy Conservation Office”, dated June 14, 2005, be received;

 

AND THAT the Markham Energy Conservation Office allocate $1,000,000 over three years, $500,000 in 2005, $250,000 in 2006 and $250,000 in 2007, in conservation demand management funding from PowerStream toward the objectives, programs and staffing outlined in Appendix B;

 

AND THAT the Canadian Urban Institute be funded to an upset limit of $65,000 from the conservation demand management funding from June 2005 through March 2006 to implement and lead the start up of the Markham Energy Conservation Office;

 

AND THAT approval be given to hire a Manager of the Markham Energy Conservation Office and one administrative support staff person on a annual contract for up to three years to oversee the conservation demand management program;

 

AND FURTHER THAT the Town provide up front funding for the contract positions at a cost of $127,100 annually to oversee the conservation demand management program to be repaid from future energy cost savings.

 

PURPOSE:

The purpose of this report is to establish the Markham Energy Conservation Office (MECO) objectives, business plan and staffing to initiate the energy demand conservation program.

 

BACKGROUND:

In February 2003, the Engage 21st Century Markham process was completed and outlined a 20-year vision for the Town.  The Engage process, led by the Mayor, Council and senior staff, was built on the vision, desires and values of many stakeholders. The process created a vision and mission for the Town that allowed a number of corporate strategic objectives to emerge including environmental protection and management.  This report outlines the concept, program and benefits that the Markham Energy Conservation Office will provide to the Town and the community.  Implementing the Markham Energy Conservation programs will allow for energy and resource conservation, encourage a sustainable community and assist the Town of Markham in achieving Kyoto Protocol objectives.  It is within the context of the Engage 21st Century Markham strategic vision that the Town has pursued and created the Markham Energy Conservation Office.

 

 

Markham’s Strategic Objective: Protect and Enhance a Healthy Ecosystem

One of the Town of Markham’s strategic objectives is to “protect, enhance and restore…a healthy ecosystem”.  Markham residents, Council and staff share a common objective of protecting and enhancing our ecosystem.  Using resources wisely is good for the environment, makes economic sense and secures a healthy future for our children and future generations.  The Town has undertaken many environmental efforts to achieve our corporate environmental objective. 

 

The Markham Energy Conservation Office is an important environmental initiative that will improve air quality, conserve resources and raise public awareness that conservation starts with individuals changing their day-to-day attitudes and behaviours.  From September 2004 through May 2005 there have been ongoing negotiations with PowerStream, Markham Energy Conservation Office and the Ontario Energy Board to establish a conservation demand management program.  As a result of these discussions, the Markham Energy Conservation Office will receive $1,000,000 in funding over the next three years from PowerStream to initiate energy conservation programs. 

 

The Markham Energy Conservation Office will have a small complement of contract staff focused on developing and implementing funded programs.  The office will report to Council through General Committee meetings on the Community Services and Environment agenda.

 

The energy conservation funding will be targeted at six programs, outlined in Appendix B, which allow Markham to assume a leadership role as a local champion for energy conservation and efficiency.  The Markham ECO efforts will reduce current energy demand by encouraging better building efficiency, better building design and introducing new delivery methodologies and/or technology.  The end result will be to improve energy efficiency within existing infrastructure, encourage energy efficient design in new infrastructure and create new delivery processes to reduce demand on the existing grid.  In addition, Markham ECO will initiate an employee awareness program that will encourage behaviour change to reduce consumption in the workplace and at home. Markham staff will become front line ambassadors for energy conservation.

 

Markham Energy Conservation Office is Aligned to Provincial Conservation Culture

In January 2004, the provincial government announced its commitment to make conservation, demand management and demand response strategies a cornerstone of Ontario's long-term energy future.  Specifically, the Province committed to:

 

·        Creating a "conservation culture" in Ontario : Making conservation, demand management and demand response strategies a cornerstone of Ontario's long-term energy future;

·        Reliability, diversity and affordability: A reliable, sustainable and diverse supply of competitively priced power;

·        Effective consumer protection : Consumers, especially residential and small business consumers, will be protected from excessive price volatility;

·        A stronger investment climate : The government will encourage new investment in conservation, generation and transmission;

·        Cleaner Air : The government will contribute to the clean up of our air by eliminating coal fired generation and replacing it with other, cleaner sources of energy.

 

 

Markham ECO Objectives

The Markham ECO approach to energy and resource conservation has been aligned to the Province’s conservation culture in determining energy conservation objectives.  The Markham ECO will:

 

§         Become a local champion for energy conservation and set a national example;

§         Make Markham more energy efficient thereby reducing greenhouse gas emissions;

§         Enhance Markham’s local energy supply and reduce its dependency on the grid;

§         Leverage multiple funding sources to deliver programs; and

§         Help reduce electricity consumption by 5% in 2007, 10% in 2014, with corresponding 10% and 20% peak reductions.

 

 

Markham ECO Business Plan

In June 2004, Markham retained the Canadian Urban Institute to prepare the Energy Conservation Office business plan. The business plan has been adapted based on the ongoing negotiations with PowerStream, Markham ECO and the Ontario Energy Board to establish the conservation demand management program.  The ECO objectives are best achieved through an approach that builds industry connections and delivers direct programs focused on curbing energy demand.  The Markham Energy Conservation Office will;

 

§         Solidify the partnership amongst PowerStream, Markham District Energy and Markham Business Enterprises

§         Develop partnerships with Enbridge and industry associations

§         Display local leadership and reach out to residents and businesses across Markham

§         Leverage funding opportunities from NRCan, Federation of Canadian Municipalities, Conservation Bureau and the Association of Municipalities of Ontario

§         Establish the Markham Energy Conservation Office programs in June 2005. 

 

Programs are funded for each of the three years with the greatest expenditure incurred in the first year.  The following section provides an overall description of the Markham ECO programs, environmental benefits and staffing.

 

Markham District Energy Thermal Storage Project Will Compliment Markham ECO

In addition, Markham District Energy will receive $150,000 in funding towards a thermal storage project. Markham District Energy is building a thermal storage chamber that cools water during off-peak periods and re-distributes to end users during peak demand periods.  The storage chamber would allow existing customers to switch from their existing chillers and tap into an alternative cooling source, thereby reducing demand and conserving energy.

 

DISCUSSION:

The Markham ECO business plan proposes six programs which are highlighted in Table 1 (below).  TABLE 1 is a summary of the demand shedding and cost avoidance targets for each program by the end of the third year.  It is generally accepted that the cost to generate and distribute electricity is $0.11 per kwH.  The savings from the conservation demand management program in TABLE 1 are based on a cost reduction of $0.11 per kwH.

 

TABLE 1:  Summary of Conservation Impact

Program

kwH Reduction

Annual Cost Reduction  ($.11 kwH)

Implementation Cost

1.      Better Building Partnerships

3,000,000

$330,000

$295,000

2.      Advancing High Performance Buildings

1,250,000

$137,500

$285,000

3.      Bringing “Cool Shops” to Markham

1,200,000

$132,000

$175,000

4.      Combined Utility Metering Pilot

160,000

$17,600

$105,000

5.      Energy and Environmental Management System software

200,000

$22,000

$70,000

6.      At-Work Energy Conservation Program

800,000

$88,000

$70,000

Total

6,610,000

$727,100

$1,000,000

 

Appendix B provides a high level overview and budget projection for each of the six programs in TABLE 1.

 

The Markham ECO office will need to be adept at measuring current consumption patterns and load shedding impact of energy conservation programs as behavior change takes place.  Measuring the demand reduction and demand avoidance impact of Markham ECO efforts will be required throughout the program lifecycle. 

 

For example, the Advancing High Performance Buildings program is focused on new designs, construction and operating approaches that will reduce the energy consumption of new infrastructure.  Therefore there is a need to document existing benchmarks and measure the outputs from new buildings that participate in the Advancing High Performance Buildings program.  On average, high performance buildings (such as a certified Leadership in Energy and Environmental Design structure), achieve a 30% reduction in energy consumption.  There are two key items to emphasize;

 

§         The Markham Energy Conservation Office demand management program is about future cost avoidance as much as it is about reducing existing consumption patterns. 

 

§         Performance measurement will be a cornerstone of the program.  This means that pre and post program measurements must be put into place for each energy conservation program.

 

Successful energy conservation programs will allow existing consumers and future consumers to reduce their energy costs.  However, it must be anticipated that development and growth within Markham will, at some point in time, consume demand that has been shed.

 

Markham ECO Will Deliver a broad Environmental Benefit

The greatest benefits and returns of the Markham ECO programs will accrue to individuals, the business community and the broader community.  The Markham ECO programs are anticipated to create annual CO2 reductions of 5,800 tonnes (a credit toward Kyoto objectives) having a positive impact on air quality.  In addition, early adopters in the business and residential hydro market will be provided with energy cost reductions/cost avoidance of $726,000 per annum at the end of the third year.  The energy conservation program will demonstrate Markham’s leadership and commitment to energy conservation and environmental sustainability.  Markham ECO will set new municipal government benchmarks for conservation efforts within Canada and across North America.  

 

Energy Conservation Office will provide a Direct Benefit to the Town

This report recommends that the Town of Markham invest $127,100 on an annual basis to provide two contract staff positions toward planning, organizing, leading and controlling the energy conservation program.  The Town of Markham is anticipated to realize the following annual cost savings from the program;

 

§         Application of the Better Building Program to Town of Markham facilities is anticipated to create annual savings of $75,000

§         Implementation of the high performance building program will provide cost avoidance of $35,000 in reduced energy bills for new facilities

§         Initiating the Employee Awareness conservation program is projected to reduce energy consumption by $88,000

§         Purchasing the Energy and Environmental Management System (EEMS) software will provide a measurement tool related to energy, water and fuel consumption that will lead to cost reductions/avoidance of $22,000

 

To summarize, as the energy conservation program is fully implemented, the Town will invest $127,100 on an annual basis for staffing to realize a direct cost savings/avoidance of $220,000 annually.

 

Program Cost Summary

The total cost estimate of these projects over three years is $1,000,000.  Program budgets include the cost of the Canadian Urban Institute involvement in implementation, program specific staffing, operating costs and communication. 

 

The Town of Markham will fund the Manager of the Markham Energy Conservation Office and one administrative support staff on a contract basis for $127,100 per annum.  In addition the Town will provide office space for the Energy Conservation Office, information technology support, telecommunications and direct support from existing staff when appropriate.

 

Simple Payback Projection

If at the end of the third year, 100% of the energy efficiency cost avoidance and demand reduction targets identified in Table 1 are achieved, the pay back projection, including Town of Markham direct staff support, for the program is:

 

$1,381,300/ $727,100 = 1.90 years or 23 months

 

The specific programs and budget allocation for each program is attached in Appendix B.

 

Markham ECO Staffing

The Markham ECO will retain a combination of full time and part time contract staff.  Markham ECO will retain two full time contract positions including;

 

§         Manager of Markham Energy Conservation Office

§         One Administrative Support staff

 

The full time ECO contract staff will be funded by the Town at a cost of $127,100 on an annual basis.

 

In addition, the conservation demand management budget through PowerStream will fund a number of part time and short-term full time contracts focused entirely on developing and implementing funded programs.  This will include funding to retain expert knowledge for specific programs.  The ECO Manager will be responsible for hiring staff, administration of the ECO conservation demand management program, applying for additional financial support, tracking performance and preparing reports on conservation demand outcomes to the CAO, Markham Council, PowerStream and the Province.

 

With respect to the Energy and Environmental Management System (EEMS) software and the At-Work Energy Conservation Program, existing Town staff in the environmental leadership portfolio may take on a leadership role.  Existing staff have a better understanding of the internal touch points and processes required to implement the EEMS program.  This knowledge will streamline implementation.  In addition, existing staff have gained some valuable experience with public education through the Idle Free Challenge, which can be applied to the At-Work Energy Conservation Program.  Throughout the lifecycle of the program, performance results will be tracked and reported through the Manager of the Energy Conservation Office.

 

 

Link ECO with Environmental Leadership to form a Project Management Team

In the short term there is value in integrating the Markham ECO staff and the ECO program with the existing Environmental Leadership portfolio within the Strategic Services work group in the Community Services and Fire Commission.  By the fall of 2005, this will create a project team of three managers, two within the Environmental Leadership portfolio and the ECO manager.  Each manager will be responsible for specific environmental projects. 

 

The Energy Conservation Office and the Environmental Leadership project team will meet on a monthly basis.  Linking this project team together will facilitate information sharing, pool resources and create a broader awareness of the environmental efforts within the organization. In addition, the Transportation Demand Management (TDM) program promotes a number of clean air programs. The TDM manager should attend these meetings to share information and coordinate efforts when appropriate. 

 

Reporting Outcome Achievements

The Environmental Management Project Team, including the Markham ECO, will continue to report through the existing Town of Markham Committee structure.  However, as the Markham ECO is established there will be a number of milestone meetings to review results of the energy conservation efforts and prepare reports for PowerStream and the Province.  These meetings will be scheduled as required focusing on ECO project results.  The Director of Strategic Initiatives will attend these meetings to facilitate communication to the Chief Administrative Officer and Commissioner group on conservation demand progress.  This will help ensure that the energy conservation program secures support from across the whole organization as required.

 

Once fully operational, the Markham Energy Conservation Office is expected to produce the following results;

 

§         Annual cost avoidance of $726,600

§         Annual cost avoidance of $220,000 directly to the Town

§         Annual CO2 reductions of 5,800 tonnes toward Kyoto objectives

§         Additional leverage of partnerships with NRCan, FCM and OPA Conservation Bureau

 

Progress reports will be provided on a quarterly basis.   

 

Retain Canadian Urban Institute to Establish the ECO Program

It is recommended that the Canadian Urban Institute be retained to work on implementing, oversight and reporting on the Energy Conservation Office efforts.  The Canadian Urban Institute created the ECO business plan, has expert knowledge of the energy market and a full understanding of the performance expectations for the Markham Energy Conservation Office.  It is critical to the process to continue to engage the Canadian Urban Institute over the next year to hire the ECO Manager, establish the energy conservation program and download their expertise to Markham ECO staff. 

 

 

 

Environmental Management Plan

The Town has retained CH2MHILL to assist in the preparation of an Environmental Management Plan (EMP).  The EMP will prioritize internal organizational efforts to maximize our Kyoto Accord impact and to ensure that the Town is positioned to encourage environmental responsibility across the community.  As part of the EMP process, staff will work with CH2MHILL to develop organizational design options that will support environmental initiatives over the long run.

 

 

FINANCIAL CONSIDERATIONS:

Financial considerations include:

 

·        Retain the Canadian Urban Institute to work on implementing, oversight and reporting on the Energy Conservation Office efforts from June 2005 through the end of March 2006.  The cost estimate for this contract is to an upset limit of $65,000.  Funding will be provided from the conservation demand management fund.

 

·        Hire a full time Markham Energy Conservation Office Manager and administrative support staff on a contract basis to be funded by the Town of Markham at a cost of $127,100 per annum.  It is anticipated that the prorated (June through December) Town cost of staffing for the remainder of 2005 will be $63,500. 

 

The budget mandate of Markham ECO will be to operate within the approved conservation demand management budget funding of $1,000,000 over three years.  The funding allocation is $500,000 in 2005, $250,000 in 2006 and $250,000 in 2007.

 

CONCLUSION:

Markham’s strategic vision and planning process has positioned the Town to anticipate and implement effective and efficient environmental programs.  The Markham ECO is one example of the benefits of strategic planning.  The Markham ECO will provide significant environmental benefits to the Town.  The Energy Conservation Office will improve air quality, implement programs leading to energy conservation, provide opportunities for creating a conservation culture in the provision of future infrastructure and set a leadership example for municipalities across the country.  In addition, the Markham ECO program represents an investment that provides a medium and long-term return on investment.     

 

BUSINESS UNITS CONSULTED AND AFFECTED:

CAO’s Office

Corporate Services

Community and Fire Services

Markham District Energy, Inc.

 

 

 

 

ATTACHMENTS:

Appendix A      Letter of Engagement from PowerStream May 13, 2005

Appendix B      Proposed Markham ECO programs and budget for approved CDM programs

 

 

 

 

 

 

 

                                                                                                                                                           

 

 

Anne Pozywiak,

Director of Strategic Initiatives

Stuart Taylor,

Director of Strategic Services

 

 

 

 

 

 

 

                                                                                                                                                           

 

 

Jim Sales,

Commissioner of Community & Fire Services

John Livey,

Chief Administrative Officer

 

 

 

 

 

 

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