GUSTINE - The city will invest in a $2.6 million energy program which holds the promise of $4.7 million or more in savings over the next three decades.
The City Council, which in December had appeared to cool to the proposal and shelved it pending further information from the council, voted 4-1, with Joe Oliveira dissenting, to move forward with the energy firm ENGIE on the project.
The approved project will involve a number of solar panel arrays at city facilities, including Schmidt Park and Henry Miller Park, among others, as well as lighting upgrades in city facilities, upgrades at a city well and new HVAC at the police station.
But it will not include the $570,000 system of solar-powered lighting along the planned walking paths which will encircle Schmidt Park. The pathway lighting was a part of the initial project scope, but the council balked at its inclusion after the financial projections came more clearly into focus.
The project will be funded through a $2.2 million, low-interest loan through the California Energy Commission (CEC), augmented by an internal loan of $356,000 from the city’s sewer fund reserves. Had the pathway lighting remained in the project, an internal loan of $928,000 would have been required.
Even at that, council members questioned the feasibility of paring the project further back by eliminating all the planned improvements other than the solar arrays.
But doing so, City Manager Doug Dunford said, would essentially negate the CEC loan, which was predicated on the full range of energy-savings projects.
Gustine was one of only five cities approved to receive the loan, noted Carolyn Kiesner, project development manager for ENGIE. Even if it changed the scope, she added, the city would still be faced with necessary expenses such as the police station HVAC.
While savings from the project will not outstrip expenses for the first five years, Kiesner pointed to the long-term savings as the benefit of the project.
“This project will hedge the city against rising PG&E energy costs and the PG&E bankruptcy,” Kiesner told the council.
The projected savings of just under $4.7 million over 30 years is based on PG&E rates increasing by 5 percent annually, she said, but if the utility’s current proposed rates are enacted the savings could actually approach $7 million.
“This project will provide long-term savings. We believe that this is a positive decision and a long-term investment for the city,” she stated.
The city will be “upside down” in an amount of nearly $29,000 in Year One, according to projections, and will not see positive savings until the sixth year, when a $5,000 net result is projected.
Annual savings break $100,000 in Year 16, the projections indicate, and jump sharply to $300,000 in Year 19 - after the city has paid back its loan from the sewer reserve.
Council members expressed concern about borrowing from the reserve and the length of the repayment.
City Manager Doug Dunford said the city could accelerate those payments and retire the loan more quickly.
“If PG&E rates hold true our savings will be higher and we will pay it back faster,” Dunford told Mattos Newspapers.
The savings are guaranteed by ENGIE, he noted.
The city will purchase the solar arrays outright.
ENGIE has one year from the start of construction to complete the project, Dunford said.
The timing of installation of the solar panels in Schmidt and Miller parks will take into account periods of time when those facilities are being extensively used for programs or special events to avert conflicts, he added.
While the council debated at length before reaching a decision, they eventually gave ENGIE the green light.
“We have been looking at this for quite some time,” said Mayor Pat Nagy. “In 30 years we will save $5 million to $7 million, which for our little city is quite a bit of money. Solar is the way everything is going.”
“Let’s quit talking about it and do something,” said council member Craig Turner, who made the motion to move forward with the project.