ITEM:		PUBLIC HEARING
14.	CONSIDER FIRST READING OF ORDINANCE NO. 149, AN ORDINANCE OF THE BOARD OF DIRECTORS AMENDING THE REBATE PROGRAM
Meeting Date:			August 15, 2011	Budgeted:	N/A
From:			Darby Fuerst,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Stephanie Pintar	Cost Estimate:	N/A
General Counsel Review: Yes
Committee Recommendation: On July 21, 2011, the Water Demand Committee recommended the Board approve the proposed amendments to the Rebate Program. The Technical Advisory Committee (TAC) reviewed the ordinance on August 2, 2011, and recommended approval.
CEQA Compliance: The replacement of existing facilities is a categorical exemption under Class I, §15301 of the California Environmental Quality Act.

RECOMMENDATION: Ordinance No. 149 (Exhibit 14-A) amends the District’s Rebate Program to increase the rebate amounts for Residential and Commercial High Efficiency Clothes Washers (HECW), eliminates the Rebate for Synthetic Turf and Rain Sensors, and reduces the amount of the Rebate for Lawn removal. The ordinance also adds a definition to MPWMD Rule 11 for Commercial High Efficiency Clothes Washer and deletes language in Rule 141-B that was inadvertently omitted during adoption of Ordinance No. 148 in April 2011.

The elements of this ordinance were approved by the Water Demand Committee after an extensive review of the history of the Rebate Program that included the funding mechanisms, the outreach program, and Rebate approval and participation rates, and staffing requirements. The Rebate Program within the California American Water (CAW or Cal-Am) system has been suspended pending future funding through the California Public Utilities Commission (CPUC). Funding for rebates in the amount of approximately $2.1 million is anticipated in January 2012, necessitating amendments to the program at this time for implementation by January.

DISCUSSION:

High Efficiency Clothes Washers (HECW)

The price for replacement of an older Clothes Washer with a HECW ranges from approximately $500 to $2,000 or more. The District’s experience with Rebates indicates that current prices for HECW have dropped and that models can be purchased for between $500-$700. Although water savings vary depending on an individual’s circumstances, the District currently estimates the cost per acre-foot (AF) of water saved to be approximately $2,000 at the current $250 Rebate amount. Increasing the Rebate for HECW to $500 will increase the cost of water savings to approximately $2,100/AF, still below the cost of water (approximately $2,400 as used by CPUC Division of Ratepayer Advocates in reviewing the Rebate Program budget for the 2012-2014 General Rate Case). An individual purchasing a HECW for $500 could expect to save approximately 105 units of water year at a cost of $0.46/unit in the second residential rate tier. Energy savings would also contribute to the customer’s monetary benefit. Simple payback for a HECW is approximately eleven years at the second tier rate level. The benefit of increasing the Rebate amount and obtaining higher installation rates is that the savings are proven and will reduce community water consumption.

The proposal to increase the Commercial HECW Rebate from $450 to $1,000 is due to the cost of purchasing commercial laundry equipment. The cost of a Commercial HECW is $1,500 or more per machine and includes coin-operated washers used in commercial laundromats and in apartment complex common laundry rooms. These appliances are designed for heavier use and are more expensive than the residential models. The District currently estimates the cost per acre-foot (AF) of water saved for retrofitting to a Commercial HECW to be approximately $390 at the current $450 Rebate amount. Increasing the Rebate for Commercial HECW to $1,000 will increase the cost of water savings to approximately $860/AF, far below the cost of water in the California American Water system. As proposed, a Site would be limited to Rebates for no more than 20 Commercial HECW, with a provision that the applicant could request a formal variance to the limit from the Board.

There was concern noted at the June 22, 2011, Water Demand Committee meeting that increasing the amount of the Rebate could result in abuse of the program. To address this concern, staff added rule 141-D-9, giving the General Manager discretion in approving requests for multiple HECW at a Site. Staff does not believe this will be a problem but will monitor the program carefully for signs of abuse. The following “security” measures are in place to reduce potential for abuse:

1. Ownership of a property is verified upon receipt of the Rebate application. If the applicant is not the property owner, the applicant must secure the property owner’s written permission to receive the Rebate.

2. All Rebates are limited to the actual price of the Qualifying Device.

3. Rebates are only available for the initial purchase of a Qualifying Device, except for HECW where tenants may have moved. To address this situation, two actions have been added to Rule 141: The first addition is that applicants for repeat Rebates of High Efficiency Washing Machines may be required to provide evidence of conditions that merit successive Rebates. In most cases, this would occur in a tenant-occupied building where the landlord is already required to consent to the Rebate. In other cases, this would occur following a Change of Ownership or Use and the District would have a record of the property. The second amendment specifies that the General Manager has discretion in approving a Rebate for multiple HECW on a Site. This determination can be appealed to the Board.

4. Rebates for Commercial HECW are limited to 20 per Site.

5. The Commercial HECW Rebate Program will only be available until December 31, 2012, when retrofit to Commercial HECW becomes a District mandate.
6. Applicants agree to install the fixture on the property shown on the application and attest to the information on the application under penalty of perjury.

7. Applicants agree to a provision that the District may conduct an inspection of the Rebate Site to verify installation of the Qualifying Devices.

The Water Demand Committee asked staff to contact The Monterey County Association of Realtors and the Monterey Commercial Property Owners Association for feedback regarding the proposed changes. Staff will report on any information received from these organizations at the August Board meeting.

Lawn Removal and Synthetic Turf

The Water Demand Committee recommended that the Lawn removal Rebate be reduced from $1.25/square-foot to $1.00/square-foot and that the Rebate for Synthetic Turf be eliminated. These recommendations were the result of the significant level of participation in the Lawn removal Rebate program between January 2010 and March 2011 resulting in Rebates of over $178,000 for Lawn removal ($123,000) and Synthetic Turf installation ($56,000). Estimated water savings for these programs is 9 acre-feet per year. The Water Demand Committee lowered the amount of Rebate for Lawn removal to accommodate a higher number of Lawn removal Rebates in the future. The Synthetic Turf Rebate was eliminated due to comments received from the public and representatives of the local Jurisdictions regarding environmental concerns related to run-off from Synthetic Turf.

Rain Sensors

The Rebate for Rain Sensors has been eliminated in the draft ordinance. The elimination of the Rain Sensor Rebate was agreed upon by MPWMD, California American Water and the California Public Utilities Commission’s Division of Ratepayer Advocates (DRA) during discussion regarding the 2012-2014 General Rate Case. A requirement that Rain Sensors be installed on all automatic Irrigation Systems prior to Change of Ownership, Change of Use or Expansion of Use, as well as in all New Construction, was added to the District Rules effective January 1, 2010. Rain Sensors are available at the District at no charge for property owners who want to voluntarily install them. In addition, California American Water is currently undertaking a Rain Sensor installation program for its high use and dedicated irrigation meter customers. Due to these new programs, continuation of a Rebate for Rain Sensors was discouraged.

The Rebate for Rain Sensors has been eliminated in keeping with discussions between California American Water and the California Public Utilities Commission’s Division of Ratepayer Advocates. Rain Sensors are currently required upon Change of Ownership or Use, Expansion of Use and in all New Construction. MPWMD agreed to discontinue the Rain Sensor Rebate as a component of the California American Water General Rate Case. Wired Rain Sensors are available at the District to property owners who want to voluntarily install one.

.

RECOMMENDATION: Following public comment, staff recommends the Board approve the first reading of Ordinance No. 149.

This ordinance is exempt from CEQA. Upon adoption, staff will file a Notice of Exemption with the County Clerk. Replacement of existing facilities is a categorical exemption under Class I, §15301 of the California Environmental Quality Act.

IMPACT ON STAFF/RESOURCES: The changes proposed in this ordinance will increase the participation level of the HECW Rebate program.

EXHIBITS

14-A Ordinance No. 149

U:\staff\word\boardpacket\2011\20110815\PubHrng\14\item14.docx