Christopher Cappiello

Assistant Public Works Director

Julie Leonard

Public Works Director

Issue Statement: In November 2017, the City entered into a Guaranteed Energy Savings Performance Contract (GESPC) with Energy Systems Group, LLC (ESG) for advanced metering infrastructure and related efficiency improvements. The agreement requires annual Measurement and Verification (M&V) services during the Guarantee Term to verify project performance and guaranteed benefits.

The contractual fee for Year 7 M&V services is $25,075. Because the payment exceeds the City's $25,000 expenditure approval threshold, City Commission approval is required.

Recommended Action: Staff recommends the City Commission adopt a resolution approving payment of $25,075 to Energy Systems Group, LLC for Year 7 Measurement and Verification services pursuant to the Guaranteed Energy Savings Performance Contract approved by Resolution No. R-2017-144.

Background:  Following a competitive solicitation and investment-grade energy audit, ESG identified replacement of the City's aging water meter infrastructure with advanced metering infrastructure (AMI), or "smart meters," as the most financially viable improvement measure.

On November 15, 2017, the City Commission adopted Resolution No. R-2017-144 approving the GESPC with ESG. The $6,465,296 project included replacement of approximately 8,500 water meters with smart meters. ESG began installation of the improvement measures in December 2017, and final acceptance was completed in April 2019. The Guarantee Term began May 1, 2019, and continues through April 30, 2034.

The primary objective of the project was to improve the accuracy of water consumption measurement and billing. Water meters typically become less accurate as they age, resulting in an increasing volume of water that is consumed but not accurately measured or billed. Installation of new meters allows water consumption to be measured more precisely, improving billing accuracy and reducing unbilled water. The automated reading capabilities of the AMI system also provide operational efficiencies, support leak detection and water conservation efforts, and enhance customer service.

The GESPC requires ESG to perform annual M&V services to document project performance and determine whether the guaranteed benefits have been achieved. The annual M&V reporting fee began at $21,000 and increases by 3% annually in accordance with the contract.

ESG's annual M&V report documents the results achieved under the GESPC and compares verified project benefits with the benefits guaranteed by contract.  For the Seventh Guarantee Year, the contract established guaranteed benefits of $995,011. ESG calculated actual verified project benefits of $1,509,679, exceeding the Year 7 guaranteed amount by $514,668, or approximately 52%.

These results demonstrate that the project continues to provide benefits above the contractual guarantee. The benefits are attributable to the improved accuracy of the City's water meter system and the operational capabilities provided through advanced metering infrastructure, including more precise consumption data, improved billing accuracy, automated meter reading, leak detection capabilities, water conservation support, and enhanced customer service.

Continued M&V services provide the City with an annual independent contractual measurement of project results and document whether guaranteed performance levels are being achieved. The services also maintain the associated savings and water meter accuracy guarantees under the agreement.

The contractual Year 7 M&V fee is $25,075, an increase of $730 from the prior year in accordance with the contract's 3% annual escalation. Year 7 is the first scheduled annual M&V payment to exceed the City's $25,000 expenditure approval threshold and therefore requires City Commission authorization.

Under the Support Services Agreement, failure to pay the annual reporting fee within 60 days of receipt may allow ESG to terminate the agreement, ending its obligation to provide future annual reports and satisfying the associated contractual guarantee obligations.

As shown in the attached invoice, the cost for Year 7 services is $25,075, consistent with the fee schedule established under the Guaranteed Energy Savings Performance Contract executed in 2017, including the contractual 3% annual escalation.

Sufficient funding is available in the FY 2026 Adopted Budget of the Public Works Department’s Water Division for the annual contract with Energy Systems Group, LLC.

The proposed expenditure is as follows:

Staff recommends the City Commission adopt a resolution approving payment of $25,075 to Energy Systems Group, LLC for Year 7 Measurement and Verification services pursuant to the Guaranteed Energy Savings Performance Contract approved by Resolution No. R-2017-144.