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HomeMy WebLinkAboutCSD-11-143 - LEAF 2011 - REEP Home EnergyJ Staff Reporf KITC;H~,~T~R Community Services Department www.kircnenerca REPORT T0: Community & Infrastructure Services Committee DATE OF MEETING: November 7, 2011 SUBMITTED BY: Jeff Willmer, Deputy CAO Community Services Department Lesley MacDonald, City Solicitor Finance and Corporate Services Department PREPARED BY: Barbara Steiner, Senior Environmental Planner 519-741-2293 Corinn Brayshaw, Assistant City Solicitor 519-741-2264 WARD(S) INVOLVED: All DATE OF REPORT: November 1, 2011 REPORT NO.: CSD -11 -143 SUBJECT: 2011 LEAF GRANT RESIDENTIAL ENERGY EFFICIENCY PROGRAM (REEP) KITCHENER HOME ENERGY IMPROVEMENT PROGRAM RECOMMENDATION: THAT the Kitchener Home Energy Improvement Program supported by the Local Environmental Action Fund (LEAF) continue to be implemented by Waterloo Green Solutions (operating as the Residential Energy Efficiency Program, or REEP) as outlined in their 2011 grant application. EXECUTIVE SUMMARY: After a concern was raised by a Kitchener resident, staff was asked to determine if options exist to open up the Kitchener Home Energy Improvement Program to homeowners who obtain their ecoENERGY energy audits from service providers other than REEP. Staff has determined that there is no desirable option to so expand the program. BACKGROUND: In 2007, Kitchener City Council approved the creation of a $5 million environmental fund called the Local Environmental Action Fund (LEAF). Grants from the fund are awarded to eligible applicants whose projects and programs best meet grant criteria and the fund's goal to reduce, or repair, Kitchener's impact on the environment focusing on the reduction of greenhouse gases, and to enhance the ability of the Kitchener community to live sustainably into the future. Grants have been awarded annually in 2009, 2010 and 2011 based on Council resolution, and guided by the recommendations of the Council-appointed LEAF Steering Committee. One of the 2011 grants was made to Waterloo Green Solutions (operating as the Residential Energy Efficiency Program, or REEP) for their Kitchener Home Energy Improvement Program. 7-1 J Staff Reporf KITC;H~,~T~R Community Services Department www.kircnenerca This project provides incentives to the owners of pre-1970s homes to complete energy audits and install insulation and air-seal their homes using the federal government's ecoENERGY model including those accepted procedures for grant verification. Only pre-1970s homes installing insulation and doing air-sealing-the two most effective retrofits to reduce energy use, but the least undertaken in the recent ecoENERGY program-are eligible for the incentives. A concern was raised by a Kitchener resident who works for a local, for-profit energy audit service provider that the program was "unfair" because eligible Kitchener homeowners can only receive the incentive provided through LEAF if their energy audits are conducted by BEEP. Options that have been considered to address the resident's concern about perceived "unfair" incentives being provided through a 2011 LEAF grant are outlined below. REPORT: Having this concern raised offered the City the opportunity to undertake a more rigorous consideration of whether the LEAF grant to REEP actually creates an "unfair" advantage for that organization over other home energy auditors operating in this market. The concern was raised by an energy audit service provider who works for a private, for-profit company. For-profit organizations are not the target for LEAF grants due to the constraints imposed by the Ontario Municipal Acf with respect to "bonussing" (see Eligibility Requirements attached as Appendix A). After much deliberation, and with significant input from Legal staff and the LEAF Steering Committee, staff advise that no option to address the resident's concern is very desirable. The k~ reason for this is that altering a program funded by LEAF after Council has approved the grant threatens the integrity of the operational framework and application evaluation process (Appendix B attached) as approved by Council (DTS 08-033 and DTS 08-194). Other disadvantages, as well as advantages, of options to open up the program to other audit service providers are also given below. It bears repeating that REEP's program provides an additional incentive only for Kitchener owners of pre-1970s homes who wish to undertake insulation and air-sealing retrofits. No advantage (unfair or otherwise) would exist for energy audit service providers to homeowners whose homes were built after December 31, 1969 or where no insulation orair-sealing would be taking place (i.e. those who are interested in federal ecoENERGY grants for window /door / furnace replacement). Current Context for Energy Audit Costs in Kitchener • As part of their Demand Side Management program, Kitchener Utilities has been providing an incentive to Kitchener Utilities customers who undertake the "pre-" and "post-" energy audits. Kitchener Utilities has been providing this incentive to its customers o~ when the audits are conducted through REEP (not any other audit service provider). The "pre-" audit is discounted by REEP directly to the customer by $60, the "post-" audit by $40. Kitchener Utilities is invoiced monthly by REEP and pays those costs directly to REEP. No other audit service provider has questioned this business relationship to date. 7-2 J Staff Reporf KITC;H~,~T~R Community Services Department www.kircnenerca • The Province has been paying up to $150 of the cost of the initial audit, and will continue to do so until the end of the current provincial budget year (at least). It is assumed this is the case for all audit service providers. • Some large commercial enterprises are currently providing free audit services for ecoENERGY. Options 1. Amend Council's approval of the 2011 grant to REEP so that the $440,037 earmarked in the report for direct homeowner incentive would become available to homeowners using all other audit service providers. The $59,963 direct grant to REEP for education, marketing, and administration of the new incentive would still go to REEP for the substantial education piece of their work program. • Amending the grant application is not possible as it is REEP's grant application, not the City's document, and involves issues around intellectual property of the work program /concept etc. • Amending the grant outside of the timeframes and deadlines imposed on all other potential and actual applicants may be regarded as unfair by other grant applicants. • A similar amount for "education" may be expected by all other certified audit providers; they would have to apply to LEAF next year. • There are 27 certified audit providers serving the Kitchener area according to the Natural Resources Canada website, ranging from very large (e.g. consumer l home improvement l energy retailers) to very small and, possibly, with varying approaches to the audit service. Most are located outside of Kitchener. This would be difficult to administer by the City, and we do not have good knowledge of, or an existing business relationship with, these other audit service providers as we do with BEEP. • The City would need to identify the other audit service providers, contact them, and inform them of the amended program. Unfortunately, Green Communities Canada who does the "third-party" check of the REEP audit for the City is only able to provide this service as BEEP is a fee- paying, non-profit member of this national non-profit organization. For-profit organizations are not eligible for membership in Green Communities Canada. • According to the approved Operating Framework for the program, the City would first require the homeowner or audit service provider to apply to LEAF and, if approved, the City would then enter into a Legal Agreement in order for the approved applicant to receive LEAF funds. 7-3 J Staff Reporf KITC;H~,~T~R Community Services Department www.kircnenerca 2. Offer all other audit service providers operating in Kitchener the opportunity to apply for a LEAF grant in 2012 • The City would need to identify the other audit service providers, contact them by mail and invite them to apply for a LEAF grant in 2012. • The City would have to assure them in this correspondence that our Energy and Water Efficiency for Land and Buildings (June 2010, DTS 10-097) Community Improvement Plan (CIP) will be successfully amended by Spring 2012 to permit the "advantage" tofor-profit companies such as theirs ~. • It is quite possible that these companies will not even care by Spring 2012 when, as of April 2012, there will likely be no more federal ecoENERGY incentives to make this grant "doubly" attractive as it is now. • It is probable that the Operating Framework for LEAF may have to be amended to clarify the conditions under which such for-profit organizations would be eligible to apply for and receive a LEAF grant and promote homeowner incentives from LEAF. INe would immediately have to move to amend Kitchener's Energy and Water Efficiency for Land and Buildings CIP (June 2010, DTS 10-097) so that it is approved and ready for Spring 2012. • For-profit organizations could be folded into the program, if they apply for and submit a program that meets the established criteria of the LEAF grant. As noted, an amended CIP would also have to be developed and adopted by the City of Kitchener in consultation with the provincial government prior to the LEAF applications being approved, or any grant approvals would have to be conditional on a successfully amended CIP. Given the 3rd bullet point above, this alternative is not viable. 3. Offer a hybrid solution REEP has historically had the administrative capacity to take on customers who have had the pre-audit completed by another service provider for a nominal transfer / administrative fee. In addition, when the federal government reinstituted the ecoENERGY program as of July 2011, they did not require homeowners to re-enter the program by having a new initial audit done; this was practical as the program may potentially only run for another additional eight (8) months (July 2011-March 2012) and requesting new audits would be onerous with that time constraint. Ontario municipalities are generally prohibited from granting bonuses or incentives to private enterprises directly or indirectly through the restrictions of the Municipal Act. An exception to this general rule can be made by the Province when a Community Improvement Plan (CIP) is completed and approved in consultation with the Province and implemented through municipal bylaw. Approved CIP programs permit public benefits being achieved through municipal incentives resulting in more socially cohesive, environmentally friendly and/or economically sound communities. 7-4 J Staff Reporf KITC;H~,~T~R Community Services Department www.kircnenerca So, for the two reasons described above, REEP is willing to take on files where the original energy audit was completed by another service provider, and where that original audit (by others) was completed prior to the announcement of the matching incentives through the Kitchener Home Energy Improvement Plan, i.e. prior to July 18,2011. However, REEP does not have the customer service or audit staff capacity to take on files from Kitchener residents who entered the program (had their initial audit done) after July 18, 2011. This would continue to be an option for Kitchener residents who wish to take advantage of matching incentives under the Kitchener Home Energy Improvement Plan if they meet the criteria of that program, and had their initial audit (the "pre-" audit) completed by others prior to July 18, 2011. After that time, the additional incentives under Kitchener Home Energy Improvement Program were known to Kitchener residents and they could enter the program through contracting with REEP. With this option, the integrity of the REEP work program, the LEAF grant application and grant approval process would be maintained. In addition, it does not involve more City staff time to administer the inclusion of other audit service providers. 4. Status Quo Continue to run this program through REEP per: the work program in their LEAF grant application. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: Community Priorities Leadership and Community Engagement Financially supporting local environmental initiatives through LEAF will enhances our partnership with citizens, business, agencies, organizations, school boards and all orders of government in all Healthy Community initiatives (Strategic Direction 1) Environment Funding important environmental projects through LEAF helps achieve the Citizens' Vision for the Environment (2027), in which our community focuses significant energy and resources on becoming more environmentally friendly. FINANCIAL IMPLICATIONS: None, if the status quo or hybrid option is selected. Options 1 and 2 would require more resources, primarily additional staff time, to be expended. Current staff resources do not give us the capacity to administer such expanded programs. 7-5 J Staff Reporf KITC;H~,~T~R Community Services Department www.kircnenerca COMMUNITY ENGAGEMENT: A draft of this report was distributed to the LEAF Steering Committee, which includes five (5) citizen advisors (50% of committee membership) for review and comment. ACKNOWLEDGED BY: Jeff INillmer, Deputy CAO Community Services Department Attachments: AppendixA Eligibility Requirements Appendix B Current LEAF Process 7-6 J Staff Reporf KITC;H~,~T~R Community Services Department www.kircnenerca APPENDIXA ELIGIBILITY REQUIREMENTS The following groups are welcome to apply for a LEAF grant: • Charitable organizations • Organizations incorporated as not-for-profit in Ontario • Other public organizations (universities, schools, hospitals, faith groups) • City departments and affiliated agencies Individuals, and other municipalities and levels of government, are not normally eligible for funding, unless: • A strong partnership application is submitted. • Matching funds are made available. • The partnership offers the opportunity to leverage Kitchener's investment to its maximum potential. • The project provides along-term, sustainable benefit to Kitchener. For-profit organizations are not normally eligible forfunding, unless: • A strong partnership application is submitted. • Matching funds are made available. • The partnership offers the opportunity to leverage Kitchener's investment to its maximum potential. • The project or grant does not constitute a financial benefit to the organization with respect to its business. • The project is not located on property owned by the organization. • The project, program or grant does not constitute a bonus under the Ontario Municipal Act. • The project provides along-term, sustainable benefit to Kitchener. All projects or programs must be located and implemented in Kitchener. 7-7 J Staff Reporf KITC;H~,~T~R Community Services Department www.kircnenerca APPENDIX B: CURRENT LEAF PROCESS REEP's Application to LEAF LEAF Steering Committee Recommendation And Council Approval Other For- Profit Audit Service Providers •. •., • '•• Homeowner 3rd Party Check (Green Communities Canada) REEP's Approved Application - 3rd party check - homeowner ••••• No contractual relationship Contractual relationship Explanatory Note: The current LEAF process begins with an applicant applying for a LEAF grant. It is up to the applicant to create, design and submit an application. Once an application has been approved by Council, the City of Kitchener enters into an agreement with the successful applicant in order to ensure that the application is properly carried out. The checks and balances contained in Waterloo Green Solution's (ola REEP) agreement with the City of Kitchener enables the homeowner to receive funds. At this juncture, individual homeowners do not apply for LEAF funds; it is only through REEP's application that the homeowner receives LEAF funds. 7-8