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• The PG&E Energy Efficiency Retrofit Loan Program or On-Bill Financing (OBF) also provides loans to conduct facilities improvements without the need for large outlays of cash. Financing is available for a range of upgrades including lighting, LED street lights, refrigeration upgrades, and HVAC improvements. The program is designed so the PG&E provides a 0% interest loan on a first-come first-served basis that is repaid through a customer's monthly utility bills. As such, the customer/city is not required to actually submit a monthly loan payment check. Governmental agencies are eligible to receive loans of up to $250,000 that have a loan period of 120 months. The actual loan repayments are calculated by PG&E based on its analysis of energy savings realized through the improvements. PG&E inspects all work to assure it meets its specifications. BENEFITS There are four benefits to pursuing staff's recommendation: 1 . The proposed energy upgrades are anticipated in the City Climate Action Plan and represent an important step toward meeting its goal to reduce energy used by municipal operations (Goal 2 of the Energy Strategy). Specifically, Supporting Action EG1-3 of this Goal encourages the City to "replace existing sodium vapor streets lights with more energy efficient systems (e.g.LEDs)." Strategy EC2 also encourages leveraging state and local programs to increase energy efficiency and conservation. 2. The lighting conversion is anticipated to reduce green house gasses by an estimated amount of 1 ,556 metric tons annually. 3. The use of the low and no interest loans are financially beneficial since they eliminate a significant up front expenditure of City funds and reduce the amount interest paid on the loan. Staff has researched open market loans for this work and they would carry an interest rate ranging from 2.65% to 3% Also, due to the fact that the loan payments are structured around energy savings, servicing of the loans is minimal and won't be a staff burden. Finally, the overall estimated annual cost savings of $286,000 will result in a ten year payback which is well before the equipment's anticipated 20 year lifespan. It should also be noted that the City anticipates that this project will also qualify for a PG&E rebate of approximately $470,000. 4. The LED lights will provide a "truer" light, which can aid in crime prevention and public safety. The City currently has a number of LED street lights in service and the lighting has been received well by surrounding neighbors. Moreover, the new technology is compatible with remote monitoring systems and controls, allowing the lights to be dimmed when no motion is detected, and to proactively identify lights that are not working properly. The new LED fixtures include a standard 1-year warranty for installation, and an extended 7-year warranty for equipment. With an expected lifespan of >20 years, this equipment will reduce the City's ongoing equipment and maintenance costs by roughly $125,000 annually. Page 3 of 4