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HomeMy WebLinkAbout14 026 RealTerm Energy Corporation Letter of Intent (LED Street Lighting System) By-law THE CORPORATION OF THE MUNICIPALITY OF KINCARDINE KBT ono" O BY -LAW NO. 2014 - 026 BEING A BY -LAW TO AUTHORIZE THE SIGNING OF A LETTER OF INTENT WITH REALTERM ENERGY CORPORATION FOR PROPOSED UPGRADE OF THE EXISTING STREET LIGHTING SYSTEM TO LED FIXTURES WHEREAS Sections 8 (1) and 9 of the said Municipal Act, provide that the powers of a municipality under this or any other Act shall be interpreted broadly so as to • confer broad authority on the municipality to enable the municipality to govern its affairs as it considers appropriate and to enhance the municipality's ability to respond to municipal issues and a municipality has the capacity, rights, powers and privileges of a natural person for the purpose of exercising its authority under this or any other Act; AND WHEREAS the Municipality deems it advisable to agree to and accept a Letter of Intent with RealTerm Energy Corporation for proposed upgrade of the existing street lighting system to LED fixtures; NOW THEREFORE the Council of The Corporation of the Municipality of Kincardine ENACTS as follows: 1. That the Council of The Corporation of the Municipality of Kincardine agree to and accept a Letter of Intent with RealTerm Energy Corporation for proposed upgrade of the existing street lighting system to LED fixtures, attached hereto as Schedule `A' and forming part of this by -law. 2. That this service be procured under 10.3 Best Value Process of G.G. 2.17 • Purchasing and Procurement Policy. 3. That the Mayor and Chief Administrative Officer or Clerk be hereby authorized to execute, on behalf of The Corporation of the Municipality of Kincardine, the Letter of Intent and any other documents required. 4. This by -law shall come into full force and effect upon its final passage. 5. This by -law may be cited as the "RealTerm Energy Corporation Letter of Intent (LED Street Lighting System) By -law ". READ a FIRST and SECOND TIME this 5th day of March, 2014. READ a THIRD TIME and FINALLY PASSED this 5t" day of March, 2014. ( 4)0._ 8 a ayor Clerk • This is Schedule " A " to By -Law No. passed the E day ofMoich 20(4 February 28, 2014 Donna MacDougall Clerk Municipality of Kincardine 1475 Concession 5, RR5 Kincardine, ON N2Z 2X6 Subject: Energy Services Agreement — Binding Letter of Intent RealTerm Energy Corp. The Municipality of Kincardine ( "Customer ") Dear Sir: Pursuant to your recent discussions with Local Authority Services ( "LAS "), RealTerm Energy Corp. (the "Company ") is pleased to enter into this binding letter of intent ( "LOI ") with the Customer with respect to the proposed upgrade of your existing street lighting system to LED fixtures ( "the Project "). TERM: Ten (10) Years commencing on the Acceptance Date of the New Equipment (the "Term "). ANTICIPATED SAVINGS: During the Term of the Agreement, the anticipated Savings (as defined below) for each year of the contract will be shared, on a monthly basis, between the Customer and the Company as follows; Customer Company Percentage share of 19% 81% Energy and Repair Savings MEASUREMENT & VERIFICATION: The Savings shall be calculated as per Schedule B and Schedule C. SERVICES AND EQUIPMENT: The Company agrees to replace the Customer's entire existing cobra head high pressure sodium street lights in the Municipality with energy efficient equipment in accordance with the schedule and specifications set out in Schedule A. Following installation of the New Equipment (as defined in Schedule A), the Company will maintain, replace, and repair the Equipment. The Equipment shall be designed, supplied and installed (the "Services ") by the Company free of charge to the Customer. Such Services and New Equipment shall remain the sole and exclusive property of the Company until the Customer has formally accepted the Project at which time the New Equipment and all related warranties will be transferred and become the sole and exclusive property of the Customer for the duration of the Term. INVESTMENT GRADE AUDIT: Within 120 days of the date of execution of this LOI by the Customer, the Company shall complete an Investment Grade Audit. Such audit shall verify the size, location and type of the Customer's existing street lights, energy invoices, maintenance invoices, and other detailed aspects of the Customer's street light system. Once the Investment Grade Audit is completed, and where the results indicate that, within 10 %, the project will achieve 634,794 kWh of annual energy savings (the "Savings "), the parties agree to proceed to negotiate the Energy Services Agreement as provided below, and the Company shall notify the Customer of this fact by the issuance of a "Proceed Notice," and the parties shall proceed with the negotiation of the Energy Service Agreement. If the Customer does not proceed with such good faith negotiations with the Company, the Customer shall reimburse the Company for such reasonable costs and expenses incurred in performing the Investment Grade Audit and negotiating this LOI, to a maximum of $25,000 within 30 days of receiving an invoice from the Company for such costs and expenses. If the results of the Investment Grade Audit do not meet the Savings, the Company shall notify the Customer that the Project is not proceeding (the "Termination Notice ") and the Customer shall within 60 days of such notice reimburse the Company for 50% of the Company's reasonable costs and expenses in performing the Investment Grade Audit and negotiating this LOI to a maximum of $12,500 and, in return, the Company shall furnish all work materials related to the Investment Grade Audit to the Customer including a full GIS /GPS audit of the Customer's street lighting system. ENERGY SAVINGS AGREEMENT: Upon issuance of the Proceed Notice, the Customer and the Company shall act in good faith and use commercially reasonable efforts to conclude an Energy Services Agreement (the "ESA "), an initial draft of which shall be provided by the Company. We would expect the ESA would contain provisions that are customary of agreements of this nature and in any event would include provisions which reflect the terms and conditions of this LOI other than those under the headings "Investment Grade Audit" and "Termination ". ADDITIONS TO THE LIGHTING SYSTEM: The Company shall at all times have the right, subject to the Customer's prior written approval, which approval shall not be unreasonably withheld, to change the New Equipment, revise any procedures for the operation of the New Equipment or implement other energy saving actions relating to the Customer's street light and exterior lighting system, provided that: a) such modifications or additions to, or replacement of the New Equipment, and any operational changes, or new procedures are necessary or desirable to enable the Company to achieve energy savings; and b) any cost incurred relative to such modifications, additions or replacement of the New Equipment, or operational changes or new procedures shall be the responsibility of the Company. INSURANCE: In addition to the insurance the Customer shall carry which shall be specified in the ESA, the Company shall insure the Company's interest in the energy efficient equipment and maintain public liability and property damage insurance. Such policies shall be written on a comprehensive basis with inclusive limits of not less than $5,000,000 for bodily injury to any one or more persons or property damage, stock in trades and list the Customer as additional insured. MUNICIPAL FRANCHISE, LICENCE OR EASEMENT: The Customer shall grant a licence, easement or right -of -way giving the Company rights of access in the streets and rights to remove, replace and repair existing lights. Further, the Customer shall use its best efforts to assist the Company in obtaining any licenses, easements or rights -of -way required to access any existing lights outside MOK's jurisdiction. RIGHT OF FIRST OFFER: To the extent any energy savings opportunity related to street light contracts, wherever located within the Customer's geographic area, and during the term of the ESA or during the period in which the Company remains an LAS approved supplier partner (whichever is longer), hereinafter becomes available (a "New ES Opportunity "), the Customer shall first present and discuss same with the Company with a view to providing the Company with a right of first opportunity to pursue such New ES Opportunity. Similarly, should the Company become aware of any New ES Opportunity which would be suitable for deployment within the Customer's geographic area, the Company shall, on a non - exclusive basis, present and discuss same with the Customer. Each of the Customer and the Company shall act in good faith and use commercially reasonable efforts to conclude an agreement (on such terms and conditions as are acceptable to the parties, acting reasonably) which would provide for, among other things, the removal or upgrade of the existing fixtures and equipment which are the subject of the New ES Opportunity and, as agreed to by the parties, the design, supply, installation, maintenance and/or repair of any new fixtures, upgrades and equipment comprising such New ES Opportunity as soon as reasonably practicable following presentation thereof by the Customer to the Company or by the Company to the Customer, as the case may be. If the Customer and the Company shall be unable to come to agreement as aforesaid in the form of a binding letter of intent or definitive agreement in respect of any New ES Opportunity within 90 days of the presentation thereof by the Customer to the Company or by the Company to the Customer, as the case may be, the Customer shall be free to pursue same with another interested party; provided that it shall use commercially reasonable efforts to ensure that any such New ES Opportunity undertaken with another interested party does not interfere with, or increase the costs of performance by, the Company of its obligations under the Agreement or would otherwise result in a reduction of the energy savings contemplated by the Agreement. CONFIDENTIALITY: The Company and the Customer agree to maintain the strict confidential nature of this LOI and the negotiations with respect to the transaction proposed herein. No public or other announcement of the existence or terms and conditions of this LOI shall be made by either party except in consultation with and subject to the approval of the other. The Company and the Customer agree to use all reasonable efforts to coordinate any disclosures concerning the proposed transaction. Notwithstanding the foregoing, the Customer is permitted to disclose details of this LOI as part of its staff report or other internal reports required for approval of this agreement. The Customer shall not be obliged to keep in confidence or incur liability for disclosure of information which: a) was already in the public domain or comes into the public domain without any breach of this agreement; b) is required to be disclosed pursuant to applicable law or court order; or c) is made to the legal counsel, auditors, and other professional advisers to such disclosing party, in which event such disclosing party shall, so far as reasonably possible, cause the recipient to comply with this section as if it were a party to this agreement TERMINATION: This LOI shall terminate on the earlier of (i) immediately upon issuance of the Termination Notice, or (ii) 90 days after the execution of this LOI by the Customer if the Company has not provided either the Proceed Notice or the Termination Notice, or (iii) immediately upon execution of the ESA, or (iv) one year after execution of this LOI by the Customer. This letter will be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable herein. Should the above terms and conditions be acceptable to the Customer, please sign this letter in the area indicated below and return to my attention. If you have any questions or require additional information, please do not hesitate to call me. Thank you for allowing RealTerm Energy Corp. to address your request for an Energy Savings Proposal related to the retrofit of your existing municipal street lighting equipment. Best regards, REALTERM ENERGY CORP. Sean Neely, President The above LOI is hereby agreed to and accepted this 5-t1A day of Mo,rd, , 2014. The M icipality of Kincardine, 1 By: Lan Kraerh,Pr- ( M a%icsc Nam.e and Title: De*o.a `tom a ate By: nnnn Ma.e.Dourii Cicrk Name and Title: SCHEDULE A — COMPANY'S SERVICES 1. Scope of Services • System Design including a full GPS /GIS audit of the system. • Supply Labour and Material to remove existing Customer street light fixtures • Disposal of existing Customer street light fixtures as per government standards including providing the Customer a "Declaration Letter" stating same. • Supply Labour and Material to install the New Equipment • Inspect and repair or replace the existing wiring, fuses, or any other item other than the New Equipment as required. Currently we have assumed 40% rewiring & refusing will be required. Percentage split of savings is subject to change if less or more rewiring /refusing is required. • On a best efforts basis, work with the Local Distribution Company to modify their invoicing system to recognize the New Equipment. Administer the process to obtain all grants, subsidies or rebates that may be available from the Ontario Power Authority related to this Project. • Post - installation, maintain, repair or replace the New Equipment as required. Note: The Company is not responsible for maintenance and repair of the street light poles or the main electrical distribution lines or other elements of the system other than the New Equipment. 2. Existing Equipment Inventory and Specifications Westario Inventory HPS 70 20 1 HPS 100 28 20 HPS 150 42 656 HPS 200 42 6 HPS 250 57 94 Unknown 150 0 19 Total 796 Hydro One Inventory HPS 100 30 123 HPS 150 40 65 HPS 250 60 4 1 _. LPS 135 35 2 MV 175 35 7 MV 250 35 1 1 Unknown 150 0 1 I Total 203 , 1 1,..._ } 3. New Equipment Inventory and Specifications ( "New Equipment ") ∎;I k,1 oh"• 34 Yes 1 10 Yrs r CREE -XSP -1 39 Yes 143 10 -Yrs CREE -XSP -1 53 Yes 2 10 -Yrs CREE -XSP -2 65 Yes 741 10 -Yrs CREE - XSP - 83 Yes 7 10 -Yrs CREE - XSP - 101 Yes 99 10 -Yrs t Total 999 4. Schedule of Services Commencement Date: Within 90 -days from the Proceed Notice. SCHEDULE B — ENERGY SAVINGS "Baseline Energy Consumption" means 955,160 kWh. "Baseline Repair Consumption" means $43,422 per annum. "Expected Energy Savings" means, for each Contract Year, the value of the expected reduction in consumption of electricity over Baseline Energy Consumption. Expected Savings for each Contract Year will be calculated as follows: The Baseline Energy Consumption multiplied by the cost per kWh for a given Contract Year less the annual energy consumption of the New Equipment multiplied by the cost per kWh for that same year. "Expected Repair Savings" means, for each Contract Year, the value of the Baseline Repair Consumption adjusted for inflation and multiplied by the Customer's Share of Energy and Repair Savings as outlined in the LOI. Expected Repair Savings for each Contract Year will be calculated as follows: The Baseline Repair Consumption adjusted annually as per the June, Consumer Price Index for the Province of Ontario (Energy Category) multiplied by the Customer's Share of Energy and Repair Savings as indicated in the Expected Savings as outline in the LOI. "Savings ", means, the addition of the Expected Energy Savings and Expected Repair Savings. SCHEDULE C CHANGE IN BASELINE ENERGY CONSUMPTION AND BASELINE REPAIR COSTS The parties will mutually agree upon an updated Baseline Energy Consumption and updated Baseline Repair Costs as and when there are changes made to the system by the Customer.