Portland,
Oregon

"How do we transform a culture that is organized around presumptions of energetic growth - and inexhaustible resources to fuel that growth - into one that manages for sustainability without stagnation; a society that can still grow, still reward human aspiration and ingenuity, without consuming the natural resource base on which those aspirations ultimately depend?" 

- Angus Duncan, Northwest Power Planning Council 

ABSTRACT

The city of Portland is an active proponent of sustainability, with resource stewardship programs in land-use, watershed protection, pollution prevention, and energy efficiency and conservation. One of these efforts, the City Energy Challenge program, demonstrates an innovative approach to funding and implementing sustainability programs. Nicknamed "One Percent for Energy," it imposes a fee of one percent on all city government energy bills to finance an energy management program for city facilities. In its first four and a half years, the program has identified a potential annual energy cost savings of over $1.2 million in over 70 facilities. To date, the program has completed energy efficiency projects that will save taxpayers over $700,000 each year. 

THE CITY ENERGY CHALLENGE: Finding Seeds of Conservation in Consumption 

The city of Portland, Oregon will save more than $700,000 in energy costs in 1996. By the end of 1996 energy-efficiency improvements in city facilities will generate annual savings of as much as $1.2 million. 

For those impressive results, Portland can thank its City Energy Challenge (CEC) program.

An outgrowth of Portland's progressive energy policy, the CEC promotes energy efficiency and conservation in the city's eight bureaus to reduce overall city energy expenditures by 20 percent. Under the program, each city bureau is required to contribute one percent of its energy expenditures in exchange for a range of energy-management services form the CEC. These include annual energy reporting, energy audits, technical assistance, training, and information through the CEC newsletter. 

By promoting energy efficiency in the workplace, the program strives also to educate and encourage city employees to save energy at home.
 

Growing Energy Demands Threaten Regional Resources

Portland's unique effort to conserve energy and money is a new response to a long-simmering problem. For the last 50 years, low cost, renewable hydro-electricity has dominated the Pacific Northwest's energy landscape. The region is now realizing, however, that the cost of this power source is not as low as it was once believed. Decades of damming the area's rivers, and pursuing other detrimental land-use practices have now sharply diminished salmon runs. Five salmon species are now on the Endangered Species List. Measures taken to preserve this important economic resource, and to respect Native American treaty rights, have driven up costs and required the region to seek alternatives to hydropower. 

Noting the environmental degradation and economic cost associated with over dependence on hydro electricity, the city of Portland adopted a formal energy policy in April 1990. Among the policy's major areas of concern are residential buildings, land use, commercial and industrial facilities, transportation, telecommuting, expansion of renewable energy use, and waste reduction and recycling. Before the city could credibly address these issues, however, it had to assess its own energy consumption and implement cost-effective and energy-efficient strategies in its own operations.

When Portland surveyed its energy usage, it found more than 830 electricity, natural gas, and transportation fuel accounts in its eight bureaus (General Services, Parks, Water Works, Fire, Police, Maintenance, Environmental Services, and Traffic Management), with a total energy bill approaching $9 million. Portland set a goal to save 20 percent of the city's energy bill - approximately $1 million annually by July 1996. 
 

Encouraging Sustainable Energy Use: The 1% Solution 

To meet its goal, Portland launched the City Energy Challenge (CEC) program in July 1991. The program was designed to overcome obstacles to investment in energy efficiency and to develop an energy-saving incentive program to encourage efficiency in City government by returning a portion of the money saved to the participating bureaus. 

Successful implementation of the program, however, proved challenging. Obtaining the funding needed to staff the program was the first and most critical obstacle. While selling the concept of a coordinated push for energy savings was easy, convincing City Council to approve a new position at a time when police and fire services faced budget cuts was difficult. Rather than draw from the city's general fund, the CEC employed an innovative mechanism to fund its energy management activities. It gained approval to assess each of the city's bureaus a fee for CEC services equal to one percent of its energy expenditures (subject to a cap of $15,000 per bureau). The bureaus gladly support the cost of the program for two reasons. First, as paying customers of the CEC, they are direct beneficiaries of the program's services. Second, they stand to gain not only service but actual revenue form their contributions to the conservation effort: some of the energy savings reaped as a result of CEC activities return directly to bureau budgets, rather than to the city's general fund. 

Specific services offered under the CEC program include:

• Annual Energy Reports, which prioritize city facilities for energy audits, helping bureaus focus attention on areas of greatest need.
• Energy audits, which identify strategies and technologies that can achieve energy savings and estimate the magnitude of those savings.
• Technical assistance, which helps bureaus choose products, prepare bid documents, select contractors, apply for utility rebates and identify funding sources for energy-saving capital improvements.
• Energy and environmental training, which helps bureaus raise energy consciousness and get the most from their energy efficiency investments.
• The CEC Newsletter, which recognizes bureaus for energy efficiency, provides updates on CEC projects, and informs city employees of technologies and training opportunities. 

The CEC clearly provides crucial services, but it would be a vain effort without capital to fund actual efficiency upgrades. Once energy upgrades have been recommended by the CEC's energy management coordinator, the bureaus are responsible for their implementation. However, the CEC also provides assistance in arranging financing. Initially, identifying capital outside the city budget and gaining approval to use it were major barriers to many new energy projects. Although many of the first energy-saving opportunities identified by the CEC were fairly small, they could not be financed within bureau budgets. To combat this problem, the CEC enlisted the help of the Portland Office of Fiscal Administration (OFA), which combined the financing of 46 individual upgrades and 'piggy-backed' the funding on a larger debt-sale to finance construction of a new police facility. This strategy gave each project access to a five-year, 3.86 percent loan. 
The city continues to employ the practice of issuing debt for energy efficiency investments through "certificates of participation." This mechanism allows bureaus to participate in debt sales primarily aimed at financing large city construction projects. For instance, if the city plans to build a $10 million community center it may sell a total debt of $10.5 million, designating the additional $500,000 for energy efficiency improvements in existing city facilities. The OFA then dispenses funds to bureaus, which repay the loans from their utility budgets.

Apart from this mechanism, several options for financing energy-saving enhancements are currently available to bureaus:

• The Oregon Department of Energy Small Scale Energy Loan Program offers bureaus 5.9 percent loans for up to 15 years. These loans are also repaid from bureau utility budgets.
• Capital improvement funds designated through the City's annual budget process may fund some energy-saving upgrades.
• Bureaus may pay for low-cost efficiency measures from their maintenance and repair budgets.

Assessing Performance and Replicating Results

The results of Portland's City Energy Challenge are impressive. In four and a half years, the CEC has identified potential annual savings of over $1.2 million in over 70 facilities. Projects the program has implemented to date already save taxpayers over $700,000 per year. These investments in energy and resource efficiency have cost the city $2.6 million in capital but yield an internal rate of return averaging 25.7 percent and recapture their costs in under four years. 

Yet, just as important as the programs immediate impact on city budgets and direct dollar savings to the Portland taxpayer are its long-term assurances of Portland's environmental health, economic strength, and overall livability. By reducing the demand for energy, Portland's CEC also reduces the demand for natural resources used to produce electricity and, in turn the need for construction of new electricity-generation plants and other energy-supply infrastructure. Utility costs for all ratepayers in the area are held in check as a result. Lower utility bills not only ease pressure on residential, commercial, and industrial pocketbooks but also feed money into sustainable development. Traditionally, dollars paid to utilities are exported from the local economy. Dollars saved from conserved energy, in contrast, are spent locally, supporting the city's economy and local jobs. Indeed, demand for installation of energy-saving equipment - generated largely by CEC efforts - has created over 100 skilled, jobs in basic trades and industry in the Portland area over the past four years. 

Having demonstrated the financial savings available through energy efficiency and developed an plan to identify and seize energy-efficiency opportunities, the city is now in an excellent position to promote the goals of its energy policy to private individuals and businesses. Leadership by example is a powerful means of communicating to government employees, businesses and residents that sustainable practices are important, achievable, and, particularly in the case of energy efficiency, financially attractive.

The funding strategy employed by Portland is replicable in almost any jurisdiction. "Any organization can spare one percent to identify energy-efficient opportunities." After all, hen notes, the idea is simple, direct and elegant: city agencies directed to participate in the CEC must contribute one percent of their energy budget to support the program; in return for that one percent, CEC conducts an audit and makes recommendations for energy-efficiency improvements. Technical assistance, innovative funding mechanisms and incentives erode institutional barriers to implementation of the suggested improvements.

Clearly application of this strategy is not confined to energy programs alone. It is not difficult to imagine 'one percent for recycling' or 'one percent for pollution prevention' programs elsewhere. The only real requirement of this approach is that the financial benefits of efficiency improvements outweigh the costs. 
Portland's City Energy Challenge is money in the bank. As the city implements more energy efficient projects, government and taxpayers realize increased savings and benefit. Interestingly, as energy bills decrease so does the funding the CEC program receives. An effective CEC may make itself obsolete and un-fund itself in the process. And that, perhaps, is the best measure of a good government initiative. 

LOCATION:
At the confluence of the Columbia and Willamette Rivers, in Northwestern Oregon. 

SIZE:
147.5 square miles

POPULATION:
495,000

PER CAPITA INCOME:
$15,286

FORM OF GOVERNMENT:
Mayor/City Council 

CONTEXT:
Over the last two decades, the Portland area has seen steady growth in population and new business. Much of this growth is attributable to people relocating in the area from out of state. Portland is known for its livability - it is a large city that retains a sense of community, has few congestion problems, and a moderate cost of living. While Portland's growth has buoyed the local economy, it has also created concerns about eroding quality of life. Because Portland has an interest in sustaining its livability and local natural resources, it is an active promoter of urban sustainability. 

"Any organization can spare one percent to identify energy-efficient opportunities."
- David Tooze, City Energy Challenge Program Director 

Before Portland could credibly promote energy conservation to its businesses and residents, the city had to assess its own energy consumption and implement cost-effective and energy-efficient strategies in its own operations.

The CEC has identified potential annual savings of over $1.2 million in over 70 facilities.

As part of the City of Portland's effort to create a model of a sustainable city, it adopted a comprehensive energy policy. The City Energy Challenge, an outgrowth of the policy, reduces operating costs and increases energy efficiency in city facilities. 

Computers, printers, and monitors that meet the standards of the U.S. Environmental Protection Agency's Energy Star program can cut computer related energy consumption in half by automatically shutting down when not in use. By purchasing only Energy Star computers the Federal Government expects to save $40 million annually. 

Benefits of Portland's City Energy Challenge

In four years of identifying and implementing energy-cost saving measures Portland's City Energy Challenge has saved a total of nearly $2 million. Because the savings come from permanent changes in city facilities the total benefits of the CEC grow geometrically as the program continues to identify and implement cost saving measures. By the end of 1996 total savings will approach $3 million. The program will provide sustained savings well beyond the its initial five-year time frame, including the following annual benefits:

Energy Cost Savings:
Identified:$1.2 million
Realized:$710,000 

Energy Savings: 14.2 million kWh 

Jobs Created over 100

Environmental Benefits:
NOx emissions avoided:9,096 lbs.
CO2 emissions avoided: 12,780,000 lbs 
 

[These estimates were not necessarily developed by the sponsoring jurisdiction].

In 1992, government-owned buildings represented approximately 25 percent of major fuel consumption in commercial buildings. Of major fuel consumption in government-owned buildings, 57 percent occurred in buildings owned by local governments, 34 percent occurred in state-owned buildings, and 9 percent occurred in buildings owned by the Federal government. 
 

Other Jurisdictions Promoting Energy Efficiency in Public Facilities:

Boston, MA
Des Moines, IA
Kansas City, MO
Philadelphia, PA
Phoenix, AZ
Sacramento, CA
San Francisco, CA
Toledo, OH 

Other Sustainable Programs in Portland, Oregon

SUSTAINABILITY

Sustainable City Principles
Establishes a set of 10 sustainability guidelines to be followed by city elected officials and staff.

Sustainable Business Development Workbook and Training Workshops
Educates the local business community about sustainable opportunities through the city's BEST (Businesses for an Environmentally Sustainable Tomorrow) program.

ECONOMICS
Winner of Empowerment Zone/Enterprise Community Award

ENERGY
Portland Metropolitan Area-Regional Transportation Plan
Incorporates an urban containment strategy to control urban sprawl and facilitate public transportation.

Energy Edge Project for New Commercial Buildings
Researches and demonstrates energy-conservation measures in new commercial buildings. Provides design and financial assistance to owners installing or implementing energy-conservation devices and measures.

Energy Savings Plan
Offers financial incentives to manufacturers, processors, and refineries through a three-year pilot project to encourage electric energy-efficiency improvements in industrial processes.

Appliance Efficiency Award Program
Encourages the purchase of energy-efficient appliances ranking in the top 15 percent.

Block-by-Block Weatherization
Increases energy efficiency in low-income households through a neighborhood-focused marketing effort. Provides free insulation, energy-use education, and weatherization kits.

Multifamily Building Weatherization Assistance
Offers utility and state financial incentives to apartment building owners for weatherization.

Aluminum Smelter Conservation and Modernization
Provides information on electricity efficiency to agricultural, commercial, industrial, and residential utilities. Offers free plant energy analysis to identify conservation opportunities and performance based incentives.

LAND USE
Urban Growth Boundary Line/Metro 'Region 2040' Planning Effort 
Examines two ways to accommodate urban-growth in the Portland area: by expanding the urban growth boundary line, or by retaining the current boundary line and increasing population densities within the boundary. 

WASTE MINIMIZATION AND POLLUTION PREVENTION:
Polystyrene Foam Food Container Ban
Bans the use of polystyrene foam food containers through a city-wide ordinance.

Curb-side Recycling Program
Targets a 50 percent municipal solid waste reduction by the year 2000.

Participant in U.S. Department of Energy Clean Cities Program
Strives to decrease urban air pollution.

WATER
Storm Drain Stenciling Program
Creates awareness of pollutant runoff by marking urban storm drains. Combines stenciling with education outreach.

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