Energy Performance Contract Could Solve Haldane’s Heating Woes

By Michael Turton

It has been a long, winding and at times torturous road but the Haldane Central School District may be very close to answering a question that has been on the table for years: What is the most cost effective way to upgrade the aging heating system while spending less money on energy?

Tuesday’s Board of Education meeting included a public hearing at which Con Edison Solutions (CES) outlined its proposed “Energy Performance Contract” – a novel approach to Haldane’s needs that at first glance seems almost to be too good to be true.  Here’s how it works. After being selected from companies that responded to the district’s request for proposals, CES conducted a detailed audit of Haldane’s current energy use and facilities. Based on that audit CES has proposed more than twenty upgrades designed to more efficiently light, heat, cool and ventilate campus facilities. The upgrades will save a considerable amount of money over an eighteen year period. In fact, according to CES, savings alone will pay for all upgrades with no additional funding required from taxpayers.  And here’s the punch line: if Haldane does not reap the cost savings guaranteed in the contract, CES must write a check for the difference.

Not surprisingly, trustees were quick to ask how that can be true. “Con Ed is very conservative in its estimates. We don’t want to have to write that check” was CES’s John Cain’s response. CES estimates that with the upgrades $42, 094 in electricity costs will saved each year. How? In part by replacing or refurbishing some 1900 light fixtures.  The savings will mean a 41% decrease in Haldane’s annual electric bill. Even more dramatic is the estimated annual savings in heating fuel – $88, 790 or a 45% drop in heating costs.  Those savings will come in large part from replacing Haldane’s two boilers, both of which have already exceeded their expected lifespan. In total, CES estimates that the Energy Performance Contract will save the district approximately $135,000 annually.  Cain explained that while the payback period for the new boilers will be more than eighteen years, the payback period for lighting improvements is considerably less which helps offset the cost of the boilers within the eighteen year timeframe.

Total cost of the project is estimated at $2,264, 900. A second public hearing will be held on September 7th.  An Energy Performance Contract is not considered a capital project, thus the district is not required to hold a referendum to approve the project. In the interest of accountability, however, the district will hold a referendum some time in October. District president Dave Merandy said, “Even without the savings we don’t want to just slide something through. It’s a big chunk of money. We want people to vote on it.”

Superintendent of Education Mark Villanti pointed out that while other districts have entered into Energy Performance Contracts without a public referendum it makes economic sense to do so. “If no referendum is held state aid decreases by 10 %” he said. If the referendum is approved state aid would be approximately $900,000. Even in the midst of New York State’s current fiscal chaos Villanti is optimistic about that level of aid, indicating that construction-related projects have traditionally not been subject to cutbacks. “Three or four years ago we were looking at an eight to eleven million dollar project. We have cut as much as we can to do all the basics. It can mean no tax increase if we do it right.”

The district has considered several other options over the past two years including switching from the current steam-based heating system to hot water. Geothermal has also been looked at but has been rejected because of larger upfront capital costs and a considerably longer payback period. Questions have also been raised about the efficiency of geothermal in Cold Spring’s climate. Consultants have said that even if a geothermal was installed a backup boiler system would still likely be required. Merandy said that the Energy Performance Contract will not limit the district’s options in the future. “The public should know that the boilers can be switched over.” The system will continue to use steam heating but the cast iron boilers proposed for purchase can be adapted for use with either hot water or geothermal systems should those options become economically viable in the future.

Haldane’s president also said that the project will have a built-in auditor. Eisenbach & Ruhnke Engineering Inc will be hired to independently monitor the project. “It will cost a little but it will mean peace of mind” Merandy said.  Summing up the project he said, “We have to replace the boilers anyway. At least this way we have a chance of not increasing taxes.”

Cain said that CES recently implemented an Energy Performance Contract in the Mahopac School District and that that district has begun making payments using the funds saved on energy costs. Most districts accumulate savings for a year before beginning to make payments.

If approved by public referendum and subsequently by the New York State Department of Education the project could begin in May, 2011 with all major upgrades completed by September of that year.

3 thoughts on “Energy Performance Contract Could Solve Haldane’s Heating Woes

  1. Very well-done story — a good explanation of a creative method for financing energy upgrades. With so many big projects facing the village, it is good to be reminded that there are ways of doing things that don’t raise our taxes!

  2. I have been an Energy Manager for over 25 years. In most every building I survey,(about 1,000 over the years) I find that the maintenance staff does not know how to operate the building systems efficiently and effectively. Most buildings have a 25% to 50% savings potential. One should always start with the maintenance staff because they simply do not have proper training. Followed by reviewing the control systems which are rarely programmed properly. Those two areas have the best pay backs. Replacing equipment should always be the last place to invest money.