Energy efficiency plan gains support
Despite disagreement last week in funding a $5.9 million energy efficiency project, Wilkes-Barre officials showed strong support for it.
City council approved the project with Johnson Controls Inc. in late September, championing the company's guarantee that its projected savings will cover the multimillion-dollar price of the project and bond interest over a 20-year period.
On Tuesday, city council approved issuing $5 million in bonds, which will cost the city more than $6.3 million after interest, but not without opposition from Councilman Tony George. Even though Mr. George approved the project, he voted against the bonds and defiantly argued against borrowing any money until the city approves a budget for 2013.
The project is a guaranteed energy savings performance contract, which are an increasingly popular way to undertake large energy efficiency projects because they require no upfront funding and are often guaranteed by contractors to pay for themselves with the energy savings produced over an extended time period, according to the Energy Efficiency and Renewable Energy, a branch of the U.S. Department of Energy.
Johnson Controls audited the city's buildings and energy use and identified 18 upgrades to streetlights, water fixtures and other infrastructure that could result in savings of more than $10.9 million in the next 20 years. The city then contracted the company to undertake and manage the upgrades.
Johnson Controls guarantees the city will save $3.9 million by reducing its energy and water consumption. The company is responsible for implementing and measuring these savings.
The remaining $6.9 million is projected to be saved through maintenance and operational costs avoided with the upgrades, as well as potential utility savings the city could achieve through its own actions.
This means the city bears most of the responsibility to achieve the savings, which should fund the entire cost of the project. It must implement Johnson Control's recommendations, properly maintain equipment and monitor its bills to ensure it's actually obtaining the projected savings.
But if the city follows the company's recommendations and the savings still fall short of projections, Mr. McLaughlin said Johnson Controls is required to cover the costs.
In 2005, the United States Government Accountability Office released a report about the federal government's use of energy savings performance contracts. Between 1999 and 2003, federal agencies spent an estimated $2.5 billion dollars on such projects. The report found that many of the agencies reported the savings covered the cost of the project. But the report stated it could not "verify that conclusion" using their data, and audits revealed "unfavorable contract terms, missing documentation and other problems" that caused the report to "question how consistently the savings cover costs."
Contact the writer: chong@citizensvoice.com