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School Board mulls pitch for energy conservation program - again

The King George School Board is mulling a proposal from a company that says it can save the division 20-30 percent annually on its utility costs, proposing a gross savings to the division of $4.5 million over the next 10 years.

The company, Cenergistic, estimates that over a ten-year timeframe, the division would pay a fixed fee amount of $169,000 per year only for the first five years, adding up to $845,000 for the company’s fees.
But the fees would not add to the division’s budget. Instead the company’s fees for the program costs would be 100-percent funded by utility cost savings.

Cenergistic was previously called Energy Education, Inc, with a name change made about a year ago, according to Cenergistic regional vice president Dr. Larry Price, who provided a presentation on the energy conservation program at last week’s meeting on Oct. 28.

Prior to the  name change, Energy Education, Inc, provided a similar pitch to the School Board three years ago in 2010. (See below for background.)

THE PITCH
Price told the School Board, “Our entire program is funded from your existing utility budget.” He added, “If your savings don’t exceed your investment, we will refund the difference.”

Price said there is an initial four-month period of time called QuickStart when there are no fees charged and the EnergyCAP software is provided for that time frame. Price said they estimate that the division would save $40,000 in the first four months.  

The program is designed around a five-year contract with ongoing savings and support from Cenergistic that is projected to add up to $187,150 in net savings during QuickStart and the first year of contract, which is during the first 16 months.

That cost savings within the division’s utility budget are projected over 10 years to add up to a gross savings of $4.5 million and return on annual investment of 325 percent, and is a 10 year net savings of $3,445,208, according to a handout sheet tailored to the King George division.

After the first five years, there would be no more annual fees to Cenergistic, but a business relationship would continue as long the division picked up the cost of salary and benefits for a part-time ‘energy specialist,’ along with costs for EnergyCAP software usage. It’s unclear whether conference training costs would also be necessary.

Price said, “We help you over a period of time to become a self-sufficient and energy-efficient organization.” He stressed that they do not sell equipment or recommend retrofits for new equipment. “There’s no capital investment – we take the infrastructure that you have and help you maximize it,” Price said.

ASSIGNMENT OF ENERGY SPECIALIST
The assignment of an energy specialist is a key component, with Price saying it could be a part time position, with someone either from the division or the community.

Price said, “The energy specialist is out in buildings at 5 a.m. in the morning and 10 p.m. at night, on weekends and on holidays, making sure that things that are supposed to be off are off, and that things are operating the way they are supposed to be operating.”  

That energy specialist would be highly trained by participation in Cenergistic’s national energy conferences, along with visits from some of their 45 experts who will rotate through the division to share their expertise for on-the-job training.

ORGANIZATIONAL BEHAVIOR CHANGE
Price stressed, “We look at organizational behavior change. It is about turning off lights, but it’s more about the behaviors around large consumption items.”

He said about 65 percent of most electricity in school divisions is used for heating and air conditioning, adding, “There are lots of opportunities there where we can help you learn how to better optimize your equipment and how to use that equipment better.”

In a nutshell, their integrated comprehensive program includes active management by a trained energy specialist position in the division, along with the use of organizational behavior science, EnergyCAP accounting data collection and analysis software, and proprietary technology to result in optimization of current infrastructure and energy cost savings.

Price added that the fixed-fee cost of $169,000 per year includes the company’s costs for the energy specialist and all the training. After the five year contract, the division takes over the cost of the energy specialist position and payment for the use of the software. The division benefits by keeping 100 percent of the savings.
Price reiterated that there are no fees to go to Cen
ergistic in additional years, but the company continues to supply support as long as the program is kept in place, supplying data with the software and the division’s energy education specialist.

SCHOOL BOARD MEMBER COMMENTS
Rick Randall and Mike Rose were the only two School Board members now who heard the pitch in 2010. Randall said he was in favor of the program as previously, when the company was Energy Education. He said he hoped it wouldn’t “jump the tracks this time.”

Rose was likewise enthusiastic, suggesting that it could be a topic on a proposed joint meeting agenda to talk about with the Board of Supervisors. He added, “They may be interested in it for their buildings.”

Ken Novell had asked some questions and for clarification and he also stated, “It sounds too good.” Chairman John Davis directed that the topic be placed on an upcoming meeting agenda.

BACKGROUND
When Cenergistic was called Energy Education, Inc, the company provided several presentations to the School Board three years ago in 2010 beginning in June of that year.

At that time, the annual contract was to be for four years, not five, and the company proposed a net savings to the division of $4.2 million over 10 years. Over the four-year period, the division was told by Energy Education that it would pay about $869,383 towards the company’s program costs, including $600,000 in fees to the company, $205,600 for a stipend/salary for a part-time position of an ‘energy education specialist,’ $31,000 for conference travel for that person hired, and about $32,783 for software costs.

Then, it was discovered that the division was required by its policy and state law to put out a request for proposals (RFP) due to the high proposed cost of the annual contract and the fact that there are other companies that offer similar services for energy conservation practices resulting in cost savings.  

At the time, the Dallas-based Energy Education, Inc, and two other firms, Honeywell and 2RW Consultants, Inc. submitted proposals with Energy Education coming out on top after review by a procurement committee.
The committee was authorized to negotiate with Energy Education to come to terms. That’s when the deal fell apart, with the two parties unable to come to terms with no official reason provided.

The main difference this time around, in addition to the name change, is that the contract term has increased from four years to five, the annual contract cost has gone up, but the contract fee is now fixed to include the costs for the part-time energy specialist position and for the software costs. Those last two costs are assumed to be picked up by the division at the end of five years, for the energy cost savings to continue to be realized.

Phyllis Cook

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