About energy performance contracts
Energy performance contracts leverage money saved on energy costs to pay for energy-efficient building improvements. In the case of BKW, money already budgeted for operational expenses such as oil and gas would be saved and instead used to pay for the improvements listed in the energy performance contract. In addition, the state provides funding for energy-efficient projects such as those proposed in the contract the district has agreed upon.
About the payment process
The energy performance contract would include a guarantee to deliver enough savings to pay for the equipment installation and maintenance at no additional cost to district taxpayers. This, and the fact that no new expenses are incurred by the district, means the projects in an energy performance contract do not go before the public in a bond vote. However, the district does bond the up-front costs of the total project, then uses the savings produced to pay off the bond over approximately 15 years.
If the equipment installed does not produce the savings guaranteed by Honeywell, the company upgrades, adjusts or completely replaces the equipment in order to generate the guaranteed monetary savings at no additional cost to the district. The company also cuts the district a check for any savings lost.
Further, the district would receive up to 80 percent reimbursement on the entire project in the form of state aid. Since the savings generated would be used to pay the bond, the state aid becomes a windfall the district can use to help lower costs in other crucial areas of the budget as well as help the district weather current and future economic crises.
The district Board of Education originally considered energy performance contract proposals from two companies, Johnson Controls and Honeywell. Public discussion of the energy performance contract first began in June of 2009. The Board ultimately decided to contract with Honeywell.
The district then consulted with the architects and contractors for its capital project in an effort to perform capital project work in tandem with energy performance contract work. This would ensure equipment, upgrades and design accommodated both projects simultaneously. The capital project is currently underway.