Performance Contracts Reduce Cost

March 3, 2008
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In light of new reports and a Congressional push for energy independence, performance contracts are rising to the top of many commercial building owners’ lists of things to investigate. Across the country, concerned citizens are calling for a more responsible corporate America and a more responsible government. As the government endeavors to fulfill its promises, many facility managers are implementing performance contracts.

COUNTING COSTS

Wilson County, N.C., for example, has reduced its utility costs by $107,000 annually since completing $900,000 in facility upgrades to improve operations, comfort, and efficiency at 10 county buildings totaling 363,000 square feet. The county is now launching a second phase of facility enhancements at its detention center and a newly acquired office property. This $330,000 project will save an additional $29,000 annually, helping the county to achieve its objective of reducing utility charges by at least 15 percent annually.

Wilson County, which is 30 miles east of Raleigh, N.C., was struggling with high utility costs to operate its aging buildings. The lack of an integrated building management system (BMS) made it difficult to regulate temperatures and to manage energy consumption.

Through the performance contract, TAC implemented a variety of energy conservation measures (ECMs), including installing a BMS with direct digital controls (DDC) to manage mechanical equipment and energy usage at county buildings; upgrading to efficient, uniform lighting; and implementing water conservation measures, such as installing low-flow faucets. The latest projects will add the BMS and energy-saving lighting to the county detention center and the newly leased office building.

Wilson County launched the second phase of its facility enhancements at this newly acquired office property and at its detention center. This $330,000 project will save an additional $29,000 annually.

Both of these projects have been achieved through performance contracts with the Energy Solutions division of TAC, an energy services, building automation, and security company.

“These performance contracts with TAC allow us to make essential improvements to our county facilities,” said Ellis Williford, county manager. “Since we are trading the money we were spending on utilities to complete the work, our citizens are not burdened with a tax increase. In addition, our employees enjoy a better workplace and the county sets an excellent example of environmental concern by reducing energy consumption.”

Performance contracting is a turnkey method of delivering facility improvements whereby the design, construction, commissioning, and performance measurement are incorporated into one guaranteed fixed price. Improved facility efficiency, comfort, financial management, lower utility costs, and environmental protection are among the long-term results of a performance contract.

The utility savings are typically generated from new and more efficient equipment and upgraded facility automation systems. In addition to saving utility dollars, these improvements maximize energy efficiency and improve occupant comfort. TAC guarantees the amount of savings the projects will achieve and agrees to pay the difference if that amount is not realized. Performance contracting projects are funded in a variety of ways, including general obligation bond funds, maintenance reserve funds, and financing secured against guaranteed energy savings.

“Wilson County is able to completely fund the comprehensive upgrade of these buildings by working with TAC and using the performance contracting method,” said Wes McDaniel, vice president of TAC Energy Solutions. “As a result of these projects, both county workers and citizens will enjoy a better indoor environment at county facilities. Furthermore, Wilson County’s facility staff uses the BMS to carefully control and manage energy usage at properties throughout the county.”

Wilson County, which is 30 miles east of Raleigh, N.C., was struggling with high utility costs to operate its aging buildings such as the county court house pictured above. Through a performance contract with TAC, the county was able to implement a variety of energy conservation measures.

BACK TO SCHOOL

Schools are another popular place for performance contracting. The Clyde Consolidated Independent School District (CISD) in Clyde, Texas, is just one of the many educational establishments that has completed a project to lower its utility costs and improve operations, comfort, and efficiency at its facilities. With the school’s $792,000 project, TAC guaranteed that Clyde CISD would reduce its utility costs by $57,000 annually.

Located in West Texas, the school district serves 1,515 students in grades Pre-K through 12. The district’s four schools and administration buildings, which encompass more than 340,000 square feet of space, were struggling with rising energy costs, aging HVAC equipment, problematic lighting systems, and electricity surges. To remedy these problems, TAC performed an extensive lighting retrofit, installed a direct digital control energy management system (EMS), and conducted power monitoring at the district’s facilities. The company also replaced the HVAC equipment at the junior high school.

“Not only will the Clyde CISD enjoy significant energy savings as a result of the performance contract, but it has also enabled the district to qualify for a rebate from the local utility company,” said L.O. Williams, assistant superintendent of finance for Clyde CISD. “Students and staff at the junior high appreciate improved comfort, and we now have better control of all our facilities because of the new EMS. Furthermore, the power monitoring has quelled concerns of damaging power surges.”

According to McDaniel, the estimated environmental impact of the Clyde CISD performance contract, based on annual guaranteed energy savings, is equivalent to removing 74 cars from the road for a year or planting 112 acres of trees.

“The performance contract made it possible for the Clyde CISD to resolve its facility problems using money that was already being spent on utilities,” said Wes McDaniel, vice president of TAC Energy Solutions.

“For smaller school systems with limited budgets like Clyde, performance contracting is an excellent method to finance part of facility upgrades.”

For more information, visit www.tac.com.

Publication date: 03/03/2008

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