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NYS Comptroller’s Office school energy audits:

Savings elusive

Dan Hust - Staff Writer
Posted 4/22/14

SULLIVAN COUNTY — Energy savings from performance contracts at three area schools weren't always what was expected, says the state.

The NYS Comptroller's Office audited eight upstate districts …

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NYS Comptroller’s Office school energy audits:

Savings elusive

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SULLIVAN COUNTY — Energy savings from performance contracts at three area schools weren't always what was expected, says the state.

The NYS Comptroller's Office audited eight upstate districts recently to determine the actual savings, if any, of energy performance contracts (EPCs) the schools entered into with private companies.

It's a brisk business, as the state says more than 1,200 EPC-related projects were approved for over 200 districts between 1996 and 2012.

During that time, Eldred, Fallsburg and Monticello central schools created four EPCs (two in Eldred).

The contracts were designed to help the schools become more energy-efficient through installing, maintaining and/or better managing energy systems, via the guidance and assistance of an energy service company (ESCO).

A particular advantage is that the school could finance large-scale capital projects without having to bond for them, ask voters to approve them, or request competitive bids. The overall goal is to save the district money while reducing its impact on the environment.

Auditors found, however, that none of the local schools with EPCs would realize net actual savings without the help of state aid/grants.

Fallsburg is projected to save a net of $851,485, but that's only because it's getting over $1 million in projected state aid, covering the gap between the EPC's cost of $3.4 million and the projected overall savings of $3.1 million.

Monticello is coming out ahead, too, with a projected net actual savings of $247,768, but again, that's only because the state is projected to pitch in nearly $2 million, covering the difference between the $5.6 million projected cost of the EPC and the $4 million in projected savings.

In Eldred, the projected cost of one of the two EPCs was nearly double – or $415,000 higher than – the projected savings, and state aid of $225,030 isn't sufficient to create savings, leaving a projected $190,041 hole.

The other EPC in Eldred will result in about $48,000 of projected net actual savings, but only because state aid of $119,221 covers the difference between the EPC's projected cost of $686,593 vs. the projected savings of $615,055.

State auditors blamed Eldred officials' lack of monitoring of the program.

“There had been turnover in staff and the current officials were not involved in the EPC,” wrote auditors. “Therefore, they didn't have any insight as to why it didn't meet the guaranteed savings.”

Additionally, the ESCO for the EPC that won't save Eldred any money has gone out of business, said the state, “providing limited recourse” for the district to recover any shortfall.

Fallsburg, on the other hand, was lauded for paying attention to its EPC, with auditors saying the business manager monthly monitors energy consumption and costs, and the ESCO itself prepared a measurement report in the first year.

Monticello officials told the state they're requesting an overdue report from their ESCO, which may give them insight into why their savings aren't higher.

Auditors urged all the districts to ensure timely reviews are done and to consult school attorneys if the savings have not been met, in case legal action is warranted.

“Because state aid is not guaranteed,” they wrote, “the cost of the project should be covered by the energy and/or operational cost savings of the project to ensure that net savings are achieved.”

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