Battling Utility Costs

• By Michael Fickes
• 10/01/02

Eastern Illinois University (EIU) estimates that it has avoided several million dollars in utility costs through the past six to 10 years. More importantly, EIU hopes to improve its utility cost performance substantially through the next 10 years and to begin pumping at least a portion of those cost avoidances -- or savings -- into EIU budgets serving the school’s core educational missions.

Credit this energy-efficient performance to a strategy developed by Gary D. Reed, P.E., C.E.M., EIU’s utilities manager. In 1993, Reed developed a three-prong strategy to lower utilities costs at the 70-building, 325-acre campus in Charleston, Ill. Following a recent review of the results of his program, Reed outlined its key strategic components for COLLEGE PLANNING AND MANAGEMENT.

CPM: Describe the energy strategy you’ve developed.

Reed: In 1993, EIU’s facilities, planning and management department decided to look into techniques for conserving energy and cutting utility costs. Given tight budgets, we structured our early efforts around a series of no-cost and low-cost initiatives.

The success of these first strategies gave us the confidence to consider performance-contracting initiatives through agreements with Energy Service Companies or ESCOs. These companies design and implement major utility system upgrades under contracts guaranteeing that the savings generated by those upgrades will cover their costs through a specified period, usually 10 years.

CPM: Let’s start with the no-cost strategy. What can you do that doesn’t cost anything?

Reed: First, you can apply all the common sense energy-saving techniques that you use at home but forget about when you come to work. Communicate the importance of saving energy to students, faculty and staff. Tell them to turn off lights and computer monitors when leaving a classroom or office. Second, review your maintenance practices. Tighten leaky valve packings. Insulate valves and pipes that have become bare. Clean your air handling coils. Adjust the operation of outside air dampers. Negotiate better rates with your utility companies.

CPM: Doesn’t everyone do these things?

Reed: We thought we were, but we found we could do better. If you want a no-cost example with more dramatic savings, we were fortunate to be able to acquire some grant support from the State of Illinois related to utilities. A $2-million Coal Development grant enabled us to recommission our coal plant in the late 1990s. In 2000, when natural gas prices began to spike, we switched to coal and ended up avoiding about $2 million in higher costs for natural gas.

CPM: Exactly what kinds of energy savings did the low-cost program provide EIU?

Reed: Three programs will eventually save us about a quarter-million dollars a year. First, we spent about $26,000 to replace the incandescent bulbs in all our desk lamps with screw-in fluorescent lamps. After one year in operation, we calculated a $21,000 savings. We estimate that these lamps will last five or more years, paying back enough to replace the lamps and enabling us to avoid about $80,000 in costs.

Second, we installed sensors on 115 soda machines for $12,800. The sensors turn the machines off when no one is around, and are providing us with a payback of $11,500.

Third, we spent $15,300 to install showerheads that reduced water flow from 5 gallons per minute to 2.5 gallons per minute. This one program is paying us back at a rate of $240,000 per year.

CPM: What have you done in the area of performance contracting?

Reed: We’re in year seven of a 10-year performance contract with our “Phase I” ESCO, and we’re now at final commissioning of “Phase II.” Our involvement in performance contracting began in 1995 under an Illinois pilot program initiated by Governor Jim Edgar. This pilot project provided us with $3.4 million in state-sponsored bonds, which we are repaying out of energy savings obtained through the program.

Following an open and competitive selection process, a performance contract begins with a comprehensive energy audit performed by the selected ESCO. In our case, the ESCO recommended a series of energy efficiency upgrades, which we carried out using the $3.4 million in bond funding. The upgrades included the installation of T-8 fluorescent lamps with electronic ballasts, compact fluorescent lighting, variable air volume controls, variable speed fan drives, and building automation systems related to HVAC. The ESCO guaranteed that this work would save a minimum of $553,000 annually, enough to pay off the bonds as well as the debt service. We’re now in year seven of this initiative, and the actual savings have exceeded the performance guarantee in each of the contract years. The EIU administration has been supportive in folding utility savings back into other energy conservation measures.

CPM: Describe your next performance contracting initiative.

Reed: Our first initiative only considered half the campus. Being unfamiliar with the program, we wanted to be conservative. The success of the first initiative gave us the confidence to look at the rest of the campus. Working with our Phase II ESCO, we developed a more aggressive program, under which we are spending $10.8 million to produce a guaranteed annual savings of nearly $1.2 million.

Many Phase II measures focus on water conservation. Once again, we’re replacing showerheads. The latest devices will reduce water use even further -- to 1.5 gallons per minute. We have also replaced 1,117 toilet fixtures and flush valves and installed 1,500 aerators in lavatory sink faucets. In addition, we replaced all the washing machines in residence halls with high-efficiency units. These upgrades are expected to save us more than 72 million gallons of water annually. Our water cost is $6.59 per 1,000 gallons, and our savings on water is expected to be more than $470,000 per year.

We have also installed four new centrifugal chillers, along with loop piping for chilled water. This enables us to provide the same level of cooling we’ve always had, while using only half the chillers at any one time.

I should mention that, in each of our performance contracting programs, we set aside money to train our maintenance staff on new procedures related to the new equipment. Part of our responsibility under these contracts is to maintain the new equipment to manufacturers’ standards.

CPM: It sounds like performance contracting is the most important part of your strategy.

Reed: Don’t make that mistake. The no-cost and low-cost measures that I’ve described are things that you can do by yourself, probably for less money than if they were included in a performance contract. Do what you can do on your own. Then talk to a performance contractor.