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Performance Contracting Bids May Become Common In Cheshire

April 7, 2011 by Josh Morgan

For years, the buzz word at Cheshire Town Council meetings has been performance contracting.
It now appears that concept is more than just a debate topic and might become a reality.
The Town solicited bids from companies to perform performance contracts in Cheshire at the Town Hall and Police Station, as well the high school and Dodd Middle School. A total of three bids were received for the project and were opened last week. Normally, work is awarded to the lowest qualified bidder, but all three firms will be interviewed, as each provides a different scope of work for the project.
"It's uncharted territory for Cheshire. Several other towns in the state have been involved with it, but there isn't a big history of this work for municipalities in Connecticut," explained Operations Manager George Noewatne. "It's not new by any stretch, but it's new for Connecticut more so than other parts of the country, and certainly new for Cheshire."
Over simplifying it, performance contracting, as it relates to the Town and school buildings, is a way to pay for energy improvements through the savings the project generates. For instance, if an entire project would cost $10 million, the Town would pay the contractor up front after taking out a loan. That loan would then be paid back over time, say 15 years, with energy and utility savings. After those 15 years, true savings would be realized by the Town.
"There won't be much upfront money," Noewatne said. "There isn't a plan to put any money up front. It's paid through savings."
The three bids ranged in price from a low of $2.25 million to a high of $4.5 million. ConEdison Solutions bid $2.25 for the project, and expected a payback in savings in nine years. Schneider Electric proposed $3.6 million and expected payback to occur within 15 years. Ameresco Inc. bid $4.5 million for the work, and expected the payback to be 11.6 years. The work could be as simple as installing energy efficient lighting and hooking up computers to timers, to more advanced and intricate work such as the use of solar panels.
The Town's energy consultant for the project, Celtic Energy, is reviewing the bids to produce an apples-to-apples comparison for local officials, Noewatne explained. The documents are lengthy and full of industry jargon, covering many different projects, from efficient lighting to new boilers. Celtic will put the documents into layman's terms, Noewatne said, and then a decision will be made to move forward with the project.
"Before any physical work is done, the Town Council will want to make a decision to go forward or not, and if we do go forward, to what extent," he said. "Performance contracting is really designed to go across all buildings, instead of a few targeted ones."
The bids are for work in four different Town buildings, but there would be even more "economies of scale" if the project was opened up to the five other schools and Town buildings, such as the fire department or senior center.
"The way it’s designed to work, if they do an assessment of a smaller portion of the buildings, then they spread it out over the whole town," Noewatne explained. "The ultimate goal is to go through all of the buildings and develop similar projects."
After the firms are interviewed, the Council will ultimately decide whether or not to move forward with the project and hire the company. Then, discussions could occur as to whether or not to expand the performance contracting to other buildings in town. If the hired company would need to perform work at other buildings, the assessment could take an additional four to six months, Noewatne said, stating it would be tough to see this work begin in 2011.
"This calendar year could be pushing it a little bit," he said.

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