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Town Mulls Energy Contracting Program

August 11, 2011 by Josh Morgan

The Town of Cheshire is slowly delving into relatively new territory as it continues to explore the idea of performance contracting for its buildings.
A brief presentation was given to the Cheshire Town Council on Tuesday night, but no action was taken on whether or not to proceed with the projects. Performance contracting is a new way to finance energy improvements for buildings. George Noewatne, deputy director of Public Works, has worked closely on this project and explained that performance contracting is a way to "improve infrastructure" and pay the projects "through various energy savings."
"The savings the projects would show would pay for themselves in about 12 years," he explained. "We wouldn't pay less in energy costs. We'd install more efficient equipment and the difference would pay for the project."
The idea has been discussed by the Energy Commission for a number of years and it's finally making it's way to the Town Council agenda. The Town received a federal grant through a stimulus package that allowed it to hire an outside consultant to manage the project. With the funds, the Town hired Celtic Energy from Glastonbury, which has been working for the the Town for more than a year.
This past spring, interested companies were invited to tour the four town buildings that are under consideration for performance contracting. Noewatne explained that the town has roughly one million square feet of building, and the four chosen structures — Cheshire High School, Dodd Middle School, Town Hall and the Police Department — make up nearly 40 percent of that. Agostino Dell'Oso, with Celtic Energy, stated that more than six companies toured the buildings and looked for energy improvements, with three actually bidding on the work.
The three companies were invited in for lengthy interviews and were scored on a number of criteria. The decision was made to go forward with Ameresco for the performance contracting work. Noewatne stated that Ameresco has found about 20 projects across the four buildings, totaling $4.5 million, that would help with energy efficiency.
"These projects take around 12-18 months," Noewatne said. "After the payback, the savings would come back to Cheshire. There will be some savings for the Town."
Dell'Oso explained that the financing for the project would not come from the taxpayers of Cheshire. Rather, a third party would put up the money at an interest-free rate, since the program is supported by the state and federal government. According to Dell'Oso, Ameresco is willing to guarantee certain savings every year, but he did not divulge the particular amount. In simple terms, if the Town's annual energy costs were $500,000, and after the work was completed it dropped to $350,000, that difference would then be given to the third party. The next year, the Town would continue to pay $500,000 for it's energy, or actually increase the line item, then continue to reap savings and pay back the third party. In about 12-15 years, Noewatne explained, the projects would be paid back. After that time, all the savings would be for Cheshire.
The next step for the Council is to decide whether to hire Ameresco for $48,000 to do an energy audit of the rest of the town buildings. If that moves forward, the Council can still decide to take the information and do nothing, or move forward with all or some of the projects and roll the fee into the performance contract.
Celtic Energy also proposed it stay on as a consultant for the length of the project, which is estimated to cost about $196,000.
The Council plans to continue its discussion on performance contracting at future meetings.

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