Power play: Conserving, not rates, focus of schools

Published: Monday, January 23, 2006 at 6:01 a.m.
Last Modified: Sunday, January 22, 2006 at 11:10 p.m.
Electric rates in the Alachua County Public School system are expected to jump by 10 percent in fiscal year 2006, but a state study of school energy costs shows that a successful energy management plan can reduce the bills by just as much.
School Board member Eileen Roy sparked an argument about the district's rates earlier this month when she suggested hiring an energy consultant. Other board members said the district has done well in working with its primary provider, Gainesville Regional Utilities, to reduce costs. They rejected Roy's idea, suggesting the district instead focus on conserving more.
GRU's Ed Regan, an assistant general manager for strategic planning, said the district's rates are the best GRU can offer, but he said the district might save significantly more money by looking at its "energy consumption and load management."
An educational energy manager with the Florida Association of School Business Officials agreed.
"I doubt they have very much opportunity for rate-savings. It's very regulated by the Public Service Commission," Robert Van Der Like said.
He suggested the district ensure its technology is up to date and determine whether employees use energy efficiently instead.
Superintendent Dan Boyd said the district's energy situation was "blown out of proportion" when community members criticized other School Board members' response to Roy's suggestion.
"No one is uninterested in cost-savings," Boyd said, "but the good news is, the concept of saving money did not begin this week. Energy conservation efforts went into effect years ago."
He said the district contracted with a consultant in 1997 to have its energy management reviewed, leading to equipment replacements such as more cost-effective lighting. He said the new equipment paid for itself in eight years, netting an annual savings of about $479,000. Another energy audit in 2001 saved the district $60,000, Boyd said.
School Board Chairman Wes Eubank said the district will continue to look into finding more ways to conserve, but he also noted strides Alachua County schools made in the past several years, such as reflectors that increase the effect of lighting with less power, and devices like automatic timers for thermostats so power won't be wasted when school's out.
Even with those savings, Kik Koppitch, a senior account representative in GRU's large-account marketing program, said Alachua County schools paid GRU $3.4 million for electricity from June 2004 to June 2005. In fiscal year 2006, the cost is expected to climb to $3.7 million, he said.
To help soften the blow, GRU gives the district conservation advice, conducts energy-use audits in its facilities and issues a 10-percent "business partner" discount to the school system in exchange for a 10-year contract, most recently renewed in 2002. The partnership saved the district $942,963 from July 2001 to June 2005, according to Koppitch. If the district reneges on the contract, it's required to refund three years' worth of discounts to GRU.
Nevertheless, Roy argues it wouldn't hurt to hire a consultant since the district would only be charged a portion of whatever savings the consultant finds.
"It's a new day in energy consumption. I have no doubt the district has pursued every avenue in the past, but there are a lot of new ideas out there about how we can save money," Roy said.
The board member's beef about the bills came after she found out the district, GRU's second-largest customer, doesn't qualify for the reduced rates the utility offers its large power users. The reason: Alachua County's bills come in on 115 separate accounts that do not reach the required threshold for the reduction.
If the 14 bills that keep the lights on at Eastside High School were combined with the 10 bills for Buchholz High, the eight bills at Loften High and all the bills at the district's other 34 sites, Alachua County's schools would get a significant discount: Instead of paying $5.75 per-kilowatt hour, it would pay $5.25 per-kilowatt hour. At Buchholz alone, that could lead to an estimated savings of $580 a month.
But the Florida Administrative Code says it's illegal to offer "conjunctive billing" that combines so many meters on one account. The code regulates privately owned electrical companies and has a limited amount of control over municipally owned companies like GRU: The city-owned company can set its own rate, but a change in the structure of its rates, such as combining the meters, would have to be approved by the Florida Public Service Commission.
GRU's Regan said the change would mean a tariff change, and GRU would be forced to raise rates for other customers to balance the district's savings. Even so, he said, the three schools that would likely benefit from a large power rate would collectively save about $25,000 a year.
As absurd as it sounds to have so many accounts in one school district, it's "not uncommon," said Florida Power and Light Spokesman Bill Swank. "It's a matter of economics for the school district. If they had to wire everything into the same meter, it would be far more expensive."
Superintendent Boyd told the School Board that it has multiple accounts with GRU by design.
"Alachua County (schools have) done to Alachua County (schools) exactly what they wanted to do - reduce the up-front construction costs," he said, noting it was the district's choice to add new meters to bring electricity to school additions rather than paying the high price of rewiring them altogether.
Hearing that, Roy continued to call for a review of rates.
"My thought is, yes, GRU saved the district money initially, but how many years do we have to pay for it?" she said.
She conceded that GRU's rates may be comparable to private energy companies, but said the district deserves a better rate since the municipally owned provider doesn't have to pay taxes.
According to Roy's calculations, the district would have received $6.3 million in taxes a year from GRU, which would more than pay its electricity bill. But Regan likewise pointed out that the school system doesn't pay utility taxes, surcharges or property taxes.
Energy consultants Meanwhile, as energy rates continue to climb, some other districts throughout the state are taking drastic measures to keep their bills low, hiring consultants more and more often, appointing full-time energy education specialists to their staff, even offering financial incentives to schools that lower their usage rates.
In Osceola County schools, Projects Manager Jim Fisher, who headed the district's energy program for years, said his district gets a large account discount on 42 of its bills.
Like Alachua County, the district deals with multiple accounts and a municipal utility. In negotiations for better rates, the district agreed to sign a 10-year contract and the Kissimmee Utility Authority agreed to lower the threshold the district's meters would have to meet to get the large-power discounts.
"We sat down and worked with their billing department, looked at all the hundreds and hundreds of accounts we have, and came up with a manageable amount," Fisher said.
He also placed two of the district's campuses on "primary metering" by purchasing the $35,000 transformers that lead to the schools. That makes the district responsible for low-voltage electric work on the school's side of the transformer, Fisher explained, "but it got rid of all the customer-service charges and gave us a discount on every single kilowatt hour."
Marion County Public Schools, another district praised for its work in energy conservation by energy consultants, uses interruptible rates to lower its bills. That means its providers can turn off power during high-usage times.
Van Der Like, of the Association of School Business Officials, who's also Marion County schools' former energy manager, remembers only once when power was shut down during the school day.
"It was not a good thing," he said, recalling the outcry when classes had to stop because the lights went out.
He said using the interruptible rates is one of the most "controversial" ways to conserve. It worked for Marion County largely because Sumter Electric Cooperative installed generators in many of the schools, making the interruptions unnoticeable. SEC has since stopped offering the generators, but those previously installed are still in use.
GRU recommended using the interruptible rates to cut costs in Alachua County schools, but district officials felt it would be too "disruptive," Regan said.
The Florida Legislature's Office of Program Policy Analysis and Government Accountability reviewed Alachua County schools' energy management in its 2003 "Best Financial Management Practices" study. An accounting firm that conducted the analysis, ValienteHernandez P.A., recommended that Alachua County schools set up an energy management plan.
"At a minimum," the firm said, the plan should include incentives to schools to reduce energy usage; energy audits; strategies for effective demand-side energy management; and any energy rebates utility providers would provide to lower rates.
The school incentives aren't offered in Alachua County, but in Hillsborough County schools, a similar incentive led to a 12-percent drop in energy costs and a 15-percent drop in utility costs in just six months, records for Government Accountability Office show. The hook was that schools responsible for the savings were rewarded part of the funds that would have paid the higher bills.
The Alachua County district does conduct energy audits with GRU's help, and the district's facilities manager and superintendent and their staffs monitor energy rates. However, the district does not have a designated employee to solely evaluate energy matters.
Rose Cook, an accountability office senior legislative analyst who reviewed several district's energy programs, said every school system should have an energy manager. She blamed tight budgets for the lack of such employees.
Van Der Like said smaller school districts often give energy monitoring responsibilities to one person who wears several hats, but larger districts have as many as four or five energy managers.
Marion County Public Schools hired two former teachers this year to work solely to reduce energy costs. A consulting firm called Energy Education trained them to cut costs and educate teachers and staff members about cost-saving techniques.
When Roy first raised concerns about GRU's rates in the fall, Superintendent Boyd met with GRU General Manager Mike Kurtz. He came away satisfied and submitted a six-page report to the board about the "direct cost benefits" the district garnered from GRU over the past eight years.
According to Boyd's report, the benefits added up to $2.2 million. That included $1.3 million from the business partnership and various programs, such as student mentoring by GRU employees; a golf tournament to raise funds for GRU's adopted school, Williams Elementary; a solar energy education program; "e-grants" to install fiber optic technology in the district; and several others. Boyd also praised GRU for working "around the clock" to restore power to Alachua County's schools during last year's storm season.
Tiffany Pakkala can be reached at (352) 338-3111 or pakkalt@gvillesun.com.

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