GLOVERSVILLE — The Gloversville Enlarged School District Board of Education is moving forward with the energy performance contract with Siemens Industry Inc.
The board at a special meeting on Tuesday approved the contract for the energy performance project to decrease energy costs that will include a solar array, boilers, improved insulation, LED lighting and daylight harvesting.
The improvements which will be made to all buildings within the school district will be at an estimated cost of $4.53 million without any out of pocket expenditure, funded through building aid and projected savings. The project will include a written guarantee of utility savings and reduced operational costs set by Siemens at $242,774 annually over an 18-year period. If the energy savings fall below the guaranteed projection, Siemens will pay the district the difference between the actual savings and the guaranteed savings.
“The board approved the EPC forward and it now goes to state education for review. An EPC is different than a capital project, it’s something the community has to have a vote on,” said Superintendent David Halloran. “It’s an investment in the future of the district. The state obviously wants the schools to do things like this because ultimately it decreases energy costs because the state has finance obligations to support schools.”
At the board’s March 18 meeting, the board yielded the contract on the recommendation of the district’s financial advisor until further review was conducted of the estimated $4.64 million in savings. The district’s financial advisor Rick Timbs, president and CEO of R.G. Timbs, Inc., made the recommendation to yield the contract due to concerns over the estimated savings included in the proposal.
Timbs had concerns with the building aid projections included in the proposal to exceed the amount the project will be eligible to receive. The payments on the construction may not align with the receipt for the building aid, meaning the district may have to pay for a portion of the project up front before later being reimbursed. The projection includes savings against possible future increases in energy costs without the project that cannot be definitively determined in advance.
Additional concerns included that the savings projection includes associated savings from work that will not have to be performed by district maintenance staff as it is carried out by contractors, but instead, district staff members will work on other necessary maintenance tasks, meaning there will not be any savings to the district in this area.
During Tuesday’s meeting before the board voted to move forward with the contract, Shadrick Treat, Siemens account executive presented to the board and addressed those concerns.
Treat, who presented the project in March, originally estimated the completed project to generate savings of $6.52 million over an 18-year period, generating a cumulative positive cash flow of about $4.64 million.
After reviewing the numbers with Timbs, Treat said the new estimation for cash flow would be about $4.1 million. Treat said the contract was not affected in any other way.
“[Timbs] was helpful in helping us in how a financial advisor looks at that especially in his role,” Treat said. “It’s good to have that role to help review that process.”
Treat was also there to answer any questions the board had before approving the contract.
Board members questioned the 630 kilowatt photovoltaic solar array that will provide power to the Gloversville Middle School and when it could be tied into the high school as well.
“If we create too much energy behind the meter and we’re servicing the middle school, if we create more energy than the middle school can use, the option is to sell it back at a rate to National Grid,” Treat said. “The other benefit is we can actually tie it in to the high school. We can take whatever is over abundantly used and use it to offset the high school. That’s usually a typical better rate because National Grid, when they buy it from you, it buys at a discounted rate compared to what your consumption of that would be. So we’re trying to make it so that we can work between the schools and get the best benefit from that.”