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OPPD program finances consumers’ efficiency upgrades

Most commercial and industrial customers would love to cut their operating costs with more efficient equipment if only they had the money to pay for the improvements. Enter Omaha Public Power District with energy services contracting, an innovative program that allows a business to complete a major upgrade of energy-related systems without any up-front investment.

“The improvements literally pay for themselves with guaranteed savings,” said OPPD Account Executive Jim Krist. “OPPD carries the debt through construction and may sell the debt to a third party financer once the project is completed. The energy savings are the customer’s collateral.”

Energy services contracting benefits the customer by reducing costs, improving energy efficiency and reducing or eliminating maintenance and repair expenses. There are plenty of benefits for the public utility, too. “We encourage and will assist all of our customers, including our Federal hydropower customers, to become more energy efficient. More energy-efficient customers in our ever-growing customer base reduce our risk of having to buy more expensive supplemental power from other utilities,” he observed. “The program has helped to delay construction of new generation, and it’s a great relationship builder.

Federal efficiency mandate inspires program
OPPD launched the program in 1998 to help its Federal customers comply with Executive Order 13123. The order directed Federal agencies to reduce their energy use 35 percent by 2010. “At a meeting of the Federal Utilities Partnership Working Group, we were talking about ways to help customers achieve those savings,” said Krist. “Bases and agencies in California and a few other areas of the country were having a lot of success with performance-based financing programs, and the idea grabbed our attention.”

Federal customers were the first participants, but OPPD soon realized those weren’t the only key accounts interested in big energy savings. “We featured this program at an annual customer meeting and that sparked a lot of interest among OPPD’s commercial and industrial customers,” Krist said.

Today, OPPD has energy services contracts with about a dozen of its 200 large C&I customers. Federal and local government facilities, schools, hotels and an insurance company have signed on to upgrade aging, inefficient systems and equipment.

Partnerships supply technical expertise
To offer its key accounts this opportunity, OPPD enlisted Chevron Energy Solutions as its technical support partner. Finding a knowledgeable and experienced partner is critical to the success of performance-based energy services contracting, advised Krist. ChevronES responded to the utility’s request for proposals and OPPD has been very happy with the partnership. “The firm brings a level of trust and service to the table that makes the program work,” he declared.

The energy engineering firm conducts feasibility energy analyses for interested customers to determine where energy improvements are needed.

“It starts with the walk-through,” Krist explained. “Together, we look at utility bills, and talk to owners and employees to prioritize their needs. It’s a customer-driven process.”

At Offutt Air Force Base in Bellevue, Neb., the account representative recalled, water conservation was a big concern. “Obviously, it wasn’t an electrical issue, but it was a conservation issue that we were asked to assist the customer with.”

The recommended measures have to produce enough guaranteed savings to pay for upgrades within 10 years. “That’s the most important determiner,” Krist insisted. “If we can roll a bundle of upgrades into one package and get the 10-year payback, then OPPD will arrange the financing. That's what we did at Offutt.”

When the project is completed, ChevronES monitors the customer’s energy savings to ensure that the guarantee is being met. “If they don’t get the guaranteed savings, we pay the customer the difference,” said Krist.

Federal customer upgrades efficiency
With an annual combined utility bill of more than $7 million, Offutt Air Force Base was a prime candidate for an efficiency makeover. Energy services contracting helped the 10-million-square-foot facility cut its operating costs, and the base became the poster customer for OPPD’s program. “We definitely pursued that contract,” Krist acknowledged.

Several measures implemented across multiple buildings since the program started have reduced the base’s annual electrical costs by more than $1.8 million per year. Equipment upgrades included installing direct-digital controls and variable-speed drivers on electric motors and automated systems.

Geothermal heat pumps, more efficient boilers and chillers and state-of-the-art CO₂ ventilation control improved HVAC performance as well as comfort in base facilities. Increased insulation, efficient lighting and new well-based irrigation systems and water-circulation pumps added to savings.

Offutt is just one success story for a program that has provided Omaha Public Power District with a powerful tool to manage resources and strengthen customer service. “The choice is between paying for new equipment and paying for electricity flowing out of inefficient equipment,” said Krist.

OPPD customers are making the smart choice with energy services contracting.