Chapter Four

Program Administration

Another necessary component for improving the state's energy management program is identification of a primary agency to lead the effort. Figure IV-1, prepared for the program review committee's February 2002 Energy Availability study, shows the range of entities with energy-related roles in Connecticut. Nearly all influence multiple categories of energy consumers including state government, and for many, energy duties represent only a portion of their mission.

The principal entities involved in state government's energy management efforts are the Office of Policy and Management and the Department of Public Works. The Department of Administrative Services plays an important role facilitating purchases, while employees in individual state agencies carry out day-to-day tasks such as plant maintenance and data collection. (See Appendix E for a detailed list of the energy-related duties of the key state agencies.)

Currently, no single entity is responsible for the management or coordination of all energy-related tasks on behalf of the state of Connecticut. Nor, in recent years, has any state entity sought a leadership role regarding energy management. Indeed, some staff directly involved with state-level energy efforts were unaware of some long-standing laws requiring specific actions until program review staff asked about the performance of those functions.

Based on existing statutory language, it would seem OPM is expected to be the principal agency guiding and implementing state energy policy. C.G.S. Sec. 16a-37u specifies the secretary of OPM is "responsible for planning and managing energy use in state-owned and leased buildings and shall establish a program to maximize the efficiency with which energy is utilized in such buildings."

OPM is also supposed to establish goals to reduce state energy consumption and maximize the use of energy conservation and load management programs offered through public service companies. Further, with respect to the allocation, rationing, conservation, distribution, and consumption of energy resources, C.G.S. Sec. 16a-14 authorizes the secretary of OPM to:

In practice, OPM does not currently have a high-profile role in the energy area. As described previously, OPM routinely performs only a portion of the energy-related activities statutorily assigned to it. Efforts related to state government operations focus on aspects of monitoring consumption and reducing fuel costs. Further, because these tasks are directed from OPM's office in Hartford, the agency attains limited visibility with its energy efforts.

The primary energy-related responsibilities of DPW involve aspects of property management. The department interacts with employees of individual state agencies and outside contractors on construction projects to retrofit existing facilities or incorporate energy efficient measures into new buildings. DPW staff coordinates the various energy efficiency projects the state undertakes and signs off on payments to contractors for work completed.

DPW staff are more likely to be involved with energy considerations involving space owned by or being built for the state than leased space. For example, under C.G.S. Sec. 16a-38h, DPW is not supposed to execute new leases for more than 10,000 square feet of space unless the owner conducts an energy audit, implements improvements, and provides energy consumption data. Based on information collected as part of the program review committee's December 2001 Department of Public Works Space Acquisition and Disposition study, it does not appear compliance with these requirements is routinely verified.

Other entities whose actions could affect state government's energy management efforts include the Connecticut Energy Advisory Board and the Energy Conservation and Management Board (ECMB) in conjunction with the DPUC. In practice, although CEAB includes members from six state entities and is charged under C.G.S. Sec. 16a-3(b) with making recommendations to enhance the state's energy management, the focus of the group is on discussion of a wide range of energy issues rather than implementation of specific projects. Alternatively, the role of ECMB is focused on advising and assisting with the development and implementation of cost-effective energy conservation programs for all categories of electric customers. The majority of its focus is on nongovernmental efforts.

A new participant in the system is the Institute for Sustainable Energy at Eastern Connecticut State University. Initially funded principally with money from the funds overseen by ECMB and DPUC, the institute hopes to focus on energy issues of interest throughout the New England region. The institute is currently working on assessments of Long Island Sound natural resources and certain transmission line issues in accordance with Public Act 02-95. As a result, most institute activities to date only affect Connecticut governmental agencies indirectly.

Ultimately, it may not be necessary to give a single agency formal responsibility for management and control of all state government energy-related activities. The best chance for achieving the state's energy goals -- reduced consumption, lower costs, and greater use of alternative energy -- would seem to lie with a system that incorporates all participants in the process and makes them stakeholders in the outcome of the efforts undertaken.

For the present time, the program review committee believes the Office of Policy and Management should remain the primary entity for coordinating state energy management efforts. However, OPM must take on a more visible and vocal role regarding opportunities for energy conservation within the state. Resources should be targeted to identifying and educating state agencies and individual state employees about steps they can take to make a difference in the state's overall energy consumption profile. Potential actions state workers could take include:

Public energy conservation education efforts are sometimes dismissed as having too limited a return. But, in the long run, their cumulative effect can make a difference.

The program review committee recommends the Office of Policy and Management take steps to increase its influence over state energy management practices and elevate its public presence regarding energy issues. At a minimum, OPM should identify basic energy conservation practices individual state agencies will be expected to adopt, and it should promote the incentive program established under C.G.S. Sec. 16a-37c. It also should provide more information to state employees about opportunities for energy savings.

OPM should convene periodic meetings (in conjunction with DPW) of representatives of the state's largest energy consuming agencies to discuss energy conservation issues and opportunities. Likewise, OPM staff currently attend CEAB meetings, but do not participate in the discussions. In the future, they should be active participants, helping identify areas of focus and bringing attention to issues within the scope of the board.

Another area where OPM could improve its energy-related efforts is the quantity and timeliness of the data posted on the agency web site. The OPM web page contains a section called "Energy Data." In October 2002, the most recent Connecticut consumption data on the page was from 1996, even though information for 1999 has been available from the Energy Information Administration (EIA) since mid-2001. The web site also would be a good location to post data about state government energy use such as a summary of information from the state facilities consumption monitoring database.

The program review committee also believes additional discussion of the best organizational structure for creation and implementation of state energy-related activities is warranted. To assist with that effort, the program review committee recommends the Connecticut Energy Advisory Board do an analysis of what would be the appropriate state entity to have responsibility for oversight of state energy policy.

Other states. Comprehensive energy programs including outreach efforts to various types of customers and management of state government activities are coordinated under a single entity in a number of states. However, agencies other than the primary one are frequently involved in implementation of energy-related programs. Likewise, in most states only a limited portion of the state's energy-related resources are specifically directed toward state government facilities.

The type of agency with responsibility for state energy management varies around the country. Figure IV-2 summarizes the location of the primary governmental entity for overall energy operations in each state.

The most commonly used agencies are those concerned with economic development and commerce (40 percent) or environmental and natural resources (22 percent). Sixteen percent of the states have some form of independent energy agency, while 10 percent put the energy function in an administrative or general services agency. Other locations include the governor's office or a utility-related entity.

Funding

The money to pay for initiatives to reduce state agency energy consumption has come from multiple sources. Utility ratepayers and shareholders, the federal government, and oil companies have all contributed directly or indirectly to the state's energy retrofit projects. State General Fund dollars cover staffing and administrative expenses, while state bond funds have been an important source of money for energy-related retrofit projects.

Since 1983, Connecticut has received annual disbursements from oil companies as part of federally negotiated settlements with companies that overcharged customers between 1973 and 1981. Two-thirds of the nearly $93 million received by the state (through July 1, 2001) has been used for programs benefiting low-income households; state government projects received several million dollars.

Connecticut also receives annual grants from the federal government to implement the State Energy Plan. In FY 02, Connecticut received $553,000; in FY 03, it will receive $641,000. (The state provides a 20 percent match for each grant.) Again, only a portion of the grant is used for state government projects.

State facilities received approximately $1 million in calendar year 2001 from the Energy Conservation and Load Management Funds as participants in energy conservation programs operated by the utilities for a variety of energy customers. DPW is scheduled to receive $12 million directly from the funds during calendar year 2002 as a result of a legislatively directed allocation in Public Act 01-9 (June Special Session).

With the pending end to gasoline settlement funds, the potential for decreased federal grants, and likely changes in the disbursement of conservation and load management funds, the state is faced with decreased discretionary money for new state-level energy conservation projects. In deciding how to pay for future projects, it is important to consider the role of potential funding sources in the day-to-day operation of the energy system. The amount of effort and creativity a source (e.g., a utility company) puts into the evaluation of options could be influenced by how the project will affect the business operations of the source. For example, there could be an inclination to focus on less costly changes with smaller overall paybacks because those projects would have less impact on future energy sales.

As another option, the program review committee believes the state of Connecticut should investigate further the potential benefits of entering into performance contracts with private businesses. Under this type of arrangement, an energy service company (ESCO) guarantees the projects it undertakes will result in enough energy efficiencies to produce sufficient annual cost savings to pay the ESCO for its work over the length of the contract. The ESCO finances and installs the agreed upon energy conservation measures up front, and the expenses are paid back over an agreed time period from the savings generated. Contracts can last 25 years, but more typically run from 10 to 20 years, with shorter ones also possible.

To assist individual federal agencies and facilities that want to take advantage of this type of program, the Federal Energy Management Program (FEMP) has developed Super Energy Savings Performance Contracts (Super ESPCs) with pre-selected ESCOs. Six super contracts cover specific geographic regions, while others cover emerging technologies in the renewable energy area. The super contracts establish the general terms and conditions of the agreement, and then individual agencies customize the contract to meet their particular needs.

The program review committee recognizes participation in this type of program requires a major time commitment on the part of state agency staff, particularly during the preliminary stages of developing and negotiating the initial contract. A wide range of issues such as the ones listed in the adjacent box must be clarified before an energy performance contract can be finalized.

Key performance contract provisions define:

Indeed, since the late 1990s, DPW has invested many hours in efforts to write RFPs, evaluate submissions, and reach agreement with an outside vendor to serve as the performance contractor at several state buildings. However, to date, the state has not completed all of the steps in the process with a specific contractor.

The program review committee recommends the Office of Policy and Management and the Department of Public Works pursue new energy performance contract efforts in order to have at least one pilot project in place by July 1, 2003. The agencies shall report on the results of the contract program to the committees of cognizance for appropriations and energy annually for the life of the contract.