Chapter Two

State Energy Savings

Energy requirements are an ongoing consideration in the construction of new state buildings and the maintenance of existing structures. Major efforts to reduce state building energy costs undertaken in the 1970s and 1980s focused on conducting energy audits, adopting life-cycle cost analysis standards, and completing energy conservation renovations. In the 1990s, the legislature directed the larger utilities in Connecticut to help the state reduce its energy expenses and required the utilities to pay part or all of the cost of the work.

Many of the state's efforts to lower energy consumption focus on reducing the amount of electricity used, but other projects replace or reduce other fuels consumed for heating and for motor vehicles. Examples of projects undertaken by the state include:

• updated lighting (e.g., replacing old fixtures with more efficient ones and installing motion sensors to control the amount of time the lights are on);
• converting equipment in facilities from the use of No. 6 fuel oil to natural gas;
• pilot programs to obtain power from photovoltaics and fuel cells; and
• installation of more efficient equipment and materials (e.g., hot water heaters, insulated windows, high R-factor roofing systems, etc.).

Other efforts involve group purchasing opportunities and behavioral changes to shift the time of day and manner in which energy is used. For example, information from the interval metering program coordinated by the Office of Policy and Management helps agencies control expenditures by giving them a better understanding of electricity usage patterns within their facilities. Because the rate non-residential customers pay for electricity is based on peak usage, adjusting the time when equipment starts and stops helps avoid spikes in consumption that lead to high peak pricing levels. (See Appendix B for a detailed description of the interval metering program.)

The best way to assess the value of energy conservation programs is to calculate the savings they produce. The value of a project is derived by balancing up-front costs against estimated long-term savings, with additional consideration given to environmental benefits. Private businesses investing in energy projects usually target spending reductions within specific percentage ranges and payback periods. (Savings rates will vary by type of project.)

Savings estimates take into consideration factors such as those listed in the adjacent box. In order to determine dollars saved, one must determine the amount of energy saved. To obtain both numbers, information is needed about base line consumption and the product(s) involved in a project; then projections must be made about future energy prices. The resulting estimate of savings can fluctuate considerably, depending on the values selected for the components.

Factors affecting estimated savings:

· cost of replacement product

· useful life of replacement

· difference in efficiency between replacement and original equipment

· cost of fuel for replacement

· cost of fuel for original equipment

· cost of maintaining replacement versus original equipment

The reliability of the value assigned to each component of the equation varies. For example, the cost of a replacement product should be readily known. Characteristics such as the useful life of the product and the difference in efficiency versus the equipment being replaced also should be attainable. More difficult to quantify is the price of fuel in the future. Although trend data incorporating fuel reserves, weather forecasts, and anticipated world events are available, ultimately this number represents a guess.

Keeping in mind the imprecision of savings estimates, it is still worthwhile to look at the results of the energy management projects the state has undertaken. Unfortunately, no comprehensive compilation of the state's energy efficiency investments exists.

A variety of databases contain information (in a mix of formats) about energy-related projects undertaken to reduce the amount of energy used by the state. The Department of Public Works has records describing the type of equipment installed, the company performing the work, the location where the work was done, and the cost. However, not all of the information is available for every project. Further, most of the databases are limited to a single program or to activities coordinated by a specific electric or natural gas utility company, and projects individual state agencies entered into directly with a utility may not be in the databases.

Based on a program review committee staff analysis of available documentation, it appears energy efficiency measures undertaken for state of Connecticut properties between 1990 and 2001 included:

• at least $48.5 million for electricity-related projects, resulting in estimated lifetime savings of 2 billion kilowatt hours (kWh) and $153 million -- a return of $3.15 and 41 kWh saved for each dollar invested; and
• $1.6 million for projects involving natural gas, producing estimated lifetime monetary savings of $3 million (and an unspecified amount of energy) -- a return of $1.88 for each dollar invested.

For the most part, the expenditures reflect the cost of materials and labor. In some cases, additional costs such as waste removal and quality assurance were included as well. The cost of preliminary activities such as energy audits were also included, if they were performed in conjunction with a specific project.⁶

The money to pay for the projects came from state bond funds and contributions from large energy-related public service companies in Connecticut statutorily required to participate. In the early years, expenses incurred by the utilities became part of the rate base, and customers eventually paid for the work. More recently, money for new projects came from a fund financed by a surcharge on electric ratepayers. The state paid about one-third of the cost of the electricity-related projects summarized above and half of the cost of the natural gas projects.

Energy savings data were not available for the projects involving natural gas. Monetary savings were calculated prior to the start of the purchasing pool program currently available to state agencies.

A key component of the savings equation not factored into the estimated numbers is the environmental benefits of using less electricity. Besides reducing the quantities of sulfur dioxide (SO₂), nitrous oxide (NO_x), carbon dioxide (CO₂), and mercury released into the atmosphere, the demand for natural resources will be lessoned. Another less tangible result of shifting to a more diversified fuel mix and increasing the use of renewable energy sources is the benefit to national security when the United States can reduce its reliance on other countries for energy supplies.

Table II-1 lists the major programs the state used to obtain energy savings since 1990. These programs paid for more than 2,500 projects in dozens of buildings benefiting nearly every state agency. Additional work was accomplished when individual state agencies used funds from projects involving new construction to partner with utilities in the geographic area to incorporate energy-efficiency enhancements within those projects.

⁶ Savings from energy conservation projects undertaken in the 1970s and 1980s, which may still have been producing savings during the 1990s, are not reflected in the estimates presented.