Energy Performance Contracts (EPCs):
Through a Superintendent Lens with Dr. Donald James
Energy Performance Contracts guarantee financial savings and reduce the carbon footprint of schools. Here’s how to maximize your school’s energy potential.
Dr. Donald James, Executive Director of the Center for Integrated Training and Education (CITE),
20 Year Superintendent, Ed Reformer focused on “Access and Opportunity”
— National Blue Ribbon HS and US News and World Report Top 100 HS
It can be frustrating to make tough choices between which educational programs to keep and which to cut, while also facing necessary facility expenses — including rising energy bills. At Commack School District, where I served as Superintendent, we found another way.
Energy Performance Contracts (EPCs) guarantee financial savings — all while reducing your carbon footprint and giving you greater financial freedom to fund initiatives that directly support student learning outcomes. Energy Performance Contracts (EPCs) are a safe, guaranteed-to-work way to reduce energy expenses for schools, allowing school leaders to redistribute savings to programs that more directly benefit the community.
Energy savings projects can reduce your school’s carbon footprint and enhance your ability to support students without sacrificing the fundamental need to heat and cool district buildings.
Capital Gains From Energy Savings
Reducing energy costs, and therefore becoming eligible for additional state aid, means that projects are paid for in totality.
EPCs require no additional funding, outside of what districts already spend on energy consumption.
At Commack School District, a public school system on Long Island in New York, my team and I successfully leveraged an EPC to reduce energy costs and increase our district’s annual cash flow by close to a million dollars. That surge in funding meant we could reinvest the extra money into where it would serve a better purpose: quality educational programs for our students. Our energy savings project was a win-win-win: benefitting our students, our environment, and our budget.
Independence from outside financial factors
Not only do EPCs mean that you are spending less on energy costs, but they also provide more financial freedom from influences outside of school leadership control. With ever-rising oil costs, the surge in energy expenses is a significant drain on every school’s budget, but it doesn’t have to be.
On the other hand, the price of natural gas has fallen. In my district, we used our EPC to convert our heating system to dual burning furnaces. This change meant that with the flip of a switch, we could start saving on our energy overhead expenses by moving to natural gas.
By implementing EPCs, schools are unshackled from the more unpredictable financial aspects of running a school, such as the fluctuating cost of single-source energy.
The advantages of EPCs over other procurement methods
EPCs, like other capital investment projects, are bond funded.
However, the difference between an EPC and a capital project is that for the latter, you need voter approval. But for an EPC, you only need school board approval since the savings and state aid are guaranteed. As school leaders know, capital projects require a significant investment merely in campaigning to voters. With EPCs, that expense is a non-factor.
EPCs are also much more streamlined than a capital investment project in other ways — for example, the planning and implementation timeline is significantly shorter than a traditional capital project, which means you can reap the financial rewards quickly.
Time is a valuable asset to every educational institution. A year in a child’s education is a very long time. Identifying projects that yield significant and rapid rewards means that superintendents are making a difference not just in the education of future students, but in the educational experiences of the children currently in our care.
Why Communicating With Your Colleagues and Community Is Vital to Success
School superintendents have a lot of responsibilities. Without the support of their administrative team and community, they can’t drive change within their districts. Superintendents can’t single-handedly run everything; they need people supporting their work and the work of the district to be successful.
That’s why ensuring that you communicate from the start with all stakeholders is essential. It’s critical to start these conversations with your board of education, your community and, of course, internally with your administrative staff, as early as possible. Constituents need to understand the process from the outset and have the means and opportunity to ask questions.
Remember that everyone is passionate — and with good reason
It’s important to remember that, in education, everyone is passionate. This means that people will stick to their opinions when they think they are right, because they care about their job, their community and the outcome of their decisions. That’s why it’s critical to make sure everyone is on the same page.
It might be that you, as a superintendent, can see the value straight away, but others don’t. Change is always seen as a risk when the status quo is already working. Taking the time to demonstrate the value that an EPC brings to the school community is essential.
Early engagement with all stakeholders is vital to ensuring the benefits of an energy savings project is maximized as quickly and seamlessly as possible.
Common Concerns When Implementing an EPC
When you sit down with your school board and administrative staff to discuss EPC implementation, it’s just as important to be prepared for their inevitable questions and concerns.
Here are some of the most common questions I heard when implementing an EPC at Commack:
1. Are EPCs too good to be true?
This is likely the biggest question you’ll face. Here are some tools that you can use to show your constituents that EPCs offer a winning formula.
⋅ Calculate the savings. Energia provides an Energy Savings Calculator that, with some basic information, can give you an estimate of just how much can be saved through implementing an EPC.
⋅ Show the legislation that proves EPC savings are guaranteed in your state. Identify your state’s specific legislation that guarantees the money will be paid back.
⋅ Lean on the audit. An independent third-party audit is typically used to indicate the EPC savings potential. If the audit forecasts a million dollars a year in savings, that is because it can be proven — as a third party, they don’t have a stake in whether the EPC is actioned. This audit will also reassure you before making a final decision on implementing the energy savings plan.
2. What if the EPC rules change?
This is another common concern and one that I heard a lot when first presenting the opportunity to my district stakeholders. “Ok, yes, I understand the savings are guaranteed, but what if the rules change?”
And I agree; the rules could change. However, that logic could also be applied to all aspects of running a school or school district. With almost 20 years of experience, I don’t anticipate a change to these programs in the future, however, should the program change, superintendents must do what they always do: adapt based on the newly implemented parameters.
The Case for an EPC in Your School District
EPCs offer schools a means to reduce energy usage and increase capital — two big wins for districts and the children they serve. It’s risk-free, the savings are backed by an independent audit and the program is supported with state financial aid.
The biggest stumbling blocks to actioning this change will come from within your team, but only if you don’t invest the time to clearly communicate the benefits of an EPC initiative. Talk to your teams, listen to their concerns and get their buy-in early.
And then? Reap the rewards of reducing your carbon footprint while redirecting capital into the places it really matters in schools — educational programming that benefits your students.
This article is based on an episode of the EnergiaSaves Podcast, a new podcast about how you can turn school district energy liabilities into educational assets. Don’t miss out on future episodes — subscribe to our YouTube channel for more best practices in energy finance solutions.
Energia believes that energy savings projects should result in actual savings. That’s why we work so hard to protect the school districts we work with from irregularities and cost overruns in Energy Savings Performance Contracts. To learn more, visit www.energiasaves.com.