Lebanon schools approve $11.5 million guaranteed-energy-savings project with long-term maintenance escrow

The Lebanon Community School Corporation on Aug. 19 approved a districtwide guaranteed energy savings project that officials say will reduce operations costs over time by installing building controls, rooftop solar and natural-gas microturbines. Assistant Superintendent for Business and Operations Mr. Dennis presented the project and sought board approval for the construction manager and the vendor who will execute the work.

District officials said the construction and equipment contract for the energy conservation measures is $11,501,006.74 and that the district will also set aside $896,148 in escrow to pre-fund years 6 through 20 of maintenance and service. “The cost of these energy conservation measures, $11,501,006.74,” Mr. Dennis said during the meeting. He told the board the project includes virtual energy management meters, rooftop solar on three newer roofs, boiler replacements, controls retro-commissioning and microturbines to generate electricity and reusable heat for pools and HVAC reheat at middle school and high school sites.

The district characterized expected savings as both immediate and cumulative. Mr. Dennis said savings begin as systems are commissioned and that the contract’s modeling projects roughly $17.3 million in avoided operations costs over the life of the project; he and contractors said the payback period is about 17 years. The board approved a construction manager’s agent agreement with StrataLine and the contractor agreement with Verigee (contractor name in meeting) by voice vote.

Verigee representatives described the maintenance and monitoring approach. A vendor representative said the contract covers daily monitoring of meters and generation equipment, quarterly site reviews and annual maintenance of inverters and turbines, and that the contractor will be responsible for repairs and replacements covered by manufacturer warranties. The meeting record shows the contractor agreed to provide metered savings reports and to make the district whole if guaranteed savings are not achieved.

Board members asked about risks: equipment failure, vendor solvency and response times. Mr. Dennis and a Verigee representative said the escrow and contract language are intended to protect the district if the vendor cannot perform, and that response-time commitments (24–48 hours for major faults) are included to limit lost production. Mr. Dennis said the escrow will earn interest; approximately $132,887 in interest was estimated to be returned to the district over the escrow term. The district also expects a solar credit of $618,630 to be deposited to the operations fund under current rate rules with Lebanon Utilities.

The board debated procurement alternatives and guarantees. One board member questioned whether a traditional procurement and separate maintenance contract could yield equal savings without a share of performance risk; vendors said an alternate procurement could be used but would not include the same 20-year service guarantee. The district said that statutory limits require guaranteed-energy-savings contracts to be structured with 20-year terms, though the modeling shows the district would recoup costs in about 17 years under the proposal.

The board approved both the StrataLine construction-manager agreement and the Verigee contract during the meeting by voice vote.