Energy Efficiency Bill Would Encourage Vendors to Bid on Projects

Tom Johnson | March 27, 2012 | Energy & Environment
Saving taxpayers millions may mean making changes to public bidding laws

Lawmakers are trying to craft fixes to a program to help local and state governments save taxpayer money by reducing how much energy they use. But whether the changes go far enough is a matter of dispute — even among the proposal’s proponents.

The bill (S-1753) aims to overhaul the Energy Savings Improvement Program, which advocates say could save hundreds of millions of dollars for governments if impediments discouraging energy companies from participating in the effort were removed.

Without giving these companies more flexibility in deciding who actually performs the energy efficiency work, they will never invest in long-term contracts that guarantee energy savings, according to some who have followed the bill through the legislature.

“They’re just not going to come,’’ predicted Fred DeSanti, an energy lobbyist who represents an energy service company. “They have to have some input into the quality of the work being done.’’

The bill aims to address that issue by eliminating a provision that would require competitive bidding on state contracts for energy efficiency projects. Instead, a company seeking to win the contract could select three subcontractors through a separate selection process.

While that process would only be limited to state energy efficiency contracts, a trade group representing mechanical contractors opposes the changes, saying it would undermine public bidding laws in place for nearly a century.

“This is not rocket science,’’ said Edward Frisch, an attorney for the Mechanical Contractors Association of New Jersey, who argued there are as many as 20 or 30 contractors trying to bid on each job. “We have qualified people who want this work,’’ he said.

Alan O’Shea, executive director of the association, said the changes in the public bidding provisions would no longer discourage cronyism, nepotism, and favoritism in the awarding of pubic contracts.

“Competitive contraction will open the doors for games to be played,’’ O’Shea told the Senate Economic Growth Committee during a recent hearing on the bill. The panel moved the bill to the full Senate floor by a 4-1 vote.

The original law, approved more than three years ago, was designed to allow government entities to enter into performance-based contracts with energy service companies, enabling them to cut energy use without any capital expenditures. The agencies pay off the projects over a 15- to 20-year period through the energy savings they capture, which can run as much as 25 percent.

Among other things, the bill moving through the legislature, would eliminate a requirement that state contracts be awarded to the lowest bidder. Instead, it would allow contracts to be awarded on a basis of best value, a standard that would allow New Jersey to award deals based on which bids provide the greatest energy savings.

“There are literally hundreds of millions of dollars of projects that can be done,’’ said Steve Goldenberg, an energy lawyer who has been pushing for changes in the law.

DeSanti agreed, saying there is probably $400 million worth of local energy audits sitting on a shelf that could be done if lawmakers remove the impediments, which have prevented energy service companies from bidding on contracts.

Meanwhile, as the issue becomes more contentious in the Statehouse, SolarCity, a leading installer of solar systems for homes and businesses, unveiled a new Home Energy Loan program to help homeowners cut their energy use and save on their power bills.

According to the company, the typical U.S. family spends about $1,900 a year on utility bills, a large portion of which is waste. SolarCity estimates homeowners lose approximately $40 of every $100 spent on heating and cooling to leakage alone.

The company says it is enabling customers to finance energy efficiency through Admirals Bank, a Boston-based bank, with a new loan program that will allow customers to finance upgrades through either a one-year “Save Now, Pay Later’’ option or a three- or 10-year “Pay As you Go’’ option.