PSE&G Energy-Efficiency Program Helps Hospitals Spend More on Healthcare

Zero-percent loans let hospitals upgrade antiquated heating and cooling systems without diverting money from core mission

PSE&G crew readies new energy-efficient boiler for HackensackUMC Mountainside facility in Montclair.
Imagine saving hundreds of thousands of dollars in energy costs a year, reducing significantly your carbon footprint, and averting the headache of spending limited capital dollars on equipment not part of your core mission.

That’s the case for 32 hospitals thanks to a $129 million program by Public Service Electric & Gas. It has enabled those facilities to reduce their energy bills by updating, renovating, and replacing antiquated boilers, lighting, and other equipment.

The program is probably one of the more successful efforts in the state to sharply curb energy consumption by businesses and residents — a top priority of the Energy Master Plan adopted by the Christie administration.

Hospitals have huge energy bills.

Take the HackensackUMC Mountainside facility in Montclair. PSE&G — the state’s largest utility — last month completed $4.2 million worth of energy efficiency upgrades at the hospital, a move company officials say will save the facility $350,000 annually in energy costs, or about $7 million over the 20-year lifespan of the equipment.

According to PSE&G officials, the program has generated similar savings at other participating hospitals, along with environmental benefits.

The program has generated about $10 million in savings in the first year for projects that have been completed, according to Michael Jennings, a spokesman for the utility. Between 2010-2013, on average, 490 jobs were created by the projects, including direct and indirect employment, he said.

The electric savings made possible by the project would be enough to power approximately 6,900 homes. The gas savings offset the carbon dioxide emissions — a main source of global climate change — equivalent to taking 2,800 vehicles off the road.

“Our hospital efficiency program is helping these institutions save money on their utility bills, which frees up resources they can better use for their core healthcare mission,’’ said Joe Forline, vice president of customers solutions for PSE&G. “And lower energy translates into cleaner air for all of us to breathe.’’

The program made a lot of sense for HackensackUMC Mountainside, according to Mike Locke, president of MechTech, a technical consultant to the hospital. The facility’s boilers and chillers (which run cold air through the facility) were both approaching 40 years old, Locke said.

On the hospital side, every dollar that spent on new energy equipment means it can spend less on replacing medical devices to improve healthcare, Locke said.

“These are the type of investments they want to make, but they are not going to invest in HVAC (heating ventilation and air conditioning),’’ Forline explained.

Under the program, PSE&G provides an investment-grade audit at no cost to the hospital and then proposes improvements to the hospital’s energy efficiency infrastructure with payback periods of fewer than 15 years. PSE&G provides upfront funding for the total cost of a project, which the hospital pays back when it is complete at zero percent interest over 36 months.

The utility also recoups money for the program from its electric and gas customers.

The program is so popular that there are another 20 hospitals on the waiting list, Forline said. “We’re looking to expand it to nursing homes and other types of medical facilities,’’ he said.

PSE&G has been the most aggressive of the state’s utilities in trying to promote energy efficiency, with more than $300 million invested in the past three years. With a tentative agreement reached on a $1.2 billion program to harden the electric and gas grid, the utility is expected to propose a new energy efficiency program to the New Jersey Board of Public Utilities in the near future.