Program Boosts Energy Efficiency, Trims Costs at State Facilities

Oft-delayed program uses savings realized by reducing energy to help pay for itself

Katzenbach School for the Deaf.
The state finally seems poised to implement a once highly touted program that would allow government facilities to significantly reduce energy costs without laying out any capital.

The program, dubbed the Energy Savings Improvement Program (ESIP), has been a big disappointment to its proponents since no projects have ever been undertaken since former Gov. Jon Corzine signed the law in 2009.

That could change this year. In responding to questions from the Office of Legislative Services, the state Board of Public Utilities said it expects to fund $87.4 million worth of projects at seven state facilities, ranging from prisons, developmental centers, and the New Jersey Department of Transportation’s headquarters to the New Jersey State Police headquarters.

The State Energy Office projects the seven facilities could reduce energy costs by 20 percent and save a combined $15 million annually. The first project could be ready for bid by July 2014.

In addition, the office has created a priority list of the largest energy users among state facilities. Initially, it is focusing on the 30 biggest consumers of energy, which account for 54 percent of the total energy of all state facilities.

Like businesses in a state suffering from some of the nation’s highest energy bills, the cost of keeping the lights and heat on at those facilities, many of which are decades old, ends up being a big-ticket item in the annual state budget.

“There appears to be a compelling and immediate need for state and local governments to upgrade critical infrastructure that has, in the passage of time, become inefficient, obsolete, or outlived its expected useful life,’’ a report prepared for the BPU in 2011 suggested.

In some cases, the state has relied on short-term fixes, such as renting boilers and chillers (used to cool facilities or equipment) in the replacement of the equipment, the report said. These temporary solutions have continued for years, eventually costing more than simply replacing the equipment in the first place.

The state has secured a $100 million line of credit to fund these projects on a contract basis, over a 15-to-20-year period, with the savings reaped by the improvements repaying the loans, according to the BPU. Upon recommendation of the state Treasury Department, it urged the agency to enter lease agreements with the contractor a more cost-effective approach. At the end of a predetermined time, the state will assume ownership of the equipment.

The first facilities targeted for the program include: the Bayside Prison/Southern State Prison ($25 million); Hunterdon Developmental Center/Edna Mahan Prison ($20 million); DOT headquarters ($12 million); Trenton State Prison ($11 million); Katzenbach School ($9.1 million); Vineland Developmental Center ($5.3 million); and NJ State Police headquarters ($5 million).