City’s water board makes $33M energy deal
The Honolulu Board of Water Supply said Wednesday it has entered into a $33 million contract that will cut its energy use.
BWS signed an Energy Savings Performance Contract with NORESCO LLC, a Westborough, Mass.-based engineering consultant.
The contract guarantees BWS savings from installing photovoltaic systems, energy-efficient pumps, energy-efficient lighting and air-conditioning upgrades.
BWS said the installations will reduce its annual electrical use by 9 percent.
“NORESCO guarantees the (Board of Water Supply) energy savings,” said Ernest Lau, BWS manager and chief engineer. “If the savings are not realized, then NORESCO must reimburse the difference.”
BWS said over a 20-year period it will see more than $56 million in savings through avoided electrical costs, which will be reinvested in additional energy-saving projects and will not affect water rates.
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The project cost is being financed by a loan from the Drinking Water State Revolving Fund, managed by the state Department of Health.
BWS said the loan will be paid back by $3.3 million in annual savings in energy costs over 17 years.
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Star-Advertiser staff
5 responses to “City’s water board makes $33M energy deal”
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So, a drop in rates/bills is forthcoming, right? (NOT!!)
Was this part of a competitive bid process?
The BOW is a city agency. Poorly run and constantly jacking the public in the Caldwell years.
Doesn’t the BWS have people who can figure out how to save money by “installing photovoltaic systems, energy-efficient pumps, energy-efficient lighting and air-conditioning upgrades”? Why pay an out-of-state company $33 million to tell them that?
Taking the contract amount and figures on face value, the guaranteed savings ($56M) exactly equal what BWS will pay back to NORESCO ($56M), at a 6.89% interest rate, with NO guarantee of additional savings for future investments—despite what the article proclaims. Here’s how these “cost savings” play out. The contract is $33 million. The loan will be paid back in annual amounts of $3.3 million (annual savings in energy costs) over 17 years. At that rate, BWS will pay back $56.1 million dollars—the exact amount of savings NORESCO guarantees in the contract. That works out to a loan interest rate of about 6.89% Again the 17 year loan of $33M costs $23.1M in interest, and the total amount paid back to NORESCO is exactly equal to the amount of savings NORESCO guarantees in the contract. So what projection is BWS using to promise additional investments for future savings. The contract guarantee does not promise any additional savings. And as another reader suggested, was this competed, because I’m betting BWS could’ve got the money cheaper than 6.89%.