School Board Faces Powerful Decision Thursday

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A final decision on whether to enter into an agreement with a company that is offering a plan to help county schools save money on its utility bills could come when the Cannon County Board of Education meets Thursday night.

The decision to accept the offer from Schneider Electric might have been made easier had the Cannon County Commission agreed to fund the preliminary inspection, which will determine how much the system will save on power bills.

However, county commissioners referred the matter back to the school board last month without agreeing, or declining, to fund the audit.

Schneider Electric Account Executive Kaitlynn Pastor said she was not surprised at the stance taken by the county commissioners, and plans to push forward this week with the school board.

"I understand the service we provide can be complex and difficult to understand so I don't blame the commissioners for being confused," Pastor said. "I have often times heard that our proposal sounds 'too good to be true.' I think this stems from the fact that the financial method we use to leverage the energy savings from the utility bill to pay for the equipment isn't common and many people shy away from what they don't understand.

"The truth behind it is that these projects do perform and we try to be as up front and transparent as possible. It's unfortunate that the information I had to provide the commission was only estimates, which is why we typically wait until after the Investment Grade Audit to speak to the commission. In the end, it should have been an informative meeting for the commission rather than taken up for a vote."

Pastor will take up with matter with the school board again this week when its meets for first a workshop Wednesday evening at the Central Office, and again Thursday for its regular monthly meeting at the high school.

"I'll be meeting with the school board at their next workshop to debrief them on the commission meeting and gauge their reactions," Pastor said. "I believe the project could still have a chance if the school board members would be willing to speak with their commissioners about the project. I believe they will be voting to either sign or not sign the Investment Grade Audit contract at the next board meeting and their vote will determine whether I continue to pursue this opportunity. I would love to see Cannon Co. get improvements in their schools, especially when there is so much incentive opportunity and energy savings available, but in the end it is their choice.

"If they move forward at this point they incur no cost. They only incur cost if we would complete the audit and then the school would decide not to implement the construction project. Right now the estimated project cost is between $900k-$1.5 million.

Schneider Electric is guaranteeing the school system a 100 percent return on its investment. However, one of the concerns expressed so far, both by board members and county commissioners, is that the proposal does not include replacement windows.

"As far as the guarantee goes, the number we have come up with so far is our Preliminary Potential Annual Savings amount which equals $83,045," Pastor said. "We believe we should find even more savings after our Investment Grade Audit. The guaranteed savings amount is a 100% Guaranteed Return on Investment or we write a check to the school for the difference.

"Right now, because we haven't developed the full scope of the project, the recommended energy conservation measures include a new chiller (for the high school), occupancy sensors, and an Energy Management System which will give the occupants of the buildings greater control of their heating and air and significantly reduce excess energy use. More scope items could be added in the Investment Grade Audit.

"Windows might be possible. If we find significantly more savings during the Investment Grade Audit we might be able to add some windows to the scope of the project. We are limited in scope by the amount of savings we can find to fund it because the school has indicated they have no outside capital available for these types of improvements and we are looking for a Self Funding Project."

Pastor is still hoping to convince the board the proposed project will be of benefit to the county over the long term.

"The biggest point I'd like to make is that our job is to help county schools reduce their energy spending, reduce the impact of energy rate increases, and get improvements they desperately need and wouldn't be able to fund otherwise," she said. "If the school doesn't move forward with this project their utility costs are still going to exist, and probably continue to increase, they lose out on not only the opportunity to get their chiller replaced now, they miss out on $150,000 of federal incentive dollars, which could pay for a chiller, and all the rebates offered by TVA."
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May 11, 2010 at 6:32am
Why don't the commissioners and the school board look at building a middle school before we invest $900K to $1.5 million in something that might or might not work?

Wouldn't that $1.5 million go a long way towards building a new middle school vs. trying to remodel any school built in the 1950's, 1960's and 1970's?

This shouldn't be this hard to figure out. I wish everyone would quit trying to get the carrot dangling in front of them and look towards the future.
May 11, 2010 at 9:52am
Hopefully our elected officials will not fall for this. Spending $1.5 million to save $84,000 a year is a terrible investment. They fell for a similar scam when they installed the geothermal system in the new grammar school. Hundreds of thousands of extra expense up front and nothing but headaches now, the savings never materialized. Even spending $1 million to save $100,000 a year isn't a good investment, it is literally spending a dollar to save a dime.
May 11, 2010 at 10:42am
"Even spending $1 million to save $100,000 a year isn't a good investment, it is literally spending a dollar to save a dime."

Isn't it a good investment if after 10 years you have been been repaid the $1 million, and if each year thereafter you are still saving $100,000?
May 11, 2010 at 11:18am
Not really. The time value of money must be considered as well as external factors that could effect the return on investment such as the service life of the equipment, how long the buildings will be in use and obsolescence of the technology and maintenance costs.

Generally in the business world you have a tough time selling projects that have a 3 to 5 year payback with the time value of money factored in.
May 11, 2010 at 12:53pm
Would the additional per year savings be used to help fund a Middle School?
May 11, 2010 at 3:02pm
If you spend $1.5 million to make these improvements today and save $83,000 a year in utility bills and it takes 18 years to get your money back, then that leaves less money to fund a middle school for the next 18 years.

That assumes that you don't have to pay any interest on the $1.5 million or that you wouldn't have gotten any interest if you had just put the money in the bank. It also assumes that those new ac units and electronics will last more than 18 years to start paying for themselves.

This isn't a wise investment for our county and will make it more difficult to build a middle school.
May 11, 2010 at 3:18pm
Why spend $83,000 more per year than one has too for utilities? Even if it is a break-even proposition in the long run, the system still has a new chiller for the high school, occupancy sensors, and an Energy Management System.

If a new middle school, or any new school, is built, this project would not effect it one way or the other. If there is no project there is no savings. If there is a project the savings goes toward pay it.
May 11, 2010 at 3:58pm
Nice logic that spending $1.5 million on a "possible savings" won't affect building a middle school. That seems to be the same logic that Greece and the United States are both using right now and you see where it is getting us both.

If we don't spend $1.5 million on upgrading school systems that are defunct, out of date and run down almost beyond repair and use that money to help build a middle school that would be modern then how can you possibly say "it would not affect it one way or the other"?

And that is also not taking into consideration the fact that mine and your tax dollars both would be spent toward repaying that $1.5 million and the cost of a new middle school if that were to materialize.

They absolutely go hand in hand because if they use the $1.5 million towards a middle school and not a band-aid for the other schools then there is less money for me to have to help pay back.
May 11, 2010 at 5:15pm
The "logic" would come in the form of a 100 percent return on investment guaranteed by Schneider Electric, who also guarantees "savings."

Most if not all of the elementary schools will still be in use for the next two decades and beyond.
May 11, 2010 at 8:24pm
Why spend $83,000 more on utilities per year? That is an easy one, because it saves more money than spending $1.5 million for the upgrades. Does Cannon County have an extra $1.5 million laying around so it could write a check for those upgrades? No it doesn't. What will be the interest rate to borrow the money to pay for the upgrades? To make the math easy say 4% interest rate and the upgrades save $7,000 per month. It will take 32 years for that chiller and those occupancy sensors to break even. If you have a problem before then, even longer. Do you think that chiller will come with a 50 year warranty so you can actually save some money? The County will be paying out an extra $7,000 a month for 32 years to pay for those upgrades, and if they don't last or work out as planned for 32 years then it was a bad investement. Yeah, the upgrades will 100% pay for themselves, guaranteed, IN 32 YEARS!

Even if you only spend the $900,000 and still get the full $7,000 a month in savings it will take 14 years to break even.

This program is nothing but a waste of our hard earned money that we had to pay in taxes.
May 11, 2010 at 9:21pm
"This program is nothing but a waste of our hard earned money that we had to pay in taxes."

Won't $7,000/month, $83,000/year and eventually the $1.5 million over the long term still end up being spent on utility bills?
May 11, 2010 at 9:37pm

The point is that those upgrades will not last 32 years to ever pay for themselves.

It's like Wimpy saying I will pay your 32 years from now for a hamburger today.

Would you personally go borrow $1.5 million for something that hopefully will START paying for itself 32 years from now?
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