Transforming Challenges into Opportunities: Energy Performance Contracting Improves Efficiency And Reduces Costs

Rising energy costs and consumption are challenges faced by fiscally restrained utilities across the country. The Puerto Rico Aqueduct and Sewer Authority (PRASA) implemented a comprehensive energy management plan to reduce system wide energy costs and stabilize consumption through the effective use of energy performance contracting.PRASA provides water and wastewater services across the island of Puerto Rico through a substantial infrastructure network consisting of 129 water treatment plants, 60 wastewater treatment plants, 1600 pump stations and 300 wells. In addition, PRASA must implement higher levels of treatment which requires additional energy use. Electrical energy is provided solely by the Puerto Rico Electric Power Agency, which generates electricity primarily through fuel oil resulting in a high and often unpredictable cost per kilowatt hour (kWh).PRASA’s electricity costs are approximately $220 million in 2013, representing approximately 20 percent of the overall budget. Rising energy costs coupled with increasing consumption due to increased flows, higher levels of treatment and aging equipment were a significant driver for rate increases, and prompted PRASA to embark on a comprehensive energy management program to reduce operational energy consumption and diversify energy sources. Starting in 2009, PRASA began a stepped approach to evaluate and implement performance based contracting for energy management. The initial steps focused primarily on evaluating existing energy management practices, identifying potential energy savings initiatives, and determining the willingness of private sector energy services companies (ESCOs) to participate in performance-based contracting programs. Rather than embarking on additional studies, PRASA used a two-step (RFQ/RFP) solicitation process that yielded meaningful results for both demand and supply-side initiatives. Through a rigorous third party technical review and contract negotiation process, PRASA ensured certainty in the energy cost savings to be obtained over the duration of the contracts.PRASA is currently implementing several energy performance contracts and power purchase agreements with selected contractors, and is on target to achieve reduced energy consumption, reduced energy costs, and energy source diversification. This presentation will describe the successes and lessons learned, as well as the challenges and opportunities, of energy performance contracting from the utility perspective.