001Okay, this uh board special session is called to order. Uh we're meeting for the purposes of a report from Straight Line. And you want to go or just turn it over to them? >> No, we're going to turn it over. They have uh run all the numbers across the entire corporation and they're going to give us an insight into how we could potentially save on our energy over the next 20 years and immediately and give us really a breakdown on solar tonight. So I'm just going to let them take it away. >> Can you all hear me okay if I stand right here instead of go over the microphone? Yes, you're good. >> Okay. Thank you. Uh my name Good evening. My name is Bob McKini. I'm with Strat Line. I'm joined by my co-orker
002Chris Boils. Uh, real quick, uh, Strataline is an energy services owners rep. Uh, in translation, we work for school corporations and municipalities to empower them with your data. Uh, so you can make informed decisions on what, if any, energy conservation measures will help your operating budget. In our effort, uh, to conduct the study, we uh, approach it from multiple angles. We do a utility analysis. So we uh review your energy use for the past two years at an hourly uh hourly uh cadence. So we want to understand every hour of every day how that energy is being consumed by your mechanical and electrical equipment school corporation. We also do a a detailed uh utility rate tariff. I know this word tariff has been used in the news a lot but a tariff for for your
003rates it's different. It's it's it's a the name they give the rate plan you're on. It's the structure for how utility company charges their their customers. So each building that has a meter has a a rate tariff based on your consumption of energy and that's determined by your utility company. So what we're looking at there is uh how effectively are you using energy as it correlates to your rate plan. And that's why having your your hourly uh use data is very important. uh for for the conduction of our report. Um once we have that that information um digestible in house, we then um mirror that with or marry that with your mechanical systems that you have in place. So I I do want to take a quick step back and thank your team. Your team
004has been very helpful to us. Uh we do need to make site visits. We do need access to a lot of your data. So both steeps have been very helpful with us as has Renee. Um she she's been I mean very patient with all the information we've requested. You guys keep great records. We also had access to your utility uh online portal so we could download the data um to save everybody time. So that was a huge help. Um without your team we wouldn't be able to do our job. Um so again once we we had our data we then toured your facilities and Steve was very helpful in shedding light on certain things that the data was telling us. We have a better understanding of how your control systems are and aren't working. Uh
005we have an understanding of your equipment, what's being replaced, and potentially when it's being replaced. For example, chillers or controls for the cooling side in your high school, middle school building. Um and that's important information as we then move to our final phase in your report, which is your energy conservation measures. So we are agnostic to a solution. We are very critical of a solution making sense for our clients. And so what we typically find when going through our our analysis is there are typically free things you can do to save money. And our hope is there's enough free items uh that fund any investments or partially fund any investments you would need to make down the road. So, we did find some opportunities for you guys to save money by making some changes with
006the team you have inside your current control systems. It will save some money. Um, and then we look a step further into what should be done immediately uh to save money in your operating fund. And then we do look out. I mean, we understand you're replacing equipment and we also understand if if money wasn't an issue and you could borrow money to save money in your operations fund, there may be some investments you would consider making. and that's really your call but we wanted to present that in our report. So I'm going to quickly highlight this report. Um copies will be made digital copies available to you. Uh it's a very detailed report. We start very high level in the front. The deeper you go uh the more detail you can get. We have links
007to sub reports so you can see all the homework we've done uh for you guys. Uh before we jump into that, uh one of the things that Steve and Renee shared with us when we first engaged is you have a solar array. So congratulations on putting that in years ago. It is a great hedge. Um Chris is a master electrician and comes from the renewable energy world. Chris at C request did a deep dive into your current array and you know one of the questions is are they working and if so how well? So Chris is gonna share information on that just so you can understand what you currently have and how how it's performed and then we can roll back into information. I think go ahead take home with you. Um this will be
008the same thing you're looking at up there. And as he did mention, this is an investment you guys made in 2017. Um, I I from what I could gather, I think it went online somewhere right around Halloween from around the end of October of 2017. Uh, so what what we've done is we've on the second page and I know I'm jumping around, but this is this is a print out from your guys energy monitoring system that Steve went ahead and shared some of the information so we can get in and do a deep dive to make sure that this is operating. Uh, it when you made this investment, it is forward looking and it was the the goal here is to hedge for rising utility rates. In 2017, you had no idea that they were
009going to go up at the rate they are today. Um, there was a couple other unknowns. You had no idea net metering was going to go away. You might have known it was going to change in 2018. Net metering is the being able to put your power back on the grid and there'll be a credit for what you're putting back on the grid, what you're purchasing. Um, that's kind of the layman's terms for it. But in 2018, the year after you put this on, it changed. um when you in 2017 when you engage in net metering you've had a lifetime till the lifetime of your net metering was till 2047 for some reason they chose July 1st mid year 2047 2018 it got cut down uh to 2035 in 2022 it went away entirely so
010and it switched to what they call EDG um access distributed generation and that's just your credits are then wholesale times 1.25. So diminish your return on investment. Um not not entirely, but it's not the same as that one for one credit. And so great job in investing in 2017. You had no idea those things were coming, but this is part of getting out in front of different regulatory changes, raising utility rates, inflation, things that are unknown that you don't know about. So what we did it in 2017 we were grandfathered in and those changes you just described did not apply to us. Is that correct? >> That is a correct statement. >> Yes. >> So the you you engage in a contract with Duke Energy and that contract is good until 2047. July 1st 2047
011and at that time you'll then go to whatever is that right now we'll assume it's EDG. Who knows in 2047 but I mean that that's you're good until that point. So all the financial modeling that was done in probably 2016 2017 when this was being developed all reflects that that it's you're good for >> now and when we changed in 2022 how much did that hurt us? >> None. >> So that was just >> your grandfather. >> So we're still on the >> you're on net metering on net metering >> till 2047. >> That's correct. >> Okay. >> So even when it changed in 2018 it didn't matter. So people that would have put a system in in 2018 then could only have net bearing until 2035. People put a system in 2022 and don't
012have net. But anybody that was prior to those days is is grandpa throughout that whole contract period. And so one of the things we wanted to understand, so we we knew that history that you guys were good for a while, but we don't know what your solar system and how it's producing, what it's doing, and if it's actually giving you the return on investment that was, you know, promised to you 8 years ago. So what we wanted to do was we wanted to get in and really see if there's been any error faults. And when Mr. Sean and I had spoke, we thought maybe there might have been. And we were here on a day just seeing it's it's so hard to see a snapshot of a single day and predict what your system is
013doing. So, we really wanted to get in there and really understand it. And we were pleasantly surprised to see that it is not only um been producing at but above what it was expected to. So, on this graph here, we have it there as well. The table to the on the top right, this one with the squiggly blue lines, you can see that it kind of it kind of caps every time. What this is is it's production and so what its max power is over the course of all of these are over the course of a year over the course of the last 12 months and this is a one a one megawatt AC or 1000 kilowatt AC system so that's the power that you can put back out on your grid it can't go
014above that that's where it's clipped out at that's what your contracts with this just shows that for the majority of the year you hit that mark which is excellent um you're not going to hit it as much in the January or the November December you don't have as much sunlight the you know we're in the northern hemisphere so there's there's less the the sun doesn't cross as high as it does during the summer months but for the but that simple fact that you've hit it for most of the year other than a few dips here or there's a there's a something going on right here that there might have been some faults or some errors and for some reason or just was that cloudy for 3 weeks but other than that it it's it's excellent.
015Um so that that's what that one's showing. This one here is showing your performance and there is a legend over here. The blue being measured. So this is what was actually measured each time. Orange being modeled. Yeah. Blue being measured. So that's that's what you actually produced. Orange is what what um the system designer developer that put the system in for you guys said that you probably will get. And then the green is just your your your index. So, it's just indexing the whole thing. Um, if you go along this, you can see that you were trending right there. Sometimes over what they modeled, sometimes under, but it's it trends perfectly. And this is just another representation of that performance with some of the same metrics. And then it kind of a little snapshot of
016what it looks like by month. This ratio right here shows that if it was one, that means it's perfect. That's exactly what they modeled. If it's over one, you guys outperformed. As you can see in this snapshot, it outperformed every month. And so the what this is saying is that your system is operating as it's supposed to. It is producing. It's it's it's doing exactly what they said it would do, if not more than what they said it was going to do. But what does that mean? Um what what that means is when we did our in-depth uh our our inepth utility analysis of this facility, we saw that there was a need for that meter where you guys are putting you're putting solar generation on and it's as we can see here, it's it's
017working really well. What what that means is it was probably masking a bigger problem over the last eight years. So if you're still paying a pretty high electricity bill, if you're still buying a bunch of energy from the utility company, why? I mean, we knew they capped it at one megawatt because that's as much as this dupe allows you to put on it. So that's part of the reason, but there's another reason. And getting into the utilities, we learned that you guys are using a lot of energy at night. And so during the day, you're solar. And if you're overproducing, it's going on the grid, but then at night, you're buying a tremendous amount of power from Duke Energy. And so as the rates are escalating over the last three to five years, you're getting
018hit harder and harder and harder. So yes, you have solar and it's producing really well and it's doing great, but it's it's also masking a a larger problem. And so if you didn't put the solar in, you would have probably noticed this maybe a year or two ago. And I'm not saying that's at the fault of the solar. It's still doing exactly what it's supposed to be doing. You probably would be sitting there doing the same thing today. But it did identify another problem that's on that figure. So solar is part of the solution. It's not all of the solution, I guess, is what my point is there. >> Any [clears throat] questions thus far? There was a ton of information on solar. >> Yeah, that's what I wanted to say. Why are we using
019so much money? >> Well, we will definitely get into that, especially as Bob starts getting through the feasibility form. We did that in-depth analysis of what's going on right now and how we can fix that moving forward. What I want to at least convey is that what you did eight years ago, it worked. It did its job. It's it's it was a good sound investment. It hedged your bets. There's a graph at the bottom of the first page I handed around. What this is is retail energy rates. Red being pretty aggressive. Um that's where we're trending right now. It's not going to keep going at that rate. Blue is probably pretty a little too conservative. It's probably going to fall somewhere in between those two. What the green line is is what you're buying your
020energy from your own solar field. That's the best way I can put that. We call it the LCE levelized cost of energy. You invested in something. It's a power generation source. So, you're buying your own power because that was your investment. So, it levelizes throughout that entire time. And based on pretty rough numbers and estimates about what we believe you invested in that, that's your levelized cost. So that means that you know for the first couple years, yes, it was cheaper to buy power from the grid, but over the course of the time of the um of the investment, you will far uh it'll be far it'll be the cheapest um energy source that you can buy. And going to the open market, going to the great buy, not really open market. you own shorts,
021you're buying product. That's that's what it is. And so that that's that's what that represents there. It's just to show you that your investment in that that energy source over time does create that hedge that Bob was talking about. >> You you've eliminated the inflation risk in your energy purchase for that million and a half kilowatt hours it generates for you every year. >> And so the delta >> dollar amount on that, >> pardon me, >> is there a dollar amount? >> Yeah, so the dollar amount. So we we we reverse well the system we got access to your engineering we re we reverse engineered the financials we went back to Duke Energy's rates in 2017 that were published and ran your utility usage through those and you were paying somewhere about 7 cents a
022kilowatt hour back in 20 2017 2018 and then we know what today's rates are and so uh compounding inflation over the last seven eight years uh for for The rate tariff on this building is about 9%. A year inflation. Um we see normalized inflation between 5 and 7% over the long term going forward uh conservatively. So we were able to see that you know where you were and where you are now and what your savings are for for that. um where the real winds come in or every time Duke Energy has a rate increase, you don't feel it for that energy you're producing. So that avoided cost is what you're seeing here. That that red or blue line, wherever your future energy rates may be, that the difference between that line and the green line
023is your net benefit as the facility owner. Duke Energy is pursuing a $3.3 billion rate increase that you're going to have the joy of paying. So on this system when there that rate and future rate increases are instituted you won't pay it. And that's that's the those are that's the magic of these system to put um put it in perspective based on its current production and your current utility rate. So you're generating about a million and a half kilowatt hours and your current all-in energy rates between 12.5 and 13 cents. So >> 1.5 million times 13 cents would be your operational fund savings. 200,000 >> because that was also because it would our payment was 200,000 a year um out of operations. So I was trying to see if that would >> you probably >>
024save more than we were paying for it to to make it. Now we've moved that out of operations which will help us. But yeah, the financing can be tricky and you know, you may have had a 15-year note or a 10-year note, so you're paying down principal. Um, but if you're able to do what you did and transfer it to your to a debt fund, I mean, every dollar you're saving, so whether it's $175, $200,000, that's that's affecting your positively impacting your operating fund, and it is doing that. It is functioning really well. >> Yeah. and and one last step before we move on from your existing uh solar array. It you could just put another one theoretically you could just double it and fix that overnight cost. Um that's not that's not the best
025solution and that's what we're going to help identify today. Um that a good analogy for that would be if you had a leak in your fuel line and just putting a larger gas tank instead of fixing a fuel line. And so this is good. this is a good system. This is this is hedging your bets for utility rates, but there's there's more work to be done. Um, solar is a large investment. We want to continue to just invest in more and more solar without fixing an underlying problem. So, that that's just wanted to kind of conclude with that because it I don't want to take away from what you got. There's just there's just some other work that can be done. >> So, Chris is going back to 2017, did you make a wise decision
026or I mean, did this thing pay for itself or break even or cost? So without knowing all of the and we we've done quite uh we've put together a workbook on this and um without knowing all the ins and outs like I was saying on how it was financed and what the amount was, what the note was and where it was financed out of. We just we ran it as just flat cash. If you just bought this in cash for what we could find in the news article at $3 million, um it it's its break even point would have been somewhere right around 10 to 12 years. Um conservatively, maybe sooner depending on inflation, but there are more things, more variables, more inputs in there. It's we're just really conservative with that. That being said,
027yes, you're you're in year eight and the system's still out performing what it's expected to do in year one. So yes, it was a sound investment um in our in our opinion, but the actual break even payback dates are a little more tricky to get. We can get there. >> Get all the financials like what you paid, what type of financing you had, what your financing costs were, if there were any tax credits that were passed through you guys or rebates or incentives, we can we can tell you exactly. Um another element to look at is that levelized cost of energy. So if you take the total cost of your system and then what the expected maintenance cost of your system is going to be going forward, which we found, [cough] you're right at 10
028cents a kilowatt hour is your cost for your own system. So you you hedged, you were paying more than 7 cents for a couple years, but now your rate's close to 13 cents. So you're saving that 3 cents and and it'll never change. So um if if we look at it through the internal rate of return lens, the net present value lens, the levelwise cost of energy lens, um what you would have paid in utilities over 20 years with 5% inflation versus what you're paying or avoiding now. Um each of those boxes were checked um as it would which would indicate it was a good investment. We're happy to get as grand as you want if you want to feed us that information. >> I'm sorry. >> Yeah. No, I was just curious. Do we
029have what kind of warranty do we have on that system? And do we have a maintenance agreement? >> 16 years. Is it after 16 years? It's up to us. Yeah, we got a maintenance agreement and we got about four more years renew every five years. We just last year >> last year. >> So it's 12 years not 16. >> We had some >> we I think we had when I first started when we first had to sign our first one. So I think this is our second. We had our first couple years of free >> and to speak to the warranty without knowing the manufacturer. Most often solar panel manufacturers carry a 25 or 30 year performance warranty. So if it falls below what they project it's supposed to perform, it's warranty. And same thing
030with the inverter. Those are generally 10 or 12 years. Um now that being said, that's an important note that inverters doing all of the work. The solar panels don't do anything. They just sit out there and collect the sun. The inverter is actually doing physical work. So it it can and will most likely fail or break at some point in time. We normally model those in about year 10 to 12 15 depending on the inverter. So you're 8 years in there's chance that there will be a maintenance cost in 5 to 10 years on the system. And so that is that is just something that you consider. But as of right now, both the current maintenance plan and warranties [clears throat] >> and the only way to know if there's a maintenance issue would be
031if that starts to fall. >> That's right. There's actually alerts and we we've gone through this. We'll they'll notify us if there's an alert that happens. >> They've actually had to come and fix a few things through the warranty. I mean, through the maintenance. Yeah, I did a did a lifetime check on the alerts and there were a few and they were cleared up and they were resolved and there was good notes in there and so um monitoring is very important for these types of systems. You want to be able to sit back and know nothing's happening and somebody else is taking care of the problem. >> Seems like 20 years in my mind for some reason when we did that you remember >> something about 20 years when we first because that was all
032the questions we asked >> 20 year life. Yeah. >> Yeah. I remember saying it could last as long as 45 years. I heard that statement >> when they were talking about it. >> I think it properly maintained. I mean, there are systems that Bell Labs has modules on that were put in in the 60s that are still functioning 85% of the main plate capacity. So, again, back to maintenance. when whenever your current maintenance is up for renewal, if you want us to review your current one now and advise when it's ready to renew, it is worth it's not that expensive. It is worth just making sure it's maintained properly. When we were with uh Mr. Steiner, he he has the this this comes from a dashboard or I should say from software that's tied into
033your system. He he was easily able to get us in there, let us poke around. Um, and it's that software that's alerting the contractor and also hopefully you get alerts as well. I get it from from alert me. >> Okay. All right. Which is good. You want to be proactive with that. >> As soon as it goes unnoticed and if there isn't somebody keeping track of it and it's not producing for two months, that's a significant hit on your investment. So it is it is important to make sure that it's properly maintained and monitored. That does happen. Believe it or not, a lot of people make the investment and forget about it a few years later. That's sad, but it happens. You guys have working great. >> One of the things that I learned just
034by all this is the system that we have is as big as what we can have for that one system. Because I'd always ask like what? So, we already knew going into when they did the solar project, they knew that there would still be a Duke >> um bill or a more need than what we the biggest that's the biggest. >> That's right. And that's that's a great point and that that's kind of what I meant by by masking it is you that you were so you were got to see this huge credit and less you know your bills were so much smaller right after this was put in and that felt good. So when they went up a little bit you didn't you didn't notice it as much. If you didn't have it, you
035would have noticed a lot to put in for yourself for your own generation. >> So what and forgive me if if I'm getting ahead of Carter, you know, we had we had Duke come in. Steve, correct me if I'm wrong, but we we had we did some dealings with Duke where we changed out ballast, went to LEDs, did all this stuff. >> Yeah. Now we now we have went ahead and >> even got an idea of what's costing us especially at night. I mean if that's our is that our biggest enemy right now? >> Yeah. >> Yes. >> Happy to do. Thank you Chris. >> Yeah absolutely. >> Uh real quick before we jump into it I just I want to give you guys a snapshot of what's going on with the four public utilities
036in Indiana. This is a historical uh chart for all four. It's a blend of the four public utilities. Commercial rates, so you school corporations are on commercial rates. Um, commercial rates are the least protected rate. It's a whole other conversation. The residential rate has a very strong lobby group advocating for for the residents and the industrial group has a very strong lobbying group. So currently um the commercial rateayers are paying approximately 120% of what they should be paying to supplement the residential rate payers. It's just it's just a fact. Um so it's it's why this graph is the most egregious of those three categories. So again, blended rate uh what you have on the right side of your your your chart here is is um the average total all-in cost. So there's a there's a
037publish rate tariff and and it might say 5 cents a kilowatt hour and then there are riders and adjustments that the utilities are allowed to pass through on your bill. So if you look at a bill the largest one you're going to see is it's called TD SIC transmission distribution storage and infrastructure charge. Utility companies are allowed to recoup costs that they didn't budget for anywhere else and they're allowed to pass that through on your bill retroactively. And so that's that's why if you look at if you if you think you should be paying 12 cents per kilowatt hour, if you look at every month, it it could be 12.2 13.1 and that's that charge. That's one charge. That makes up about 5% of the inflation a year currently. So just that alone is going
038up causing your goal to go up 5% a year. You have fuel cost adjustment riders. You have all sorts of different riders, environmental riders that have passed through. So when you add all those up and divide by your usage for these these this is this is all published information that that we we obtained from uh the public utility companies and Indiana utility regulatory commission. And you can see that the rates were around 8 cent 8 12 cents on average. Duke is good news for you guys. Historically, Duke has been the lowest of the four. Um, rates have essentially almost tripled in the last 15 years. And you see that little hockey stick, you know, where it starts to go up around 2020 pretty significantly. And there was there's what's going on there is the current
039energy generation supply can't meet the the the new demand. And you know the new demand is you know infrastructure is first of all it's aging has to be replaced that's one of the costs but de the demand increased is cost is has been caused by the advent of all the technology and and so we have to build more infrastructure we utilities have to build more infrastructure to keep up with that. Um and so there's a lot of replacement and also um advancement of of the infrastructure being created. So that that's a quick history. I just wanted to also share with you a forecast. So the Indiana uh state utility forecasting group is published through Purdue University and each utility company publishes forecasts public companies all the information's available. So taking uh that information that's available
040to all of us uh we we broke it down and put it into a graph and um over the next 10 years. We the the forecasting doesn't go out 20 years. It's it's pretty it's pretty loose once you get past 10 years. Um we're seeing uh utility rates on average for average rate again you're on the low end currently. So, yours may not be this high in 10 years, but um doubling in 10 years. I had a client on AES. We met with with AES or one of AES's top five energy users, and AES came into the meeting with their own one of these and told my client, "Your energy rate is going to double by 20 uh by 2035." So, um this is just an example of of where rates are likely going and
041and and trying to highlight the importance of getting ahead of it. you guys got a great head start with your solar field. So, you're already making strides. Um, sorry, I skipped one. Yeah, that was that was um so here here's a this is just a general example of of our average client base. So if you take our average client base um average school size about 150,000 ft when we add up all elementaryies, high school, middle school for an average client, uh we using the amount of energy we're able to on average help our clients reduce. This is a snapshot of what's happening. So this is what we would say this is the cost of doing nothing or the benefit of making an investment. So on an average client of ours in that size building, 150,000
042square feet, we're typically able to find about $60,000 in year one savings, which benefits the operating fund. Over 10 years at 5% inflation, we're we're a very conservative I'm not we're not trying to sell our clients projects. We're trying to help you not invest in poor ones and use your money as wisely as possible. So 5% inflation, you would save about $830,000 in in 10 years by by making modest energy reductions. That's that's the impact of that, you know, the avoided cost benefit. So it's a it's not your snapshot. That is a typical average snapshot. And we we've been working with clients for for quite a while. Um, so I just wanted to share just a little bit of historical and then kind of what may be coming with with the utility firms. Um, now
043I'll jump into your your guys's report. And again, if if you haven't received it already, we'll make sure copies are forwarded to you. Um, so you can see it electronically and really drill down however far you would like. So I'm going to just start with what [clears throat] you've been asking. Um, what can we do? And so what can be done on your energy use overnight? When we were touring your touring your buildings, Mr. Steiner was really quick to say, "Hey, we we don't have controls on our cooling side of our equipment. The controls are defunct and you guys are budgeting for your capital planning for those." Um, so he pointed it out just so we knew when we were looking at data that that that could be a reason. Um, so I wanted to
044share that it's not an unknown. It's just I think the impact of what's going on was probably a little bit of a surprise. Um, so when we looked at your what we call 8760 data, which is your hour, that's 8,760 hours a year. um what we'd like to see outside of your normal operating hours. We understand buildings get used some nights and we uh we notice that um around 9:00 most healthy school buildings should start to you should see the power curve the demand the KW curve start to ramp down and then it ramps down. you you want to maintain a building and each building has its own set of challenges to maintain, but you don't want a building to in the winter time go down to 60 because you're never going to regain it
045by the time the kids get in the classroom and you're getting a bunch of calls from angry teachers and and that's not a good thing. So while maintaining the healthy operation of a building, we still would like to see your KW at night be about 20 to 30% of your peak power usage during the day. And and right now it's about 80%. So right there we could see here's an opportunity. The good news is the opportunities that have been identified are the lower cost, higher payback. And so what are they? The the first one that um we put here and these these three just these three really need to work together. So an energy monitoring and management system is a dashboard like you saw there for your solar field. It it shows you in real
046time [snorts] everything we have in our report. So what what is our energy use? What's the demand use? What's the kilowatt hour use? Um where is it being used? is is are the chillers pulling it right now? Are the boilers pulling it? Um and then it's able in real time to make recommendations on what needs to be done at that point in time. Um it can also be programmed to beat the rate tariff that you're on at its own game. So it's sort of a gaming system where you you can use the least amount of energy when they're trying to charge you the most. Um, in order for that to function or be impactful to you, your control systems have to function. As Steve pointed out, you really don't have control over your cooling side
047of this building. There's some control, but it's not the type of control where you can program it and check in with it. Um, and that's why it's it's not allowing you guys to set back uh at night time. So, so if it's only the cooling system controls and I rather the heating system controls are working properly, right? >> No, no, they're not either. We're still in the process. We got right now we got two systems. We still got the old train. We still got a bunch of that. They're in the process that still has the old controls in [clears throat] the boxes and a lot of the air handlers or some of them have been upgraded to the new uh but they're not able to talk together. So we're having to run things longer than
048we, you know, once they get it done, we can make it all work like it's supposed to. >> We're having cold rooms in the mornings. We don't keep it on. >> Yeah. No, you he wouldn't be able to get his building back. He's aware. It's just he he has to run the equipment because it can't modulate. It can't communicate with your other system. So, believe it or not, in in the winter time, you have to and in it's it seems counterintuitive, but you have to run cooling in conjunction with your heating. And in the summer, you have to run heating to dehumidify the or to warm up the cold air that's dehumidifying. So, you might be calling for 59° air in the summer. Nobody wants 59°ree air. So, your air so your boilers are reheating
049to to get you up to 70. And if they're not communicating, you can't do that efficiently. And so yes, you have new some new controls, but that's why I say these [clears throat] all three need to work together. So retrocommissioning, it's a it's an overused term in our industry and utility companies offer rebates for retrocommissioning. This this is and I in your report we put a detail what it truly means. But what retro commissioning is, it's taking your existing system control system and we're looking at the the front end, which is the points in your control system. Are all of the points in your control system there? A point being like this boiler is online, your chiller is online. And then can those points, can your controls uh graphics actually impact your systems operation? Meaning,
050do the dampers actually open and close because the actuators are functioning. All of that is tested through the retrachine process to ensure that it can do what your controls are asking it to do. and and then you commission that system meaning so what is commissioning commission you have a new system that you just put in it was tested in balance but commissioning is optimizing its operations to meet your expectations meaning if if you need 70° air in the summer or 72 in the winter it will optimize how that's done given the rate tariff you're on meaning you can set way back at night start to ramp it up you might not need the ramp ramp it up where you turn it from 0 to 100. You might start at zero and 10 and 20 and
051you time it so you don't pay those rates when they're most expensive. And so all of those three things together will give you that freedom and help you lower your costs. So we went through your buildings and fairly high level uh looked at your current controls. Steve was really helpful at letting us know what's coming with with budgeting for replacements. Even in our experience, buildings that have relatively new controls still may have downline like actuators and dampers that need to be fixed. And so we calculated it would be more exact if you move forward through an RFP, but this these are very accurate numbers um within 10% of where you would be. Um we still believe you will need to replace even on your new system some of the downline equipment to function properly. So
052th that is where the bulk of your savings can be found is through your controls. You you you've lost control of your buildings and there's a road map to get you back. Um and it's really I know it's I don't want to get in the weeds. It's it's really about lowering that KW, not your kilowatt hour, but the instantaneous power that you draw because the power companies are charging you for that power. So, if you set a demand at 1,000 KW, you won't pay less than 60% of that for the next year, even if you never get back up to it. And so, these systems can help you demand shave and continue continuously lower your your utility costs. So, our our study found really leaned into the control side. Like you pointed out, you've done
053a lot of the kilowatt hour stuff. you've done a lot of LED lighting, you have solar, you have fairly fish efficient mechanical equipment that's operating. Uh so it's really the control side where you can find uh operational savings. >> This was savings for one and two exactly the same. Is that combined savings or is that savings for each one? >> For uh one and two. >> Uhhuh. >> It's so one and two have to work together and and so without one you're not going to get the other. So we split it's about 50/50 or 6040 in the real world. So we just went with it. >> So it's 1.4 billion in total. We just split it in two. >> Yeah. The to all three all three of those um energy conservation measures together are 1.556
054million. The total total budget for those one two and three. So, Steve, are we currently online to get everything replaced so that our systems can start talking? >> Yes, it's they're in the end everything all our controls are supposed to be uh upgraded to the new. Um, but they they're limited on when they can work on it because it disrupts schools. like spring break, summer break. That's when they hit it the hardest. >> Okay. It's part of our current $4 million question. [clears throat] So, looking back to my question, the cost is 1.556 million. What's the savings for one through three? I I mean, I see one or two about 2.7 million over 20 years. for one through three. Uh year year one savings is about $80,000. Um [snorts] prior to the short term one
055of just take a quick step back when I when I mentioned there's some also some no cost opportunities. uh and our report goes into all the details, so I'll spare you that. But uh there's an opportunity um for uh there's three opportunities uh for Steve and his team to go through. We we created a roadmap for some modifications they can make now to save. It's it's not a ton, but it's about $36,000 in annual savings. um and and we uh put a a plan together, specifications for his team. We've offered to come assist when when ready. It's going to take a little bit of data logging and and and trial and error, but we we we felt within a month or two we could assist Steve in getting the that corrected. So, um we you
056know that's that's an immediate start taking community action. Is >> this one and a half million Is that Steve? Is that above and beyond our bond money that we put in place to get all these upgrades done now? Is that additional monies? >> Um the controls would be part of that, right? Be part of that already. So that total figure would really be less for our next bond when we got the other one in the back. I I think you mentioned um [snorts] in our call when we reviewed with with Steve and his team um somewhere around $350,000 worth of controls were are still yet to be completed and >> we don't have the exact figure yet on our >> So yes, if if if that's in an already bonded scope and you've accounted for
057it, we we would that we'd modify this report and and reindeerate that out. There will be some controls upgrades needed uh as I mentioned some at the control level some downstream but whatever you guys have already either purchased or designed would come out of that the cost will go down >> right >> this is also for all of the buildings so it's not just this building it would also be for the elementary and >> so Steve again everything's planned out. We're going to do it. Do we have a timeline? We want to be done by X. >> I want it done today. >> Yeah, right. >> They haven't got the timeline working on it. >> I mean, like, what's the potential of this dragging out for another year? Oh, I think it's going to go
058on for a while. Really? Get them, air handlers, all the controls upgrade. >> Do you have to go through I think separate from the you still need to go through the procurement process on on the piece that Steve's talking about would you still need >> so Kevin's already started working I'm I've got a note here I'm going to call him tomorrow and find out where we are and then if we need to then start moving towards the next 4 million because we're getting towards the end of because we have two chillers on that already and some other things. So what what I what I would propose I'm not asking for what I would just throw out for your guys consideration outside of us being here. We have so much data that will be helpful to
059the installers whoever is selected through a through an RFP if they haven't already been selected. There may be pieces where people have been. If they haven't been, what I would propose is what all have you bonded for that hasn't been done that we could throw into this report. I mean, I know you have some capital replacement items and um including those in an RFP that we can help manage because we can set the guard rails. We we are working on a project right now all new controls in seven buildings and those buildings are perfor their worst performers and it's because they weren't commissioned in a public bid process commissioning is never in the scope and so we can take you through an RFP that gets that in the scope and captures everything and like your
060public bid process we it's a competitive bid environment we will help drive the price down as well so we I just want to offer that we can help manage so we can get this on tighter time frames. The the contractors that work on our projects are used to working however if you wanted this done by the end of summer. The controls piece we we we have project managers and their teams will work second shift, spring break, summer. I mean, they'll get it done uh to to meet whatever you need to have done for for the prices we've budgeted. And it's so we we can help advocate uh really criminally for for Mr. Steiner. It's a lot to have on one one person's plate or a couple people's plate and we have the horsepower to support
061that. So, we we would love to throw our hat in the ring and help you guys manage that procurement process. Tell me, tell me what's wrong with my thinking. It's 1.556 million. We're lost. We're going to be scared. >> So, I got to go, Steve. That's 1.566 million in cost, 2.7 million in savings. The payback on that, I mean, roughly, you got to compound the money and everything. It's It's like 13 years. We ran >> That's awfully long. So we uh so each energy conservation measure in in your report has different paybacks. Um and so um the simple payback for for so we're not factoring cost of funding that's paid for out of your debt service fund. Um I'm inside of our workbook right now. So just kind of showing you that the the paybacks
062range from nine years down to about four years depending on the the building and the the energy conservation measure. >> Is it worth mentioning or have you already covered German process energy savings contract? >> Not yet. >> And that you're right. I mean we we can calculate the blended one for you. Um the the the the true benefit is you you know if if if you have the debt capacity you you have to have controls and they should be installed correctly so you can maximize their benefit. If you have the ability to pay for those out of your debt fund all of these savings that are calculated hit your operations fun pay back to the ops ops fund because it's not encumbered by anything else. and our our it's in your report. I do want
063to commentate on budgeting. So when we budget, we we get pricing from contractors. We have in-house ability for solar. We do all that in-house. Obviously, we get material pricing. So you can see, you know, we we've built out all of these are raw costs. Those are the costs that came in. And then whoever gets hired to do the job is going to put some margin on it. So we we interview those folks and ask them what their margin is on the all-in margin and we we use that as a factor here. So it's you know it has a 20% margin. Sometimes it's 15 but we want to be conservative for you guys. So, it's we we we take pride in giving you data that's that's accurate and and when you would go through an RFP
064process, the responses would closely mirror this. You're not going to get a budget that's 2x what we're showing you. It might be 10% higher or lower. [clears throat] Steve, do you know um what controls above and beyond what we've already ordered, what we've got on the equipment itself needs to be replaced. The the the next thing that would be left would be the art building that has lots of old controls on it. It it does have new controls on the gym unit and So on the new chiller, some controls on that end, but all the classrooms I saw all the old stuff. >> This building will be all new. >> This one's done. >> The elementary, it's it's great. It's the one that's been upgraded. >> Pretty much all the way except the only thing
065we could do more on it is if we add some separate controls to be able to set back unit ventilators. They're like in the lobbies three ways classrooms rest buildings get all upgraded [snorts] and it's working through >> how long would it take for it to say 60 days could we come up and get a an idea of actual cost above and beyond the bonding that we've already issued for what we've already got going on. Right. Um, and then we're really not going to be able to get an a true savings until we get all that in place. Correct. I mean, we're just guessing. >> Ste, my understanding right, you have to have all the buildings done before they can start the communication process. In other words, even though you have one completely done, it
066still can't do it full work until >> it'll come in. It's >> not necessarily all of it has to be done. It's like sections the building once they get the air handlers and the VA's talking get that section. So there so there could be will be potential improvement today and then do a little bit and then improvement tomorrow. Is that what you're saying? >> Yeah, there is it's a work in progress right now. I mean they'll be doing the children work actually start right now getting ready for the new children that's a work in progress right I guess for me it's just all about we we know our financial situation and [snorts] I'm just I'm just curious as to what addition above and beyond what we already approved and then I don't know if we
067can even come close to calculating probably can't what the actual savings might be. >> I think what what we could do to help on that end is we could spend a little more time with Mr. Stein and Mr. Deshawn and >> for for us what we would want to understand is what what's already been procured. you you've gone through procurement and and they just haven't finished installation >> and then what hasn't been procured yet, but you've allocated budget for it. And that'll that'll tell us one set of answers. And then let's look at your 5-year plan and and you know when are you replacing major air handling equipment, chillers, and and look at your budget. we can help budget and then just look at that picture and say what makes the most sense. Um if
068we took you through an RFP, we really we have to you know we have a lot of information here. We're clearly still we we're not complete. So we'll work with your team to round that out. If we went through an RFP, all of that information would be taken into consideration. We've worked with this group here this year and then they're going to have a million dollars in 27. $2 million in 28. Contractors will finance without charging. They'll they'll say, "Look, if if we win the project, we'll do it all now because they need to get it all done and we'll take payment for your payment schedule." So, you don't have to wait to start getting your savings though. We we would propose it's a different procurement process called the guaranteed energy savings uh project process.
069We put put the statute in your in your study and we take plans and the specifications we've created. We invite certified they have to be certified in the state of Indiana service contract providers like you worked with with uh the folks that did your solar and we take them through the process using our data room using the specifications that we've agreed to as a group and it's really no risk to you because if we create a mo roadmap and we're like yeah we think we could get your $4 million done now and you pay for it over three years and they don't come in at $4 million and they won't do the the finance plan. We don't you just you don't do we're not going to charge you for that. We we partner with our
070clients and say, "Look, we're going to recommend you not a fee. We believe in our data and we believe in in our ability to help you get it done. If we're wrong, you shouldn't pay this." And so, we're not we we would all just it'd be your time in Steve's time that he's helping us out with, which is largely done. And and then you'd have an answer. But before we can do that, we we've got to learn a little bit more about what you've paid for, what you've approved, and what is coming in the next several years. That's not hard to do. We we we're happy to >> I'm just saying we come in with these numbers, and I'm not sure little bit, you know, we got we got a tough situation and if they
071don't go back and do something with this tax thing, I mean, within two years, we won't even need to build it. So, we got to be really careful about how we approach going forward. agreed to sell bonds to continue the work. We've got everything covered at this point in the [snorts] new controls that we've got order that are coming in this building, but to move beyond that, we have to part of that's another spray. >> [clears throat] >> I will get that information exactly who we are. We'll we'll work with both Steve and Renee and we'll factor that information in just so you have something to look at to talk about as a group. If you want us to come back if you want to call us anytime, I mean, we're here to you guys
072hired us to provide you with information from which to make a decision. The meeting's not coming. you want to see something different, you have questions, we're we're here to answer them. Please don't hesitate. >> I will call. >> All right. Please do. >> You guys have any last questions? >> Good to meet you. >> I'll get in touch with you after. >> Yeah. [snorts]