FRHSD to Upgrade Infrastructure through Energy Savings Improvement Program

To address the ’s (FRHSD) capital projects, the district has decided to pursue an Energy Savings Improvement Program (ESIP) in order to fund facility projects which the district’s general operating budget cannot cover. An ESIP project is backed by an energy firm and the energy savings incurred will repay the debt on the project.

An ESIP allows school districts to issue debt without voter approval to fund facility improvements that generate energy savings, Assistant Superintendent of Business Administration and Board Secretary Sean Boyce explained. This can only be done, however, if the district services the debt within their budget cap.

“Typically, debt issued by school districts is outside of the budget cap, it’s in the debt service fund so it doesn’t count towards your 2 percent [cap],” Boyce said, speaking of the 2 percent tax levy cap currently required by the state of New Jersey for all public school districts.

With an ESIP, the money saved on energy will be put towards paying off the debt issued to pay for the project in the first place; therefore, an ESIP is budget neutral and facility projects are taken care of without taxpayer money.

The FRHSD sent out Requests for Proposals (RFP) to all pre-qualified energy service companies for the district to partner with in this project. After evaluating all proposals from the energy companies, district administration recommended Tozour Energy Systems to the Board of Education.

Tozour Energy is a local energy firm made up of about 200 employees that specializes in energy engineering construction projects, Josh Costel, an employee of Tozour, said.  The firm has generated more than $14 million in incentives and more than $3.5 million in annual energy savings for their clients over the past two years, according to Costel.

The projected energy savings for the district will be greater than $1.2 million a year and an excess of $2 million in incentives will be provided to the district to be used for what the administration deems necessary, Costel said.

The ESIP will also address infrastructure requirements at all six high schools, Costel said, and will focus on heating, ventilation, and air conditioning (HVAC). “The students will have a much more comfortable and reliable learning environment,” Costel asserted. “It will be noticeable from the lighting, to the temperature, to the humidity, to, quite frankly, the amount of CO2 they are breathing; it will be a much more healthy environment.”

Over the next two to three months, Tozour will conduct an investment grade audit, meaning the firm will take their preliminary findings and have the district select energy conservation measures, which will be ranked and prioritized for the project. Then, the firm will take these selections and figure out how much savings each measure will produce.

Under ESIP legislation, six independent measure and verification phases will occur, three done by the state and three done by an independent firm of the district’s choosing. Both will review the savings projected by Tozour in order to ensure that the savings Tozour projected will materialize, Costel explained.

Boyce said that these measure and verification phases are extremely important because they guarantee that the target for energy savings are sufficient to fund the facility projects that would cause those energy savings. 

As a result of the investment grade audit, the district will have a group of financing options available to lend money against the future savings, since Tozour is backing the project, according to Costel. Accordingly, instead of money going towards the utility bills, it will be used to pay off the energy conservation measures, making the project budget neutral.

Next, bids will be solicited for construction, reviewed, and a company will be chosen in accordance to state public bid laws. The district will determine the construction schedule to ensure that the students are not disrupted by the project.

Once the last energy measure is completed, a check valued at $1 million will be written to the school district. One year later, the savings will be checked again and then a second $1 million check will be issued to the district, Costel said.

Tozour will be verifying the savings over the web, and in real time people can see the amount of savings incurred versus the amount of savings projected.

“We think that it will be a very powerful tool and very transparent,” Costel said.