Establishing a Green Lights Revolving Fund in Houston.

• Author: Huckabay, Dewayne
• Position: Houston, Texas

The City of Houston, Texas, has established a revolving fund to support selected departmental energy improvement projects whose energy savings will repay the initial project costs plus a fund-administration fee within 24 months.

This article consists of excerpts from the report Establishing a Green Lights Revolving Fund, published by Public Technology, Inc.'s Urban Consortium Energy Task Force, and is used with permission.

The City of Houston, Texas, owns and operates more than 1,100 facilities with a combined size in excess of nine million square feet. They vary in use - ranging from unmanned pump and lift stations to office buildings, airports, and convention centers - and are operated by 11 departments. To operate these city facilities, Houston incurs annual energy costs of $70 million for electricity and $4 million for natural gas.

Efforts to optimize the energy efficiency of all of the city's facilities began with the Federal Emergency Temperature Building Plan of 1978. The federal plan was allowed to be modified for the Houston region because of the climate and was named the Houston Emergency Temperature Building Restriction Plan. The City of Houston Office of Energy Conservation was created in order to enforce the plan citywide. After the ordinance was rescinded in 1982, office staffing was reduced, and the office was charged with monitoring and assisting operating departments in optimizing facility energy consumption.

The Green Lights Program

The most recent effort to optimize energy usage in facilities on a citywide basis is the City of Houston's commitment in the U.S. Environmental Protection Agency's (EPA) Green Lights Program. In 1992, Houston was the first large urban government to sign the memorandum of understanding (MOU) with the EPA. As part of the MOU, the City of Houston agreed to review the lighting efficiency in all of its facilities over the next five years and to implement those lighting upgrades which are cost effective and environmentally beneficial.

The City of Houston expanded the EPA Green Lights Program by executive order of the mayor to include not only lighting but all major energy consuming equipment and factors in the city's facilities. Houston's Green Lights Program allows the departments operating facilities several options for conducting facility energy audits and for financing cost-effective energy improvements identified through these energy audits. As the facility-operating departments proceeded with the Green Lights Program, the single most important obstacle to widespread adoption of energy-efficient, cost-effective improvements was the question, "Where does the department get the funds to buy the equipment to make the improvements?"

The Green Lights Revolving Fund project was designed to provide an attractive answer to that question: an internal source of recurring monies to be devoted to energy improvements. The proposal to create a revolving fund for energy improvements had its roots in previous city experiences with private-sector performance contracting.

Performance Contracting

In 1987, the City of Houston library department entered into an energy-savings performance contract. This was one of the first energy performance contracts entered into in the State of Texas in which all of the capital costs were to be paid by the contractor and recouped through savings. The installation of energy management systems, lighting retrofits, and building envelope renovations and modifications were made and resulted in significant reductions in electric and natural gas utility costs in the range of 20 percent to 40 percent. The annual cost of electricity and natural gas was approximately $1.3 million in 1987. With savings guarantees from the energy-service contractor, the annual energy cost for the library department essentially would be frozen for the five-year period for the contract. In addition to the energy-efficiency and building improvements, the library department also received a full repair and replacement maintenance contract on two large facilities located in the central complex and preventive maintenance in all of its 36 branch libraries.

In 1993, as part of Houston's Green Lights Program, the library department renegotiated an energy performance contract with a similar scope of work as the first contract except for additional capital mechanical equipment, updated lighting, and additional maintenance services. The contractor was required to renovate, retrofit, and modify the city facilities to improve energy efficiency and reduce energy consumption. The energy conservation measures the contractor included were replacing inefficient water chillers; changing a constant-volume air conditioning system to variable-volume; replacing existing motors with energy-efficient motors; cleaning the lenses of fluorescent lamp fixtures; removing lamps where not required; and installing an energy-management system for the control of the air conditioning, lighting, and other miscellaneous measures included in the contract. This was a large project with several million dollars invested up front by the contractor, who will reap a good profit from the...