Water authority considers moves to generate profit
Proposal could produce $1.5 million annually for AWA
The Altoona Water Authority next month may choose one of three candidate companies to evaluate the potential for energy generation revenue and energy savings at its two sewer plants under a program overseen by the state — a move that all three companies say should ultimately produce $1.5 million in annual benefits for the authority.
At its Oct. 18 meeting, authority management will recommend one of the “Energy Service Companies” or ESCOs, interviewed recently based on those firms’ analyses of how much “combined heat and power” or gas production income the plants could generate by “digesting” outside biomass material for other organizations and how much savings the authority could realize by swapping standard lights with LEDs, replacing inefficient heating systems and other changes.
The projects would be financed through a bond pool administered by the Pennsylvania Sustainable Energy Fund, a partnership between the Treasury Department and the Foundation for Renewable Energy and Environment (FREE) — operating under a law that requires that ESCOs to fulfill at least 90 percent of their estimates and that the projects they propose break even at least during the payback periods — which means that the benefits are free and clear after debt service ends.
The Treasury limits financing deals to 12 years, according to Brian Book, a consulting engineer from cb3 Solutions LLC in Bellefonte, who is working with the authority as it considers the “performance contracting” program.
The firms interviewed from among Johnson Controls, Energy Systems Group, Schneider Electric Co., Brewer-Garrett Co. and Siemens identified $1 million in annual revenue from generation of “combined heat and power” (CHP), production of gas and payments for receiving hauled-in biomass, along with $400,000 and $600,000 in energy savings, according to Book and Todd Musser, the authority’s director of water treatment operations.
Before passage of the law that requires ESCOs to guarantee results, companies used to inflate their promises, Book said.
Now, because of the requirement for the guarantee, they estimate conservatively, Musser said.
The potential for generation of heat, power and gas is large because the plants have excess capacity, Musser said.
The potential for energy savings is substantial because there were old but functioning fixtures and equipment left untouched during an upgrade of the main plant facilities a few years ago, according to Musser.
FREE, the treasury partner, stays with organizations like the authority through their loan paybacks, to ensure everything works out, Book said.
Authority General Manager Mark Perry, who along with Musser interviewed the three candidate firms, said he is skeptical about the program.
“(It seems) too good to be true,” Book said, expressing the typical outlook among agencies considering the program.
But it worked well for the Moshannon Valley School District a few years ago, said Dave Consiglio, solicitor for the authority and that school district.
If the authority decides to accept next month’s staff recommendation, the chosen company would perform a preliminary audit of the potential benefits, which would take two or three months, cost the authority nothing and still not commit the authority to a project.
The audit would make reliable predictions about the revenue and savings potential of the sewer plants and generate a slate of specific “projects” to achieve those benefits.
At that point, the authority would decide whether to sign a contract with the company to do an “investment grade audit” on one or more proposed projects of the authority’s choosing.
If the authority decides not to sign a contract for an investment grade audit for any of the projects, there’s no cost.
If the authority commits to an investment grade audit for one or more projects, then backs out, it would be liable to pay for the cost of the investment grade audit, Book indicated.
Musser appears to be a believer.
“You can’t oversell it,” he said.
Asked by board member Marla Marcinko what he thinks of the program, regular authority consulting engineer Mark Glenn of Gwin Dobson & Foreman cautioned that potential orders from the state Department of Environmental Protection to modify the authority’s handling of its Combined Sewer Overflow systems could compromise the plants’ ability to treat imported biomass efficiently during storms.
The CSOs, which serve areas of the city where “combined” sewer pipes handle both sanitary and storm flow, are a holdover from an earlier era, tolerated for now by the DEP, but targeted eventually for phase-out.
They include tanks on either side of the city that during heavy rain accept and hold excess flow that doesn’t fit into the outfalls to the sewer plants.
That excess is the “first flush” from the streets.
When the tanks are full, the excess is then diverted from the outfalls into streams.
That water diverted into streams is highly diluted, but still includes sanitary waste.
Before the renovations, the outfall pipes took as much or more to the plants as the plants could handle during storms.
But since the renovations, the plants are not working at full capacity, even during storms.
Thus, more than necessary of the diluted — but still polluted — excess is flowing into the streams, to the consternation of DEP.
Eventually, the department will probably require the authority to add piping so that the plants are taking all they can handle of the mildly polluted excess storm flow, Glenn said.
During those times of high flow, the ability to handle other organizations’ biomass may be compromised somewhat, Glenn said.
Mirror Staff Writer William Kibler is at 949-7038.