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Energy Management
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FY2011 House 2 Budget Recommendation:
Issues in Brief
Deval L. Patrick, Governor
Timothy P. Murray, Lt. Governor
The Governor’s fiscal year 2011 budget proposes the nation’s first comprehensive energy procurement and management system open to all public entities. Commonwealth Energy Solutions will provide energy savings for state agencies, higher education campuses, quasi-public authorities, and others. Public entities, including municipalities, in the Commonwealth spend approximately $750 million annually on energy, with over $250 million of spending in fiscal year 2008 just at the state level across the Executive Branch, higher education campuses, quasi-public authorities, and others. As a result of the Commonwealth’s high energy consumption, Governor Patrick directed Secretaries Gonzalez and Bowles to evaluate the potential to reduce energy expenditures through bulk purchasing and more active, centralized management of energy contracts.
Energy Management Initiative
Historically, estimated and actual utilities spending throughout the Commonwealth has varied due to the fact that off-budget spending in trust, capital, or federal accounts are not identified in initial projected agency spending plan submissions. Over the past three fiscal years (2007-2009), the average actual spending for both non-executive and executive branch agencies from all funding sources have totaled $246 million.
*Estimates include spending from all funding sources for both executive and non-executive branches on electricity, natural gas, heating, and fuel for buildings and vehicles.
Today, there is no single entity with the mission of driving down energy spending for public entities. Energy procurement is undertaken separately by the Executive Branch, higher education campuses, quasi-public authorities, etc, with over 15,000 electrical, natural gas and heating oil accounts in the Executive Branch alone. Aggregate purchasing options have become available for some agencies in recent years through a statewide contract for electricity managed by the Operational Services Division and through Massachusetts Higher Education Financing Authority’s (HEFA) PowerOptions program. However, substantial opportunities for savings from a comprehensive approach to energy management for all entities remains, including:
- Bulk purchasing: The Governor’s H.2. Budget proposes the creation of a single entity – “Commonwealth Energy Solutions” (CES) at the Massachusetts Clean Energy Center – to perform energy-related duties for public entities similar to those provided by the Group Insurance Commission (GIC) or the Pension Reserve Investment Management Board (PRIM), namely expert management of specialized functions. As a first step, the Governor’s budget includes a $255.5 million intra-governmental services account under the Division of Capital Asset Management (DCAM) to facilitate the management of energy-related spending within Executive Branch agencies. This account will allow the Executive Office for Administration and Finance (A&F) to consolidate fiscal management of energy costs while the CES takes charge of realizing energy cost savings across the Executive Branch.
- Advanced energy management: With an investment of American Recovery and Reinvestment Act (ARRA) funds, the Commonwealth is deploying an advanced energy management system for state agencies. This system will allow real-time monitoring of energy use and trends to identify both operational malfunctions and long-term asset improvement opportunities. In addition to identifying discrepancies in utility, this information system will give Commonwealth Energy Solutions the detailed data needed to optimize purchasing strategies for participating public entities. Such systems have demonstrated savings of 10-20% in other state and local governments and in the private sector. As a result of this initiative, the Governor’s H.2. budget assumes 5% savings or approximately $6 million on the state’s total budgetary spending on energy costs in fiscal year 2011.
Prepared by Sarah Glassman and Chantal Mont-Louis, Executive Office for Administration and Finance ·
www.mass.gov/budget/governor
For more information contact: contactanf@massmail.state.ma.us (617) 727-2040
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