[Editor's Note: This is part 2 of a multi-part article series on the Grant County Commission work session and regular sessions this week on June 13, 3017 and June 15, 2017.]

By Mary Alice Murphy

During the Tuesday, June 13, 2017, work session, commissioners heard from Scott Stevens, representing Energy Control Inc. as senior project developer and of OpTerra Energy, and Mark Valenzuela, first vice president of investment banking firm George K. Baum and Company for its New Mexico Public Finance Group. Valenzuela is the county's advisor on bond financing.

"We work most in schools, municipalities and counties," Stevens said. "We did an investment grade assessment (IGA) and an energy services performance contracting (ESPC) evaluation. Our energy services can bridge the gap with solar and energy efficiency."

He showed a PowerPoint® presentation citing the financial challenges as lack of funding, diminishing budget, rising utility costs, bond limitations, capital expense priorities and increased maintenance costs.

The technical challenges include aging facilities and equipment, emergency replacements, increased service calls, material standardization, regulatory compliance and geographic location.

Stevens cited the New Mexico program based on the Public Facility Energy Efficiency and Water Conservation Act of 1978. He said the Energy, Minerals and Natural Resources Department and the General Services Department created the process.

"Is there an opportunity to do this in Grant County?" Stevens rhetorically asked. "The ESPC with an audit and construction is part of the process. We would tailor it to each building, dependent on financing availability. Savings are guaranteed."

He said he has identified seven buildings owned by the county and completed an energy use intensity (EUI) study by taking the utility data of electricity and gas costs and usage.

In his preliminary solution summary, he said solar could be incorporated on four different sites and would bring a 28 percent reduction in utility costs.

"The first rule of solar is that you should make sure your buildings are efficient," Stevens said. "You need to do a careful analysis of your aging HVAC infrastructure and you need to standardize systems.

"I'll say again—we guarantee savings," he continued. "It will be a debt service not to exceed your savings. For program financials, the preliminary estimate is $1.1 million project cost, including the project development fee, it will be a total of $1.2 million, not including operation and maintenance. Project development would take three to five months, and program implementation 12-18 months. Measurement verification would be done through the agreement term. It would be a collaborative effort with county staff."

He said for the on-site audit, they use monitoring equipment. The engineering analyses go through the systems and look at ways to make an impact. "We work with PNM to leverage rebates. Project management would work with the facilities so as not to interrupt events. It's a turnkey project with OpTerra, with one point of contact, vendor neutral, with streamlined procurement and transparent auditing to eliminate risk. Results are guaranteed, with fixed costs and no change orders."

Valenzuela said the county had several financial options, including a tax-exempt lease purchase, a power purchase agreement, self-financing, other debt financing or a combination. "As your bond advisor, I will help you make the best decision for you."

"We are confident we will deliver," Stevens said. "If you do not get savings, you don't have to pay for the IGA."

Commissioner Harry Browne said the Conference Center was underutilized for the years that were audited, so "there may be more savings."

"We troubleshoot items ahead of time," Stevens said.

"After 20 years, you're paid off, then the savings go to the county?" Browne asked.

"Yes, and the solar is good for up to 25 years," Stevens said.

Browne noted that Triple H solar had identified the same buildings.

County Economic Development and Planning Director Michael "Mischa" Larisch said the Bataan Park building had been pulled. "Scott and I talked about making the buildings more efficient, with solar still built into the project."

"This is still in the preliminary stage," Stevens said. "The power purchase agreement (PPA) might be your best approach. There are benefits to PPA and ownership."

Larisch said in looking at solar, the PPA would require no upfront capital.

Browne said he was confused about how it all works. "Would we still be offering a request for proposal?"

Stevens said his company is prequalified by the state of New Mexico.

Commissioner Alicia Edwards asked what the expected lifetime of solar panels is. Stevens said 80 percent last up to 25 years and the inverters up to 15 years.

He explained the panels step down in efficiency over the years from 100 percent at the beginning to 80 percent later.

Edwards asked if the rates include the requested PNM rate increases.

"This is a conservative estimate," Stevens said.

Edwards asked: "With the wind and dust around here, do the panels need to be cleaned?"

"Usually the annual cleaning is included in the cost," Stevens said.

Commission Chairman Brett Kasten said: "With an anticipated $18,500 savings a year, do the extra warranties on the inverters come out of that?

Stevens said it was all negotiated.

"If it's not a public-private collaboration, how do you take advantage of the subsidies?" Kasten asked.

Stevens said the panels have decreased in costs and coupled with the PNM rate increases "make solar more cost effective."

"When I looked at solar for my house, without subsidies, it was a dead deal," Kasten said.

Stevens said the costs are higher for residential use and require higher efficiency panels.

"Meaning we would use less efficient panels?" Kasten asked.

"Yes, because they are more cost effective," Stevens said.

Browne asked: "Is that all irrelevant if we are guaranteed savings?"

"It's a solid number," Stevens said.

Valenzuela said: "We see renewable projects across companies. We'll help to advise you what the best pricing will be. The PPA is private and is getting the 20 percent subsidy. We will make sure you get the best value. Two options are the qualified energy conservation bond and the clean renewable energy bond. We work with different agencies."

"With taxable bonds, the federal government gives you rebates," Valenzuela said. "With that scenario, you will own the facility. The town of Silver City used the qualified energy conservation bond for changing out the water meters. At 4.5 percent, with the rebate, it goes down to a 1.64 percent fixed rate. Hopefully, we can add more value to your savings."

The next article will cover the agenda items, probably a combined work and regular session report.