State awards energy pact to serve UM

Innovative accord signed with team led by Baltimore firm

College Park campus

First U.S. university to outsource needs to alternative supplier

Utilities

April 22, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

In a move that may be used as a model nationwide, the state awarded a $469 million contract yesterday to supply the University of Maryland, College Park with electricity, heat and air conditioning from a team led by a Baltimore energy company.

The deal with the team of Trigen Energy Corp. and Cincinnati-based Cinergy Corp. will provide the 35,000-student campus with energy services through 2019.

University officials say the Trigen-Cinergy deal also represents the first time a U.S. university has contracted with an alternative energy supplier to outsource all of its utility requirements.

The Trigen-Cinergy equip- ment and energy management is expected to save the 1,350-acre university $120 million over the life of the contract.

It will also reduce the university's energy consumption by 32 percent, enough power to supply all the homes in Kent County, state officials said.

"All of our aging utility systems are stressed," said Frank Brewer, assistant vice president of facilities management at the College Park campus.

"And I think that as a solution, you'll see more of these kinds of programs being used across the country."

Trigen-Cinergy will install $71 million worth of new equipment as part of its contract, including a new power plant to generate electricity for College Park's 150 buildings. The university's utility infrastructure dates to 1934, Brewer said.

"Their campus is growing, and they needed substantial capital upgrades to keep pace," said James J. Abromitis, president of Trigen Energy's Baltimore division. "And it makes a statement for Trigen, because it shows we can compete head-to-head against local utilities. We hope to translate this model to other universities and other states."

The new equipment will be financed with 20-year bonds issued by the state that will be repaid by Trigen-Cinergy.

The length of the financing raised the ire of state Treasurer Richard N. Dixon, however, and caused him to vote against the plan at yesterday's state Board of Public Works meeting.

"It concerns me greatly that we are doing this," Dixon said before the measure passed the Board of Public Works by a 2-to-1 vote. Most state bonds are issued for 15 years, as directed by the state's constitution. The bonds will be issued by the Maryland Economic Development Corp.

Brewer said the funding mechanism was necessary because the state did not want to finance the improvements through its capital budget.

Despite the conflict, state officials hailed the contract as a unique solution that will also help the environment.

"We are going to replace an outdated and outmoded energy system at the university with a high-tech, efficient system that saves money and saves energy," said Lt. Gov. Kathleen Kennedy Townsend, who chaired the meeting in Gov. Parris N. Glendening's absence and voted for the contract.

Trigen-Cinergy's systems are expected to reduce emissions of nitrogen oxide by 9,800 tons and carbon dioxide emissions into the air by 3.5 million tons, between now and 2019.

Trigen-Cinergy, which also manages energy systems for the University of Maryland's downtown Baltimore campus and Medical System, is expected to take over the university's utility systems July 1, and have all of the new equipment to supply steam heat, chilled-water air conditioning and electricity operational in about 15 months.

"We felt the project contains a lot of risk," said Ed Mayberry, president of Pepco Services, a subsidiary of the Potomac Electric Power Co., which currently supplies College Park's power and was a finalist for the contract.

"A lot can happen over 20 years. The University of Maryland is a valued customer, but we're not sorry we lost at the price we bid."

Pepco Services bid $843 million for the work.

Sun staff writer Greg Garland contributed to this article.

Pub Date: 4/22/99

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