Surging Energy Costs

November 28, 2005

As the temperature drops on many campuses, there’s probably an extra little chill in the air for the facilities managers and budget officers responsible for making sure that buildings are heated and energy bills paid.

Around the country, colleges are facing sharply higher energy costs, as prices for oil and natural gas have been driven up by increasing demand and, especially, by the impact of Hurricane Katrina on production and delivery. Campus officials say that cost increases are averaging in the 20 percent range but spiking in some places by 40 percent, which can mean $1 million on a small campus or as much as 10 times that on larger ones.

Institutions are taking an array of short-term steps to deal with the steeper bills, such as restricting the hours that they ventilate buildings, turning down thermostats sharply and, when necessary, moving money out of other crucial accounts to meet the higher energy costs. "Some colleges are having to rethink their priorities for what they are going to do, or not going to do, because they have to pay the utility bill," says E. Lander Medlin,executive vice president of APPA: The Association of Higher Education Facilities Officers.

While the short-term steps may get colleges through the winter with slightly less pain than they would otherwise have felt, most officials say the current mini-crisis will be a harbinger of much bigger ones if colleges don’t respond to it by making longer-term changes in their approach to energy consumption.

“You have to hope that a situation like this serves as a catalyst for the kind of change that we’ve all been saying colleges need to adopt,” Medlin says. “Colleges are already piloting all sorts of efforts in renewable energy, wind power and the like, but I’m hoping people use this as an opportunity to really change behavior.”

In the immediate term, that’s what numerous campuses have tried to do. Vanderbilt University was among many large commercial energy users for which the Tennessee Valley Authority, which supplies most power for the region, restricted the flow of electricity in late September for eight days (customers had to pay significantly more if they exceeded their allotment). 

Chancellor E. Gordon Gee sent a campuswide appeal urging staff members and students to cut back on their consumption so that the university could continue to provide sufficient power to its most critical needs, including the medical center and residence halls. Among the steps he encouraged: raising air conditioning settings to 78 degrees and turning off lights and equipment (computers and other office equipment for professors, stereos and laptops for students).

During the eight day period, energy consumption at Vanderbilt fell by 8 percent, and the power authority ended its mandatory cutback. But Gee seized the moment to try to change behavior for the longer term. In a followup e-mail, after praising the campus, he wrote: “Rather than thoughtlessly adjusting office or room temperatures or turning lights on that we have learned to live quite well without, now is an excellent time to make some of our recent energy reducing measures more permanent.”

He added: “Let us continue in this vein of thoughtfulness and deliberateness in our deeds and actions. While keeping lights turned off or offices a bit warmer than usual may seem a minor thing, it is a small way for us to continue to make a difference to the environment and to a nation working together to more carefully manage limited natural resources.”

What has happened in the month since then suggests the uphill climb that colleges can face in changing behavior for the long term. Mark Petty, director of buildings and facilities at Vanderbilt, says that the 8 to 10 percent decline in consumption that the university saw during the eight-day curtailment has fallen to about 2 percent. “People saw an opportunity to jump in and help in the crisis, but now that we’re out of the immediate crisis, it’s hard to sustain that,” Petty says.

Other campuses went beyond voluntary cutbacks from the get-go. The University of Nebraska at Lincoln, which has absorbed a series of budget deficits and cutbacks in recent years, found in September that it faced an anticipated rise of $3.6 million, or 25 percent, in its annual utility costs – “serious money coming on top of our other fiscal challenges,” as Chancellor Harvey Perlman put it. 

Nebraska had spent $2.4 million since 2002 putting in place a series of energy projects, and in 2003 the campus initiated a “Turn Off the Lights” campaign in which it urged everyone on the campus to switch off computers and other equipment whenever they weren’t in use. Although those efforts had some effect, this fall’s shortfall “forces us to consider measures that are more draconian,” Perlman wrote in a campuswide e-mail message.

Perlman proposed that the university shut down heating, ventilation and air conditioning systems in state-financed buildings from 6 p.m. to 6 a.m. and on weekends, which the university’s facilities management department estimated would save $2.7 million if applied to all buildings. The change would result, Perlman wrote, in temperatures dropping to a low of about 55 degrees. 

“I would not consider such a move if I were not called upon to choose between a measure such as this and further compromising program budgets,” he wrote.

The university invited campus officials to petition for exemptions from the restriction if they could cite “major extenuating circumstances.” Campus officials culled through about 125 requests for exemptions, mostly from laboratories, libraries and classrooms with heavy night-class traffic (a different approach was taken to dorms). In the end, Nebraska wound up applying the new policy fully in about two dozen buildings, with estimated annual savings of about $1 million.

Even campuses with highly sophisticated approaches to energy have faced rude surprises this year. The University of Maryland at College Park has a cogeneration plant that produces some of the electricity the campus consumes, and like some other savvy institutions, Maryland buys more than half of its power about 36 months in advance, through a process known as "hedging."

But despite those steps, Maryland officials were confronted this fall with an increase of nearly $11 million in their utility bill for the 2006 fiscal year. (If Maryland had not bought 55 percent of its energy for '06 by last April, says J. Frank Brewer, associate vice president for facilities management, the tab would have been $7.5 million higher.)

The university has taken a series of steps to shrink the size of that deficit (which has begun to decline a little naturally as oil and gas prices have fallen from their peak in September). All campuses in the University System of Maryland have coordinated their purchases of electrical power. College Park officials are turning heating and air conditioning systems on at 7 a.m. and off at either 6 or 9 p.m., depending on the building, and turned thermostats to 78 on warm days and 68 on cold ones, as opposed to 72 year-round, as it was previously.

While the university hopes to trim funds through those and other efforts in the short term, it, like other institutions, is contemplating spending more money in the short term with the hope of reducing expenditures, and becoming more efficient, over the long haul. The University System of Maryland's Finance Committee approved a plan this month to invest $10 million to retrofit lighting fixtures and lamps on system campuses, which would ultimately save $170,000 a month.

The approach at Maryland is just the sort of longer-term thinking -- toward renewable energy, wind and other sources of power, and the like -- that Medlin of APPA and others hope emerges from the energy crunch colleges find themselves in right now.

"Just like you hope that as gas prices go up, you see fewer SUV's on the road, you hope that times like this get universities to find new ways to save energy," said Brewer of Maryland. If it doesn't, he said, "it's kind of a lost opportunity."

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