Technology Coordinators, LLC

AZ Auditor General Follows Up on Solar

by | Feb 18, 2014 | School, Solar | 0 comments

The Office has completed followup reports on recommendations to mitigate savings shortfalls on solar system contracts for Higley Unified School District and Gila Bend Unified School District.

RecommendationStatus/Additional Explanation
Higley Unified School District May 2012: FINDING 2: District’s solar power system contract unlikely to meet expectations for cost savings
Since the District loses money on every excess solar kilowatt hour accumulated at the end of the hour, the District should work with its solar power system vendor to either decrease the size of the system, increase the number of meters to which the system is connected, or find some other means to reduce the amount of excess solar power.Implemented at 18 months
The District negotiated new contracts with its solar power system provider to lower its per kilowatt hour charges at its two sites with solar power systems from 9.6 cents to 8.25 cents at one site and from 12 cents to 9.25 cents at the other. It also negotiated a lower annual per kilowatt cost escalator at one site from 3 percent to 2 percent and connected one of its solar power systems to a meter with a higher energy load. These changes alone are expected to reduce the District’s solar power costs by over $1 million over the length of its solar power contracts. Additionally, the District’s electric utility made changes in November 2012 to allow the District to begin banking unused solar power and use it to reduce its regular electricity demands through April of each year. This has substantially reduced the amount of unused solar power the District sells to its electric utility at a loss.
To determine the actual cost savings from using solar power, monthly and annually, the District should calculate and compare its total electricity costs, including the costs of solar power and other electricity purchased from its electric utility, to what its electricity costs would have been had the District continued purchasing all of its electricity from its electric utility.Implementation in process
The District’s electric utility conducted an analysis showing that during the 1-year period from November 1, 2012 through October 31, 2013, the District paid $12,153 more for electricity than if it had continued purchasing all of its electricity needs from the electric utility. The District should conduct or obtain a similar analysis for the period covering July 2011—when it began purchasing solar power—through October 2012. Additionally, it should continue to conduct, or obtain, such an analysis annually over the life of its solar power system contracts.
If the District finds it is paying more for electricity through its solar power system contract than it would have through its electric utility, the District, in consultation with its legal counsel, should ensure that the operational cost savings as described in A.R.S. §15-213.01 are accurately applied to the contract and that the solar vendor makes reimbursements of any savings shortfall, as appropriate. Additionally, contract modifications to further reduce losses should also be considered.Implementation in process
According to district officials, they are scheduling a meeting with the District’s solar power vendor to discuss reimbursements for increased costs associated with its solar power system. During the 24-month followup, auditors will review whether the District has been reimbursed for any losses resulting from its solar power system contracts.
Gila Bend Unified School District August 2011:FINDING 2: Questionable savings in District’s solar power contract” was addressed
To determine the actual cost savings from using solar power, monthly and annually, the District should calculate and compare its total electricity costs, including the costs of solar power and other electricity purchased from its regular provider, to what its electricity costs would have been had the District continued purchasing all of its electricity from its regular provider.Implemented at 24 months
The District’s solar power vendor conducted an energy audit of calendar year 2012 and found that the District spent more on electricity during 2012 because of its solar power agreement than it would have if it had used only electricity from its regular provider. As a result, the solar power vendor refunded $47,094 to the District. This is in addition to the $52,094 the vendor refunded to the District in 2011.
If the District finds it is paying more for electricity through its solar power contract than it would have through its regular electricity provider, the District, in consultation with its legal counsel, should ensure that the operational cost savings as described in A.R.S. §15-213.01 are accurately applied to the contract and that the solar vendor makes reimbursements of any savings shortfall, as appropriate. Further, any contract modifications to further reduce losses should also be considered.Implemented at 12 months
Since the District loses money on every excess solar kilowatt hour accumulated at year-end, the District should work with its solar power system vendor to either decrease the size of the system, increase the number of meters to which the system is connected, or find some other means to ensure that the system produces no more than 100 percent of the District’s electricity needs.Implementation in process
The District is waiting until its vendor conducts the required calendar year 2013 energy audit of the District’s electricity costs and usage before considering whether changes are necessary to the solar power system’s size. When the solar power system was first implemented, the District operated using a 4-day school week. However, since August 2012, the District the District has been operating using a 5-day school week. The 2013 energy audit will show whether usage has increased with the 5-day school week, eliminating the need to decrease the solar power system’s size.

These reports and subsequent related actions are beginning to establish precedence for the mitigation of unrealized cost avoidance/savings for solar power system contracts.

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