BUSINESS AND OPERATIONS MANAGER'S MEMO

DATE: 8/2/2005

TO: SCHOOL DIRECTORS

CC: ARMANDO VILASECA, SUPERINTENDENT;

FROM: JOHN C. GIFFORD, BUSINESS AND OPERATIONS MANAGER

RE: COST SAVINGS IN UTILITIES

You know that we have been working toward saving money on utilities. Rates continue to climb and with fuel costs going up, the cost for utilities goes up.

Electricity:

We have reduced our usage. The cost has stayed just about the same over the past four years. The following table shows the history:

          KWH        Cost     Cost/KWH

FY 2002 2,894,431 $296,730.55 1O.25¢

FY 2003 2,298,834 $249,188.12 10.84¢

FY 2004 2,651,154 $302,649.04 11.42¢

FY 2005 2,180,094 $298,786.72 13.70¢

Average 2,506,128 $286,838.61 11.45¢

Our preventive maintenance program is also reducing usage. As we continue to maintain equipment, it will continue to run efficiently. More efficient operation means lower KWHs.

So how much does this save? Compare FY2005 to the average (includes FY2005) we used 326,831 fewer KWHs. The cost is 13.7¢ per KWH so that means we would have paid $44,775.87 more for electricity if we had not taken the steps we have so far. In effect a savings of that amount of money.

I expect that FY2006 will show another significant drop in KWH usage. We have replaced the distribution transformers at CHS with more efficient ones. The old ones were overheating to the extent that the paint was coming off the wall. When a unit is heating up like that, it is wasting energy. We also replaced the transformer that manages the power to the stage in CHS. We have replaced control units for air handling equipment in both CHS and CMS. This will reduce or eliminate our "peak" charges. I will continue to monitor our progress.

Natural Gas:

We saved on our usage of this utility as well. The preventive maintenance program has worked to improve our energy usage. We used less natural gas, measured in CCFs, than the average for the past four years. The table that follows tells the story:

         CCF’S     Cost       Cost per CCF

FY 2002 180,383 $151,820.15   $0.84

FY 2003 211,876 $183,016.32   $0.86

FY 2004 206,940 $183,688.47   $0.89

FY 2005 198,866 $174,293.14   $0.88

Average 199,516 $173,204.52   $0.87

In truth, this does not tell the whole story. One could ask, how cold was it each of those years. Well one more table will help with that question. The Federal Government tracks Heating Degree Days (HOD). This is a measure of how much heat is required for a given day. The higher the HDD for a year, the more heat is required. A measure of efficiency is how many CCFs (how much gas) we used per HOD. The following table details our history:

         HDD    CCFs per HDD

FY 2002 6568    27.464

FY 2003 7946    26.665

FY 2004 7602    27.222

FY 2005 7626    26.077

Average 7436    26.857

While the cost of energy is increasing, we are using it more efficiently. In FY2005: we spent almost exactly the average; we used almost exactly the average amount of fuel.

The winter was colder than average.

Kudos, to Ricky Johnson our Maintenance Foreman, Bobby McGoon our in-house electrician, Hi-Tech Electrical Systems, our contracted electrician and to Climate Systems for managing our heating and ventilation systems. We need to keep the preventive maintenance program going.

JCG