By Lynne Hendricks
NEWBURYPORT — Though he's waiting to publicly disclose results of proposals the city received in December to lease a 500-kilowatt-hour solar array, which would be installed atop Nock Middle School and the Department of Public Services building, Mayor John Moak has circulated preliminary numbers to the School Committee that show several bids provide better terms than the controversial, no-bid deal struck with EyeOn Solar in September.
Moak had previously accepted EyeOn's offer to charge the city 14 cents per kwh with a 4 percent increase per year for all solar energy produced over a 20-year term. Framingham-based firm Ameresco has bested that deal by offering the city a price of 11.1 cents per kwh with a 4 percent escalator. Notwithstanding potential buyout provisions, this price difference could save the city $400,000 to $500,000.
"We're pleased with the up-front costs of the electricity," Moak said, adding that the base bid by Ameresco was one of many scenarios presented by the company. "We could have gone with a little higher electric cost with a lower buyout in the end, but looking at it, the savings is about the same at the end of 20 years."
The Ameresco plan chosen by Moak and lead solar adviser Jeff Wootan provides a termination cost of $724,142, assuming the city purchases the system at the 16-year mark. Per that bid scenario, the buyout cost would reduce to $520,673 at the end of the 20-year contract. The School Committee will vote on the proposal on Monday.
Moak's deal with EyeOn came under fire last year when The Daily News reported that Wootan had business ties to one of the companies that EyeOn planned to hire as a subcontractor. Wootan had acted as the city's primary negotiator in the awarding of an unusual no-bid contract.
A complaint was lodged with the state's Ethics Commission to determine whether Wootan had violated the state's conflict of interest laws. No decision has been announced by the commission.
EyeOn eventually pulled out of the deal, citing financing problems.
Moak's office did not provide the new bids to The Daily News, instead the newspaper was provided with a financial comparison of the bids. Without seeing the actual bid, it's not clear whether the buyout costs are fixed or subject to later determination, as was the case in the agreement signed with EyeOn. To comply with IRS regulations that govern power purchase agreements, the EyeOn agreement stated that any future "purchase price shall be the greater of (a) the then Fair Market Value ... or (b) the Termination Value" listed in the agreement.
According to Moak's spreadsheet, Ameresco offered the city seven different rate plans, one of which was a flat 15 cents per kwh annually for a slightly smaller 432 kwh system, with the city paying just $1 at the 16-year mark. They also proposed a 500-kwh system plan that offered a rate of 14.6 cents with a 4 percent escalator and a $1 buyout at the 16-year mark.
Andover-based Nexamp offered the city an even lower rate of .073 cents per kwh escalating 4 percent for a 476-kwh system, but that price didn't include paying the city the up-front $400,000 portion of a state rebate offered in competing bids.
The mayor has said that rebate money is important to consider, as it could be used to either pay for the system in later years or fund other green initiatives in the city.
"We're looking at around $1 million (savings)," said Moak, referring to the numbers he and Wootan project the city will pay for electricity in the future, assuming a 3 percent annual rise in energy costs and a 4 percent annual return on the $400,000 rebate.
Right now, Moak said the city pays 10.93 cents per kilowatt hour for electricity, plus a delivery charge of around 4 cents for a total of 15.6 cents a kwh.
Moak said Ameresco has indicated it will seek to split the installation by using 400 kwh on the Nock Middle School and 100 kwh on the Department of Public Services building, in contrast to the 50/50 split presented in EyeOn's design. Moak said Ameresco is planning to use a subcontracting company called International to install the panels.
School Committee to consider contract
The School Committee is expected to vote Feb. 23 on whether to allow the city to install, per a new solar panel contract, a 500 kwh installation atop the Nock Middle School and the Department of Public Services building. It falls within their jurisdiction to govern any alterations made to the school, and they must grant Ameresco the right to use the roof accordingly. The School Committee voted 5-2 in September to allow EyeOn's solar installation, but given the new contract, it will be required to repeat the formal vote. Moak said he's had conversations with some members of the School Committee, and he says they indicated if all things in the contract are equal, they'll vote yes.
"We have to get that same write-off again," Moak said. "I've spoken with the School Committee and as long as the contract has the safety factors that the last one did, and there's been no changes to that. I don't think there will be a problem with the school signing off on this."
Stephen Cole and Stephanie Weaver voted no last September based on concerns over the Nock roof's stability, and the 20-year contract terms Weaver thought were too long.
