By Mark Whitmore, AAC Chief Legal Counsel
Common sense indicates that counties facing outdated equipment, increasing maintenance and energy costs, and limited budgets should consider energy efficiency projects. Some of us are old enough to remember the call for use of solar energy during the oil embargo. The development of alternative energy dates back centuries. Developments in technology and the laws in Arkansas now make energy efficiencies available to counties and local communities.
The mills harnessing the power of the wind or water are nothing new. Europeans commenced use of water mills as sources of energy as far back as 200 B.C. Persians commenced use of windmills as energy sources to grind grain and pump water in the 10th century. Starting in the 1590s, the Dutch built windmills to saw wood, ground spices and grain, and to reclaim lands from the sea, to control water and keep it back. The first hydroelectric plant commenced operation in Appleton, Wisconsin, in 1882. The first windmill to generate electricity was located in Cleveland, Ohio, in 1888. The Hoover Dam was completed in 1935. The world’s first wind farm was built in Crotched Mountain, New Hampshire, in 1980. The World’s largest windmill farm was created in 1981 at Altamont Pass, California, in 1981.
Harnessing energy from the sun predates the Carter administration. The first solar cell, generating electricity directly from sunlight, was produced in 1876 by exposure of selenium to sunlight. Albert Einstein published his papers on light having the packets of energy, quanta, and significant energy known as the photovoltaic effect in 1905. The first silicon solar cell was developed in Bell Laboratories in 1953 and began the ability to harness energy from the sun. Solar cells flourished in space during the 1960s and 1970s. During the 1970s, solar cells became commonplace on oil drilling rigs on land or sea and remote places. These uses provided the fledgling solar cell industry the capital it needed to continue forward.
In 1977 the U.S. Department of Energy launched the Solar Energy Research Institute in Golden, Colorado, (now the Renewable Energy Laboratory); and the same year President Jimmy Cater called upon conservation, reduction in the reliance upon foreign oil, and the development of solar energy. The Solar One Power plant was the first large-scale power plant to go online in 1981. In 1999 Solar Two was developed near Barstow, California, to collect and store over 10 megawatts. The largest concentrating solar power plant (CSP) in the world, Ivanpah, commenced generating 393 megawatts in 2014 and services over 94,000 average American homes. More recently states including New Mexico, California and Hawaii are now injecting solar energy panels into the design of new homes.
According to the State Energy Office, the following counties have completed energy savings/solar energy projects: Washington, Pulaski, Jefferson, Howard and Ouachita counties. Energy efficiency projects include upgrading county owned buildings, HVAC, lighting, and solar panels for energy efficiency (and as well include local community-based projects to convey energy efficiency to the local businesses and residents).
Amendment 89 is related to energy efficiency, the repeal of the usury provisions of the Arkansas Constitution limiting the interest rate ceiling on consumer debt in Arkansas; and amended the provisions on rates for state and local bonds. During the 2009 regular session the Arkansas General Assembly approved House Joint Resolution (H.J.R.) 1004 to submit the measure to the citizens. By a vote of the people of 448,711 For and 250,167 Against the measure was approved and became effective Jan. 1, 2011.
Section 4 of the “Amendment 89, Energy Efficiency Project Bonds, Issuance, Terms and Conditions” authorized a government unit, under laws adopted by the General Assembly, to issue bonds to finance all or a portion of the costs of energy efficiency projects. Prior to Amendment 89, the capacity of counties to finance or issue bonds under the Arkansas Constitution was generally contained in Amendment 65 (Revenue Bonds) and Amendment 78 (City and County Redevelopment Bonds and Short-Term Financing). During the regular sessions of 2013, 2015, 2017 and 2019, acts were adopted authorizing and enhancing the feasibility of energy efficiency financing, projects and programs. “Governmental unit” means: The state of Arkansas, county, city, school district, or other political subdivision of the state, special assessment or taxing unit established under the laws of Arkansas, and any agency, board, commission or instrumentality of any of the foregoing.
In February 2017, Chet Howland, Financial Projects Manager with the Arkansas Energy Office, kindly made a presentation to the County Judges’ Association of Arkansas (CJAA) during the CJAA winter conference. Director Howland explained the Arkansas Energy Performance Contracting (EPC) program, which originated with respect to the state of Arkansas under Act 554 of 2013 and extended to local governments under Act 1275 of 2015. Act 1252 of 2013 was the enabling legislation for Amendment 89.
Mr. Howland explained how counties and other governmental units can take advantage of the alternative financing mechanisms available, without the need of upfront capital. Most energy performance contracts are financed by leveraging contractually guaranteed energy savings over a period of up to 20 years. In essence, the improvements are paid for by the energy cost savings the project generates. As I recall, the Arkansas Energy Office can provide technical assistance such as providing a county a list of qualified potential energy service companies (ESCOs) that have experience in and are approved to do projects in Arkansas. Technical assistance by the Arkansas Energy Office can also include monitoring construction activities, verifying the validity of reported savings, and even resolving disputes. The ESCO serves as a combination Architect/Engineering Company and General Contractor. The ESCO provides assurances and indemnifies the public entities by virtue of an annual energy savings guarantee. The Arkansas Department of Finance and Administration (ADFA), provides the financing for projects for the state of Arkansas and may be an attractive partner for local entities for small to medium sized projects.
Washington County Judge Joseph Wood explains: “In April of 2017, Washington County began looking into performance contracting to address energy production, lowering the need for total energy consumption, and deferred maintenance throughout county buildings. Performance contracting is allowing Washington County to replace HVAC equipment, update campus building life and fire alarm safety systems, manage its utility consumption units with much higher energy efficient units, and install the largest, completely taxpayer owned, solar production facility in Arkansas. In making Washington County better, our elected officials see the opportunities and benefits of being good stewards of our environment while being cost efficient in managing county facilities.”
During the 2019 regular session of the General Assembly the CJAA supported Senate Bill (SB) 145 sponsored by Senators David Wallace and Bart Hester, Act 464 of 2019. The act amended the Renewable Energy Development Act and amended the authority of the Public Service Commission on renewable energy. These amendments are vital to the feasibility of net metering by counties and cities and the feasibility of the establishment of energy efficiency improvements and net metering by cities, counties and local communities. We greatly appreciate the support and efforts of sponsors and the General Assembly, as well as Pulaski County Attorney Adam Fogleman, the various stakeholders, and Ted Thomas and his staff at the Public Service Commission.
The authority of cities, counties and local communities to acquire access to efficient energy and feasible net metering goes far beyond furnishing energy for buildings owned by city or county government. Local communities now have the authority to feasibly establish energy efficiency improvements for city and county owned buildings and to an extent for local communities, business or residents.
The CJAA fall conference in Benton during Sept. 23-25 will focus on these issues. Chet Howland, Financial Projects Manager for the Arkansas Energy Office, Pulaski County Attorney Adam Fogleman, and several of our county judges will update the CJAA on the efficacy and contract necessities regarding energy efficiency in Arkansas.