Program Aggregates Energy Consumption of Over 250 Buildings; Expected Savings is $1.5million Annually

FS Energy has announced the completion of an energy aggregation program that significantly reduces energy costs for over 250 buildings in New York City.  The FS Energy Aggregated Purchasing Program, which comprised of the purchase of 130 million KWH in electric load and over 600,000 Dths in natural gas load, is considered one of the largest ever completed for multi-family real estate in the city.

FS Energy leveraged the purchasing power of Cooper Square Realty, the largest residential real estate management firm in New York City, to secure rates on electricity and natural gas that will effectively reduce the average building’s annual commodity costs by as much as 15 percent, depending on usage.  The program is expected to net a total annual savings of $1.5 million based on current utility commodity rates. The participating buildings are independently owned and operated, making this aggregation and the anticipated results even more impressive.

 “We are very pleased to be able to offer such significant savings to Cooper Square Realty-managed properties,” says Ron Merhige, COO of FS Energy. “FS Energy was founded two years ago with the goal of helping our clients reduce energy consumption, cut costs and have a positive environmental impact. Through the FS Energy Aggregated Purchasing Program, we took the initiative to identify an opportunity for our clients and secured the best rates available, delivering significant savings at no cost whatsoever to our customers,” he adds.

Energy aggregation occurs when a group of customers consolidate the purchase of their energy commodities and leverage the size of the purchase to negotiate reductions in costs. Utilities such as Con Edison and National Grid do not guarantee the best rates possible for energy commodities and thus encourage customers to research and compare prices of energy service companies (ESCOs) to get the best rates.

“This energy aggregation program is the latest step we’ve taken to achieve our goal of reducing clients’ energy consumption and costs by 25% by 2013,” notes David Kuperberg, President of Cooper Square Realty. “This no-cost solution, by FS Energy, has put money directly in the pockets of our clients at a time when many buildings are being challenged financially,” he concludes.

FS Energy is a full service energy management company specializing in multi-family properties. In addition to energy aggregation and procurement, the company assists clients in creating comprehensive, state of the art energy management plans that can include oil to gas conversions, capital improvements, energy assessments, billing audits, maintenance staff education, demand management strategies and compliance checks.

FS Energy is a subsidiary of FirstService Corporation (TSX: FSV; FSV.PR.U and NASDAQ: FSRV), the largest residential property manager in North America, managing more than 1.3 million homes in 5,300 communities. Cooper Square Realty, the New York City affiliate of FirstService Residential, manages more than 450 buildings throughout New York City.

For more information about FS Energy, please visit www.fsenergyservices.com.

COMPANY CONTACTS:

Developing a Database
The first step toward this goal was to create a unique database of detailed information on every building's current and historical energy consumption, which can be used to identify both strengths and weaknesses in a building's energy usage. With this database, FS Energy can accurately compare the energy usage across its entire management portfolio. So far, the division has given Energy Report Cards which list energy usage to more than 350 of its properties.

"We aren't in a position to make decisions for the buildings' owners," Patterson says. "But, as the knowledge leaders in this area, we are in a position to put forth the facts to our clients and help them realize the potential savings."

Kuperberg says this benchmark information shows building owners how much they are paying for energy compared to similar buildings next door or down the street. And he notes that the largest potential for reducing energy consumption is in retrofitting buildings, most often by replacing old and inefficient equipment with newer products.

However, the menu of energy-saving retrofits is long and includes some very simple fixes. So far, FS Energy has helped improve energy efficiency through the implementation of 26 separate projects. Energy-saving measures have included everything from replacing a building's heating and air-conditioning system to developing cheaper procurement and maintenance systems to upgrading lighting systems.

The division's unique combination of skills in procurement, negotiating contracts and retrofitting properties has saved their clients millions of dollars in just the first few years.

FS Energy helped New York's famed Plaza Condominiums save more than $500,000, which will be realized over a two-year period. Another property, University Towers, has already seen cost reductions of $200,000 per year, and FS Energy was able to save St. James Towers more than $330,000. To no one's surprise, many buildings in New York are extremely energy-inefficient, relying on old equipment or even steam from the city's electricity generating plants to heat the properties. Tenants of such buildings have no control over the temperature in their units.

"In many buildings in New York, the thermostat is literally your window," Kuperberg says with a laugh. "You have to open the window to let in cooler air to adjust the temperature in your apartment. Some of the buildings are so energy inefficient that energy savings projects produce investment returns over 20 percent."

In fact, some basic fixes, such as upgrading a building's lighting system, can pay for themselves in energy savings in less than one year. Another popular measure is to convert dirty oil-heating systems to gas. The City of New York is promoting the conversion by passing ordinances restricting certain types of oil-heating systems. Following FS Energy's example, city officials passed Local Law 84, requiring buildings to benchmark their energy usage and enter the results in the Environmental Protection Agency's Energy Star database annually.

Changing the Status Quo
While the initial cost of some of the retrofits is not inconsequential, FS Energy has worked out three different options for paying for the retrofits that shouldn't cost tenants a dime and would save building owners money in the long run.

The first option is for a building's ownership to pay for the upgrades out-of-pocket and then collect the savings. The second is for ownership to take an unsecured loan from one of the banks that FirstService has made an agreement with to help fund these projects. The banks are paid back with the energy savings resulting from the retrofits, and the building's tenants don't pay any extra fees. Kuperberg says that in many cases such loans are paid off in only a few years.

The third method is only available to certain properties and requires FS Energy to actually pay for the retrofit. The company would pay itself back with the resulting energy savings. In this age of enlightened environmental awareness, FS Energy's idea of retrofitting properties at no cost would seem like a no-brainer. However, Kuperberg says he still struggles at times to talk building owners into making the necessary changes. Ironically, their attitude is that the deal is too good to be true.

But he says attitudes continue to evolve and an increasing number of property owners are seeing the light. "The most important thing people should realize is that it pays to be energy-conscious," Kuperberg says. "And I'm not talking about just tangentially by attracting more tenants. I'm talking about saving money. The bottom line is buildings can do well financially by doing good."