Owners at the 425-unit Carrollsburg Square condominium in Southwest Washington are saving energy and money on their utility bills and are guaranteed continued savings.
So are the residents at the Americana Finnmark condominium in Silver Spring and at the Westchester cooperative in Northwest and the owner of the Capitol Park apartment building in Landover.
They're among the 15 local customers of Steuart/STM Associates, a three-year-old District energy service company that offers to take over a building's heating, lighting and cooling systems and to pay its utility bills for a fee that is less than what the residents would otherwise pay for energy. Steuart/STM makes its profit by slashing the complex's energy costs to less than the amount charged the customer.
Under Steuart/STM's service, the company analyzes a building's energy use to judge how much utility bills can be cut and whether the savings would be profitable enough for it. The building generally needs to have an energy bill of about $200,000 a year, at least 300 residential units and central heating and cooling facilities and thermal controls, Betz said.
The complex's monthly fee, which varies with fluctuations in weather and energy prices, is guaranteed not to change. If Steuart/STM's conservation efforts fail and the building's utility bills are more than the fee, the company pays the difference.
Steuart/STM's service centers on the customer buying thermal comfort--heating, lighting and air conditioning--rather than gallons of oil or kilowatt hours. The company operates a building's energy systems at the comfort level the residents want.
"People are not interested in oil, gas, therms, BTUs. They are interested in what the energy system can produce. They want 72 degrees of heating and 130-degree hot water. They want uninterrupted thermal comfort," said Jim Betz, Steuart/STM's residential marketing manager.
The service is a variation of shared-savings plans offered by other energy service companies. Under shared savings, the contractor takes over a complex's energy system and the building owner pays the lower utility bills plus a share, usually 50 percent, of the cost of the energy saved to the service firm.
A recent Energy Department report called shared savings ideal for condominiums, cooperatives and apartment buildings.
Like shared savings, Steuart/STM's service provides relatively little risk to the building owner because the company maintains existing equipment and selects, finances and installs whatever additional gear is needed.
Steuart/STM is a partnership between Steuart Petroleum Co., the Washington area's largest fuel oil distributor, and Scallop Thermal Management Inc. in New York, a subsidiary of Scallop Corp., a Royal Dutch/Shell Group company.
Although the idea of building owners turning their energy operations over to a contractor is new to the United States, the practice is widespread in Europe, Betz said. For the Washington area, he said, Steuart/STM sees a "terrific market" for its service because many buildings have old, inefficient heating and cooling systems.
The company also trains the building's staff in maintaining the heating and cooling operations and it periodically analyzes the systems. Betz noted that some building owners are more interested in Steuart/STM's expertly running their systems than in energy savings.
Once Steuart/STM takes over a complex's energy systems, the building owners "don't change a thing. We do. We pay for it. They just save money year after year after year," Betz said.
Adjustments to the systems range from fine-tuning of the machinery--"what we call the hands, brains and screwdriver method"--to major investments in new equipment, he said. The resulting savings for customers have ranged from about 3 percent to 30 percent and, in most cases, surpassed expectations, Betz said. The extra savings, beyond a fixed amount, are deducted from the fee charged to the building owner, he said.
At Carrollsburg Square, at 1250 Fourth St. SW, the owners' association last year budgeted about $173,000 for fuel oil, but Steuart/STM contracted to operate the complex's systems for about $156,200.
"That gave us a savings of $16,800, or approximately 9 percent," said Guy Caiazzo, president of the association. But he noted the condominium actually saved more when lower maintenance and related water and electrical costs were included.
"This year we expect to save at least 3 percent more" because of a switch to gas, he said.
Steuart/STM spent about $70,000 to convert Carrollsburg's boilers to burn gas as well as oil and to install water heaters, Betz said. The boiler change allows the condominium "not to be captive to an expensive fuel" and the water heaters replace an inefficient, costly practice of using the boilers to heat water, he said.
"It's good for us because we don't have to put out front the money" for the gas conversion, Caiazzo said. Steuart/STM's investment is reflected in the fee paid by Carrollsburg Square. The condominium would have been hard pressed to pay for the conversion itself, Caiazzo said.
"We're a young condo, and we don't have that much in cash reserves," he explained. "To raise the money we could have had a special assessment (on each condominium owner) or had to borrow it at prime rate plus two or three points. With the prime back up to 16 1/2, that could mean 18 1/2 or 19 1/2 percent."
Other Steuart/STM customers contacted were pleased with the company's service. The Americana Finnmark, 9900 Georgia Ave., Silver Spring, expects to save $8,000 this year, said Peter Mechak, spokesman for Condominium Management Inc., which operates the complex.
"Basically, they give us a well-run and -managed plant, and we save energy. They make money by saving more than we could, and our system is running better," he said.
Jeff Feldman, owner of the 540-unit Capitol Park apartments, 3103 75th Ave., Landover, said he considers the maintenance and technical expertise provided by Steuart/STM "far more valuable than the energy savings. They keep my plant running."
Steuart/STM's newest customer is Naylor Gardens cooperative, 2735 30th St. SE, where more than $350,000 is expected to be saved in energy and other costs over five years, the company said. CAPTION: Picture, Condominium owners in Southwest Washington's Carrollsburg Square cut $16,800 on fuel last year using a shared savings plan. By Larry Morris -- The Washington Post