Bethany House, a Rockville apartment complex for elderly and disabled residents, has been selected as one of two federal housing projects in the country to receive a heating and cooling system expected to save nearly $70,000 a year.$1153.001nt, is part of a test to use energy management companies at some of the agency's housing projects to achieve substantial savings in energy costs and usage, housing officials said.

"This project will provide a mechanism to upgrade these buildings at no cost to the project owner," said Arthur Reiger, program manager at HUD. "It has a lot of appeal."

Under terms of a contract negotiated between Bethany House and Kirlin Enterprises Inc., a Rockville-based energy management company, Kirlin -- through its Combustioneer subsidiary -- will install the energy-efficient system, which is expected to provide residents with cooler summers, warmer winters and cheaper fuel costs year-round.

The project's cost is estimated at $190,000, but neither Bethany House nor taxpayers will be responsible for the payment.

Instead, Bethany House and Combustioneer have entered into a shared-savings arrangement that should pay for the system in about three years, said Ed Dunne, the company's vice president of engineering.

Combustioneer expects savings of about $67,000 a year, which will be shared on a graduated percentage basis throughout the 10-year contract, Dunne said. Any money saved over the $67,000 figure will be shared equally between both parties.

The company also will provide maintenance services up to $8,000 a year for 10 years free of charge.

"The project has great potential savings for our residents," said Rev. Benton Hanan, director of the 277-unit non-profit apartment complex on Rollins Avenue that is home to nearly 350 residents with limited incomes.

Hanan said Bethany House also will achieve substantial savings by not having to pay the costs of the four contractors it took to service the old system.

Combustioneer began replacing the original heating and cooling system at the 18-year-old Bethany House late last month.

The new system, scheduled to come on line by this summer, will consist of a more efficient chiller and cooling tower for air conditioning, a separate system for domestic hot water use, plus a computerized management system to control all utility services.

The Christian Church Facilities of the Aging, owners and operators of Bethany House, has the option to buy the system after the 10-year project period.

The Bethany House management has kept residents abreast of the project, and many have expressed enthusiasm about the shared-savings program.

"We're very lucky. It will improve our system without having to increase our rent," said Betty Bobst, 71, who has lived at Bethany House since 1967. She is the widow of Wayne Bobst, the home's first administrator for 12 years.

Bethany House, along with the Wesley Towers apartments in Newark, N.J., were chosen by HUD last year to take part in the program from among 350 federal housing projects across the country, Reiger said.

Their selections were based primarily on the large size of the units, which HUD officials said they thought would be more appealing to energy management companies.

Combustioneer, which HUD selected after reviewing proposals from several other companies, also will benefit from the project, said Ron Wood, company president.

"By recognizing the needs of the community, we can better develop and fine-tune our energy-efficient systems," Wood said.

HUD, which will monitor the anticipated energy savings at Bethany House and Wesley Towers, is hoping that such shared-savings programs eventually will become commonplace among some of its housing projects, Reiger said.

Officials expect that both complexes will achieve a total savings of more than $850,000 in energy costs over the terms of their contracts.