By Mr. William Scott Farrow (USACE)December 14, 2012
A recently released document provides Army installations with standardized instructions for achieving maximum utilities reimbursement opportunities and thereby reducing the amount of appropriated funds required to pay for purchased utilities, was written corroboratively by Huntsville Center and U.S. Army Corps of Engineers HQ personnel.
The 44 page document, known as the Interim Guidance of Rates for the Sale of Utilities Services, supersedes the outdated TN 420-41-1 published in 1992 as a supplement to the AR 420-41, Acquisition and Sale of Utilities Services. The AR420-41 was published in 1990. The Army Installation Command and Office of the Assistant Chief of Staff for Installation Management have both been eagerly awaiting the Interim Guidance.
In the Nov. 9 memorandum to Lt. Gen. Michael Ferriter, Assistant Chief of Staff for Installation Management, U.S. Army Corps of Engineers Lt. Gen. Thomas Bostick, Commanding General, USACE, explained that the guidance will "assist our Army garrisons with utility acquisition invoice review, calculation of utilities sale rates and to properly bill reimbursable customers for utility services."
Bostick also wrote in the memo that the garrisons' immediate need for this guidance "warrants its dissemination prior to publication of the revised AR 420-41 and its supplemental handbook due to be published by the end of FY 2013."
Writing the revised AR-420-41 is a shared effort between USACE HQ's Rafael Zayas, Deputy Assistant Power Procurement Officer, and CUP Program Managers Bernard Givan and Bob Hennessee of U.S. Army Engineering and Support Center,Huntsville's energy division. Givan said there are three general customer categories on garrisons: intra-Army, other Defense Department (non-Army) and federal, and non-federal organizations such as Army and Air Force Exchange Service entities.
Givan explained that these customers fit into various utilities sale-rate schedules depending upon specific conditions or exemptions. "These conditions could be imposed by statute, Defense Department directives and instructions or Army policies and regulations, utility industry fair market prices and the Army cost of providing the utility service," Givan said. "Combine accurate tenant payment with their other CUP services such as utility rate intervention cost avoidance, and the garrison is likely to see savings of several thousand dollars annually," he said.
Givan said Huntsville Center's CUP is not only the center of expertise for tenant reimbursement oversight and the conversion of tariff-based utility rate arrangement to special utility contracts, but also provides utility rate intervention support and installation utility rate reviews too. According to Givan, USACE receives numerous requests from Garrisons and major commands for assistance on utilities acquisition and sale actions to make informed utility acquisition decisions.
Citing a recent rate intervention at Fort Knox, Ky., which successfully avoided rate increases of $1.3 million and $500 thousand annually each succeeding year for the life of the garrison's various generating plants, Givan said he thinks CUP is a tool garrison commanders should continue using to save on the cost of utilities.
Despite diligent efforts by installations to reduce their energy consumption, the gap between future utility costs and the utility budget is expected to increase further, Givan said.
"Because installation's utility bills are a "must fund," budget shortfalls are often paid from other Base Operation and Support accounts, diminishing sustainment of real property assets. Our main objectives are to identify ways to reduce utility services by intervening rate case increases, conducting installation utility rate surveys and performing utility contract management oversight."
Givan said major benefits to the Army installations employing CUP are simple: substantial costs avoidance (minimizing cost increases) and cost savings (reduction of utility costs).
That's why Givan said he feels it's so important installations understand that although there is a cost associated with CUP activities, cost avoidance and savings achieved by CUP services are so helpful in closing the utility cost gap.
"Historically the savings far outweighs the cost in manpower and contracts required to implement the activities," Givan said.
"Troops are returning from deployment thereby increasing utility use at stateside Army bases. Based on past experience, it is expected that utility rates will rise as energy demand, production costs, and the cost of capital to pay for needed infrastructure improvements increases in tandem with economic recovery. The Commercial Utilities Program can reduce the funding gap and provide utility cost savings," he said.