Energy-Saving Contracting for Schools Argued

By Peter Schmidt

A widely used method of financing school energy improvements has come under fire from some state officials, who say it leaves schools vulnerable to being cheated.

Lawmakers in Arizona and Minnesota last week debated whether to place new restrictions on the method, known as energy-saving performance contracting.

Under performance contracts, firms agree to do work to make schools more energy efficient--for example, installing blowers or computer-controlled thermostats--for free. Schools for several years continue to pay out their previous level of energy spending, and the firms recoup their investment from the difference between that amount and the new, lower costs. Once the contracts are over, the schools benefit over the long term...