5-A – 5-E
Problem Identification:
While energy-related costs might represent a relatively insignificant portion of a facility’s total operational costs, the City’s aggregated energy costs represent a large operating expense for which there exists no comprehensive approach to managing this cost center.

Recommended Action:
– Reduce the City’s utility-related costs through improved management and energy conservation efforts. Potential strategies include:
– Inventory all utility accounts and regularly monitor for billing inaccuracies and unusual usage levels.- Reduce the number of estimated utility bills.- Pursue bulk-purchase discounted rate reductions from the City’s energy providers.- Increase participation in State and federally-funded energy conservation programs.- Install energy efficient lamps in City facilities.

Cost Savings

Functional/Operational Area:
All Department Operations

Estimated Annual Impact:
While the immediate financial impact cannot be estimated, implementing a comprehensive and coordinated approach to managing the City’s energy costs should result in a minimum of a 5 to 10 percent savings on the City’s total utility charges. In the absence of a detailed statement of the City’s annual energy costs (a need discussed in the Next Steps section of this recommendation), consideration should be given to establishing a goal of achieving a $1,000,000 reduction in the City’s total energy costs.

Estimated Implementation Costs:
Not Determined

Barriers to Implementation:

Projected Implementation:
120 – 180 days

Next Steps:
Develop a comprehensive statement of the City’s annual utility costs. Isolate particularly high cost centers and explore opportunities to achieve cost reductions through energy conservation and cost savings initiatives and the implementation of energy-efficient technologies.

Recommendations 1-A, 4-A, 4-B, and 4-C pertain to recommended strategies to improve the City’s management of its real estate assets. These recommendations, however, focus largely on the physical structures being managed and methods of reducing the total number of buildings that comprise the City’s portfolio of managed facilities. Beyond the more effective management of the physical structures, additional efforts should be pursued to reduce associated operational costs, particularly in the area of energy management.

One of the most impressive successes of Philadelphia Mayor Edward G. Rendell’s Private Sector Task Force was the creation of the Municipal Energy Office (MEO). The MEO was established in FY94 and charged with cutting Philadelphia City government’s energy expenditures by 5 to 10 percent within five years’equivalent to an annual cost savings of between $1.35 million and $2.7 million.

The MEO’s initial goal proved modest, as its initiatives resulted in over $28.5 million in cumulative savings between FY94 and FY99. Additionally, this well-directed effort towards managing energy costs enabled Philadelphia to attract an additional $5.7 million in grant commitments through FY99 to support capital projects designed to produce further energy management benefits.

The list of recommendations included within this template represent some of the more successful initiatives undertaken by the MEO. If the decision is made to pursue the implementation of these recommendations, consideration should be given to assigning the responsibility of managing the implementation to either the proposed general services department (see Recommendation 1-A of this report) or the Office of Management Initiatives (see Recommendation 5-A of the Citywide section of this report).