LSU’s utilities infrastructure is essential to the long-term success of the University and consists of three elements — the utility plant system, the distribution system, and the building mechanical systems. Cohesively, these three elements are responsible for providing heating, cooling, and electricity to the campus. Although many of the major components of the infrastructure had continued to operate long beyond their expected useful life, the maturity of these systems combined with the necessity of extensive deferred maintenance due to a lack of capital funding failed to provide redundancy for the campus, meaning that even a small failure in one component of the system could cause large portions of campus to suffer a loss of heating and cooling. Major components of the utilities infrastructure were beginning to fail, resulting in large, unplanned expenses for emergency repairs and replacements in order to maintain uninterrupted heating and cooling services on campus — which not only diverted resources from other campus priorities, but was neither financially sustainable nor economically strategic.
Rather than continuing to engage in reactive and expensive maintenance of their existing utilities infrastructure, LSU sought to strategically invest in a more modern and efficient system that would reliably meet the campus’ current and future needs based on anticipated growth described in the Comprehensive and Strategic Campus Master Plan.
The Initiative
Working with its consultants, LSU prepared the Utilities Modernization Initiative (“UMI”), which called for a public-private partnership with an energy services firm to finance, construct, and operate significant renovations to LSU’s utility plant system (the Central Utility Plant and the Highland Utility Plant) and portions of its distribution system. The UMI also provided for the same private firm to operate the improved plants for the term of the agreement, as well as for the potential future construction of improvements to the various building mechanical systems.
Upon completion of construction, the positive financial benefit for LSU was immediately evident in that the expense for the vendor to operate and maintain the utility plant system was less than the cost for LSU to perform the same services in-house. Additionally, the capital improvements made by the vendor resulted in greater energy efficiencies in the production of steam and chilled water to heat and cool the campus, which reduced the amount of commodities (electricity and natural gas) consumed by LSU.