Financial Energy Management, Inc.

Jim Crossman Testimony

HEARING ON KYOTO PROTOCOL: IS THE CLINTON-GORE ADMINISTRATION SELLING OUT AMERICANS?

Thursday, April 23, 1998
House of Representatives
Subcommittee on National Economic Growth
Natural Resources and Regulatory Affairs
Committee on Government Reform and Oversight
Washington, D.C.

Testimony of James C. Crossman

     Mr. CROSSMAN. Thank and I appreciate the committee making a change and allowing me to speak a little earlier so I can get into my inefficient plane and fly home to Denver.

     I would Just like to say, that the comments made by the gentleman from Virginia, are true, in respect to education, I think it is critical. That’s what my business is.

     We’re an energy services company. We go into facilities and look at ways to reduce gas and electric consumption in facilities. In addition to consulting, we are a contracting firm and we install energy efficient improvements and we get paid back out of the savings stream that’s generated. That’s why we call ourselves Financial Energy Management. We’re a small company. We do about $2.25 million in sales per year, and we’ve had some pretty dramatic growth recently – about 280 percent growth in our business. We employ mechanical engineers, electrical engineers, and journeyman electricians to install energy efficient lighting, motors, drives, glazers, and they install solar film on glass to reduce solar gains to reduce air conditioning loads. We have a diverse group of employees.

     The company was formed in 1984, and in the past 14 years, we’ve retrofitted hundreds of existing facilities, from schools, hospitals, industrial facilities and offices. And in the past four years, we’ve retrofitted 6 million square feet of offices, which are saving those businesses $1.1 million a year in utility costs. And the installed equipment costs were about $3.5 million. So that’s a 30 percent return on investment in these technologies. And what we like to stress, obviously, to our clients is that energy efficiency is a very good investment. It improves the comfort of the facility. It also increases productivity. And a building owner that investments in energy conservation can expect to get returns on investments of between 20 and 60 percent. Since 1984, our company has identified $35 million in energy improvements, with an average return on investment of 35 percent.

     More recently, however, we’ve begun to emphasize the environmental benefits of energy efficiency. The electricity that’s saved in building is directly related to coal that is not burned at power plants. For example, the 77 buildings that we just completed are saving 970,000 therms of energy, which is 28 million kilowatt hours of electricity. In these projects, therefore, by saving coal, which in Colorado is the primary source of electricity, is eliminating about 17,000 tons of coal, which would produce 28,000 tons of carbon-dioxide and 144 tons of sulfur dioxide at the power plant. And not all of us have a big building where we can make these kings of great investments and have significant impacts, but all of us, primarily most of us have homes and we can make similar kinds of investments in energy efficiency with similar kinds of returns.

     In Colorado, there is a residential energy rating program, which has shown that the typical home in Colorado, burning natural gas, spending $2,000 to upgrade to more efficient equipment, would save $200 a year in natural gas and if it was electronically heated would save $400. And I think, importantly, would save about two tons of emissions in natural gas per household if it was gas heated and 7 tons of CO2 if it was electronically heated.

     Last year our company completed an energy efficient retrofit of one of the largest buildings in Denver, a commercial office building that was 1.3 million square feet, and we did an energy efficient lighting retrofit. We incorporated T-8 lamps, which are slightly smaller diameter lamps. They are more efficient, but more importantly, they’re better light. It’s better quality light, so the productivity of the tenants in these spaces, improved. These lamps also have 50 percent less mercury in them, than the standard fluorescent bulb. So when in four and five years, these lamps burn out, there will be less mercury in the landfills. When you get 30 percent gains in efficiency in lighting, it also equates into lower heat given off by the light fixtures, and that means lower air conditioning costs. In fact, in this building, the first time since the building was built, they didn’t have to turn on a second chiller during the summer to maintain cooling temperatures in the building. I think that’s significant, as building owners are converting to ozone friendly refrigerants. They are going to HCFC refrigerants. You lose a little bit of cooling capacity in your existing chiller, and this can more than be made up with an energy efficient light retrofit.

     So, in summary, I’d like to say, that energy efficiency is very good business. It’s a good investment. It increases productivity, improves comfort, we create good jobs. And in a sense, we do impact the air and land pollution and we have a negative cost way to achieve reductions in CO2. Negative costs because of investments that businesses are making in energy saving stream and this environmental benefit of reduced CO2 emissions and other emissions of the power plant continue year in and year out. That’s all I have to say.

Mr. TIERNEY.  Now Mr. Crossman, I applaud you on representing your industry and your business. I know how difficult it is to start up a business. I think it’s good to hear that you’re having great success. Of all of the sites to which you’ve gone, or your company has gone and provided the services that you provide, has there been a large reduction of jobs at that location after you left, having completed your work?

Mr. CROSSMAN. No. No impact on job at the site, at all.

Mr. TIERNEY. So energy efficiency and those types of concepts haven’t resulted in a loss of jobs, at least, where you’ve worked?

Mr. CROSSMAN. No, in fact, schools across the country are looking at energy efficiency as a ways to expand their budget and pay for books and teachers. Because they can pay for it out of the energy saving reductions.

Mr. TIERNEY. And how many jobs did you create in your company?

Mr. CROSSMAN. Fifteen.

Mr. TIERNEY. And I would assume that you are in favor of some research and development for future energy efficiency and renewable energy and carbon reduction technologies?

Mr. CROSSMAN. Yes.

Mr. TIERNEY. Do you think that’s a good policy, the direction to go in?

Mr. CROSSMAN. You bet, yes.

Mr. SUNUNU. [Just because oil prices are at an all-time low] that does not mean that Mr. Crossman isn’t providing a very valuable service to his customers. Energy efficiency can pay back in a very short amount of time. I used to be employed gainfully in a business that provided products to people just like you and I guess, out of curiosity, I would ask whether or not you do install HVAC controls and, if you do, whose line you carry?

Mr. CROSSMAN. Yes, CSI.

MR. SUNUNU. I know them well.

Mr. CROSSMAN. And we’re a subcontractor...

Mr. SUNUNU. And now in the interest of disclosure, that was not the firm I worked for.

Mr. CROSSMAN. We’re a subcontractor to Johnson Controls and Honeywell, so we’re not partial to an company.

Mr. Sununu. You’ve got great penetration in the market, no question.

Mr. SUNUNU. Mr. Crossman, one last question for you, did you start you’re business prior to the announcement of the Kyoto Protocol?

Mr. CROSSMAN. Yes. Yes.

Mr. SUNUNU. In other words, energy efficiency and energy efficient design was a strong sector of the economy well before the administration decided to initiate this commitment for dramatic reductions?

Mr. CROSSMAN. Yes, I mean, education is clearly key and when people see gasoline prices then they start thinking about conservation in their buildings and their homes. When it’s at an all-time low, they don’t think about it.

Mr. SUNUNU. Thank you again. Thank you panelists.