Veolia protests $27M energy contract awarded to Pepco

Over protests from attorneys for Veolia Energy and Comptroller Peter Franchot, the Board of Public Works has approved a $27 million contract for energy savings measures in several facilities at the Port of Baltimore.

The contract, which went to Pepco with the votes of Gov. Martin O’Malley and Treasurer Nancy Kopp, will put several energy-saving items in place at many port facilities. Some of the funding for these projects is coming from the federal government, and the projects should be built by the end of the year.

The Maryland Port Administration estimates that these energy-saving measures — including items like solar panels, new boilers, and retrofitting facilities — will save more than $28 million over 13 years.

Veolia Energy currently provides steam power for the World Trade Center, and it is not included in the new contract. Instead, the Pepco contract provides for a new natural gas-powered boiler in the building.

Representatives from Veolia protested before the Board of Public Works last month, saying they did not get the chance to put forth any proposals to continue their services. Veolia representatives also said that the cost savings before the board were overstated. Board members chose to wait until this month to vote on the contract.

Veolia has a long track record with the World Trade Center, and its steam is generated by trash incineration, which is considered a renewable source of energy in Maryland under a law O’Malley just signed.

Franchot asked if the contract could be passed without the new gas-powered boiler. According to Franchot’s calculations, the new boiler would only save the state about $500,000 in 13 years.

“I don’t dispute the overall benefit of this contract,” Franchot said. He continued that he did not appreciate the way that Veolia was treated.

Both Kathleen Broadwater, deputy executive director of the port administration, and Pepco Vice President of Business Development Patrick Sweeney said that the contract was comprehensive, and that one piece could not be broken out.

“The financial viability of this project depends on having all of the components in place,” Broadwater said. “Some of them subsidize others.”

James McGee, an attorney representing Veolia, said that his clients could perform the same services at the same cost as the new gas boiler.

Sweeney said that when Veolia was looking at the cost figures for continuing its steam producing operation, it relied on fuel consumption staying the same. With the planned upgrades, Sweeney said, consumption is expected to go down, creating a greater cost savings to the state through the contract.

Hatim Jabaji, director of the Office of Energy Performance and Conservation in the Maryland Department of General Services, agreed that the contract should not be modified. Removing the boiler system would require a complete reworking of the contract, and would mean losing time — and possibly getting less of a cost benefit.

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