Trustees to vote on $1B deal
Ohio State University officials want to go forward with a deal to lease the university’s energy facilities to a contractor who would make a $1 billion, upfront payment to the OSU endowment.
Under the deal, which will go before the board of trustees next Friday, Ohio State would sign a 50-year agreement with Ohio State Energy Partners, a new entity made up of the Parisbased energy company ENGIE and Axiom Infrastrucure, an investment company. The partnership was chosen from among three bidding teams that emerged after a two-year process involving multiple
rounds of proposals.
OSU officials say the agreement would allow the university to become more energy-efficient and boost research and development in energy technology.
In a statement, ENGIE North America said, “We look forward to supporting The Ohio State University’s efforts to advance its academic mission and to achieve its energy management and sustainability goals.” The company wouldn’t comment further until the Board of Trustees has voted on the proposal.
If trustees approve the deal, ENGIE-Axiom also would pay Ohio State $150 million to support academics in ways that students, faculty members and employees requested during the bidding process, including money for scholarships and faculty research. That payment would come in three phases over the life of the deal.
The university would pay Ohio State Energy Partners about $55 million per year to operate the university’s energy-distribution assets, about what OSU spends now to operate them with OSU employees. The yearly fee would fluctuate if operating costs change.
The idea of a deal, which the university has called a comprehensive energy-management project, has been controversial, with opponents objecting to energy employees’ union positions being converted to outsourced jobs. Opponents also say the deal will dilute public control of what energy sources the university uses.
OSU officials said that Ohio State Energy Partners is willing to hire all 52 university employees affected by the energy deal. About half of those jobs are currently union positions, but they would not be under the contractor. Ohio State also has promised that any affected employee who doesn’t want to work for the new company will be offered a different university job at similar pay.
Under the deal, the university would continue to buy its electricity, gas and other power sources directly from suppliers, but officials believe ENGIE-Axiom can help OSU get a better price. Moreover, the deal calls for the partnership to invest $250 million over the years in energy-conservation measures and other capital projects to further reduce the university’s energy use. It aims to improve energy efficiency by 25 percent over 10 years.
For the capital projects, Ohio State will pay an agreed-upon amount of interest on the money ENGIE-Axiom spends or borrows for the projects. The arrangement allows the university to preserve its own borrowing capacity for other projects, officials said.
In addition, the proposed deal calls for OSU and ENGIE-Axiom to join in building a $50 million Energy Advancement and Innovation Center on campus where faculty members, industry experts and students could work on new energy technologies.
OSU officials characterize the proposed deal as unprecedented in its scope and size, saying it ensures the university can get the $250 million worth of energy-infrastructure upgrades it needs to make the whole campus more energyefficient, plus access to cutting-edge research into new technologies.
“This partnership would position us as an international leader in energy and sustainability and further strengthen Ohio State as a national flagship public research university,” President Michael V. Drake said in a written statement.
Jen King, senior research analyst for the American Council for an Energy-Efficient Economy, said the proposed OSU deal is “definitely more comprehensive and extensive” than typical energy-management deals because of its long time span and the fact that it incorporates funding for academic and research purposes.
King said the 50-year span allows the parties to partner on largescale projects that will take decades to realize their return on investment. As a public university, he said, Ohio State is well situated for such a deal.
“They’re somebody that’s going to be in the same place in 50 years.”