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July 24, 2008

Utility costs impact budget

Gas prices aren’t the only things that are shooting skyward.

High prices are pushing Pitt’s utility bills upward in spite of recent efforts to reduce consumption: installing electrical metering systems; retrofitting ventilation systems; overhauling chilled water plants; modifying HVAC systems, and using sustainable design and constructions principles University-wide.

Over the past decade, Pitt has saved more than $21 million in reduced energy consumption, according to Facilities Management officials.

But the University’s utility bills continue to mount.

Laura W. Zullo, senior manager of capital and special projects in Facilities Management, noted that the University has budgeted for a 12.2 percent increase in natural gas rates for the Pittsburgh campus for the new fiscal year. Based on usage, that means an increase of about $118,000 over FY08’s tally.

Rising natural gas prices contribute to a higher cost for producing steam, which provides heat to most of Pitt’s buildings.

Facilities Management is budgeting for a 6 percent increase in annual steam expenditures in Pittsburgh, which adds another $291,000 to Pitt’s utility bills.

Natural gas costs also impact the cost of electricity, which primarily is produced with natural gas.

On the Pittsburgh campus, the University is budgeting for an extra $1.548 million in electric costs in fiscal year 2009, based on a projected 15 percent increase in Pitt’s electric rates, Zullo said.

Arthur G. Ramicone, Pitt’s vice chancellor for budget and controller, said the University overall is budgeting an extra $7.7 million — an increase of 16 percent — for utility expenses in FY09.

“The anticipated increase in that one expense category is more than $5 million higher than Pitt’s entire [commonwealth] appropriation increase, and this is not a one-year problem,” Ramicone stated.

Since FY01, Ramicone said, Pitt’s annual utility costs have risen by nearly $31 million. In comparison, Pitt’s state appropriation has risen only about $12 million during that time.

—Kimberly K. Barlow & Peter Hart

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