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Pacific Gas Transmission Headquarters
Energy Savings Built In
When Pacific Gas Transmission Co. searched for a new corporate headquarters, Oregon had something unique to offer: low-interest loans and tax credits that made it easy to invest in an energy-efficient new building. A subsidiary of San Francisco-based PG&E Corp., PGT is the largest transporter of Canadian natural gas in the U.S.
 
The company’s eight-story, class A office building in Portland, developed and owned by Gerding/Edlen Development Co., was a demonstration project of the Oregon Department of Energy’s Small-Scale Energy Loan Program. With a long-term lease on the building, PGT secured a 20-year loan to finance the building, which is designed to save the company about 40 percent on its energy bills — about $30,000 a year — compared to a code-minimum building.
 
“If you can get more value out of a dollar because you’re investing in energy-saving equipment, you’re better off doing that,” said Phil Osloond, manager of project development. “There is an increase in investment upfront for energy-saving alternatives. But when you run the numbers, the return on energy costs is considerable.
 
“Our customers appreciate cost-conscious decisions, and we’re ultimately able to be more competitive when our costs are lower.”
 
A 35 percent Business Energy Tax Credit on the additional cost of energy efficiency measures and a $745,000 low-interest loan from Pacific Power’s Energy FinAnswer program also were part of the package.
 

Energy-Saving Features
The PGT building is shaped and oriented toward the sun in a way that reduces air-conditioning requirements. Wall and roof insulation is nearly twice what building code requires, for substantial savings on heating and cooling. Other efficiency upgrades in the building include:
• High-quality glazing that selectively transmits light and heat
• Windows set back in the brick walls to provide shading and dramatically reduce cooling requirements
• Water for bathrooms and kitchens warmed by excess heat from computer rooms
• A video conferencing system that reduces travel costs by more than $8,000 annually
• Electronic ballasts that dim automatically as sunlight reflects onto the ceiling
• An innovative cooling system that makes ice at night to provide air conditioning during business hours
The ice system shifts a substantial amount of the electric peak load into night hours for considerable savings on the demand component of the bill. The system also positions the company to take further advantage of off-peak pricing as changes in the electric utility industry provide more options. Other advantages are being able to run chillers only when they’re needed and at peak efficiency.
 
Efficiency and comfort were further improved through “building commissioning” — the process of ensuring that lighting, heating, ventilating and air-conditioning systems work together effectively and efficiently.
The PGT building won the 1997 Architecture + Energy design award for energy efficiency. The awards are sponsored by the American Institute of Architects/Portland, Bonneville Power Administration and Portland General Electric.

No Sacrifices
“All of the building systems were designed so we wouldn’t have to sacrifice anything in order to save money on energy,” Osloond said.
 
Lighting is a good example, he said. “We have a lot of natural daylight streaming in, which dims the perimeter lights. You can’t see any difference on your work surface, but you’re using less electricity. People are pleased that if they leave their space, occupancy sensors turn off the lights and they’re saving energy — and there’s no harm done.”
Since he shepherded the building project for PGT, Osloond says he gets his share of feedback from employees on how the building operates. “The vast majority of the comments are that it’s a comfortable space,” Osloond said. “People are very happy with it.”
 

The Developer's View
“Compared to traditional buildings, ours is more attractive to tenants because their energy costs are less — a significant savings on operating rent,” said Vern Rifer, senior project manager at Gerding/Edlen Development Co.
 
“Because our building is energy-efficient, we can charge at least 50¢ a square foot less a year for rent than if we had a traditional, code-minimum building. And PGT is assured that their energy costs are held down over time.”
 
Actual energy use in the building is somewhat higher than the design target, because the company added another computer room and increased the number of employees and operating hours for HVAC and lighting systems.
 
“The energy-efficiency measures have kept energy use from ballooning out of control,” Rifer said. “But for these savings, they would have very high bills.”
Another advantage of building in energy efficiency, says Rifer, is financing through the state’s Small-Scale Energy Loan Program (SELP).
 
“The SELP loan allows you to borrow 5 or 10 percent on top of the primary mortgage — and it’s at a far lower rate than equity,” Rifer said. “The ability to borrow more is a real advantage. Underlying construction costs are trending up, and rents are not keeping pace with construction costs. So you have to find a way to creatively finance projects.”
The PGT building is a special case. Because it’s an Oregon Department of Energy demonstration building, a SELP loan was approved for the primary mortgage.
Gerding/Edlen has used SELP loans to help finance renovations of existing buildings, too. And it’s made use of some of the energy-efficient technology it used in the PGT building in other buildings it has built or remodeled.
 
Gerding/Edlen took care of the paperwork for the SELP loan and 35 percent Business Energy Tax Credit (BETC) for PGT. The development company itself has been awarded tax credits for other energy-saving building projects.
 
“We view the tax credit as real straightforward,” Rifer said. “It doesn’t take any more to get the information you need for the tax credit than to go ahead with the project.”
— Lisa Schwartz, Oregon Department of Energy

Tax Credits and Loans for Energy-Saving Projects
The Oregon Department of Energy offers tax credits to encourage businesses to invest in innovative construction, equipment and production processes that conserve energy, use renewable resources or recycle waste materials. The tax credit is 35 percent of eligible project costs taken over five years.
 
Since 1980, more than 3,500 tax credits for energy-efficiency and renewable resources have been awarded. Energy savings from these projects exceed $75 million each year. Another 1,000 tax credits have gone for recycling projects which have recovered more than 15.5 million tons of waste for reuse or reprocessing.
 
Low-interest loans are available for conservation and renewable energy projects for businesses, schools and governments. For the most part, the Small-Scale Energy Loan Program is for large projects where long-term financing makes sense. The rate is fixed for the term of the loan — up to 12 years with funds currently available. Loans can cover more than the incremental cost of energy-saving measures. Borrowers pay back the full cost of the loans.
 
By year-end 1996, more than 475 loans for $267 million had funded conservation and renewable resource projects. Savings include more than 400 million kilowatt-hours of electricity, 16 million therms of natural gas and 876,000 gallons of oil. In addition, more than 390 million kilowatt-hours of electricity has been generated through the loan program.
To learn how you can get a 35 percent tax credit and loan for improving the efficiency of your business, call the Oregon Department of Energy toll-free: 1-800-221-8035.