Executive Management: Considerations for Focusing on the F&A Future—Part 2: Understanding Your Utility Costs During COVID-19

Tony Benigno, Specialist Leader, and Monika Moses, Leader, Education, Nonprofit, and Commercial Services

COVID-19, campus shutdowns, shrinking budgets, and F&A rate extensions require that administrators consider the investment in research and impact on future years’ F&A rates. More than ever before colleges and universities are planning for the next rate proposal and examine techniques to identify and optimize cost allocation to benefitting activities. For example, many institutions took advantage of the opportunity to defer F&A proposals based on FY20 until FY21. In this four-part blog series, we examine the considerations of four important initiatives including: a diagnostic review to improve costing processes via a dry run exercise; the benefits of proper utility metering; updating capital asset depreciation expense; and the evolution of the library infrastructure.

Part 1: Why Dry Runs are Important 

Part 2: Understanding Your Utility Costs During COVID-19

The knee-jerk reaction we have heard many times is that institutions are reluctant to prepare a F&A cost proposal because of the uncertainty around costs, including utilities. Most assume that utility costs are lower than normal in response to closures at the institution, but is that true?

Before we get to that, let us take a moment to understand the importance and relationship of the F&A, utility costs, and metering. The O&M cost pool represents the largest uncapped pool and can account for over 15 points of the Facilities component of the F&A rate. Utility costs are normally the largest component of the O&M pool and are identified to the building based on utility consumption meters.  

A closer look at recent actual metered data have spotlighted some surprising results. Though we have seen decreases in utility usage and corresponding cost, we have also seen many instances of no change in utility usage (when taking into account degree-days) or even an increase in utility costs related to the age of building (e.g., increased airflow rates, older building control systems not having the ability to address partial occupancy, longer ‘occupied’ periods as physical distancing requires occupancy to be spread out, etc.). Campus wide, there can be significant variations in utility consumption on a building type basis such a research, medical, classroom, administrative, housing.

A closer analysis of utility usage and cost using building metered consumption is an important step when considering when to approach your next F&A rate proposal. If you are not yet in your base year, now is a good time to do a review of your system and replace/service meters in need so you can make an informed decision.

About the Authors

Tony Benigno, Attain

Tony Benigno is a Specialist Leader with Attain’s Education, Nonprofit, and Commercial Services practice. Tony has more than 25 years of experience in the HVAC industry, ranging from routine assessments and troubleshooting of existing meters and collection and reporting systems, to Project Management, Commissioning, and M&V related to the identification and recovery of utility and utility related costs including, but not limited to, F&A rate proposals.

Monika Moses, Attain 

Monika Moses, PE is a Leader with Attain’s Education, Nonprofit, and Commercial Services practice. Monika has more than 25 years of engineering experience, including energy benchmarking, energy utilization studies, conceptual design and implementation of metering programs, costing studies for cogeneration systems, and identification of strategies to improve the allocation of costs in the Operation and Maintenance cost pool.