Audit Report on the Department of Citywide Administrative Services’ Energy Conservation Efforts

Executive Summary

In 2007, the Mayor’s Office of Long-Term Planning and Sustainability (currently named the Mayor’s Office of Sustainability) prepared “PlaNYC: A Greener, Greater New York,” a report that set forth goals and standards for the City and its residents for conserving energy, reducing greenhouse gas (GHG) emissions, reducing climate change, responding to its consequences, and fostering economic growth.  PlaNYC was updated in 2011 and contained recommendations and specific initiatives that City agencies were to undertake, including the construction of buildings in compliance with “green” environmental standards, and the determination of actual consumption of electricity, natural gas, steam and fuel oil in City buildings.  Because the reduction of GHG emissions is an important step in mitigating the impact of climate change, PlaNYC proposed that by 2017 the City reduce municipal GHG emissions by 30 percent below the Fiscal Year 2006 level of 3.79 million metric tons.

To carry out PlaNYC’s goals, the City enacted the “Greener, Greater Buildings Plan,” which includes various legislative initiatives designed to make large New York City buildings more energy efficient and thereby reduce the City’s GHG emissions.  Two specific pieces of legislation are the major focus of this audit: Local Law 84 (which requires “benchmarking” energy and water use annually); and Local Law 87 (requiring energy audits and retro-commissioning of building systems).  These local laws apply to all buildings located within New York City, whether privately or publically owned, with some exceptions.  This audit is concerned only with buildings owned and managed by the City (City buildings).

The City’s Department of Citywide Administrative Services’ (DCAS) Energy Management (DEM) has a key role in ensuring that the energy conservation goals for City buildings in PlaNYC and the “Greener, Greater Buildings Plan” are fulfilled.  DCAS-DEM is the entity responsible for managing energy accounts and energy efficiency initiatives for City government operations.  DCAS-DEM’s responsibilities include overseeing the City’s goal of reducing municipal GHG emissions for City buildings, including compliance with the Greener, Greater Buildings Plan legislation.

DCAS-DEM benchmarks electricity, natural gas, and steam usage for all City buildings subject to Local Law 84, and records this information in the EPA’s Portfolio Manager, except for those under the management of the Department of Education (DOE).  DCAS-DEM is also responsible for overseeing the preparation of City buildings’ energy efficiency reports (EERs), and is responsible for submitting the required compliance schedule to the Department of Buildings (DOB), coordinating the implementation of retro-commissioning measures, and managing the design and construction of capital improvements.  DCAS-DEM annually reports on its energy use performance in the Mayor’s Management Report.

Audit Findings and Conclusion

The audit found that DCAS-DEM has not consistently ensured that energy efficiency goals and measures are being implemented in City buildings.  In particular, DCAS-DEM lacks in-house goals for the reduction of GHG emissions and does not track the progress it has made to reduce these emissions for City buildings.  Moreover, we found DCAS’ reporting in the Mayor’s Management Report (MMR) to be inconsistent and therefore, it is of questionable utility.

Additionally, we found the following problems in DCAS-DEM’s management of energy efficiency efforts and compliance with Local Laws 84 and 87:

• Benchmarking of City buildings was incomplete.
• Data was improperly reported.
• Data was not adequately verified.
• DCAS-DEM’s compliance schedule was incomplete.
• There were no official procedures for prioritizing buildings for energy efficiency projects.

We attribute many of these deficiencies to significant weaknesses in DCAS-DEM’s internal controls.  These include a lack of written policies and procedures and an absence of supporting documentation.  As a result, DCAS-DEM’s ability to oversee the City’s goal of reducing municipal GHG emissions for City buildings, including compliance with the local laws, has been severely hampered.

Audit Recommendations

This report makes a total of 10 recommendations.

DCAS-DEM should:

• Establish in-house GHG emission reduction goals (annual, long-term, etc.) in consultation with the Mayor’s Office of Sustainability to determine the extent to which its actions contribute to the overall City goal of reducing GHG emissions and to help ensure that the City meets its goal of reducing GHG emissions by 30 percent between 2006 and 2017;
• Establish and document a process for determining the in-house GHG emission reductions its efforts have thus far achieved, and continue to monitor and track its progress towards further achieving its goals in accordance with this process;
• Establish formal written policies and procedures, including detailed definitions, that explain how the indicators presented in the Mayor\’s Management Report are computed.  These policies and procedures should also establish a timeframe for the retention of documentation associated with these computations;
• Comply with Local Law 84 by ensuring it includes all the required buildings in its benchmarking.  To determine which buildings must be included, DCAS-DEM should establish procedures to ensure that it has and maintains an accurate inventory of such buildings;
• Establish written procedures and a methodology for benchmarking buildings associated with campuses (e.g., multiple buildings with shared energy meters) and ensure that data is accurately measured and recorded;
• Establish written procedures to address extreme fluctuations in City buildings’ energy consumption, including assigning specific numeric parameters (i.e., tolerances) to define an extreme fluctuation in energy usage or GHG emissions.  In addition, maintain sufficient documentation to show the results of investigations into fluctuations;
• Verify the accuracy of the benchmarking data DOE reports;
• Revise its compliance schedule so that it is complete and submit that schedule to DOB;
• Submit revised compliance schedules to DOB on an annual basis to reflect changed conditions such as building additions, deletions or sub-meterings; and
• Develop formal policies and procedures for prioritizing buildings for Local Law 87 compliance.

Agency Response

In its response, DCAS disagreed with the audit findings and stated that “the findings and conclusions in the Report are based on unsubstantiated claims and lack of understanding of DCAS’ role in the City’s overall energy efficiency efforts.”  DCAS also stated that it,

made good faith efforts to bring clarity to the auditors about a very complex and specialized area of the energy management and energy efficiency sector to help them better understand the City\’s GHG emissions measurement and reporting methodology.  However, the auditors\’ findings exhibit a limited knowledge of DEM\’s role within the larger context of the City\’s overall greenhouse gas (GHG) emissions reduction strategies as laid out in PlaNYC and One City: Built to Last, and in compliance with Local Laws (LL) 84 and 87 of 2009.  The auditors failed to note that DEM is not solely responsible for compliance with LL 84 and LL 87 for City-owned buildings, but rather plays a key role in coordinating efforts under these laws with other City agencies.  The failure to recognize the effort of other agencies in coordination with DEM calls into question the auditors\’ claims of ‘deficiencies’ in complying with these laws.

Notwithstanding these criticisms, with regard to the audit’s 10 recommendations, DCAS agreed with two, claimed it had already implemented five, and disagreed with three.

The full text of DCAS’ response is included as an addendum to the report.