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AUSTIN-A three-pronged deal between Austin Energy and the owners of the 235-acre Domain business campus should provide tenants with high-quality power and lots of it, the utility with an efficient energy-producing system and Domain owners with an effective marketing tool.

Austin Energy paid $9 million for a chilled water and heating plant at the Domain. With that as a start, Austin Energy will add a thermal energy storage system and then a cogeneration plant. The build-out should be complete in about five years.

“What we’re trying to do is position that location out there to welcome with open arms high-energy users and critical load-type customers. They will find that the energy environment is very supportive of what they’re trying to do with their business,” Cliff Braddock, director of energy business development for Austin Energy, the city-owned electric utility.

The Endeavor Real Estate Group, which is redeveloping the former IBM Corp. campus, has its arms open as well. “That agreement will create a competitive advantage for the Domain that relates to attracting tenants who place a premium on very high-quality dependable and reliable power,” Kirk Rudy, an Endeavor principal, says. “In fact it may create a competitive advantage relative to most other campuses in the state.”

The Domain will seek companies that require high-quality power and lots of it. Rudy lists data centers, telecommunications, software, medical-related companies, semiconductor companies and laboratories. “We’re marketing the Domain to all types of office and flex-space users,” Rudy says. “This just creates a competitive advantage as it relates to users who place a premium on power.”

The chilled water and heating plant are a legacy of IBM Corp., which built the campus and subsequently sold it to Endeavor, JER and Blackstone Real Estate. That equipment gives Austin Energy a head start on the project and makes it more economically feasible, Braddock says.

Another legacy of the IBM days is lower electrical rates for Domain tenants. Rudy says IBM had a deal with Austin Energy to pay rates significantly lower than regular commercial users through 2006. That arrangement was included in the Domain purchase and Rudy says he expects it to continue even past 2006.

For Austin Energy, the deal provides efficient energy to types of customers that can be energy hogs, Braddock says. “What we’ve seen though is a lot of critical operations-type of customers come into a locality and try to make the best deal they can on real estate and the building and they don’t pay a lot of attention to the electrical infrastructure up front,” he says.

They end up buying equipment with a lower upfront cost and easy to get up and running quickly. The problem, Braddock says, is that it usually doesn’t use energy efficiently. They also spend on back-up generators and uninterruptible power supply equipment.That’s bad for the utility’s load management, especially in the hot summer months. “So they’re actually pushing our electric peaks to new highs on our electric grid, which is not a good thing for Austin Energy as a utility,” he explains. “What we have to do then is spend more money to build additional generation and purchase power in the open market when it’s the very most expensive time to buy it.”

Braddock says the thermal storage system will cost $1 million to $2 million and the cogeneration plant will start at $20 million. “We’re selling these services, it’s not a free thing, so I don’t want to give the impression that Austin Energy has just decided to pick this site and give it these extraordinarily high-end services and not charge anything extra for it,” he says. “It’s not like that.

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