OXFORD – A letter of intent has been submitted to Siemens Building Technologies in Scarborough that may lead to the installation of a wood-chip furnace at Oxford Hills Comprehensive High School.

“We have to make it (the project) pay for itself,” said Dave Marshall, SAD 17 director of buildings and grounds.

The proposal was scrapped last fall after Gov. John Baldacci announced a $150 million curtailment of state funds for this fiscal year and the price of oil had dropped significantly enough to delay the project.

The proposed $1.5 to $2.2 million conversion project from oil to wood chips at the Paris school was planned last year to address escalating fuel costs and to make the district more energy independent by reducing dependence on foreign oil sources. At that time, the move was initially expected to save more than $400,000 a year in energy costs.

With energy prices starting to climb again, officials are looking at not only the biomass project but other alternate energy sources to reduce the cost of energy.

The high school, for example, now spends $200,000 a year in oil and $326,000 in electricity.

“Based on $2 a gallon (for oil) that’s half a million dollars,” said Marshall of the combined costs today. “If we can reduce those costs for our taxpayers, we want to do that.”

The letter, which was authorized by the SAD 17 Board of Directors on Monday, allows Siemens’ engineers to proceed with the energy audit and submit a proposal to the school district at the end of 90 days, Marshall said.

Siemens officials will be looking at all the school buildings to see what alternative energy sources they can use to reduce energy costs across the district.

The payback would be in 10 to 15 years, which is the maximum the state currently allows for performance contracts, and grant money would be used for some of the pay down, Marshall said. The cost, which has yet to be determined, would also initially affect the fiscal 2011 budget.

The performance contact guarantees what the cost savings will be for the district.

“We’re guaranteed we’ll get those savings or they have to pay the difference,” Marshall said. “They have to pay us.”

In 2007, SAD 17 showed a 17 to 30 percent reduction in annual energy consumption and an annual cost savings of $247,942 through its various energy reducing methods under a performance contract. This would be the district’s second performance contract.

“This is not a gamble. We will make money,” Marshall said. If the savings are not guaranteed, there will be no project, he said.