1. Army Policy Guidance for Utility Energy Services Contracts Randy Smidt, Headquarters Dept of Army, Office of the Assistant Chief of Staff for Installation Management Amy Solana, Pacific Northwest National Laboratory Federal Environmental Symposium Bellevue, WA June 2-4, 2009

2. 2 Utility Energy Services Contract Procurement method using utility expertise and $ to meet Federal conservation mandates Allows utilities to provide Federal customers: energy and water efficiency improvement projects renewable energy projects demand reduction services Utility’s costs repaid directly from Installation’s avoided costs resulting from project implementation

3. 3 Army UESC Program 241 UESCs at more than 30 installations Over $327 million investment Over $40 million / year savings Over 3.3 trillion Btu / year savings Funding provided to help installations partner with utilities to increase use of UESCs

4. 4 Draft Army UESC Policy Guidance Experience from ESPCs –ESPC Policy Guidance Handbook 2005 & DEC 2008 Draft “Department of the Army Policy Guidance for Implementation of a Utility Energy Services Contract” – Summer 2009

5. 5 Organizations and Responsibilities Assistant Secretary of the Army for Installations & Environment – ASA (I&E) Oversight of Army Energy Program, including UESCs HQDA, OACSIM Authority and responsibility for UESC guidance and general oversight Installation Management Command (IMCOM) –HQ & Regions Management of UESC program within respective region and assistance with UESC implementation Installations Project identification and implementation Utilities Project execution Project Facilitator Assistance for installations and utilities with UESC implementation

6. 6 Starting a UESC UESC Team Upper management or other decision-maker Director of Public Works Energy manager Engineers Environmental Office Building operators / managers Contracting Officer Procurement personnel Education / Project Documentation Plan Discuss goals, needs, and potential conflicts from each member’s perspective Talk to all serving utilities (electric, gas, and water) Contract selection Legal representative Utilities budget manager Tenants Maintenance staff Security Information Technology staff Master Planning Utility partner

7. 7 Contract Methods Area-Wide Contract Agreement between GSA and utility General terms and conditions for providing utility services for any Federal agency within utility’s service territory Installation places task order under existing AWC Basic Ordering Agreement Similar to AWC but agreement between any agency and utility Installation places task order under existing BOA Agency Master Agreement / Model Agreement Similar to BOA but more flexible Model agreement to be used under AWC, BOA, or alone Site-Specific Contract Used for special situations and when no AWC exists

8. 8 Measurement & Verification Required for Army if cost-effective Realize calculated project savings M&V Plan Define performance goals Define baseline performance Identify way to measure energy consumption before and after project implementation Assign roles and responsibilities Verify proper maintenance, operation, savings at least annually

9. 9 Additional Considerations O&M Maintenance Plan Training O&M savings based on actual expenditures Fuel-Neutral Approach Utility should offer services for all energy sources and water, regardless of commodity sold Partnering Long-term relationship between installation and utility Bundling Combine projects with long and short paybacks to maximize project effectiveness and get lower financing costs REM Combine UESC with planned construction

10. 10 Project Execution Audit Request / Project Initiation Initiated by either party Before or after UESC is in place Kickoff Meeting Clarify expectations Assign roles and responsibilities The Audit Completed by utility, typically at no cost Include renewable energy Installation reviews audit report (recommended measures, estimated costs and savings, baseline)

11. 11 Project Execution (cont.) Feasibility Study Funded by installation Compare to independent government estimate Explains procedures to acquire rebates and incentives Utility must use competitive procurement to choose contractors, comparing costs and value Engineering & Design Package 100% design Negotiate price proposal, analyze financing costs Construction & Installation Utility provides training to installation staff Project Completion & Acceptance Conduct and review periodic performance verifications, and perform continuous commissioning

12. 12 Management HQDA Notification Notice of Intent to Pursue (after Feasibility Study) Notification of Award of a UESC Task Order (after task order awarded) Approval Under $10 million – IMCOM or Command Over $10 million – ACSIM

13. 13 Risks and Responsibilities Utility prices may change, increasing or decreasing $ savings and utility bills – sufficient funds may not be available Weather, operation, user participation could affect savings – what if expectations are not met? Performance (and savings) is affected by maintenance, operation, and repair – who is in charge? Clarify in contract!

14. 14 Resource Requirements Funding Feasibility studies not resulting in project Rebates (reimbursed) – deposit directly in utility account Rest of FY payments for project Savings from project must remain in J-account to pay for project After project paid in full, “incentive account” created to use funds for further projects Buyout of project Not recommended; buy down preferred Staffing Use existing personnel Training required

15. 15 Project Financing Full or partial, can be shared with appropriations, rebates, or other available funds Bonneville Power Administration If local utility won’t participate in UESC, and if installation is served by utility that is BPA customer, or served by investor-owned utility within BPA service territory (OR, WA, ID, MT, NV, northern CA, and small portion of WY) Project financing, engineering services, and project development assistance (if utility is BPA customer) Establish “trust” accounts for installation to collect rebates and incentives to offset project cost Interagency Agreement (agreement with GSA) Payments Made from J-account or new account created for UESC payments Can re-direct funds from other accounts to pay for project through savings (O&M, tenant, etc.) Must be made within current and future budget – do not allow budget to be reduced based on energy savings

16. 16 Reimbursement from Tenants Separate reimbursement baseline contract – intra / inter- service support agreement (ISSA) Negotiated before project award Include tenant in project development, and advise of proposed project and related benefits before work begins Tenants required to meet reduction goals Can participate in UESC or, opt out in writing before award and meet goals on own Required to participate if goals not met 2 years in a row

17. 17 Reporting Requirements Notification of Intent to Pursue Installation to ACSIM Request for Project Approval Installation to higher HQ Notification of Intent to Award a UESC TO Installation to ACSIM Army Energy and Water Reporting System’s (AEWRS) Energy Manager’s Database Installation; within 15 days of award Annual Energy Management Data Report Installation, through AEWRS

18. 18 Frequently Requested Information Location Contract Vehicle Used Utility Name Project Facilitator TO Award Date Project Acceptance Date TO (or Separate Contract) Completion / Termination Date Technologies Implemented Total Investment Utility Investment Contract Length Scheduled Payments Non-Scheduled Payments Annual Savings Utility / Government Split of Savings Life Cycle Savings Buyout Performance Verification or M&V Methods Used Lessons Learned Uses of Government Share of Savings Level of Satisfaction with Utility Special or Unusual Events or Circumstances

19. 19 Case Studies Fort Knox Nolin Rural Electric Cooperative Over $117 million, 91 task orders since 1996 Fort Lewis BPA, with rebates from Tacoma Public Utilities and Puget Sound Energy Energy efficiency work and provide Resource Efficiency Manager Fort McPherson Georgia Power (Southern Company) Education assistance from FEMP and PNNL

20. 20 Questions? Randy Smidt SmidtRF@conus.army.mil 703-601-1564 Amy Solana Amy.solana@pnl.gov 503-417-7568