1. Energy Saving Improvement Programs aka: ESIP; ESCO; P.L. 2009, c. 4 Gordon Ball, Senior Procurement Specialist Division of Local Government Services Introducing…

2. NJ Division of Local Government Services What ESIP is All About Retrofitting public facilities with Energy Conservation Measures (ECM) without new capital investment Retrofitting public facilities with Energy Conservation Measures (ECM) without new capital investment –Savings from reduced energy use pays for the improvements = No New Money! Applies to all government contracting units Applies to all government contracting units Capital Referendums or ESIP? Capital Referendums or ESIP?

3. NJ Division of Local Government Services ECM Categories: –Distributed generation (solar, wind, geo, bio…) –Major HVAC (capital) and minor HVAC (non-capital) –Energy efficiency, demand response equipment (C. 83) –Non-energy savings related (building envelope) –Future capital replacements –Standalone lighting improvements –New energy related capital improvements, i.e., new air conditioning installation in un-air conditioned facility  Must be funded separately from non-operating (i.e., capital improvement) funds –Water savings, i.e., low flow fixtures

4. NJ Division of Local Government Services Two Contracting Models: Plan A - Agency hire an ESCO Plan A - Agency hire an ESCO –ESCO is a single contractor that develops and manage the process – and can guarantee savings –Use public bidding or competitive contracting process to award a contract to a firm – an “Energy Services Company” to develop & manage construction of improvements. –Contract award is for “most advantageous, price and other factors considered process” or “lowest responsible bidder”

5. NJ Division of Local Government Services Plan B – Do-It-Yourself Hire an energy consultant to develop your Energy Savings Plan Hire an energy consultant to develop your Energy Savings Plan Develop your own specs and bid the job… Develop your own specs and bid the job… …Or hire professionals to do that work …Or hire professionals to do that work Rely on built-in verification process to assure savings Rely on built-in verification process to assure savings

6. NJ Division of Local Government Services Conditions for Success Regardless of which model is chosen, the success of the project and accrual of savings depends on: Regardless of which model is chosen, the success of the project and accrual of savings depends on: – A solid, well-thought out plan – Competent construction and installation – Ongoing maintenance If any are skimped, the public loses and cost and energy savings lost! If any are skimped, the public loses and cost and energy savings lost!

7. NJ Division of Local Government Services Develop the ESIP Step 1 – Perform independent audit Step 1 – Perform independent audit –Third party, not the ESCO Step 2 – Hire ESCO or manager to prepare Energy Savings Plan Step 2 – Hire ESCO or manager to prepare Energy Savings Plan –If competitive process, use the audit as basis for proposals –DLGS Model RFP available  Carefully choose appropriate evaluation criteria  Notify State Comptroller given potential value of ESCO contract (over $2M or $10M) –Owner must select the projects they think they want to undertake –ESCO must agree to provide an optional energy savings guarantee

8. Step 3 – Develop Energy Savings Plan Identify the Energy Conservation Measures and projected energy savings Identify the Energy Conservation Measures and projected energy savings Conduct “investment grade” or ASHRAE “Level 3” audit to calculate accurate paybacks Conduct “investment grade” or ASHRAE “Level 3” audit to calculate accurate paybacks Savings based on BPU adopted standards Savings based on BPU adopted standards NJ Division of Local Government Services

9. Continuing On… Step 4 - 3 rd party verification of plan Step 4 - 3 rd party verification of plan –Ensures calculations were done properly –Savings calculations does not include Energy Audit & Energy Savings Plan verification costs –Costs can be added to financing package –Initial auditor can do verification Step 5 – Make decisions, approve plan and file with BPU Step 5 – Make decisions, approve plan and file with BPU

10. NJ Division of Local Government Services Step 6 – Design and Bid ESCO or Engineer designs and prepares specs ESCO or Engineer designs and prepares specs –Notify State Comptroller given potential value of construction contract (over $2M or $10M) ESCO or Owner advertises and receives formal bids per the agency’s contracting laws: i.e., Local Public/Public Schools Contracting Law, plus ESCO or Owner advertises and receives formal bids per the agency’s contracting laws: i.e., Local Public/Public Schools Contracting Law, plus –Bid security, Bonding, Prevailing Wages, Public Work Contractor Registration, Prompt Payment, and all related laws for owners and their contractors –Subsidiaries owned by Contractor cannot bid on work –Specifications affecting State or national codes prepared by individuals properly licensed or certified –All contractors and professionals must be DPMC listed or classified – this is new for LPCL agencies.

11. NJ Division of Local Government Services Step 7 – Construction Contracts awarded by owner or ESCO Contracts awarded by owner or ESCO Construction Management Construction Management –ESCO or separate CM to manage and oversee project schedules, installations, performance, quality and approves payment to subcontractors All administrative and fiscal procedures are managed pursuant to public works construction laws All administrative and fiscal procedures are managed pursuant to public works construction laws

12. NJ Division of Local Government Services Step 8 - Completion of Work Commissioning after construction to get it operating property Commissioning after construction to get it operating property –Initial auditor or ESP verifier can do verification 3 rd party verification required to validate projected savings after commissioning 3 rd party verification required to validate projected savings after commissioning –Required to do financing Implementation of any energy savings guarantee Implementation of any energy savings guarantee As part of maintenance, require periodic “tune- ups” to make sure standards are being met As part of maintenance, require periodic “tune- ups” to make sure standards are being met

13. Got Questions? DLGS ESIP Site: www.nj.gov/dca/lgs/lpcl/esip.htm DLGS ESIP Site: www.nj.gov/dca/lgs/lpcl/esip.htm www.nj.gov/dca/lgs/lpcl/esip.htm BPU Site: www.njcleanenergy.com/commercial- industrial/programs/energy-savings- improvement-plan+ BPU Site: www.njcleanenergy.com/commercial- industrial/programs/energy-savings- improvement-plan+ www.njcleanenergy.com/commercial- industrial/programs/energy-savings- improvement-plan+ www.njcleanenergy.com/commercial- industrial/programs/energy-savings- improvement-plan+ Email: lpcl@dca.state.nj.us Email: lpcl@dca.state.nj.uslpcl@dca.state.nj.us Gordon Ball: 609-633-6152 Gordon Ball: 609-633-6152 NJ Division of Local Government Services