1. Phoenix Convention Center Phoenix, Arizona Introduction to UESC Webinar Project Financing UESC Basics: Project Financing Through your Utility Julia Kelley Oak Ridge National Laboratory August 11, 2015

2. Energy Exchange : Federal Sustainability for the Next Decade 2 DOE Federal Energy Management Program Mission The U.S. Department of Energy's Federal Energy Management Program (FEMP) works with key individuals to accomplish energy change within organizations by bringing expertise from all levels of project and policy implementation to enable Federal agencies to meet energy-related goals and provide energy leadership to the country.

3. Energy Exchange : Federal Sustainability for the Next Decade 3 UESC Presentation Agenda Basics Authorizing Legislation Contracting Overview UESC Process UESC Resources Presentation Agenda

4. Energy Exchange : Federal Sustainability for the Next Decade 4 What are UESCs? Contracts that allow utilities to provide Federal agency sites in their service territory with comprehensive energy and water efficiency improvements and demand-reduction services. Assesses the opportunities Provides financing through a third party Purchases the equipment and gets it installed Assures equipment performance and standards of service Pays utility over term of contract from cost savings achieved Agency A UESC is a Partnership Utility

5. Energy Exchange : Federal Sustainability for the Next Decade 5 Project Re-Payment with Financing

6. Energy Exchange : Federal Sustainability for the Next Decade 6 Funding Strategy UESC projects can be funded through appropriations and financing Any combination of appropriations and financing is allowed. 100% Financing 100% Appropriations 42 USC 8253 (EISA of 2007) reinforces funding flexibility

7. Energy Exchange : Federal Sustainability for the Next Decade 7 Benefits of doing UESC projects For the Utility Company: Increased incentive program impact and participation Reduce need for new generation Improve reliability through improved customer load profiles Assist federal customer goals Meet Public Utility Commission Requirements Provide exemplary customer service For the Federal Agency: Meet energy and greenhouse gas mandated goals Meet water efficiency goals Obtain low cost financing for projects Work with knowledgeable trusted professional energy partner Make energy cost savings infrastructure improvements Replace outdated energy-consuming equipment Limited source or sole-source contracts

8. Energy Exchange : Federal Sustainability for the Next Decade 8 A UESC can be any size A UESC can include energy, water and renewable energy measures A UESC can include commissioning UESCs may not be available to all facilities Utility may be new to this type of contracting Contract process and documents are not prescribed Contract term Considerations

9. Energy Exchange : Federal Sustainability for the Next Decade 9 Utility Energy Savings UESCs Are Utility Incentives – They Vary by Utility 42 USC 8256 (EPAct 1992) authorizes the use of utility incentives TECHNICAL Audits Feasibility Studies Feasibility Studies Engineering & Design Engineering & Design Installation Performance Assurance Performance Assurance Training O&M Services Project Management Project Management FINANCIAL Rebates/ Incentives Rebates/ Incentives Project Financing Project Financing

10. Energy Exchange : Federal Sustainability for the Next Decade 10 EPACT 1992: Codified as 42 USC 8256; L.G. 102-486 Section 546(c) Utility Incentive Programs: Agencies Are authorized and encouraged to participate in utility programs generally available to customers May accept utility financial incentives, goods, and services generally available to customers Are encouraged to enter into negotiations with utilities to design cost effective programs to address unique needs of facilities used by the agency All Federal Agencies UESC Authorizing Legislation & Regulations

11. Energy Exchange : Federal Sustainability for the Next Decade 11 10 USC 2913 Energy Savings Contracts and Utilities Title 10: Armed Forces; Chapter 173 Encourages participation in gas or electric utility programs for the management of energy demand or for energy conservation Accept financial incentives, goods and services generally available from the utility Direct negotiation with energy savings contractors selected competitively and approved by the utility Repay with funds available for the purchase of utility services DOD Agencies UESC Authorizing Legislation & Regulations

12. Energy Exchange : Federal Sustainability for the Next Decade 12 Agencies within the franchised service territory may order Energy Management Services for DSM and improved efficiency A UESC Task Order is placed under the AWC TOs for UESCs may have terms up to 25 years: GSA Legal Opinion (but agencies can differ on this) OPTIONAL Master Agreement (Contract Terms & Conditions) GSA Utility Areawide Contract Agency Utility Task Order Where an AWC Exists

13. Energy Exchange : Federal Sustainability for the Next Decade 13 GSA Energy Conservation Measure (ECM) Criteria 1.The ECMs must reduce energy or water consumption or demand; 2.The ECMs must be directly related to energy or water use or demand reduction; 3.The majority of the work must be for 1. or 2.; and, 4.The ECMs must be an improvement to real property (land, buildings and anything attached and integrated, not personal property)

14. Energy Exchange : Federal Sustainability for the Next Decade 14 Agencies can place a Separate Contract for Energy Management Services, when no AWC is available Separate Contract/Master Agreement (Contract Terms & Conditions) Utility UESC Task Order Agency Where an AWC Does Not Exist

15. Energy Exchange : Federal Sustainability for the Next Decade 15 UESC With a Basic Ordering Agreement (BOA) When an AWC does not exist or when an Agency’s Policy requires the use of a BOA When there is potential for more than one UESC Task Orders FAR Part 16.703 UESC Task Order UESC Task Order Agency Utility Basic Ordering Agreement UESC Task Order Utility Energy Services – Contracting Vehicles Overview

16. Energy Exchange : Federal Sustainability for the Next Decade 16 UESC Task Order (TO) Award Process Overarching Documents TO Award for UESC Step1: Acquisition Planning through Utility Selection Step 2: Project Development Implementing the TO Step 3: Design and Installation Step 4: Post-Acceptance Area-wide contract Master Agreement (Optional) Agency developed initial SOW Acquisition strategy / planning Draft initial J&A Survey interest of eligible utilities Provide fair consideration to interested utilities Agency selects utility and notifies all utilities of selection EMSA for PA & FS Utility conducts / Agency supports and evaluates PA Utility conducts / Agency supports and evaluates FS Agency requests firm-fixed price for D&I Finalize J&A Award D&I TO Report project to FEMP & GSA Utility submits design; agency reviews/approves Utility installs ECMs / Agency monitors Utility performs / Agency receives O&M training, commissioning, etc. Utility proves ECMs performance Agency accepts projects Invoices and Payments Ongoing performance assurance and annual savings verification Close out contract at end of term

17. Energy Exchange : Federal Sustainability for the Next Decade 17 UESC Process UESC Process

18. Energy Exchange : Federal Sustainability for the Next Decade 18 The minimal performance assurance plan recommended by the Federal Energy Management Program for alternatively financed UESC energy conservation measures is: Establish baseline pre-installation Start-up performance verification (based on measured date) prior to acceptance Performance verification at the end of the warranty period (based on measured data) Operations and maintenance training (required in the more common instance where the agency continues to operate and maintain installed equipment) Provision of continuing training throughout the contract period as specified in the contract as determined by the needs of the facility Periodic inspections and verification of appropriate O&M performance Performance discrepancy resolution http://www1.eere.energy.gov/femp/pdfs/41898.pdf UESC Performance Assurance Plan

19. Energy Exchange : Federal Sustainability for the Next Decade 19 Types of contracts Laws and regulations Technology resources Case Studies Training Opportunities Utility Energy Service Contracts Guide: A Resource for Contracting Officers Working on UESC Projects http://energy.gov/eere/femp/utility-energy-service-contracts FEMP UESC Website

20. Energy Exchange : Federal Sustainability for the Next Decade 20 Federal Utility Partnership Working Group (FUPWG) Seminar –Establishes partnerships and facilitates communications among Federal agencies and utilities –Develops strategies to streamline sound projects –Next meeting: Tues-Wed Nov. 3 & 4, 2015 Houston, TX Energy Lawyers & Contracting Officers Working Group meeting Nov. 4 UESC live classroom workshop Nov. 5-6 http://energy.gov/eere/femp/federal-utility-partnership-working-group Getting Started – Partnering Avenues

21. Energy Exchange : Federal Sustainability for the Next Decade 21 Monthly live webinars: Intro to UESC – August 26 Placing UESC Task Orders Under the GSA Areawide – Sept. 16 FEMP On Demand Training Customized webinars/ Classroom training –November 5-6 in Houston https://www4.eere.energy.gov/femp/training/ Additional Training Opportunities

22. Energy Exchange : Federal Sustainability for the Next Decade 22 Direct Project Support Guide agency teams through the UESC process Assist development of contract documents and provide document templates Technical review of audits, feasibility studies, and proposals In-depth technical support Build partnerships and facilitate relationships DOE FEMP Sponsored Project Support

23. Energy Exchange : Federal Sustainability for the Next Decade 23 Utility Program Lead David McAndrew DOE EERE FEMP 202-586-7722 david.mcandrew@ee.doe.gov Webinar Instructor Julia Kelley Oak Ridge National Laboratory 865- 574-1013 kelleyjs@ornl.gov Contacts