Reducing Financing Costs for Federal ESPCs

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This report documents the recommendations of a working group commissioned by the Federal Energy Management Program (FEMP) in 2002 to identify ways to reduce financing costs in federal energy savings performance contract (ESPC) projects. The working group is part of continuing efforts launched by FEMP since the award of the Department of Energy's (DOE's) Super ESPCs in 1998 and 1999 to ensure that practical, flexible, and cost-effective alternative financing for energy-efficiency improvements is available to all federal agencies. During FY 2002-2004, the working group pursued extensive fact finding, consulted with government and private-sector finance experts, and analyzed data from federal ... continued below

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Hughes, P.J. January 28, 2005.

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Description

This report documents the recommendations of a working group commissioned by the Federal Energy Management Program (FEMP) in 2002 to identify ways to reduce financing costs in federal energy savings performance contract (ESPC) projects. The working group is part of continuing efforts launched by FEMP since the award of the Department of Energy's (DOE's) Super ESPCs in 1998 and 1999 to ensure that practical, flexible, and cost-effective alternative financing for energy-efficiency improvements is available to all federal agencies. During FY 2002-2004, the working group pursued extensive fact finding, consulted with government and private-sector finance experts, and analyzed data from federal and local government ESPC programs. The working group observed that both competition and transparency were lacking in federal ESPCs. The working group also found that the government often falls short of full compliance with certain provisions of the final rule that codifies the federal ESPC authority into regulation (10 CFR 436), which speak to due diligence in determining fair and reasonable pricing. Based on these findings, the working group formulated their short-term recommendations of actions that agencies can take immediately to reduce ESPC financing costs. The working group recommended requiring competitive solicitation of offers from prospective financiers of ESPC projects, standardization of processes to keep the playing field level and reduce energy service companies (ESCOs) project development costs, and assuring transparency by specifying that the government will see and review all bids. The reforms are intended to enable the government to determine quickly and reliably whether the portion of price related to financing is fair and reasonable and to provide auditable records of the transaction. The working group's recommendations were incorporated into modifications to the Super ESPCs and requirements to be included in the Super ESPC delivery order request for proposal (DO RFP), which is used to tailor delivery orders to the particular needs of the ordering agency and becomes a part of the contract. The financing reforms are summarized.

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  • Report No.: ORNL/TM-2004/300
  • Grant Number: DE-AC05-00OR22725
  • DOI: 10.2172/885941 | External Link
  • Office of Scientific & Technical Information Report Number: 885941
  • Archival Resource Key: ark:/67531/metadc876274

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Office of Scientific & Technical Information Technical Reports

Reports, articles and other documents harvested from the Office of Scientific and Technical Information.

Office of Scientific and Technical Information (OSTI) is the Department of Energy (DOE) office that collects, preserves, and disseminates DOE-sponsored research and development (R&D) results that are the outcomes of R&D projects or other funded activities at DOE labs and facilities nationwide and grantees at universities and other institutions.

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  • January 28, 2005

Added to The UNT Digital Library

  • Sept. 21, 2016, 2:29 a.m.

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  • Dec. 1, 2016, 1:43 p.m.

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Hughes, P.J. Reducing Financing Costs for Federal ESPCs, report, January 28, 2005; [Tennessee]. (digital.library.unt.edu/ark:/67531/metadc876274/: accessed December 13, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.