Financing Energy Performance Contracts

Pennsylvania: Guaranteed Energy Savings Act

A.   Basics:

  • 73 P.S. 1646.1 through 1646.7
  • Applies, among others, to Commonwealth Agencies
  • GESA pays for all associated project costs over the life of the contract
  • ESCO means Energy Services Company
  • Department of General Services is the centralized coordinating agency
  • There are currently around eleven participating Commonwealth agencies
  • May finance with purchase or installment purchase or lease purchase, or bonds or traditional loans
  • Once ESCO is selected, agency and ESCO enter into Technical Energy Audit (TEA) agreement
  • Based on TEA result, parties may enter into GESA, which covers the costs of conducting the TEA – if no GESA is entered into, the agency is responsible for paying the TEA before engagement ends

B.   Legal Issues to Review:

  • Contract term may not exceed 15 years
  • Non-energy improvements may be financed that are not causally connected to an ECM if: (a) the total value of the improvement does not exceed 15% of the total contract; and (b) the improvement is necessary to conform to a law, rule, ordinance or an analysis of the contract demonstrates there is an economic advantage to implementing the improvement and such improvement can be demonstrated.
  • Ensure contracts involves “allowable costs” for “energy conservation measures” (ECMs)
  • Ensure provider is a “qualified provider” and is selected based on proper request for proposal process
  • Savings in any year must be guaranteed to extent necessary to make payments under the contract
  • Must include the written guarantee that savings will meet or exceed the costs of the project
  • Must permit for termination of contract by agency in the event of a nonappropriation
  • Savings guarantee must be made by the performance contractor
  • Commonwealth must obtain bonds from contractors in connection with the project
  • If guaranteed savings do not occur, ESCO must be contractually required to reimburse the agency for the difference between actual savings and the guaranteed savings
  • Commonwealth executive agencies are required to use a certain form of Installment Purchase Agreement

Colorado: Energy Performance Contracts



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