Subcommittee Examines the Financial and Environmental Benefits of Energy Savings Performance Contracts
(Washington, DC) – Today, the House Committee on Science, Space, and Technology’s Subcommittees on Oversight and Energy held a joint hearing titled, “Green Buildings – An Evaluation of Energy Savings Performance Contracts.”
An Energy Savings Performance Contract (ESPC) is a partnership between a Federal agency and an energy service company (ESCO) to “allow Federal agencies to accomplish energy savings projects without up-front capital costs and without special Congressional appropriations.”
Democratic Members were generally supportive of ESPCs but raised concerns about barriers to expanding their use, such as the refusal of the Congressional Budget Office (CBO) to score the guaranteed cost savings of these contracts.
Ranking Member of the Oversight Subcommittee, Dan Maffei (D-NY) said, “At a time when all Federal agencies are fiscally constrained I believe ESPCs are an idea worth pursuing. I am concerned to learn that the Office of Management and Budget is presently impeding the award of the first ESPC for a data center. ESPCs are widely seen as a good idea with potential large savings to the federal government and U.S. taxpayers. I would encourage OMB to move swiftly and avoid a possible chilling effect on future awards.”
Ranking Member of the Energy Subcommittee Eric Swalwell (D-CA) said in his opening statement, “ESPCs are truly a win-win-win tool for the federal government and the U.S. taxpayers. The federal government is the largest energy customer in the country and ESPCs save money, improve energy efficiency, and reduce carbon pollution, all with little-to-no upfront cost required. ESPCs, as well as Utility Energy Services Contracts, have a proven track record of saving the federal government billions of dollars and hundreds of trillions of BTUs so far.”
Ranking Member of the Full Committee, Eddie Bernice Johnson (D-TX), addressed the auxiliary benefits of ESPCs. She said, “Investments in energy efficiency improvements can reduce energy costs as well as generate much needed jobs through the acquisition and development of necessary infrastructure and equipment. Often the useful life of the equipment extends well beyond the performance period of the ESPC. Another key component of many ESPCs is the training and implementation of sustainable energy practices. The use of ESPCs can help make the Federal government a leader in energy efficient building technologies.”
Mr. Swalwell submitted a letter for the record from a number of groups and businesses, including the Chamber of Commerce and the Business Roundtable, applauding the Obama Administration for their focus on energy efficiency and encouraging continuation and expansion of these activities.
After a contract is approved, the ESCO conducts an energy audit for a Federal facility and then designs and constructs a project that meets the agency's needs and arranges the necessary funding. The ESCO guarantees that the improvements will generate energy cost savings sufficient to pay for the project over the term of the contract. After the contract ends, all additional cost savings accrue to the agency. Contract terms of up to 25 years are allowed.
Testifying before the Subcommittees were representatives from the Department of Energy (DOE), the National Aeronautics and Space Administration (NASA), the Federal Performance Contracting Coalition, and the National Insulation Association.
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