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Overview of the Texas ESC Chapter

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Program Manager-LoanSTAR, SECO. Kevin Vaughn Private Sector Co-chair ... Does not impact debt ceiling. Endorsed by State Legislature & Governor ... – PowerPoint PPT presentation

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Title: Overview of the Texas ESC Chapter


1
Texas Energy Services Coalition
  • Overview of the Texas ESC Chapter
  • Theresa Sifuentes Public Sector Co-chair
  • Program Manager-LoanSTAR, SECO
  • Kevin Vaughn Private Sector Co-chair
  • Market Manager- Government Energy Solutions, TAC
    Americas

2
Texas Energy Services Coalition
  • Introduction to
  • Performance Contracting
  • Presenters
  • Carl Hurst, P.E. - State Government Solutions
    Director, Western U.S., Johnson Controls, Inc.
  • Scott Naab, Trane Comprehensive Solutions

3
Topics of Discussion
  • Texas PC Projects
  • Energy Conservation Legislation
  • Performance Contracting 101

4
Before we begin
  • High interest from the legislature
  • Plenty of available funding
  • Good for the states budget
  • Bond Review Board approves these projects
  • You arent the first
  • Long history of successful projects

5
Prior Projects - State
6
Prior Projects Higher Ed
7
Prior Projects- Local Govt
8
Current State Agency PC Projects
  • Texas Department of Criminal Justice
  • Texas Youth Commission

9
Existing Statute
  • State Agencies 2166.406 Texas Government Code
  • City/County 302 Local Government Code
  • State Higher Ed. 51.927 Texas Education Code
  • School Districts 44.901 Texas Education Code

10
History of Enabling Legislation
  • Senate Bill 1811 1997
  • Allows Higher Education to utilize TPFA
  • House Bill 3530 - 1997
  • Allows State Agencies to utilize performance
    contracting
  • House Bill 2492 - 1999
  • Extends term to 15 years
  • House Bill 3286 2001
  • Allows water conservation

11
History of Enabling Legislation
  • House Bill 2277 - 2001
  • Clarifies RFQ procurement options
  • Clarifies bonding issues
  • Allows TPFA financing for State Agencies
  • Third Party Engineer review
  • House Bill 2278 2001
  • Establishes SECO in Comptrollers Office
  • Requires State Agencies to implement energy
    conservation measures meeting the requirements of
    Section 2166.406 Texas Government Code

12
2166.406 Texas Gov. Code
  • 2166.406 Texas Gov Code
  • (f)- term of ESPC contract limited to 15 years
  • (g)- ESPC projects may be financed with TPFAs
    Master Lease Purchase Program
  • (h)- contractor must guarantee savings
  • (I)- agency shall procure ESPC using professional
    services by 2254.004 (RFQ) and independent 3rd
    party engineer shall review cost savings
  • (j)- legislature shall base agencys
    appropriation for energy and water on the sum of
  • the agencys estimated annual energy and water
    costs plus
  • the annual energy and water cost savings
    resulting from the ESPC (thus finding the annual
    project payment)

13
2113.301 Texas Gov. Code
  • 2113.301 Texas Gov Code (appropriations)
  • (b)- Before a state agency may use appropriated
    money to make a capital expenditure for a state
    facility purpose, the state agency must determine
    whether the expenditure could be financed with
    money generated by a utility cost savings
    contract
  • (c) If it is practicable to do so, a state
    agency that is using appropriated money must
    finance a capital expenditure for a state
    facility purpose with money generated by a
    utility cost savings contract.
  • (d) If it is not practicable for a state agency
    that is using appropriated money to finance a
    capital expenditure for a state facility purpose
    with money generated by a utility cost savings
    contract, the state agency must provide
    justification to the comptroller for the capital
    expenditure.

14
Other Initiatives
  • RP 49 Executive Order
  • SB 5 Efficiency Mandates for buildings
  • Utility Standard Offer Programs
  • Other Utility Incentives
  • State Council on Competitive Govt (CCG)

15
Performance Contracting Overview
  • Scott Naab
  • Trane Comprehensive Solutions

16
What problems do you face at your facility?
  • Limited budgets
  • Maintenance problems
  • or comfort complaints
  • Limited expertise on technologies
  • Too many demands on staff time
  • to launch new projects
  • Yetyou want to replace equipment
  • and modernize your facilities

17
If you face these problemsyou are not alone
  • An Innovative Solution
  • Energy
  • Performance
  • Contracting
  • a smart way to get better buildings

18
Energy Performance Contracting
Projects pay for themselves!
Savings stack up over time
19
Heres How It Works...
  • Money otherwise owed to the gas or electric
    utility pays for equipment!

Annual Budget
Annual Budget
20
How is the project funded?Multi-Year
Lease-Purchase Agreement
Annual Budget AFTER Improvements
  • Financed through TPFA master lease program
  • Annual cost savings exceed annual payments
  • 15-year financing term (per legislation)
  • Does not impact debt ceiling
  • Endorsed by State Legislature Governor
  • Results guaranteed by the ESCO

The money saved from the operating budget is used
to make the payments!
21
Other Financing Options
Annual Budget AFTER Improvements
  • Tax-Free Municipal Lease Purchase
  • SECO LoanSTAR funds
  • Proceeds of bonds
  • Contract with the provider of the Energy
    Conservation Measures
  • Utility Rebates
  • Grants

The money saved from the operating budget is
used to make the payments!
22
What about risk?Performance
Contracting projects are significantly lower
risk than traditional projects
  • Design build process gives agency control of
    outcome
  • Single point of responsibility eliminates finger
    pointing
  • Guaranteed Results
  • The equipment will perform as intended
  • The project will perform financially as intended
  • The ESCO is obligated contractually by a
    guarantee

Annual Budget AFTER Improvements
23
Performance Contracting is a Better
MethodThe ESCO is fully accountable for
project performance, costs and savings!
24
Measurement and Verification of Project
Performance
  • Established Protocols for Measurement and
    Verification (MV)
  • IPMVP - International Protocol for Measurement
    and Verification Procedures
  • MV Plan is required to be reviewed by third
    party engineer
  • It is possible to measure actual performance !

25
Some Example Measures
  • Lighting Improvements
  • Projects
  • Replace fluorescent tubes ballast
  • Replace fixtures
  • Benefits
  • Easily pays for itself within its lifetime
  • Cuts energy cost of lighting system by 25 or
    more
  • Improved lighting quality
  • Better indoor environment
  • Cooler rooms on hot days (less heat from lighting
    system)
  • Leveraging opportunity buy other equipment with
    savings from lighting

26
Some Example Measures (cont.)
  • Heating System Improvements
  • Projects
  • Replace old boilers
  • Upgrade with better controls
  • Benefits
  • Improved comfort
  • Better internal environment
  • Solve maintenance problems
  • Eliminate the need to buy boiler
    replacement from capital funds

27
Some Example Measures (cont.)
  • Water Utilization Improvements
  • Projects
  • Replace faucets and fixtures
  • Improve irrigation systems and controls
  • Benefits
  • Pays for itself through water savings
  • Improved application
  • Solve maintenance problems
  • Modernize optimize systems

28
Other applications/opportunities
  • Biomass
  • Renewables
  • Solar
  • Geo Exchange
  • Wind
  • LEED certification
  • Utility rebates
  • Grant money

29
A Key Differentiator of the process..
  • Your Partnership with an
  • Energy Service
  • Company (ESCO)

30
Your ESCO will put the pieces together
  • Identify and evaluate opportunities (energy
    audit)
  • Design systems (engineering), specify purchase
  • Manage construction
  • Arrange for financing
  • Provide long-term energy management services
  • Guarantee performance!

31
5 Steps to Success
  • Decide if performance contracting is right for
    you
  • (Assess your needs potential benefits)
  • Issue an RFQ
  • (Select Energy Services Company (ESCO)
  • ESCO identifies energy-saving opportunities
  • (Execute an audit contract)
  • Savings verified by an Engineer
  • (Approved by State Energy Conservation Office)
  • ESCO implements projects
  • (Develop and execute an Energy Performance
    Contract)

32
Many Advantages of Performance Contracting
  • Better Buildings! Improved Comfort! Maintenance
    Problems Solved!
  • Pay for projects with no up-front funds (your
    utility budget pays for the projects)
  • One-stop shopping (single contract for multiple
    projects)

33
Many Advantages of Performance Contracting (cont.)
  • ESCO Expertise from onset to completion
  • Energy efficiency
  • Operation and maintenance of buildings
  • Project cost assessment
  • Project financing
  • Construction management
  • Comprehensive, whole-building approach
  • Training for your staff
  • Ongoing project monitoring and trouble-shooting
    to ensure sustained savings

34
How to get Started
  • Contact SECO
  • http//www.seco.cpa.state.tx.us/sa_pc.htm
  • Theresa Sifuentes,
  • State Energy Conservation Office
  • Program Manager
  • (512) 463-1896

35
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