Federal Issues
On the federal level, NAESCO works with coalitions of national EE organizations to promote energy efficiency, renewables, distributed generation and demand response in federal legislation and federal regulatory rulemaking. The coalitions include the Federal Performance Contracting Coalition (FPCC), the Alliance for Industrial Efficiency, the Alliance to Save Energy (ASE), the American Council for an Energy Efficient Economy (ACEEE), the National Resources Defense Council (NRDC), the American Gas Association (AGA), the National Association of State Energy Officials (NASEO), the Energy Services Coalition (ESC), and a number of other groups. The coalitions plan national legislative and regulatory strategy and actively lobby. NAESCO also serves on the Executive Group of SEE Action, which is funded by US DOE and US EPA to identify and develop resources to solve problems in the acceleration of state and utility energy efficiency programs. Finally, NAESCO serves on the Board of PACENation, a national organization that provides education and expert resources to promote the expansion of PACE programs across the country.
Performance Contracting Challenge
NAESCO continues to work with the FPCC to ensure the implementation of the $2 billion extension of the Challenge announced in October, 2016, with its new focus on both water and energy efficiency, and is also supporting the FPCC’s effort to get the Trump Administration to raise the goal to $10 billion. In the spring, FEMP announced the next round of IDIQ awards to 21 ESCOs. NAESCO participated in the FEMP national webinar at which the awards were announced, and also at which FEMP announced a new study by the Lawrence Berkeley National Laboratory, which estimates the total national potential market for performance contracting at up to $300 Billion (SEE: LINK ON NAESCO WEBSITE). Finally, both the House and Senate 2018 Budget Resolutions contain provisions that resolve the ESPC “scoring” issue by directing the Office of Management and Budget (OMB) to count both costs and savings, rather than just costs.
179D Deduction
NAESCO and several member companies continue to work with Van Ness Feldman and Prime Policy Group to seek an extension of Section 179D.
FERC NOPR
The Department of Energy has filed a Notice of Proposed Rulemaking (NOPR), asking that the FERC modify the rules that govern the regional ISO and RTOs to provide for “reliability” payments to generators that have a 90-day supply of fuel on site, e.g., coal and nuclear plants. The plants that would receive the payments have increasingly been “out of the money” (bid prices too high) in the ISO and RTO capacity auctions, and so are scheduled for near-term retirement. DOE also asked for an extraordinarily fast proceeding schedule for the NOPR. There is significant opposition across the political spectrum to this NOPR, from EE and RE groups, environmental groups, and conservative free-market advocates. NAESCO joined with EE coalitions in the initial round of comments to FERC.
Infrastructure Program
The large infrastructure program that the Trump Administration had promised has been delayed by the prolonged fight over the repeal of the Affordable Care Act and the tax reform legislation. Last winter, the Trump Administration published a short outline of its proposed program: a $1 Trillion Public Private Partnership (3P) package that included about $200 Billion in federal funding, primarily tax incentives. There was substantial pushback from Senators and Governors from both parties that this type of program was more modest than they expected and would result in higher tolls and fees to repay the private investors who would provide 80% of the capital.
NAESCO has been promoting ESPC as the most successful form of 3P program in the country, with more than $50 Billion of projects and more than $35 Billion of capital improvements. We also emphasize that the private investment in ESPC projects is paid from savings, not from new tolls and fees. We are encouraged by the administration’s apparent embrace of performance contracting and believe that performance contracting will be included in the Trump infrastructure program, hopefully next year.
HUD Programs and Procedures
NAESCO and a number of ESCOs have had occasional conference calls, hosted by HUD, to discuss several chronic problem areas in the HUD PHA ESPC program, including the difficulties of implementing ESPC projects with the Rental Assistance Demonstration (RAD) program that is changing the federal funding of PHAs, the lack of knowledge of local HUD staff and PHA managers about the HUD Rate Reduction Incentive program, and the HUD initiative to stimulate EE projects in federally assisted multifamily housing.