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NAESCO Newsletter

December 2012

NAESCO Updates

Featured Articles

Industry News

Member Projects

Member News

NAESCO Updates

New Members

NAESCO is pleased to welcome the following new members and to include their "Statements of Introduction" about their organization.

LFE Solutions, Inc. - Associate Affiliate Member - LFE (Lighting For ESCO) Solutions provides a new market channel for ESCOs to assist in design, specification and procurement of energy-efficient lighting products at existing or improved price points from a company that provides value-add services designed solely for the ESCO market. LFE Solutions has filed for MBE status in MA and will scale to other states as needed.

Soraa -- Associate Affiliate Member - Soraa is a leading global developer of solid-state lighting technology built on pure gallium nitride substrates, commonly referred to as GaN on GaN™. Only Soraa uses a pure GaN crystal to create simply perfect light. Soraa's flagship product is the high performance LED MR16 halogen replacement lamp.

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Upcoming Events

NAESCO Federal Market Workshop
March 5, 2013
Washington, DC

NAESCO Midwest Regional Meeting
June 6, 2013
Chicago, Illinois

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NAESCO 2012 Advocacy Report on the Impact of Policy Deliberations on ESCO and EE

The full version is posted on the NAESCO Members Only Site, which can be accessed here.


Registration as Municipal Advisor
The SEC announced that it is postponing the issuance of the final rule on the registration of Municipal Financial Advisors until September 2013. Articles about the pending resignation of SEC Chair Schapiro cite the fact that the SEC has completed less than a third of the rules it is required to issue in order to implement the Dodd-Frank Act, so our issue has not been singled out for delay. NAESCO has been lobbying the SEC and the Congress to have ESCOs excluded from registration since the temporary rule was promulgated in 2010. NAESCO participated in an intense effort in 2012 to educate House members on the issues in an attempt to get the exclusion included in HR 2827, bi-partisan legislation with 38 co-sponsors, which attempted to correct by legislation some of the problems with the SEC interim Municipal Advisor rule. The bill was enacted by the House but is not expected to clear the Senate this Congressional session. We viewed our effort as a way to educate key members and their staff about this issue and position ourselves for 2013 as we think this bill may be the basis for future legislative consideration.

Federal ESPC Program
NAESCO continues to focus on the implementation of the $2 billion two-year acceleration of the federal ESPC program, which President Obama announced in December, 2011.

  • NAESCO is working under a Lawrence Berkeley National Laboratory subcontract to help LBNL identify and address the barriers to project development and implementation.

NAESCO is also engaged in the design and implementation of the initial pilot Deep Retrofit programs proposed by the Army and the GSA.

  • NAESCO is working under a subcontract to assist FEMP in the implementation of the initial deep retrofits in GSA buildings by producing a series of reports that provide feedback and suggestions from ESCOs about the program. The program has advanced through initial RFQ process, in which eight ESCOs were selected to develop PAs for about 30 buildings. NAESCO has interviewed the participating ESCOs, as part of its subcontract work with LBNL, to get their feedback on the process.
  • NAESCO is also working with the US Army Corps of Engineers on a potential three-building US Army pilot program that, unlike the GSA pilots, would combine appropriated renovation and modernization funding with ESPC funding.

NAESCO Wishlist for the Obama Second Administration
We surveyed our member ESCOs for their input to a short list of priorities that we, as an industry, can take to the Obama Administration for action early in 2013. Our working list is as follows:

  • Accelerate and complete the implementation of the President's $2 billion federal buildings performance contracting initiative.
  • Clarify and standardize among agencies the allowable term and other regulations that apply to UESC projects.
  • Expand the federal ESPC IDIQ to include mobility such as ships and planes.
  • Rework, expand, and re-deploy the 179(d) tax deduction.
  • Streamline HUD project development and approval procedures.
  • And finally, a wish that all of us can support from one of the founding members of NAESCO, a 30% federal tax credit for all EE and RE measures.

NAESCO is already working on all of these items. The 30% tax credit may be a stretch, but we are working with national EE and RE coalitions to extend the existing tax credits.

Federal Energy Policy Legislation
NAESCO worked in conjunction with other national energy efficiency and environmental groups on several bills, which, if enacted, would support policies that accelerate the use of energy efficiency and promote the use of ESPCs. However, all parties, including ourselves, viewed 2012 as primarily one of positioning and the focus of the legislative activity on teeing up key legislative initiatives for inclusion in a 2013 bill.

  • HR 4107 (Bass-Matheson) would mandate that the federal government lead by example in making its energy use more efficient, emphasizing the use of ESPC to meet federal energy savings goals. HR 4107 also includes a loan fund for existing commercial buildings and a mandate that US DOE develop a plan for doubling the use of CHP by 2020.
  • S 1000 (Shaheen-Portman), which was approved in a bi-partisan 18-3 vote early in the session, also emphasizes federal government EE programs, without the explicit promotion of ESPC and the loan program for existing buildings. The provisions of S 1000 that mandate increased coordination of US DOE industrial programs and standards for federal facility metering systems were passed in early December in HR 6582, which is known as the American Energy Manufacturing Technical Corrections Act of 2012.
  • S 3591 (Snowe), the Commercial Buildings Modernization Act was introduced in mid-September and would update the Section 179(d) tax deductions to address the current state of the real estate market, and emphasize retrofits rather than new construction. The bill would institute a higher sliding scale credit, from $1/SF for a 20% reduction to $4.00 per SF for a 50% reduction, and liberalize the ability of the building owner to allocate credits to project participants such as architects, ESCOs and financiers.
  • Markey-Welch (amendment to HR 3409), which was introduced in mid-September and would amend the "no more Solyndras" bill to mandate a combined national RPS and EERS.
  • Kerry-Schumer-Franken, the Energy Savings Act (ESA), which would mandate a national EERS and will be introduced in early 2013.
  • HOMES Act (McKinley-Welch), which is essentially a re-working of the HomeSTAR bill that would boost residential energy efficiency and almost passed last year.

Streamlining HUD PHA Project Development
NAESCO helped to organize an all-day meeting at HUD on November 28 that was designed to analyze the efficacy of the process of developing ESPC projects at HUD-assisted Public Housing Authorities (PHAs) with the focus on project development process bottlenecks and discussion of potential solutions. A number of NAESCO member ESCOs attended the meeting, and we came away with a list of near-term action items, which are detailed in the meeting summary letter which is available in the members' only section on the NAESCO website.

Tax Credits
The renewal and/or expansion of federal energy tax credits will be elements in the negotiation of an overall debt reduction and tax reform package that will be negotiated in 2013. Current opinion in Washington is split. One school of thought says that many of the expiring credits will be extended for one year to give the Congress time to design comprehensive tax reform. The other school says that the Congress is tired of piecemeal temporary extensions and will let the tax credits expire and devote its energies to tax reform. Some experts remind the energy industry of the relatively recent history of the tax credits which were enacted in the Carter Administration in 1979-80 and which were discontinued in the 1986 tax reform legislation. The same fate could easily befall the current energy tax credits, most of which date from 2005.

Federal Budget
The federal government is currently operating under a Continuing Resolution (CR) that carries through March, 2013. The CR, however, is not resulting in a business-as-usual continuation of federal spending at the same rate as FY12, because of the significant differences between the House and Senate version of the FY13 budget (a CR mandates maximum spending at the lower of the two) and the pending automatic budget sequestrations that are scheduled to take effect on January 1, 2013. In response to this uncertainty, the Office of Management and Budget (OMB) issued guidance that instructs federal agencies to only spend 28% of their FY12 budgets (rather than the 50% that one might expect) during the first half of FY13. We expect that this guidance will impose significant cuts on programs that are of interest to ESCOs, such as the State Energy Program (SEP), which has a 50% cut in the House budget.

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While some of our 2013 state activity will be related to new initiatives arising from the work of state legislatures convening early next year, we do know that there will be some states that will require continued attention in 2013. These states include:

Michigan -- New ESPC Legislation
We will continue to push for the passage of HB 5727, which was passed by the House in September and by the Senate on December 12. The bill is similar to legislation in a number of other states that seeks to encourage state and local government agencies to use ESPC by defining the measures that can be included in a project, extending the maximum term of the project to 15 years, appointing a state "champion" agency (Department of Technology, Management and Budget), and authorizing DTMB to create a pre-qualified list of ESCOs and a set of standardized ESPC program processes and documents.

  • In 2012, NAESCO organized a group of ESCOs to review the pending legislation, testified before the House and Senate Energy and Technology Committees, and worked with ESCOs and the Governor's office to finalize the bill language. In addition, NAESCO has submitted to the Governor's Office a Briefing Book on the potential for ESPC in Michigan public facilities (more than $1 billion of potential projects). ESPC and energy efficiency were a centerpiece of Governor Snyder's new energy policy announced in late November.

New York -- New NYPA Program
As part of Governor Cuomo's program to boost energy efficiency in New York, the New York Power Authority has initiated a new program to finance $450 million of energy efficiency projects in the next four years. This is the vindication of about a decade of work by NAESCO and member ESCOs to convince NYPA to run programs that work with ESCOs. We will continue to monitor the progress of the new NYPA programs to ensure that they are operating efficiently and leveraging the capabilities of the participating ESCOs.

Ohio -- New ESPC Initiative
In 2012, the Ohio legislature enacted SB 315, which was a key piece of Governor Kasich's state energy policy. SB 315 re-affirms the state's commitment to aggressive energy efficiency goals, and includes CHP as an allowable technology. NAESCO has been working to build on this success to persuade the Governor to re-organize the state's ESPC programs, which have significant potential in both state and local government facilities. We have convened a working group of interested ESCOs and are working with the Ohio chapter of the Advanced Energy Economy (AEE) and the Energy Future Coalition to facilitate the efficient review of local government and K-12 ESPC projects by the state government. Additionally, NAESCO was part of a coalition of energy efficiency and other groups, including the Ohio Manufacturers' Association (OMA) that beat back a challenge to the state's aggressive Energy Efficiency Resource Standard (EERS) by First Energy, a major Ohio utility. Indications are that First Energy may bring back this challenge as new legislation in 2013.

Pennsylvania -- Resurrect the GESA Program
We will continue to try to work with the Department of General Services and the Pennsylvania chapter of the Energy Services Coalition to get the state buildings ESPC program back on track. We are also working with Pennsylvania-based NGOs, in the absence of strong state government leadership, to promote local government and K-12 ESPC projects.

North Carolina -- Keep ESPC on Track
During the past few years, North Carolina has built a very successful state ESPC program, implementing hundreds of millions of dollars worth of projects. There are now some indications that the state Local Government Commission, which must approve all local government ESPC projects, is getting worried that ESPC is not delivering what it promises, because the project savings guarantee applies to energy savings, not dollar savings. Apparently some projects that were signed a few years ago contained energy cost escalation clauses that started with the then-high natural gas prices and applied high cost escalation rates for the full term of the contract. We are working with North Carolina ESCOs to ensure that the ESPC market in the state continues to grow, and to address this issue of ESCOs guaranteeing dollar savings, before concerns over this issue can disrupt the program.

California -- Continue Advocacy in Key Proceedings
We will continue to participate in the various CPUC proceedings whose outcomes affect the ESCO industry. We will continue to work with our California utility members and to focus our efforts on issues where NAESCO and its members can have a significant impact.

Proposition 39 and AB 32
California will add significant new funds to its energy efficiency efforts in 2013. In November, the state passed a ballot initiative known as Proposition 39, which closes some tax loopholes and will put about $500 million for five years into public school renovation and energy efficiency projects. In addition, the California cap-and-trade program, commonly known as AB 32 (its authorizing legislation) held its first quarterly auction in November, generating about $100 million of funds for EE and RE programs. The Prop 39 funds will be administered by mechanisms to be determined by the state legislature in early 2013. NAESCO is monitoring the development of these mechanisms in the legislature and the Brown Administration, and will reach out to ESCOs to determine if they want to mount a major lobbying effort.

Transition Period (2013-2014) Programs
In early July, the four California IOUs filed their program plans for the 2013-2014 Transition Period in response to the Commissions 450-page "guidance" document. NAESCO reviewed all of these program plans and filed comments, which urged the CPUC not to allow the IOUs to cut their program budgets, and urged the Commission to hold the REN and CCA proposals to the same rigorous standards for cost-effectiveness as the IOUs. In response to the comments of NASESCO and other parties, the CPUC ordered the utilities and the other parties to file extensive supplements to their proposals in late August, and allowed parties to file two additional rounds of comments. In response to the NAESCO comments, which were echoed by comments from other parties, the Commission ordered the RENs to file detailed cost analyses, similar to the analyses required of utilities, for their proposed programs.

The Commission issued its Proposed Decision (PD) in mid-October, and the PD contained several orders that are problematic for the ESCO industry in California. The first is that the IOUs are ordered to reduce their non-incentive program expenses by 30% (approximately $300M). The PD contained no specifics about where the IOUs should make these cuts, so it is impossible for ESCOs and other stakeholders to determine how the cuts will affect programs. Some programs may be eliminated; others may be kept going with reduced staffs that will hinder program throughput. So NAESCO, in its comments, urged the Commission to suspend this part of the order until the beginning of the 2015 program cycle to allow for an orderly planning process. This issue is particularly important for NAESCO RES ESCOs, because RES programs are often less cost-effective than C/I programs, and so the cuts would be expected to fall disproportionately on RES programs. NAESCO's comments urged the Commission to recognize this problem, and to recognize that cuts to RES programs, particularly programs that serve Hard to Reach customers and the working poor, run counter to long-established Commission policy.

The PD also put off indefinitely a revision of the dysfunctional review process for Customer Measures, which many ESCOs use, and appeared to tell the IOUS that they had to take the risk of predicting the results of the reviews (which are supposed to occur before a project is approved, but in fact are at least 90 days delayed). NAESCO comments urged the Commission to change this provision of the PD to protect the IOUs from unreasonable risk and to keep the Custom Measures program producing at full speed.

One element of the IOU program proposals that is mandated by the CPUC is a new set of financing programs that must total a minimum of $200 million of utility funding, money that would be diverted from other programs. NAESCO has supported the utilities' protests that this mandate is too much, too fast, and argues that the utilities should instead operate pilot financing programs during the Transition Period and plan to scale up the successful pilots during the full program cycle that begins in 2014. The CPUC rejected these protests and ordered the utilities to hire a finance program consultant to help the utilities assemble a program proposal in six weeks. In NAESCO's opinion, the consultant proposal, which is currently out for comment, is an exercise in putting the cart before the horse, in that it lays out a plan to develop a significant new financing infrastructure before there is a demonstrated market for the financing. For example, the plan for the large  commercial market segments envisions spending about $7 million to set up a new utility billing system and to market the new financing program to service about 22 projects over two years. NAESCO submitted comments urging the Commission to suspend these expenditures until there is a demonstrated market that warrants them.

Ratepayer Incentive Mechanism (RRIM)
Additionally, the CPUC is pushing ahead with separate elements of the proceeding that are examining the standards of program cost effectiveness, the approach to program EM&V, the proper structure for utility program administration incentives (for both the 2010-2012 and Transition Period programs) and other critical program elements. NAESCO is participating in all of these proceeding elements. The problem is that the ALJ's ruling makes the incentive fee based on what amounts to "good behavior" rather than documented energy savings. The metrics used to determine "performance" all relate to how responsive the utilities are to the rules and program changes proposed by the Commission and the Energy Division. These metrics harken back to the early days of utility EE programs, when utilities programs were evaluated on how many energy audits they performed or how many contractors attended training programs. In NAESCO's opinion, this is a terrible move.

NAESCO is working with a group of ESCOs to assist the state in the implementation of Senate Bill 1096 (SB 1096), which established the Oklahoma State Facilities Energy Conservation Program. The program is designed to combine both behavior-based and performance-based elements, but a recent RFP solicited only behavior-based services for all state facilities. NAESCO wrote a letter questioning this approach to the state official responsible for implementing the program, as well as to the Governor and key legislators. We will work with interested ESCOs to assist the state to implement a balanced program that delivers the maximum benefits.

West Virginia -- Educate State Officials about ESPC
We are reaching out to state officials who have indicated an interest in performance contracting to educate them about the value of using NAESCO accredited ESCOs in their projects and to assist them in developing language for RFQs and RFPs for ESPC.

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Featured Articles

Federal Agencies Embracing the President's Performance Contracting Challenge: An Update from FEMP Director Tim Unruh

What progress can you report one year into the goal of meeting the President's $2 billion ESPC investment commitment?
Agencies throughout the Federal government have enthusiastically embraced the President's performance contracting challenge. One year in, over $2.2 billion in potential projects have been identified. Of those projects, more than $440 million have already been awarded and a number of additional opportunities are in the development pipeline--on track to be awarded in the near future.

What was the ESPC investment level in 2012 across the government and how are lagging agencies being encouraged to up their investment level going forward?
This year, the Energy Savings Performance Contract (ESPC) and Utility Energy Service Contract (UESC) investment level reported under the President's performance contracting challenge was over $440 million. Both ESPCs and UESCs are helping federal agencies meet this important government-wide goal.

At the Federal Energy Management Program (FEMP), we consistently see that agencies are committed to identifying and implementing energy conservation measures that provide the greatest long-term return on investment. Similarly, agencies are working to maximize the value they receive through their contracts by balancing direct appropriations with performance contracting. FEMP tracks agency implementation progress throughout the contracting process on a monthly basis, and we work together with other agencies to follow up aggressively if we see any projects that seem to be stuck.

Based on the activity level in 2012, do you think 2013 will be a manic period to award and implement projects to meet the $2 billion goal?
The President's memorandum directing federal agencies to enter into a minimum of $2 billion in performance-based contracts by the end of 2013 placed an ambitious, yet reasonable, expectation on the executive branch. As the numbers indicate above, we are diligently working to exceed the President's aim. While I have no doubt 2013 will be a busy year, I have full faith and confidence in our ability to accomplish the task set out before us.

How important have been the changes that you have already made to expedite the ESPC contract process in meeting the $2 billion investment goal?
We've been working to advance a streamlined contracting process and preliminary assessment, while ensuring that each contract is executed to the highest standards.

Preliminary assessments are helpful in establishing the contract requirements while also providing an opportunity for refinement later -- giving each agency the flexibility it needs to make the right decisions for its facilities.

Do you anticipate any additional process changes in the works?
At FEMP we continue to work to standardize the ESPC and UESC process as much as possible. This includes working to develop an additional uniform contract document as well as clear, standardized project and energy conservation measure descriptions. Furthermore, we will continue to develop the ENABLE concept, which was started as part of this standardization effort. Recognizing a need to incentivize public-private partnerships in Federal facilities smaller than 200,000 square feet, FEMP recently unveiled a program that strives to guarantee these locations energy and water savings within six months.

What do you see as the remaining challenges for ESCOs and their federal customers in achieving federal energy mandates and energy efficiency investment goals?
We want to make sure agencies have the tools and resources they need to execute and implement these contracts quickly and efficiently -- helping to avoid a backlog in awards in October and December of 2013.

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Federal Agencies Embracing the President's Performance Contracting Challenge: An Update from Richard G. Kidd IV, Deputy Assistant Secretary of the Army (Energy & Sustainability) Office of the Assistant Secretary of the Army Installations, Energy & Environment

Last year at the NAESCO Federal Workshop, the Army announced $900 million in ESPC awards which finalized at $800 million. What can you report in terms of project implementation under this initiative?

The Army is working hard and will do $900m in ESPCs, just not all of it within 2 years. We did over $220m in FY12 and are on track to do even more than that in FY13.

Will the projected ESPC investment for 2013 primarily consist of working through the existing project pipeline or is there any additional 2013 investment goal in the works?
The Army is both clearing the current pipeline and adding to it. ESPCs are a standard practice for the Army and part of our long term facility investment plan. It is for this reason that we have initiated steps to re-compete the Army ESPC MATOC. We want to have a new contract in place before the ceiling on the current one is reached allowing Army ESPC efforts to continue uninterrupted.

Have you been able to expedite the ESPC contract process as you have worked through the aggressive project investment goals that have been set?
The Army's current process time is about 14 months. Follow-on Task Orders can take less time to award therefore, some of our pipeline will be executed faster than 14 months even. Army continues to streamline its procurement and review processes and standardized procedures. Our goal is to stay within a range of 12-14 months.

If Congress and the Administration are unable to avert sequestration and automatic across-the-board spending cuts are enacted, will the Army still be meet its energy efficiency targets in 2013 or do you see some slippage as a result of the cuts?
If sequestration happens, the Army will still have a utility bill and ESPCs will still be beneficial.

What challenges still remain for the Army in implementing ESPCs as part of its "regular" procurement routine and is there a way that NAESCO or individual ESCO contractors can help in this process?
The biggest challenge for the future is having sufficient, trained staff to develop and oversee individual projects. Going forward all of us are going to need to continue efforts at training and dialogue.

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Industry News

North America Paving The Way For Industrial Energy Efficiency Programs
The United States and Canada are leading the world with their innovative programs that deliver industrial energy efficiency services to customers, says a new report by the Institute for Industrial Productivity and the American Council for an Energy-Efficient Economy.

The report, Energy Efficiency Resource Acquisition Program Models in North America, looks at eight industrial energy efficiency programs across the United States and Canada. The programs were chosen because of their success at securing energy efficiency as a resource to meet current and future regional energy needs. Each program has a different model for acquiring energy savings, but all manage a series of initiatives that influence industrial customers to implement best practices and invest in efficient technologies.

In the U.S. and Canada, the delivery of energy efficiency as a resource to meet existing and future demand is now being relied upon with the same certainty as electricity or gas from new generation, claims the report. They have been responsible for postponing or eliminating the need for many expensive investments in new generation and transmission systems, and have become the model for other international programs to follow. To download the report, click here.

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Tax Reforms ‘Fail to Prioritize Energy Efficiency'
The US has an opportunity to create a corporate tax structure that encourages investments in energy efficiency and industrial modernization, according to a report by the American Council for an Energy-Efficient Economy. But none of the corporate tax reforms currently being considered prioritize energy efficiency, ACEEE said in the report, Industrial Energy Efficiency and Tax Reform. The research digs into the potential for various reforms to influence investments that might reduce the energy intensity of the industrial sector.

Two broad-based options for tax reform--reduce corporate tax rate by eliminating tax expenditures, and 100 percent expensing for tangible personal property--have a great deal of support among corporate decision-makers, according to the report. However, the ACEEE is skeptical either one would lead to energy efficiency investments on their own. Meanwhile, a pollution or energy tax, which has little support, would encourage investments in energy-efficient technologies and practices as well as make renewable energy more cost competitive, the report said. The ACEEE said that tax reform to support industrial energy efficiency would have to encourage industrial modernization, because the energy intensity of manufacturing correlates directly to the vintage of the equipment. The energy needed to produce a good or service will decrease as businesses replace older, less efficient equipment with newer, more efficient equipment, ACEEE said.

To download the report, click here.

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Businesses Leading Government On Use Of Clean Energy
A new report finds businesses are leading the way in adopting clean energy. The report, Power Forward: Why the World's Largest Companies are Investing in Renewable Energy, from Calvert Investments, Ceres and WWF reveals that a majority of Fortune 100 companies are setting their own goals on renewables, greenhouse gas emission reductions or both.

Interviews carried out with executives from Fortune and Global 100 companies, as well as analysis of public disclosures reveals that 96 out of 173 companies (56%) have set emission reduction goals, with 23 of those also have renewable energy targets. Companies are shifting away from short-term energy purchasing to longer-term strategies like power purchase agreements and on-site renewable energy projects.

But despite the progress, many companies have yet to set any goals at all citing that renewable energy is still more expensive than fossil fuels and inconsistent policies. The report urges all companies to set targets and disclose their commitments, which Calvert, Ceres and WWF say will help businesses.

For further information, click here.

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Report: Policies Already in Place Responsible For Declining Carbon Emissions
A new study released by the Center for Climate Strategies contends that cheap natural gas and the lagging economy are not the main drivers of declines in U.S. carbon emissions. The study concluded that, counted together, eight policies already in place at local, state and federal levels account for more reductions, 46 percent, than the recession or natural gas, as projected through 2020.

Although the economic downturn was the single largest reduction driver, energy and transportation policies collectively account for a bigger share, according to the report. Those policies include state renewable portfolio standards, energy-efficiency requirements, car mileage rules, and other actions that affect national energy production and use. The report analyzed federal data regarding carbon pollution and its equivalents, existing and projected, from 2002 to 2020 and beyond and found: Existing carbon policies across cities, states and the federal government -- from building codes to automobile and building energy efficiency standards -- combined with the downturn in the economy and cheaper gas, will reduce the growth of greenhouse gases by 23 percent by 2020. Combined, existing policies, the economic slowdown, and the switch to gas will lead the U.S. 69 percent of the way to President Obama's 2020 reduction goal.

The study asserts that by 2030, eight sustainable energy and transportation policies will account for an increasing share of expected emission reductions, rising from 46 percent in 2020 to 58 percent in 2030.

When it comes to energy-focused policies alone, state and national incentives and policies to switch to renewable energy will have a bigger pollution reduction impact (7 percent by 2020) than fuel switching (6 percent by 2020). The study also assessed 20 new policy steps to close the greenhouse gas emissions gap and increase economic and energy security across the board, including scaling up programs such as demand-side management, increasing public transit and transportation efficiency, and improving forest conservation and restoration. For more: download the report.

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New Report Provides Both Roadmap and Rationale for Utility Participation in Building Codes Implementation
A new report issued by the American Council for an Energy-Efficient Economy recommends ways to overcome the common barriers to utility involvement in energy code-related efforts and details pilot program concepts that can help utilities in playing a meaningful role in promoting building energy codes and in receiving credit for their efforts.

ACEEE reports that the latest national model building energy codes are about 30% more efficient than their predecessors of even six years ago, and there is a large opportunity for savings from new construction efficiency upgrades. These savings, in turn, can go a long way in helping the utilities meet their energy efficiency resource standards (EERS) targets and  in helping states comply with the requirements of the American Recovery and Reinvestment Act (ARRA). Under ARRA funding, recipient states committed to adopting national model codes along with implementing a plan to reach at least 90% compliance by 2017.

Typically utilities have faced barriers to implementation of code-based programs  as they have not been historically viewed as part of their core activities. Additionally, uniform protocols for the measurement of code compliance and calculation of savings from code compliance have not been fully developed.

This report recommends a framework based on adapting the new Progress Indicator methodology used by the U.S. Department of Energy and the Pacific Northwest National Laboratory for calculating savings from improved code compliance. To read the report click here.

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EIA Report Estimates Growth of U.S. Energy Economy Through 2040
The Energy Information Administration has just issued its Annual Energy Outlook 2013 which highlights a growth in total U.S. energy production that exceeds growth in total U.S. energy consumption through 2040. The report finds crude oil production, especially from tight oil plays, rises sharply over the next decade. Domestic oil production will rise to 7.5 million barrels per day (bpd) in 2019, up from less than 6 million bpd in 2011.

Motor gasoline consumption will be less than previously estimated. Compared with last year's report, the AEO 2013 shows lower gasoline use, reflecting the introduction of more stringent corporate average fuel economy standards. Growth in diesel fuel consumption will be moderated by the increased use of natural gas in heavy-duty vehicles, the report states. The United States becomes a net exporter of natural gas earlier than estimated a year ago. Because quickly rising natural gas production outpaces domestic consumption, the United States will become a net exporter of liquefied natural gas in 2016 and a net exporter of total natural gas (including via pipelines) in 2020.

Renewable fuel use grows at a much faster rate than fossil fuel use. The share of electricity generation from renewables grows to 16 percent in 2040 from 13 percent in 2011.

Net imports of energy decline. The decline reflects increased domestic production of both petroleum and natural gas, increased use of biofuels, and lower demand resulting from the adoption of new vehicle fuel efficiency standards and rising energy prices. The net import share of total U.S. energy consumption is expected to fall to 9 percent in 2040 from 19 percent in 2011.

Click here to download a copy of the report.

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Overwhelming Support For Building A Better, Cleaner Future
A new poll was released that showed that voters in three Western states have indicated significant support for clean energy and innovative infrastructure. The poll, made public at Greenbuild 2012,  was conducted on behalf of the BlueGreen Alliance, Natural Resources Defense Council, Ceres, and the U.S. Green Building Council by Lake Research Partners.

According to the poll, 56 percent of voters in Washington, Oregon and California favor a proposal to "reduce climate pollution and invest in clean energy by charging large companies for the pollution they create that contributes to climate change." Only 20 percent oppose it, while 24 percent are undecided. Additionally, voters were overwhelmingly in favor of updating America's innovative infrastructure, with 71 percent in favor of clean fuels, electric vehicles, bus rapid transit and commuter rail.  Voters said they support these efforts because they believe we have a responsibility for future generations and that investments in clean energy and infrastructure can provide good middle class jobs that won't be outsourced to other countries.

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Member Projects

AECOM To Implement ESPC for SSC PAC
As part of their continued effort to meet federally mandated energy efficiency and water conservation goals, the Army Corps of Engineers Support Center in Huntsville, Alabama, selected AECOM to develop and implement an ESPC for their site at SPAWAR Systems Center Pacific (SSC PAC) in San Diego, California. SSC PAC has an extensive footprint in California and Hawaii, operating approximately 225 buildings with a combined workspace of 3,032,000 square feet. In January 2012, AECOM successfully completed the first in a series of five task orders for SSC PAC. This first task order of $12.3 million included comprehensive lighting, domestic water and heating ventilation, and air conditioning upgrades throughout SSC PAC's San Diego facilities and it is anticipated to produce more than $950K per year in energy and operational savings.

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Congressman-elect LaMalfa Joins Butte County And Ameresco Officials To Mark Completion of Landfill Gas-to-Energy Project
Ameresco, Inc. joined with California and Butte County officials to commemorate the completion of its 2.2 megawatt  landfill gas-to-energy project at the Neal Road Recycling & Waste Facility in Paradise, California.  U.S. Congressman-elect Doug LaMalfa and Butte County Chair of the Board of Supervisors Steve Lambert, joined Ameresco officials for a ribbon cutting ceremony to recognize the innovative renewable energy project that is expected to generate enough clean energy to power approximately 1,300 homes, and is expected to save the county significant amounts of money through reduced energy costs and royalty payments over the next 20 years. Ameresco designed and built the facility, and will own, operate and maintain it for the duration of the 20-year contract.  The facility will collect methane gas produced by decaying organic materials and process it to generate power, with a portion of the revenues from the sale of that power returned to the county for the duration of the contract.  The clean energy produced from the project will be sold to Alameda Municipal Power through a 20-year power purchase agreement. Landfill gas is the largest source of human-made methane emissions in the United States.  A natural product of waste decomposition, landfill gas is made up of roughly 50 percent methane, 45 percent CO2, and 5 percent other components.  The current facility is expected to generate enough clean energy to reduce direct and indirect greenhouse gas emissions by over 10,400 tons of CO2 annually, which is equivalent to removing nearly 1,900 cars from the roads or planting over 2,000 acres of trees.  These environmental benefits will nearly double when the plant is expanded, as currently expected, to 4.3 MW in the near future.

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Ameresco Partners with Northeastern Wisconsin School District
Ameresco, Inc., announced that it has signed an ESPC with Oconto Falls School District in northeastern Wisconsin.  The $2.7 million ESPC is expected to save the District over $137,000 in energy and avoided operational costs annually through energy efficiency and infrastructure upgrades at eight facilities. Located just north of Green Bay, Wisconsin, the District includes six schools and two district facilities including energy and operational upgrades to be performed at the District Office and the District's bus garage. The ESPC is expected to help reduce the District's energy use by over 23  percent through the duration of the 20-year contract via upgrades that include lighting controls, water conservation retrofits, buildings envelope enhancements, boiler plant upgrades, and domestic water heater replacement.  In addition to the energy savings facility improvement measures, the District will receive future capital avoidance savings for a roof section replacement.

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Ameresco Quantum Begins ESPC at Oregon's Reed College
Ameresco, Inc. announced Ameresco Quantum, Inc., has started work on a comprehensive ESPC for Reed College in Portland, Oregon.  The $5.4 million ESPC is expected to help the college save in excess of $2.7 million over 10 years through campus-wide operational and energy efficient upgrades while reducing its annual CO2 emissions by 2.65 million pounds. The administration looked to significantly reduce the college's environmental impact by minimizing energy use, maximizing equipment life, and maintaining and improving on the livability of their building environments.  By providing the college with an accurate existing condition assessment from their meter-based Total System Evaluation™ (TSE) method, Ameresco Quantum was able to identify and prioritize major improvements to eight buildings plus campus-wide lighting and water measures to support recognized operational and sustainability goals. Based on the comprehensive energy and water audit of the college's facilities, Ameresco Quantum identified potential energy savings measures including campus-wide interior, exterior lighting and plumbing upgrades, as well as installing a more energy efficient and controlled HVAC system to lower energy use and improve building occupant comfort.  In addition, new energy efficient technologies will be installed on the campus-wide boiler system, including HVAC controls, and the installation of a new energy dashboard for stricter monitoring and regulation of the campus-wide steam system.  This project with Reed College comes on the heels of Ameresco Quantum's partnership with Portland Public Schools as well as 17 of Washington's 34 community and technical colleges, for which Ameresco Quantum has obtained nearly $7 million in energy and operational savings grants from the Washington Department of Commerce.

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Laclede County Completes Self-Funding Energy Savings Contract with CTS Group
Located in south central Missouri, Laclede County serves over 35,000 rural residents.  The 1924 courthouse was rebuilt in 1998 with traditional roof top air handling units. Even though the systems were only thirteen years old, utility costs were extremely high at $4.51 a sq. ft. and escalating.  Additionally, comfort in many areas was an issue, and increased maintenance costs were causing maintenance to be deferred.  The Commission looked to CTS Group for options and to identify the best potential choices available to the County.  After extensive analysis of the existing systems, CTS was able to develop an improvement plan for the county utilizing performance contracting to reduce annual kWH usage by 57% and guaranteeing the county at least $282,353 in annual energy savings.  By factoring in annual operations and maintenance savings at a very conservative level of $45,238, the result is an annual positive cash flow. The Hybrid Geothermal HVAC System includes 54 wells drilled 330 ft and the web based Temperature Control Building Automation System can be controlled remotely from any computer with internet capability. In addition, occupancy based CO2 Demand Control Ventilation system, lighting and lighting control upgrades, fire alarm system replacement, domestic hot water plant replacements at the Correction Center and Administration Area and water softener upgrades will also be installed.

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Finneytown, OH Local Schools Working with Trane to Launch Energy Saving Upgrades Expected to Save $120,000 Annually
Leaders at Finneytown, Ohio Local Schools are undertaking infrastructure upgrades to Whitaker and Brent Elementary Schools and the secondary campus buildings to increase energy and operational efficiency, reduce energy costs and improve the teaching and learning environment. Upgrades are expected to save $120,000 a year and generate $50,000 in one-time rebates. District leaders are collaborating with Trane to complete the upgrades by the summer of 2013. The improvements will be funded out of anticipated energy savings at no additional cost to taxpayers and represent a major step in transforming district facilities into high performance buildings which meet specific standards for energy and water consumption, system reliability and uptime, environmental compliance and occupant comfort. All standards are set to deliver established outcomes that help building owners and occupants achieve their organizational missions. The district chose to pursue Ohio House Bill 264 in funding the improvements. House Bill 264 is an energy conservation program which allows school districts to make energy efficiency improvements to their facilities using the cost savings they generate to pay for them.  The improvements are also being funded with Qualified Zone Academy Bond (QZAB) financing, a debt instrument for school finance which allows qualifying schools to borrow at little or no interest cost. QZAB requires a 10 percent match from a "qualified contributor" which will be provided by the Greater Cincinnati Energy Alliance which facilitates investment in energy efficiency for homeowners, non-profit organizations, and commercial building owners through outreach and education, project management, and financing solutions.

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Bedford County And Schools Choose NORESCO For $7.9 Million Energy Infrastructure Project In Virginia
NORESCO has secured a $7.9 million guaranteed energy savings agreement over a 15-year contract term with Bedford County and Bedford County Public Schools in Virginia.  The aggregated project includes improvements to lighting, energy management and HVAC systems, water conservation and weatherization. Construction began at the end of April 2012, and completion is forecasted for October 2013.

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Schneider Electric Promotes Energy Savings And Environmental Responsibility With Conserve My Planet Program
Schneider Electric announced that it has successfully completed its first implementation of the Conserve My Planet™ program in the U.S. at the Allen Independent School District, in Allen, Texas. Schneider Electric's Conserve My Planet program is an educational, energy-saving program for K-12 schools that includes an energy audit, educational materials, teacher and student training programs, evaluation, and recognition.  Tasked with cutting its energy budget by 10 percent, the school district turned to Schneider Electric to not only help educate the students across 16 elementary schools about ways to cut energy usage, but also to address this energy reduction goal. Schneider Electric provided an energy and sustainability manager to guide Allen Independent School District in planning and implementing an energy and sustainability awareness campaign for its elementary schools, with a focus on changing the behaviors of the administration, teachers and students. As a result of implementing various energy competitions and educational programs over the course of the school year, the district was able to save approximately $73,500, and reduced CO2 emissions by 423 tons, equivalent to removing 95 cars from the roads for one year.

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City of Denison, Texas, Enters $7.9 Million Performance Contract With Schneider Electric
Schneider Electric announced that it will implement a $7.9 million ESPC with the city of Denison, Texas, to upgrade and retrofit existing equipment and reduce operational costs in the city's wastewater treatment plant and other municipal buildings. The project, which is anticipated to be completed in the spring of 2013, will enable the city to implement long-term energy efficiency in its facilities, while saving approximately 20 percent of its annual energy costs over the 15-year term of the contract. Much of the performance contract project will focus on the Denison Wastewater Treatment Plant, which was challenged to operate at peak efficiency levels as a result of outdated equipment. Schneider Electric is working with the city and its design engineers to improve the aeration basin and aerobic digester, install new fine bubble diffusion grids, replace blowers and pumps, and perform other upgrades to enable the plant to operate at its full potential, while improving processes and efficiency. When the project is complete, operators will be able to shut down parts of the basin that are not needed, allowing sections to be drained for routine maintenance -- a task that has not been possible for 15 years -- as well as increasing the overall dependability of the plant.  In addition to the project at the wastewater treatment plant, the performance contract will also support improvements, including the addition of a central energy management system in 11 city buildings including city hall, the community center, Raynal Annex Building, the city library, Waterloo Pool, service center, police station, three fire stations and an indoor batting facility. Other upgrades made throughout the city buildings include upgrades to aging HVAC equipment and retrofits from T12 to T8 lighting fixtures.  The performance contract will allow the city to leverage the operational savings from the new, more efficient equipment to pay for almost half of the project, while reducing its energy use by 2.1 million kilowatt hours, which is equivalent to taking 240 cars off the road annually. In addition to utilizing savings achieved through the project, the city received a $64,000 grant from ONCOR, the largest regulated electric delivery and transmission provider in the state of Texas, to fund facility retrofits.

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Kansas Hospital Pledges Commitment To Energy Efficiency Through $3 Million Performance Contract With Schneider Electric
Schneider Electric announced that it will perform a $3 million energy savings performance contract with Susan B. Allen Memorial Hospital in El Dorado, Kansas, to improve patient/staff comfort and safety and sustainability of its facilities. Expected to be completed in April 2013, Schneider Electric will implement retrofits to building equipment across three hospital facilities, comprising nearly 250,000 square feet, which will result in more energy-efficient operations, lower utility costs and an improved medical environment for patients, doctors, staff and the community as a whole.  The performance contract with Schneider Electric is helping the hospital fast-track building upgrades and maintenance costs associated with aging equipment, including old, inefficient boilers, an antiquated cooling tower, controllability issues with building automation controls and poor hot water flow to a section of the hospital. Major elements of the project retrofits in the Susan B. Allen Hospital's main building, medical plaza and dialysis center will include replacement of the boilers and cooling tower, lighting retrofits, installation of occupancy sensors, and upgrades to building automation systems. In addition to these improvements, Schneider Electric partner, Sandifer Controls, will be responsible for recomissioning existing Square D by Schneider Electric electrical equipment and expanding the hospital's controls system to improve ease of use and energy efficiency, as well as increase the comfort of patient rooms and physician offices.

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Member News

EnerLogic® 70 Recognized for Energy Savings & Excellence
Solutia Inc., a subsidiary of Eastman Chemical Company has been recognized by Architectural Products magazine's Product Innovation Awards for the second year in a row. EnerLogic® 70 window film series won in the Solar Control and Shading/ Site-Generated Energy category. EnerLogic 70 is the next generation of glass insulation technology. Built on the success of EnerLogic 35, which launched in 2010, EnerLogic 70 window film combines industry-leading low-e performance with a virtually invisible appearance, offering four-season window insulation. The EnerLogic series offers ROI in as little as three years, but ROI can often be shorter than this because of utility rebates for energy-efficient products. Architectural Products' Product Innovation Awards recognize product ingenuity in the built environment. It acknowledges products, materials, and systems innovation that take commercial and institutional design to new heights. Judged by a group of 50 independent industry professionals, the program offers a method for impartially reviewing and presenting innovative, investigation-worthy products.

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Philips Releases LED T8 System
A direct replacement for linear fluorescent T8 and T12 lamps, the new Philips 22.5-watt LED T8 system, utilizing an external driver, delivers light quality comparable to traditional lamp technologies with increased energy efficiency and less maintenance.  With its patent-pending channeled optics, the new lamp features a wider beam distribution than competing products, resulting in better ambient light quality. It offers excellent color rendering properties with an 85 CRI and meets IES-recommended illuminance levels for office spaces by producing 104 lumens per watt at the system-level.  Designed to echo traditional electronic ballast T8 lamps in shape and wiring structure, this LED T8 system can be easily and quickly installed in most existing ceiling troffers. This system is among the first to meet the stringent requirements of the DesignLights Consortium's category 28 for linear LED retrofit kits. DLC compliance ensures product performance standards and enables eligibility for money-saving energy rebate programs throughout the country.

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Thermolite Window System Protects Indigo Garden District Hotel During Hurricane Isaac
Indigo Garden District Hotel in New Orleans, Louisiana, was spared window and structural damage from Hurricane Isaac after completion of the installation of the Thermolite Window System in August 2012. The Hotel initially chose the Thermolite Window System for its noise reduction properties, but soon discovered the patented technology prevents window implosion from hurricane winds. A building adjacent to the Indigo Garden District Hotel of similar size, age and design suffered window damage due to wind pressure changes that caused the windows to implode on the building. Aside from protecting the windows and structure of the building, a supplemental window system like the Thermolite Window System can save lives from the deadly dangers of imploding window glass.  Energy savings of over 20% are also possible in buildings with ¼ inch annealed glass due to the elimination of air infiltration and the improvement to the window insulation.  In the hospitality industry, energy costs are the second most expensive variable cost.

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40 Billion Dollars of Annual Energy Savings is Possible in the Commercial Building Market.
Therm-O-lite Inc. has released an infographic video that challenges conventional solutions to reducing CO2 emissions and conserving energy. The video illustrates the energy demands that commercial buildings create and the huge savings potential that exist today.  According to the company, a  simple window retrofit; taking single pane glass and making it double by placing an interior window system behind it, has the largest potential for saving energy and reducing climate change CO2 emissions. The company cites the US Department of Energy- Buildings Data Book 2011 which reports that commercial buildings consume 18.2 quadrillion BTUs and spend over 179 billion dollars per year meeting energy demands. Since 53 percent of commercial buildings have single-pane glass and these buildings experience a typical 20% total energy reduction with an interior window retrofit, the company asserts that 1.92 billion BTU annual savings is possible. Interior windows are installed on the inside of existing buildings with little or no disruption to the occupants.  They are installed in less than an hour and require no special skills or trades.  The existing window is, in effect, recycled; utilizing the energy benefits of the existing glass and multiplying it to create a terrific energy barrier.

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Trane Highlights Energy Efficiency Strategies in Series of Conference Presentations
According to an Economist Intelligence Unit survey from 2011 -- sponsored by Ingersoll Rand -- 60 percent of senior leaders say cost is the main reason to pursue efficiency improvements. High performance buildings represent one way to manage energy costs by reducing lifecycle costs so organizations can make buildings assets instead of expenses. Three recent conference presentations by Trane managers made that case before three different audiences.  Michel van Roozendaal, vice president for Trane in the Europe, Middle East, India, and Africa regions, discussed how adopting high performance building concepts can reduce energy and operating expenses by 30 to 50 percent at the Future Cleantech Forum in Geneva, Switzerland.  During his presentation, van Roozendaal made the business case for how high performance building solutions can increase the lifecycle of a building. Lou Ronsivalli, global service offers development leader for Trane developed that theme with attendees at the International Facility Management Association World Workplace 2012 Conference in San Antonio, Texas. Neil Maldeis, energy engineering manager for Trane, discussed how using energy modeling software can help identify specific energy saving opportunities and can be used to implement energy efficiency strategies during the World Energy Engineering Conference in Atlanta, Georgia.

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All content Copyright 2012 The National Association of Energy Service Companies. All rights reserved. NAESCO, as sponsor and publisher, as well as the Newsletter editors cannot be held liable for changes, revisions or inaccuracies contained in the material published. For more detailed information on the products, projects, programs, services or policies covered in the NAESCO Newsletter, it is recommended that readers contact the appropriate person, company, organization, agency, or industry group.

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