Federal Energy Management Advisory Committee - 08/03 Memo of Records

Meeting Summary
August 19, 2003
Lake Buena Vista, FL

INTRODUCTION

The Federal Energy Management Advisory Committee (FEMAC) held its most recent public meeting on August 19, 2003, in Lake Buena Vista, Florida. The meeting was held in conjunction with Energy 2003, an annual workshop and exposition co-sponsored by the Department of Energy (DOE), the General Services Administration (GSA), and the Department of Defense (DOD). FEMAC was established by Executive Order 13123 - Greening the Government through Efficient Energy Management in order to provide input to the Secretary of Energy for meeting Federal energy management goals; the committee is coordinated by DOE's Office of Federal Energy Management Programs (FEMP). The committee's Designated Federal Officer is Steven Huff, of FEMP. FEMAC is chaired by Brian Henderson, of New York State Energy Research and Development Authority. Fourteen other committee members represent a cross-section of interests, including the Federal Government, the utility and energy service industries, equipment manufacturers, academic institutions, non-profits, and energy consumers. Attachment A provides a list of FEMAC members. Attachment B includes a list of public comments. Attachment C is the meeting summary.

EXECUTIVE SUMMARY

The purpose of FEMAC's public meetings is to obtain input from Federal officials and private sector stakeholders involved in energy management in the Federal sector. Meetings are generally held in Washington, DC, and during FEMP's annual workshop and exposition. At the August 19th meeting during Energy 2003, Beth Shearer, the Director of FEMP welcomed the audience and introduced committee members. Steven Huff and Brian Henderson opened the meeting and reviewed ground rules for public participation, which included the acceptance of written and oral comments to the committee. Topical themes that were addressed included:

Energy Savings Performance Contracts (ESPCs) and alternative financing
FEMAC marketing and outreach activities on behalf of FEMP
Communications with agencies at the senior executive and facilities level
Energy efficiency and renewable energy training and education programs
Executive Order 13123
Office of Management and Budget scorecards
Distributed generation and combined heat and power

ATTACHMENT A

FEDERAL ENERGY MANAGEMENT ADVISORY COMMITTEE

MEMBERS PRESENT

Mr. Stuart Berjansky, Advance Transformer Company
Mr. Robert Collins, Jr., Tampa Electric Company
Mr. Richard Earl, PB Facilities, Inc.
Mr. Terrel Emmons, Office of the Architect of the Capitol
Mr. Richard Hays, City of San Diego
Mr. Brian Henderson (FEMAC Chairman), New York State Energy Research and Development Authority
Ms. Anne Marie McShea, The Center for Resource Solutions
Dr. Get Moy, Office of the Deputy Under Secretary of Defense
Ms. Mary Palomino, Salt River Project
Mr. James Rispoli, Department of Energy
Ms. Cynthia Vallina, Office of Management and Budget

MEMBERS NOT PRESENT

Mr. Jared Blum, Polyisocyanurate Insulation Manufacturers Association
Mr. Erbin Keith, Sempra Energy Solutions
Ms. Vivian Loftness, Carnegie Mellon University
Mr. Mitchell Rosen, Liberty Total Comfort Systems

ATTACHMENT B

PUBLIC COMMENTS - SUGGESTED ACTION ITEMS FOR FEMAC

Market FEMAC and FEMP more effectively
Promote Executive Order 13123 and ESPCs/alternative financing approaches to agency senior executives and field personnel
Collaborate with an environmental executives network affiliated with the Office of the Federal Environmental Executive
Examine rules restricting FEMP's travel and use of national laboratories
Encourage agencies to obtain renewable energy credits
Promote more aggressively, the ENERGY STAR® program
Investigate the benefits of Combined Heat and Power and Distributed Generation
Encourage an analysis of the gap between resource adequacy for National Energy Policy programs and funds available to carry out the policy
Increase awareness among Federal employees on the importance of energy management in Federal facilities
Help FEMP provide Energy Service Companies with financing assistance
Communicate to Federal agencies the message that saving energy boosts the bottom line
Solidify and announce FEMAC priorities
Assist FEMP in the development of its business case
Work to ensure the extension of ESPC procurement vehicle in the energy bill

ATTACHMENT C

MEETING SUMMARY

Ms. Beth Shearer opened the meeting by welcoming the audience and providing a brief overview of FEMAC. She noted that FEMAC is exceptional among advisory committees because membership includes Federal Government officials who offer a vital perspective on how best to serve Federal customers. Ms. Shearer introduced each committee member, highlighting FEMAC's broad range of professional experience.

FEMAC operates according to procedures established by the Federal Advisory Committee Act (FACA). Requirements include posting a notice of all public meetings in the Federal Register at least 15 days in advance of the meeting (for this meeting, the notice appeared on July 25, 2003); minutes of the meeting will be available via the DOE Public Reading Room no later than 30 days after each meeting. Public comment during the meeting is encouraged. FEMAC reviews comments received at this and all other public meetings. The committee has four working groups, which address comments in more detail. The committee as a whole takes these comments and those of its four working groups into consideration when providing recommendations to the Secretary of Energy.

According to meeting participants, both FEMAC and FEMP need to adopt a more effective approach to marketing their respective activities. The committee was encouraged to recommend that FEMP provide senior Federal officials throughout the government with more and better information on Federal energy management; special emphasis was placed on targeting senior Federal executives involved in procurement, legal, environmental, and facilities management issues. The focus should be on promoting Energy Savings Performance Contracts (ESPCs) and other alternative financing mechanisms to help fund Federal energy efficiency and renewable energy projects.

One participant provided an example of a successful promotional effort within an agency for ESPC, stressing the efficacy of a top-down approach. This was accomplished by educating senior executives at the Department of Veterans' Affairs (VA), who in turn became advocates for the financing mechanism. The executives' enthusiasm resulted in the conduct of a successful training program at the field level. Within four months, 20 performance contracting projects were initiated within VA. Receptiveness at the field level was attributed to top management's outreach and advertisement regarding the benefits of ESPCs. An Energy Service Company (ESCO) representative agreed that a top-down approach increases receptivity on the part of local contracting officers. FEMP was encouraged to foster relationships with senior government officials to promote ESPCs. In addition, agency executives should be briefed on the importance the Administration places on Executive Order 13123. FEMAC was asked to encourage Federal senior procurement officials and energy executives to take advantage of FEMP's alternative financing services. The committee might also tap into an established network of agency environmental executives; John Howard, the Federal Environmental Executive, is involved with this group.

FEMP's efficacy may be inhibited by two policy issues: (1) strict travel restrictions on FEMP staff, which limit field visits and (2) the criticism of FEMP's use of the national laboratories to access independent research and expertise.

A Navy protocol called the Capstone Program, is designed to train captains and admirals in a wide range of responsibilities for senior managers; energy is one of the topics that is addressed. It was suggested that political appointees should be enrolled in a similar program to brief them on Federal programs; such a program could facilitate the integration of energy in the appointees' overall plans for agencies. A National Guard facilities engineer said that during the building renovation and replacement process, decision makers at the facility level are exposed to a range of competing concerns. To deal with these demands and limited financial resources, guidelines establishing building project priorities would be helpful.

A Naval energy manager recommended increasing the focus on cost savings through energy reduction by the end user. Approximately 15 to 20 percent of energy use is at the discretion of the end user and does not result in a product or benefit to the government. The discretionary use of energy should be regulated at the Federal level because of continuous turnover and the lack of a consistent policy in the military at the local level. The speaker suggested an energy awareness program for soldiers to stimulate a sense of ownership and responsibility, rather than treating energy as an entitlement.

One FEMAC member responded to concerns about training, by stating that the Office of Management and Budget (OMB) trains senior energy managers and procurement executives on a quarterly basis on OMB expectations for energy, transport and fleet management, and the environment. The Administration has sent a strong message to cabinet officials that the five Presidential Management items need to be emphasized at each agency. Executive Order 13123 requires that each agency submit a scorecard to report progress in implementing executive order goals. OMB scores and ranks agencies on their progress and sends the results to the President; this effort is designed to increase agency accountability.

A FEMAC member stressed that 2005 and 2010 are milestone years for executive order goals. In order to more easily meet energy efficiency goals, FEMAC and FEMP should draw attention to the executive order at the cabinet, senior executive, and field level to garner support. In addition, agencies should focus on obtaining credits from renewable energy sources to make up for the shortfall in energy efficiency. Renewable energy credits can be deducted from conventional energy per square foot consumed in facilities. Using credits "buys time" and allows for sustainable development rather than simple upgrades to a conventional system. Use of renewable energy also helps meet related energy and environmental goals, including the reduction of greenhouse gas emissions.

Public meeting participants also raised the issue of the status of the legislative authority for the ESPC financing mechanism. An Army representative from Fort Leavenworth outlined a frequent problem regarding alternative financing. In the construction of new buildings, budget reductions often force the service to build to first (cheapest) cost, thereby omitting sustainable features. He also raised the issue of the potential benefit of a new construction ESPC.

With respect to the status of ESPC's legislative authority, which is due to sunset in October, another audience member stated that it is unclear whether the Administration is supporting legislation for replacement facilities. A FEMAC member said that the language in pending energy legislation addresses the use of ESPCs in cases where operations and maintenance and energy costs of an old building equal the cost of new construction of a more sustainable building. The Office of Management and Budget promotes ESPCs not as a first choice, but as a financing option. OMB encourages planning, life cycle costing, and inclusion of future costs to government when planning building renovations, replacements, and construction. In order to prevent cost-cutting trade-offs that eliminate sustainable features in buildings striving for lowest first cost, the General Services Administration has implemented small ESPCs to achieve desired energy efficiency.

The committee learned that the Air Force Academy, which is highly dependent on natural gas for its energy needs, is facing a 50 percent increase in the academy's total natural gas bill in October 2003, and an additional 15 percent increase in January 2004. The agency purchases only a token amount of renewable energy, in part because of a three percent surcharge. The academy is shifting its energy reliance to include more ground source geothermal energy. An energy manager for the U.S. Army Intelligence Center asked whether there are policies in the works designed to (1) lower the price of natural gas, (2) encourage non-natural gas distributed generation, including renewables, and (3) facilitate the use of alternative financing. It was suggested that FEMP increase its efforts to assist ESCOs with financing.

The ENERGY STAR® program, a highly successful Federal/state collaboration, should be promoted by FEMP at annual energy conferences and elsewhere. In general, better partnerships between states and the Federal Government are needed; stove-piping within agencies should be avoided.

A Naval representative in the agency's energy program cited a lack of resources as the primary obstacle to reaching energy efficiency goals. High premiums for renewable energy, legislation that will double the btus that the Navy must reduce, and the need to make business decisions based completely on the bottom line show that increased monetary resources are needed. An audience member from a national laboratory suggested combined heat and power (CHP) as a cost saving, distributed generation technology that is being used to finance large photovoltaic and other renewable energy sources. Distributed generation (DG) techniques generally are fueled with natural gas, which is a relatively volatile fuel in terms of price and supply. Operating a large CHP plant demands a steady load and the operator becomes a priority customer and develops extended contracts with the gas company. While OMB scorecard ratings are based on btus per square foot and CHP use increases this figure, the focus should be on overall energy consumption and emissions reduction rather than localized btus. CHP also serves to diversify fuel sources. Especially in light of the recent blackouts in the Northeast and Midwest, FEMAC is urged to investigate CHP as a viable, efficient form of distributed generation.

Despite the growing importance of combined heat and power and distributed generation, FEMP's budget request is 14 percent lower this year. The primary decline is in the areas of CHP and DG. An audience member said that FEMP has inadequate resources to support the technology and to educate facility managers and procurement managers regarding the use of CHG and DG. It was recommended that DOE's Office of Energy Efficiency and Renewable Energy perform a gap analysis between the resource adequacy for programs included in the National Energy Policy and funds available to facilitate the policy.

A National Renewable Energy Laboratory (NREL) official said that NREL and FEMP can assist agencies in organizing energy teams, perform strategic planning, determine energy usage patterns, and address renewables and sustainability.

A Bonneville Power Administration (BPA) official said that his organization provides project financing when other methods are not viable. BPA's financing compliments the UESC and ESPC programs. Lawyers' views of statutes as enabling or limiting, which vary by agency, are the major obstacle to financing distributed generation and energy efficiency improvements. Any agency can issue an opinion on alternative financing for individual projects or programs.

A Federal Aviation Administration (FAA) representative praised FEMP for the services the program has provided his organization.

A FEMAC member said that political appointees are expected to fulfill a narrow, agency-related mission during their tenure. Usually, this mission has little direct connection with energy issues. One of the challenges for FEMAC and FEMP is to communicate to the agencies that saving energy helps accomplish the agency mission and improves company performance and the bottom line. Rather than being reactive and trying to reach minimum goals, agencies must take a proactive stance. An audience member suggested that one way to sell energy management is by emphasizing that what is saved in building operations can be applied to building maintenance and repair.

Another public comment stated that in a corporate return assets model, the higher the utilization of energy assets, the better off the employees. Employees drive their behavior based on asset management, utilization, and acquisition, thereby getting the best return on investment. The utility industry is looking at performance-based rates on a return on assets model, maximizing profitability by determining the proper input of assets.

An audience member who was formerly with the U.S. Army Corps of Engineers relayed experiences with energy projects from an academic and facility perspective. By promoting FEMP services through agency newsletters, field command personnel can become advocates for energy efficiency at the facility level. According to the speaker, ESCOs are not interested in renewable energy because there is little payback.

A member of the audience asked FEMAC to describe the committee's present and future priorities. It was also recommended that FEMAC assist FEMP in building its business case, promote Executive Order 13123, and ensuring the extension of the ESPC provision in the energy bill. A FEMAC member acknowledged the need for the committee to define its goals and produce guidance in order to help move FEMP forward.

FEMAC and audience members touched briefly on other issues of interest, including an energy bank, peak shaving, understanding E.O. 13123's mandates, and concern that as building design needs rapidly change, using ESPCs can result in paying for energy savings twice.

At the conclusion of the meeting, Steven Huff thanked the committee and members of the public and adjourned the meeting.