Energy Savings Performance Contracts Laws and Regulations

Legislation authorizing energy savings performance contracts (ESPCs) was enacted in 1992, and the Department of Energy (DOE) promulgated regulations for their use in 1995. ESPC authority was made permanent in 2007.

The authorization of ESPCs is outlined in the following laws, and regulations:

• National Energy Conservation Policy Act
• Energy Policy Act of 1992
• DOE Final Rule: 10 CFR 436 Subpart B
• Federal Acquisition Regulations
• Skaggs Authority
• Executive Order 13423
• Energy Independence and Security Act of 2007

National Energy Conservation Policy Act (NECPA)

The National Energy Conservation Policy Act (NECPA) first gave Federal agencies the authority to enter into shared-energy savings contracts with private-sector energy service companies (ESCOs). It was superceded by the Energy Policy Act of 1992.

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Energy Policy Act of 1992

EPAct 1992 included the following provisions for ESPCs:

• Authorized Federal agencies to execute guaranteed-savings ESPCs
• Required ESCOs to guarantee savings
• Required measurement and verification (M&V) of savings
• Set the maximum contract term at 25 years, including the construction period

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DOE Final Rule: 10 CFR 436 Subpart B

DOE Final Rule (10 CFR 436 Subpart B) included the following provisions for ESPCs:

• Implemented energy savings performance contracts authority in 10 CFR 436 Subpart B
• Established list of qualified ESCOs
• Specified procurement procedures and criteria for selecting ESCOs
• Allowed unsolicited proposals
• Recommended standard terms and conditions
• Defined conditions of payment
• Addressed annual M&V requirements
• Prioritized 10 CFR 436 over FAR procurement requirements if the two conflict

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Federal Acquisition Regulations

Excerpts from the Federal Acquisition Regulations (FAR) related to ESPCs include:

• FAR Part 23.205 Energy savings performance contracts
• FAR Part 16.505 Ordering

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Skaggs Authority

Located in Public Law 105-277 (Omnibus Consolidated Appropriations Act of 1998)

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Executive Order (E.O.) 13423

• Set new goals for Federal agencies to:
  • Reduce energy and water use
  • Increase renewable energy sources and use

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Energy Independence and Security Act of 2007 (EISA 2007)

• Subtitle B, Energy Savings Performance Contracting (Sections 511 - 518), amended 42 U.S.C. § 8287
• Made the Federal ESPC authority permanent
• Authorized use of any combination of appropriated funds and private financing in Federal ESPCs
  • How this should be interpreted is currently under discussion
• Prohibited agencies from making policies that arbitrarily limit the maximum contract term to less than 25 years or limit the total amount of private financing
• Authorized the sale or transfer of energy generated on Federal sites from renewable energy sources or cogeneration in excess of Federal needs to utilities or non-Federal energy users in accordance with existing Federal or state laws
  • How this should be interpreted is currently under discussion
• Called for a study of non-building applications of ESPCs

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