Sustainability on Campus: Green Investment Green Returns Introduction to Commonwealth Of Pennsylvania s Guaranteed

1. Sustainability on Campus:Green Investment � Green ReturnsIntroduction to Commonwealth Of Pennsylvania�s Guaranteed Energy Savings ProgramDecember 5, 2003Larry F. Myers, PE, CEMPenn State Facilities Engineering Institute

2. Agency�s Point of Contact Department of General Services, Bureau of Engineering & Architecture GESA Program Facilitator Tom Rados, PE Assistant Director Penn State Facilities Engineering Institute Assist with implementing the GESA program Larry F. Myers, PE, CEM Energy Management Consultant

4. Cost Savings Potential For Guaranteed Energy Savings Projects Current Annual Utility Expenditures: $90,000,000 / year Assume 20% Savings: $18 million / year 10-Year Cumulative Dollar Savings: $180 million Note: This is simple Go � No Go test that an ESCO will use to determine their interest in your project. For Example: Office Building has $1,000,000 Annual Utilities 20% Savings = $200,000 over 10 years = $2,000,000 Project

5. Key Provisions Of The Guaranteed Energy Savings Act Procurement Process: Competitive sealed proposal (RFP) Contract Provisions: Amount of savings in any year shall be guaranteed to the extent necessary to make payments under the contract during that year Written guarantee that annual energy cost savings will meet or exceed the cost of energy conservation measures

6. Key Provisions Of The Guaranteed Energy Savings Act (continued) Contract Provisions (continued): Payments may be made over a period of time not to exceed ten years. Must provide for termination due to non-appropriations. Allows use of operating, utilities, or capital expenditure funds, and external monetary funding sources. Allows installment payments.

8. GESA � Small ESCO Process Flow

9. Commonwealth of PA Qualified ESCOsSee contact information on next slide Abacus Engineered Systems Alliant Energy Integrated Services Ameresco Energy Services Building Controls and Services CLT Efficient Technologies Group CMS Viron Energy Services Custom Energy Energy Systems Group First Energy Solutions Honeywell Johnson Controls Noresco PPL Energy Services Sempra Energy Solutions Siemens Building Technologies The Trane Company Vestar

11. What It Means To Be Qualified Three-year qualification period (to June 2006) ESCOs can apply at any time but are only qualified for remainder of period No more than 3 ESCOs invited by agency to submit RFPs ESCOs required to respond to all RFPs when requested ESCOs agree to comply with all terms and conditions of RFP and standard contracts

12. General Procurement Procedures Agency selects project site(s) Agency requests DGS approval to issue RFP Agency issues Request for LOIs to pool of qualified ESCOs Facilitator available for questions Project site data provided Agency receives LOIs from interested ESCOs Agency reviews qualifications and LOIs of interested ESCOs Written AFQ submissions Client references LOI Submission Agency evaluates ESCOs and selects 3 ESCOs to receive the RFP

13. General Procurement Procedures (continued) Agency issues RFP to the 3 selected ESCOs Conduct site visits Agency receives RFP responses Agency conducts evaluation Written proposals Client references Oral interviews Agency compiles and generates evaluation rankings Agency selects Project ESCO (Note: No costs have been incurred by the agency to this point) Agency enters into Investment Grade Audit contract with Project ESCO Upon acceptance of the IGA, the agency negotiates and executes an Energy Performance Contract with the Project ESCO

14. Letters of Interest (LOI)Response to Request for Letters of Interest Introduces project to all Qualified ESCOs Attachment A � Technical Facility Profile General Facility Data Operating Data Physical Data Energy Systems Data Possible Improvement Opportunities Energy and Water Consumption Data Is Project consistent with the ESCO�s business plan? Interested ESCOs should: Display an interest in the project Address the Technical Facility Profile Describe experience with similar facilities Describe experience with similar scope of work Describe other �value-added� services

15. THE RFPObtain a proposal from the 3 best qualified ESCOs Establishes the project schedule Defines the evaluation criteria Experience, Management, Technical, Financial Highlights special project terms and conditions Technical & Contractual

16. The Proposal � Response to RFP KEY INFORMATION REQUESTED PRELIMINARY TECHNICAL PROPOSAL Qualifications Project Team Members Project Work Plan and Milestones Specific Training Provisions Proposed Project Financing Annual Report

17. The Proposal � Response to RFP(continued) Preliminary Technical Site Assessment Energy Baseline Calculation Methodology Project�specific Commissioning Plan Procedure for Calculating Energy and Cost Savings Equipment Maintenance Plan

18. The Proposal � Response to RFP (continued) Subcontractor Information Corporate Background Technical Qualifications Financial References Project-specific Savings Measurement and Verification Plan

19. The Proposal � Response to RFP (continued) PRELIMINARY TECHNICAL AUDIT REPORT Identification of Preliminary ECMs Technical data and assumptions used in this analysis Methods used to develop baseline consumption Detailed energy and operational cost savings calculations Projected unit energy savings Methods for calculating and documenting operational cost savings

20. The Proposal � Response to RFP (continued) PRELIMINARY COST PROPOSAL ESCO Fees as a Percentage of Hard Costs Investment Grade Energy Audit Design Engineering Fees Construction Management System Commissioning First-year Training Fees Annual Service Fees Construction Financing Contingency Costs

21. The Proposal � Response to RFP (continued) PRELIMINARY COST PROPOSAL (continued) ESCO Preliminary Project Cash Flow Analysis Financed Project Costs and Term Annual Interest Rate Construction Months Utility/Fuel Escalation Rate Annual Fees Escalation Rate ESCO Fees Total Cost Savings (utility/fuel, operational) Guaranteed Cost Savings Financing Payment Net Savings

22. Web Based Assistance Provided by Department of General Services and Penn State Facilities Engineering Institute Description of Act 57: GESA List of PA Qualified ESCOs Standard Documents package Links to Web Sites of Related Organizations Historical PA Project Information

23. Commonwealth Technical Assistance Resources https://fei.psu.edu/ESCO/GESA_Home.asp GESA Information DGS Web Site Program Description Standard Documents Active Projects ESCO & Industry Links

24. Review of Proposal Forms Proposal Submission Documents Attachment A 1.0.1 ESCOs ECM Summary Form 1.0.2 ESCOs Projected Annual Energy Savings Data Form 1.0.3 ESCOs Projected Annual Energy Savings Data Form in MMBtus 1.1 ESCOs Team Member Qualification Form 1.6 ESCO Project History and Client Reference Form Attachment A-1 A-1 Subcontractors Qualifications Form Attachment B B-1 ESCOs Proposed Project Cost Form B-2 ESCOs Preliminary Annual Cash Flow Analysis Form

25. http://www.naesco.org/

26. Project Status Delegated DGS has assigned project to agency Request for LOI Agency notifies all ESCOs LOI Review Agency reviews ESCO Letters of Interest RFP Pending Agency has selected 3 ESCOs to work with. RFP not available. RFP Issued RFP has been sent to the 3 ESCOs Proposal Review Proposals have been received from selected ESCOs. IGA Pending One ESCO has been selected to perform an Investment Grade Audit. Contracting Investment Grade Audit has been performed. The agency is negotiating the completion of the project. Construction Project is being performed. Repayment Project is complete and Guaranteed Savings are being accumulated.

27. Question & Answer Session