Congressional Record, Volume 143 Issue 103 (Monday, July 21, 1997)

[Congressional Record Volume 143, Number 103 (Monday, July 21, 1997)]
[Senate]
[Pages S7746-S7748]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

AMENDMENT NO. 937 TO S. 1023

Mr. BINGAMAN. Mr. President, the amendment Senator Murkowski and I
have offered strikes section 630 of the bill. If enacted, section 630
would foreclose all Federal agencies from taking advantage of energy
conservation programs offered by their local utility company. I believe
section 630 would needlessly restrict an option that helps the Federal
Government, the Nation's largest energy user, implement cost-effective
energy-savings programs at Federal facilities.
Mr. President, the Energy Policy Act of 1992 set a goal of reducing
by 20 percent the average energy consumed by the Federal Government.
Federal facilities were given various approaches for reducing energy
consumption. For example, an agency can sign an energy savings
performance contract with an energy service company, or it can work
with the local utility company to take advantage of utility-sponsored
energy conservation measures. Under current law, Federal agencies may
select the option that is best for their situation.
It is important to have this flexibility because working with the
private sector to reduce a facility's energy use is not an ordinary
procurement. Purchasing energy efficiency isn't like buying paper clips
or furniture. The Federal Energy Management Program has made
substantial progress in streamlining the contracting process for energy
management services at Federal facilities. If an agency chooses to work
with the local utility company, it may go directly to the utility on a
sole-source basis to obtain the energy efficiency and management
services that are available to all utility customers. In most cases,
the utility teams with energy service companies to maximize cost-
effective energy savings for the Government.
Section 630 would eliminate the option of working with the local
utility. If section 630 remains in the bill, Federal agencies will not
be able to take advantage of the financial incentives, goods, or
services generally available to all other customers of the utility.
This could represent literally millions of dollars lost to the
taxpayers. Section 630 could also prevent payments on existing energy
management contracts between Federal agencies and utilities.

Over the years, I have spoken frequently here on the critical need
for Federal agencies to make better efforts to reduce their energy use.
According to a recent GAO report, the taxpayers' electric bill for
Federal facilities is more than $3.5 billion a year. There is no
question we could be saving a substantial portion of this amount
through cost-effective energy measures that frequently have payback
times less than 10 years. I am pleased to see the substantial progress
now being made.
For example, the Government's largest single energy user is the
Department of Defense, which accounts for half of all Federal
electricity consumption. The Department is now on a track to save up to
$1 billion per year in total energy spending by the year 2005. The
Department of Defense believes section 630 would significantly reduce
its authority and opportunity to take advantage of private sector
energy conservation expertise and capital, and would, in fact,
seriously reduce the amount of work offered to all sectors of the
energy community.
Mr. President, I ask unanimous consent that a copy of this letter
from Millard Carr of the Department of Defense be printed in the Record
at the conclusion of my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. BINGAMAN. Earlier, I described the options available to Federal
agencies to secure energy management services. If I could Mr.
President, I'd like to take a moment to give two examples demonstrating
that the program is on the right track and illustrating the risks of
hasty and ill-considered changes.
The first example is the New Mexico initiative from my home state.
The

[[Page S7747]]

General Services Administration has a contract with a local utility,
Public Service Co. of New Mexico, that covers the Federal facilities in
PNM's service territory. Under the terms of this agreement, PNM
partners with energy service companies on a competitive basis to
implement the actual energy-saving measures. This initiative is
expected to result in $60 million in new investments in conservation
and energy efficiency technologies. The initial pilot project is at the
White Sands Missile Range, where I understand that substantial
reductions of energy and water use have been achieved. This successful
program would be terminated if section 630 were enacted.
The other option available to Federal agencies is to contract with
energy service companies. I understand there may be concerns that these
companies are left out of the Federal Energy Management Program when
the agencies choose to work with their local utilities. Mr. President,
I don't believe this is the case. An article from the May 22, 1997, New
York Times describes the Department of Energy's awarding of five
competitive contracts worth up to $750 million dollars. These contracts
cover Federal buildings in Alaska, Arizona, California, Hawaii, Idaho,
Nevada, Oregon, and Washington. The winning companies include energy
service companies such as Honeywell, Inc., and Johnson Controls. Five
more awards are planned over the next 2 years for a total contract
value of $5 billion. It seems to me that all commercial players are
helping Uncle Sam reduce his energy bill. Mr. President, I ask
unanimous consent that a copy of this article be printed in the Record
at the conclusion of my remarks.

The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 2.)
Mr. BINGAMAN. Mr. President, these are but two examples from the
Federal Energy Management Program. The Energy Policy Act of 1992
simplified the contracting procedures Federal agencies may use to
implement energy conservation measures. The last thing we should be
doing is eliminating options. We should be striving for maximum
flexibility and not hamstringing the agencies as they strive for
substantial progress.
Mr. President, last week the distinguished chairman of the
Appropriations Committee stated that section 630 ``reflects no change
in the law'' and that the section ``directs federal agencies to abide
by the law.'' I must respectfully disagree with the chairman. Section
630 would make very substantial changes in energy-management measures
enacted as part of the Energy Policy Act of 1992, which Senator
Murkowski and I, and the other members of the Energy Committee, worked
to pass.
Last week, in speaking on section 630, the chairman of the
Appropriations Committee listed what he stated were the provisions that
are, in his view, relevant to Federal agency contracting programs for
energy services. However, with all due respect Mr. President, the
distinguished Chairman omitted the sections of the existing law that
section 630 would overturn. In particular, section 152 of the Energy
Policy Act of 1992 describes the implementation options available to
agencies. If I may, I'd like to read the exact text: Each agency shall
``take maximum advantage of contracts authorized under subchapter VII
of this chapter, of financial incentives and other services provided by
utilities for efficiency investment, and of other forms of financing to
reduce the direct costs of Government * * *.''
Section 630 would effectively eliminate the option for Federal
agencies to work with utilities, receive any available financial
incentives, or take advantage of attractive forms of financing. This
would be a bad deal for the taxpayer.
Another part of section 152 of the Energy Policy Act that section 630
would repeal specifically describes utility incentive programs:

(1) Agencies are authorized and encouraged to participate
in programs to increase energy efficiency and for water
conservation or the management of electricity demand
conducted by gas, water, or electric utilities and generally
available to customers of such utilities.
(2) Each agency may accept any financial incentive, goods
or services generally available from any such utility, to
increase energy efficiency or to conserve water or manage
electricity demand.
(3) Each agency is encouraged to enter into negotiations
with electric, water, and gas utilities to design cost-
effective demand management and conservation incentive
programs to address the unique needs of facilities utilized
by such agency.
(4) If an agency satisfies the criteria which generally
apply to other customers of a utility incentive program, such
agency may not be denied collection of rebates or other
incentives.

Congress placed very similar requirements on the Department of
Defense in the Defense Authorization Act for fiscal year 1993. Mr.
President, I will not read any more of the existing energy or defense
authorizations that would be wiped out by section 630. Instead, I ask
unanimous consent that there be printed in the Record at the conclusion
of my remarks all the relevant provisions that allow local utility
participation in Federal energy management programs.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 3.)
Mr. BINGAMAN. Mr. President, I have heard no arguments here as to why
these good provisions should now be repealed. In addition, the
Appropriations Committee's report offers no explanation of the need for
section 630.
Let me also observe that section 630 attempts to make these
controversial changes in energy legislation through an appropriations
bill. As far as I can tell, no formal notification to or consultation
with the Energy Committee has taken place. I doubt that such a far-
reaching change would be considered by the Energy and Natural Resources
Committee without at least a hearing.
The proponents of section 630 should have their views heard in the
appropriate forum. I am recommending to the chairman of the Energy
Committee that hearings be held so that we can get all the issues out
on the table and, if changes are needed, come to a reasonable solution.
In the meantime, I urge my colleagues to support this amendment and
strike section 630.

Exhibit 1

Office of the Under Secretary of Defense, Defense
Pentagon,
Washington, DC, July 18, 1997.
To: Mr. Dan Alpert, Office of Senator Bingaman.
Subject: Section 630 Senate Treasury and Postal Service
Appropriations bill.

This is in response to your phone request for a Defense
position on the proposed Section 630 to the Senate Treasury
and Postal Appropriation bill which would preclude any
Federal agency from obtaining energy conservation services on
a sole source basis.
I understand the intent of the section is to assure best
value to the government through competition. I cannot comment
on the jurisdictional issues, but I believe very strongly
that the language as written would significantly reduce the
authority and opportunity this Department has to take
advantage of private sector energy conservation expertise and
capital. I can only assume that the sponsor of this section
has been seriously misled as to its implications.
The Department of Defense is the single largest energy user
in the country and as such we have been and continue, to be
committed to achieving the energy efficiency improvement
goals of the Energy Policy Act and President Clinton's
Executive Order 12902. If those goals are achieved, we will
realize a billion dollar reduction in our annual energy bill
by 2005 and implement the most cost effective environmental
improvement result possible through pollution prevention.
With the reduction in available appropriated funds and
technical personnel to achieve the buildings and energy
systems improvements necessary to meet program goals, we are
turning to the private sector for those resources.
The Military Departments and this office have worked for
over a year to develop a memorandum of agreement with the
Edison Electric Institute to expedite participation in
existing energy conservation programs offered by many of
their member companies to all customers. There is no question
that Department of Defense installations, and all Federal
agencies, should have the same ability to access those
programs provided to other similar customers. The agreement,
based on authority in the Energy Policy Act, includes
direction that a competitive procurement process be used to
select the most cost effective and competent private sector
firm capable of doing the specific technical work. It is our
belief that this utility ``prime contract'' process will lead
to a significant increase in the actual work done by the
energy savings performance contractor and Architect/Engineer
communities.
The intent of the DoD/EEI agreement was simply to expedite
the contracting process through which Defense installations
could access private sector energy conservation experts and
resources. Passage of Section 630 would in fact seriously
reduce the amount of work offered to all sectors of the
energy community.

[[Page S7748]]

I urge you to work to convince the Congress to strike
Section 630.
Millard E. Carr, P.E.,
Director, Energy and Engineering.
____

Exhibit 2

[From the New York Times, May 22, 1997]

United States To Renovate Federal Buildings To Cut Energy Bills by 25
Percent

(By Matthew L. Wald)

Washington.--The Federal Government, the Nation's largest
landlord, will undertake a $5 billion renovation of its
buildings to cut energy bills by about one quarter, and all
the money will come from private companies, the Energy
Secretary, Federico F. Pena, announced today.
Mr. Pena named five corporate teams that will do the first
$750 million of work. When all the Government's 500,000
buildings are renovated, he said, energy costs will be cut by
$1 billion a year from the current $4 billion.
``That is real money, even by Washington standards,'' Mr.
Pena said.
An aide said the improvements, including better lamps,
motors, air conditioning systems and heating equipment, were
expected to save the Government $22 billion over their
lifetime.
The Energy Department has tried the approach before, on its
headquarters on Independence Avenue here and in other
buildings, but has found it cumbersome, as contracts are bid
building by building, officials said. Now the Government has
a standard contract and a list of vendors and hopes to
complete all Federal buildings by 2005.
The Government will invite an outside contractor to perform
an ``energy audit'' and suggest improvements, stating a price
for which it will do the work. If the Government accepts the
bid, the contractor installs the new equipment at the
contractor's expense, an approach taken by many private
building owners.
The Government will pay the contractor part of the money
that it saves on electric and fuel bills. The payments will
continue for a fixed period, usually five years. For the
contracts announced today, the maximum payments will be $750
million.
John Archibald, the deputy director of the Federal Energy
Management Program at the department, said he believed that
the contractors would invest about $500 million directly. In
addition, officials said, the contractors' burdens include
being paid back over several years, and the risk that the
savings would not justify their improvements.
The buildings to be improved range ``from military posts to
post offices, and from Federal monuments to memorials,'' Mr.
Pena said. Most are office buildings, officials said. The
contracts announced today cover all Federal buildings in
Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon
and Washington. Electricity prices in Washington and Oregon
are among the lowest in the nation, making savings more
difficult.
The work will be done by Honeywell, Inc., of Minneapolis,
which helped devise the concept of contractor-financed energy
improvements, Johnson Controls, of Walnut Creek, Calif., ERI
Services Inc., of Brideport, Conn., and two corporate teams.
One team comprises The Bently Company/BMP Team, of Walnut
Creek, Calif., Puget Sound Energy, of Bellevue, Wash., and
Macdonald Miller Company, of Seattle. The other team is
Enova, which is the parent company of San Diego Electric and
Gas, and Pacific Enterprises, also of San Diego.
____

Exhibit 3

Excerpts From the Energy Policy Act of 1992

Section 152(c)(2) (42 u.s.c. 8253(d)(1)(C))

Each agency shall take maximum advantage of contracts
authorized under subchapter VII of this chapter, of financial
incentives and other services provided by utilities for
efficiency investment, and of other forms of financing to
reduce the direct costs to the Government.

Section 152(f)(4) (42 U.S.C. 8256)

Utility incentive programs

Excerpts From the Department of Defense Authorization, Public Law 102-
484 (10 U.S.C. 2865(d))

Energy saving activities

(1) The Secretary of Defense shall permit and encourage
each military department, Defense Agency, and other
instrumentality of the Department of Defense to participate
in programs conducted by any gas or electric utility for the
management of electricity demand or for energy conservation.
(2) The Secretary of Defense may authorize any military
installation to accept any financial incentive, goods, or
services generally available from a gas or electric utility,
to adopt technologies and practices that the Secretary
determines are cost-effective for the Federal Government.
(3) Subject to paragraph (4), the Secretary of Defense may
authorize the Secretary of a military department having
jurisdiction over a military installation to enter into
agreements with gas or electric utilities to design cost
effective demand and conservation incentive programs
(including energy management services, facilities
alterations, and the installation and maintenance of energy
saving devices and technologies by the utilities) to address
the requirements and circumstances of the installation.
(4)(A) If an agreement under paragraph (3) provides for a
utility to advance financing costs for the design or
implementation of a program referred to in that paragraph to
be repayed by the United States, the cost of such advance may
be recovered by the utility under terms no less favorable
than those applicable to its most favored customer.
(B) Subject to the availability of appropriations,
repayment of costs advanced under paragraph (A) shall be made
from funds available to a military department for the
purchase of utility services.
(C) An agreement under paragraph (3) shall provide that
title to any energy savings device or technology installed at
a military installation pursuant to the agreement vest in the
United States. Such title may vest at such time during the
agreement, or upon expiration of the agreement, as determined
to be in the best interests of the United States.
Mr. BINGAMAN. Mr. President, I yield the floor. I suggest the absence
of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. DORGAN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Hutchinson). Without objection, it is so
ordered.
Mr. DORGAN. Mr. President, I ask unanimous consent that I be allowed
to speak for 20 minutes in morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.

____________________