[Senate Report 116-116]
[From the U.S. Government Publishing Office]
Calendar No. 219
116th Congress } { Report
SENATE
1st Session } { 116-116
======================================================================
ENERGY SAVINGS THROUGH PUBLIC-PRIVATE PARTNERSHIPS ACT OF 2019
_______
September 24, 2019.--Ordered to be printed
_______
Ms. Murkowski, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 1706]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 1706) to amend the National Energy
Conservation Policy Act to encourage the increased use of
performance contracting in Federal facilities, and for other
purposes, having considered the same, reports favorably thereon
without amendment and recommends that the bill do pass.
Purpose
The purpose of S. 1706 is to amend the National Energy
Conservation Policy Act (NECPA, Public Law 95-619) to encourage
the increased use of performance contracting in Federal
facilities.
Background and Need
The Committee on Energy and Natural Resources has long
recognized the significant benefits of energy efficiency
efforts in conserving domestic resources, saving American
consumers money, strengthening economic competitiveness, and
reducing environmental impacts. The energy efficiency
``resource'' plays an increasingly important role in the
nation's energy strategy. The advancement of cost-effective
efficiency programs and technologies can contribute to the
nation's goal of energy independence by reducing demand and
using supplies in a more effective manner. S. 1706 seeks to
increase energy efficiency and water conservation measures in
the Federal Government.
According to the Energy Information Administration (EIA),
the Federal Government is the single largest energy consumer in
the nation. The Federal Government spends over $6 billion
annually in energy costs. Congress therefore expects the
Government to pursue its own energy efficiency efforts
vigorously--not only to conserve energy resources and taxpayer
dollars, but to lead by example. To that end, S. 1706 further
encourages the federal agencies to enter into energy savings
performance contracts (ESPCs) and utility energy service
contracts (UESCs).
ESPCs and UESCs are proven methods by which Federal
agencies can increase efficiency, thereby reducing energy
costs. In both cases, an approved contractor designs and
installs systems and equipment to reduce the energy consumption
of a Federal facility and is paid back through utility bill
savings that result from the project over a stipulated period
of time. By law, and on a negotiated basis, the Government
never pays more than it would have paid for utilities if it had
not entered into the contract. By using an ESPC or UESC, the
Federal Government eliminates the need for appropriated dollars
for equipment replacement and for operations and maintenance of
such energy consuming equipment.
For over 20 years, performance-based contracts for energy
savings have provided upgrades to Federal buildings, including
the House and Senate Office Buildings and the U.S. Capitol.
According to the Federal Energy Management Program,
approximately 650 performance contracts worth $8 billion have
been awarded throughout 25 Federal agencies and in all 50
States. These projects have resulted in energy savings valued
at nearly $15 billion, of which approximately $11 billion went
to repay project investments, accruing a net savings of $4
billion to the Federal Government. The energy efficiency
industry estimates that there is over $20 billion in savings
available to the Federal Government through the use of
performance contracting.
Greater use of ESPCs has been impaired by administrative
delay and process issues within Federal agencies, some of which
are the result of ambiguity in the underlying law. S. 1706
seeks to eliminate administrative roadblocks by clarifying
certain provisions of the law to reduce confusion resulting
from statutory ambiguities such as excluding the applicability
of performance contracting at Federal hydroelectric generation
facilities. In addition, the legislation requires additional
reporting requirements, thus ensuring improved transparency.
Legislative History
S. 1706 was introduced by Senators Gardner and Coons on
June 4, 2019. Senator Shaheen was added as a cosponsor on June
10.
H.R. 3079, identical legislation, was introduced in the
House of Representatives by Representatives Welch and Kinzinger
on June 4, 2019, and referred to the Committee on Energy and
Commerce.
In the 115th Congress, a similar bill, S. 239, was
introduced by Senators Gardner, Coons, Portman, and Shaheen on
January 30, 2017. The Committee on Energy and Natural Resources
met in an open business session on March 30, 2017, and ordered
S. 239 favorably reported (S. Rept. 115-79).
Companion legislation, H.R. 723, was introduced in the
House by Representatives Kinzinger, Cartwright, Cole, Grijalva,
Love, Perlmutter, and Welch on January 30, 2017, and referred
to the Energy and Commerce Committee. The House Energy and
Commerce Committee ordered H.R. 723 reported on February 23,
2018 (H. Rept. 115-575).
In the 114th Congress, a similar bill, S. 858, was
introduced by Senators Gardner, Coons, Portman, and Shaheen on
March 25, 2015. The Committee on Energy and Natural Resources
held a hearing on S. 858 on April 30, 2015 (S. Hrg. 114-166).
The measure was included in Amendment No. 2970, which the
Senate agreed to on February 1, 2016, as an amendment to S.
2012, the Energy Policy Modernization Act of 2016, which the
Senate passed, as amended, on April 20, 2016.
Companion legislation, H.R. 1629, was introduced in the
House by Representatives Kinzinger, Peters, Valadao, and Welch
on March 25, 2015, and referred to the Energy and Commerce
Committee.
In the 113th Congress, a similar bill, S. 1308, was
introduced by Senator Coons on July 16, 2013. Companion
legislation, H.R. 2689, was introduced in the House of
Representatives by Representative Gardner and 55 cosponsors on
July 16, 2013. The Committee on Energy and Commerce favorably
reported H.R. 2689, as amended, on November 19, 2014 (H. Rept.
113-627).
The Committee on Energy and Natural Resources met in open
business session on July 16, 2019, and ordered S. 1706
favorably reported.
Committee Recommendation
The Committee on Energy and Natural Resources, in open
business session on July 16, 2019, by a majority voice vote of
a quorum present, recommends that the Senate pass S. 1706.
Section-by-Section Analysis
Section 1. Short title
Section 1 provides a short title.
Sec. 2. Use of energy and water efficiency measures in federal
buildings
Section 2(a) amends section 543(f)(4) of NECPA to revise
requirements for ESPCs and UESCs. It further requires Federal
agencies to implement cost-effective measures to increase
energy and water efficiency in Federal facilities.
Subsection (b) amends section 548(b) of NECPA to require
the Department of Energy to report to the President and
Congress on each agency's performance contracts, including
their investment value, their guaranteed compared to actual
energy savings from the previous year, the plan for entering
into new contracts in the coming year, and information
explaining why any previously submitted plans for contracts
were not implemented.
Subsection (c) amends section 551(4) of NECPA to expand the
definition of energy conservation measures that may be
contained in performance contracts to include those involving
energy consuming devices and required support structures.
Subsection (d) amends section 801(a)(2)(F) of NECPA to
state that agencies may not limit the recognition of operations
and maintenance savings associated with energy systems that
were modernized or replaced with energy and water conservation
measures.
Subsection (e) amends section 801 of NECPA to allow
agencies to accept, retain, sell or transfer energy savings and
apply the proceeds to fund a performance contract under this
title. It excludes contracts for work performed at Federal
hydropower facilities that provide power marketed by a Power
Marketing Administration or facilities owned and operated by
the Tennessee Valley Authority.
Subsection (f) amends section 802 of NECPA to expand the
category of funds a Federal agency can use to make payments
pursuant to any contract entered into to include funds made
available for the payment of related operation and maintenance
expenses.
Subsection (g) amends section 804(2) of NECPA to expand the
definition of energy savings that may be contained in
performance contracts to include the use, sale, or transfer of
energy and water incentives, rebates, grid services, or
credits, and any revenue generated from a reduction in energy
or water use, more efficient waste recycling, or additional
energy generated from more efficient equipment.
Cost and Budgetary Considerations
The Congressional Budget Office estimate of the costs of
this measure has been requested but was not received at the
time the report was filed. When the Congressional Budget Office
completes its cost estimate, it will be posted on the internet
at www.cbo.gov.
Regulatory Impact Evaluation
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S. 1706. The bill is not a regulatory measure in
the sense of imposing Government-established standards or
significant economic responsibilities on private individuals
and businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of S. 1706, as ordered reported.
Congressionally Directed Spending
S. 1706, as ordered reported, does not contain any
congressionally directed spending items, limited tax benefits,
or limited tariff benefits as defined in rule XLIV of the
Standing Rules of the Senate.
Executive Communications
Executive views on S. 1706 were not requested by the
Committee.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, the changes in existing law made
by the original bill, as reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italic, existing law in
which no change is proposed is shown in roman):
NATIONAL ENERGY CONSERVATION POLICY ACT
Public Law 95-619, as Amended
* * * * * * *
TITLE V--FEDERAL ENERGY INITIATIVES
* * * * * * *
PART 3--FEDERAL ENERGY MANAGEMENT
* * * * * * *
SEC. 543. ENERGY MANAGEMENT REQUIREMENTS.
(f) Use of Energy and Water Efficiency Measures in Federal
Buildings.--
* * * * * * *
(4) Implementation of identified energy and water
efficiency measures--[Not later]
(A) In general._Not later than 2 years after
the completion of each evaluation under
paragraph (3), each energy manager [may
(A) implement any energy- or water-saving
measure that the Federal] shall implement any
energy- or water-saving measure that--
(i) the Federal agency identified in
the evaluation conducted under
[paragraph (3) that is] paragraph (3);
and
(ii) is life cycle cost-effective, as
determined by evaluating an individual
measure or a bundle of measures with
varying paybacks.[; and]
[(B) bundle individual measures of varying
paybacks together into combined projects.]
(B) Performance Contracting._Each Federal
agency shall use performance contracting to
address at least \1/2\ of the measures
identified under subparagraph (A)(i).
(5) Follow-up on implemented measures--For each
measure implemented under paragraph (4), each energy
manager shall ensure that--
* * * * * * *
SEC. 548. REPORTS.
* * * * * * *
(b) Reports to the President and Congress.--The Secretary
shall report, not later than April 2 of each year, with respect
to each fiscal year beginning after November 5, 1988, to the
President and Congress--
(1) on all activities carried out under this part and
on the progress made toward achievement of the
objectives of this part, including--
(A) a copy of the list of the exclusions made
under sections 8253(a)(2) and 8253(c)(3);
(B) the information required under section
8253(b)(2); and
(C) a statement detailing the amount of funds
awarded to each agency under section 8256(b),
the energy and water conservation measures
installed with such funds, the projected energy
and water savings to be realized from installed
measures, and, for each installed measure for
which the projected energy and water savings
reported in the previous year were not
realized, the percentage of such projected
savings that was not realized, the reasons such
savings were not realized, and proposals for,
and projected costs of, achieving such
projected savings in the future; and
(2) the number of contracts entered into by all
agencies under title VIII of this chapter, the
difficulties (if any) encountered in attempting to
enter into such contracts, and proposed solutions to
those difficulties;
(3) the extent and nature of interagency exchange of
information concerning the conservation and efficient
utilization of energy; [and]
(4) the information required under section
8262g(d)[.]; and
(5)(A) the status of the energy savings performance
contracts and utility energy service contracts of each
agency, to the extent that the information is not
duplicative of information provided to the Secretary
under a separate authority;
(B) the quantity and investment value of the
contracts for the previous year;
(C) the guaranteed energy savings, or for
contracts without a guarantee, the estimated
energy savings, for the previous year, as
comparted to the measured energy savings for
the previous year;
(D) a forecast of the estimated quantity and
investment value of contracts anticipated in
the following year for each agency; and
(E) (i) a comparison of the information
described in subparagraph (B) and the forecast
described in subparagraph (D) in the report of
the previous year; and
(ii) if applicable, the reasons for
any differences in the data compared
under clause (i).
(c) Other Report.--The Secretary, in consultation with the
Administrator of General Services, shall--
(1) conduct a study and evaluate legal,
institutional, and other constraints to connecting
buildings owned or leased by the Federal Government to
district heating and district cooling systems; and
(2) not later than 18 months after the date of the
enactment of this subsection, transmit to the Congress
a report containing the findings and conclusions of
such study, including recommendations for the
development of streamlined processes for the
consideration of connecting buildings owned or leased
by the Federal Government to district heating and
cooling systems.
* * * * * * *
SEC. 551. DEFINITIONS.
For the purposes of this part--
(1) the term ``agency'' has the meaning given it in
section 551(1) of title 5;
(2) the term ``construction'' means new construction
or substantial rehabilitation of existing structures;
(3) the term ``cogeneration facilities'' has the same
meaning given such term in section 3(18)(A) of the
Federal Power Act (16 U.S.C. 796(18)(A));
(4) the term ``energy conservation measures'' means
measures that are applied to a Federal building that
improve energy efficiency and are life cycle cost
effective and that involve energy conservation,
cogeneration facilities, renewable energy sources,
improvements in operations and maintenance
efficiencies, [or retrofit activities] retrofit
activities, or energy consuming devices and required
support structures.
(5) the term ``energy survey'' means a procedure used
to determine energy and cost savings likely to result
from the use of appropriate energy related maintenance
and operating procedures and modifications, including
the purchase and installation of particular energy-
related equipment and the use of renewable energy
sources;
(6) the term ``Federal building'' means any building,
structure, or facility, or part thereof, including the
associated energy consuming support systems, which is
constructed, renovated, leased, or purchased in whole
or in part for use by the Federal Government and which
consumes energy; such term also means a collection of
such buildings, structures, or facilities and the
energy consuming support systems for such collection;
(7) the term ``life cycle cost'' means the total
costs of owning, operating, and maintaining a building
over its useful life (including such costs as fuel,
energy, labor, and replacement components) determined
on the basis of a systematic evaluation and comparison
of alternative building systems, except that in the
case of leased buildings, the life cycle costs shall be
calculated over the effective remaining term of the
lease;
(8) the term ``renewable energy sources'' includes,
but is not limited to, sources such as agriculture and
urban waste, geothermal energy, solar energy, and wind
energy; and
(9) the term ``Secretary'' means the Secretary of
Energy.
* * * * * * *
TITLE VIII--ENERGY SAVINGS PERFORMANCE CONTRACTS
SEC. 801. AUTHORITY TO ENTER INTO CONTRACTS.
(a) In General.--(1) The head of a Federal agency may enter
into contracts under this subchapter solely for the purpose of
achieving energy savings and benefits ancillary to that
purpose. Each such contract may, notwithstanding any other
provision of law, be for a period not to exceed 25 years. Such
contract shall provide that the contractor shall incur costs of
implementing energy savings measures, including at least the
costs (if any) incurred in making energy audits, acquiring and
installing equipment, and training personnel, in exchange for a
share of any energy savings directly resulting from
implementation of such measures during the term of the
contract.
(2)(A) Contracts under this subchapter shall be
energy savings performance contracts and shall require
an annual energy audit and specify the terms and
conditions of any Government payments and performance
guarantees. Any such performance guarantee shall
provide that the contractor is responsible for
maintenance and repair services for any energy related
equipment, including computer software systems.
(B) Aggregate annual payments by an agency to both
utilities and energy savings performance contractors,
under an energy savings performance contract, may not
exceed the amount that the agency would have paid for
utilities without an energy savings performance
contract (as estimated through the procedures developed
pursuant to this section) during contract years. The
contract shall provide for a guarantee of savings to
the agency, and shall establish payment schedules
reflecting such guarantee, taking into account any
capital costs under the contract.
(C) Federal agencies may incur obligations pursuant
to such contracts to finance energy conservation
measures provided guaranteed savings exceed the debt
service requirements.
(D) A Federal agency may enter into a multiyear
contract under this subchapter for a period not to
exceed 25 years beginning on the date of the delivery
order, without funding of cancellation charges before
cancellation, if--
(i) such contract was awarded in a
competitive manner pursuant to subsection
(b)(2), using procedures and methods
established under this subchapter;
(ii) funds are available and adequate for
payment of the costs of such contract for the
first fiscal year; and
(iii) such contract is governed by part 17.1
of the Federal Acquisition Regulation
promulgated under section 1303 of title 41 or
the applicable rules promulgated under this
subchapter.
(E) Funding options.--In carrying out a contract
under this subchapter, a Federal agency may use any
combination of--
(i) appropriated funds; and
(ii) private financing under an energy
savings performance contract.
(F) Promotion of contracts.--In carrying out this
section, a Federal agency shall not--
(i) establish a Federal agency policy that
limits the maximum contract term under
subparagraph (D) to a period shorter than 25
years; [or]
(ii) limit the total amount of obligations
under energy savings performance contracts or
other private financing of energy savings
measures[.]; or
(iii) limit the recognition of operation and
maintenance savings associated with systems
modernized or replaced with the implementation
of energy conservation measures, water
conservation measures, or any combination of
energy conservation measures and water
conservation measures.
(G) Measurement and verification requirements for
private financing.--
(i) In general.--In the case of energy
savings performance contracts, the evaluations
and savings measurement and verification
required under paragraphs (2) and (4) of
section 8253(f) shall be used by a Federal
agency to meet the requirements for the need
for energy audits, calculation of energy
savings, and any other evaluation of costs and
savings needed to implement the guarantee of
savings under this section.
(ii) Modification of existing contracts.--Not
later than 18 months December 19, 2007, each
Federal agency shall, to the maximum extent
practicable, modify any indefinite delivery and
indefinite quantity energy savings performance
contracts, and other indefinite delivery and
indefinite quantity contracts using private
financing, to conform to the amendments made by
subtitle B of title V of the Energy
Independence and Security Act of 2007.
(H) Miscellaneous authority._Notwithstanding subtitle
I of title 40, United States Code, a Federal agency may
accept, retain, sell, or transfer, and apply the
proceeds of the sale or transfer of, any energy and
water incentive, rebate, grid services revenue, or
credit (including a renewable energy certificate) to
fund a contract under this title.
(I) Excluded contracts._A contract entered into under
this title may not be for work performed--
(i) at a Federal hydroelectric facility that
provides power marketed by a Power Marketing
Administration; or
(ii) at a hydroelectric facility owned and
operated by the Tennessee Valley Authority
established under the Tennessee Valley
Authority Act of 1933 ( 16 U.S.C. 831 et seq.).
(b) Implementation.--(1)(A) The Secretary, with the
concurrence of the Federal Acquisition Regulatory Council
established under section 1302(a) of title 41, not later than
180 days after October 24, 1992, shall, by rule, establish
appropriate procedures and methods for use by Federal agencies
to select, monitor, and terminate contracts with energy service
contractors in accordance with laws governing Federal
procurement that will achieve the intent of this section in a
cost-effective manner. In developing such procedures and
methods, the Secretary, with the concurrence of the Federal
Acquisition Regulatory Council, shall determine which existing
regulations are inconsistent with the intent of this section
and shall formulate substitute regulations consistent with laws
governing Federal procurement.
* * * * * * *
SEC. 802. PAYMENT OF COSTS.
Any amount paid by a Federal agency pursuant to any
contract entered into under this subchapter may be paid only
from funds appropriated or otherwise made available to the
agency for fiscal year 1986 or any fiscal year thereafter for
the payment of energy, water, or wastewater treatment expenses
[(and related operation and maintenance expenses)], including
related operations and maintenance expenses.
* * * * * * *
SEC. 804. DEFINITIONS.
For purposes of this title, the following definitions
apply:
(1) The term ``Federal agency'' means each authority
of the Government of the United States, whether or not
it is within or subject to review by another agency.
(2) The term ``energy savings'' means--
(A) a reduction in the cost of energy, water,
or wastewater treatment, from a base cost
established through a methodology set forth in
the contract, used in an existing [federally
owned building or buildings or other federally
owned facilities] Federal building (as defined
in section 551) as a result of--
(i) the lease or purchase of
operating equipment, improvements,
altered operation and maintenance, or
technical services;
(ii) the increased efficient use of
existing energy sources by cogeneration
or heat recovery, excluding any
cogeneration process for other than a
[federally owned building or buildings
or other federally owned facilities]
Federal building (as defined in section
551); or
(iii) the increased efficient use of
existing water sources in either
interior or exterior applications;
(B) the increased efficient use of an
existing energy source by cogeneration or heat
recovery;
(C) if otherwise authorized by Federal or
State law (including regulations), the sale or
transfer of electrical or thermal energy
generated on-site from renewable energy sources
or cogeneration, but in excess of Federal
needs, to utilities or non-Federal energy
users[; and];
(D) the increased efficient use of existing
water sources in interior or exterior
applications [.];
(E) the use, sale, or transfer of energy and
water incentive, rebate, or grid services
revenue, or credit (including a renewable
energy certificate); and
(F) any revenue generated from a reduction in
energy or water use, more efficient waste
recycling, or additional energy generated from
more efficient equipment.
(3) The terms ``energy savings contract'' and
``energy savings performance contract'' mean a contract
that provides for the performance of services for the
design, acquisition, installation, testing, and, where
appropriate, operation, maintenance, and repair, of an
identified energy or water conservation measure or
series of measures at 1 or more locations. Such
contracts shall, with respect to an agency facility
that is a public building (as such term is defined in
section 3301 of title 40), be in compliance with the
prospectus requirements and procedures of section 3307
of title 40.
(4) The term ``energy or water conservation measure''
means--
(A) an energy conservation measure, as
defined in section 8259 of this title; or
(B) a water conservation measure that
improves the efficiency of water use, is life-
cycle cost-effective, and involves water
conservation, water recycling or reuse, more
efficient treatment of wastewater or
stormwater, improvements in operation or
maintenance efficiencies, retrofit activities,
or other related activities, not at a Federal
hydroelectric facility.
* * * * * * *
[all]