Is a performance contract right for your community? November 15, 2012 Steven Weisman
Is performance contracting a fit for you?Performance contracting is an effective tool for infrastructure modernization.Considerations: • Condition of your energy infrastructure • Available energy efficiency potential • Green Community aspirations • In-house technical capacity and capabilities • Likelihood of other capital improvement funding
Condition of energy infrastructureIs your community reluctant to invest funds in infrastructure renewal? • Are systems old, inefficient, poorly performing? • Is equipment technology out-of-date? • Has there been a noticeable increase in equipment repair expense? • Is the tendency to run equipment until it fails? • Are there other more pressing capital needs?
Available energy efficiency potentialIs significant energy efficiency improvement possible? • Has your community recently been a broad participant in utility EE programs? • Are many or most buildings newer construction? • Is equipment well-maintained? • Are there direct digital building control systems? • Do you aggressively manage building scheduling and temperature setbacks?
Green Community aspirationsDo you need to implement a 20% energy reduction? • Are you seeking GC designation, but unclear where to find the required 20% reduction? • Do you have GC designation, but cannot figure out how to move your ERP forward? • Are you concerned that Ch. 149 governed improvements will take longer than five years?
In-house technical capacityDoes your Community have the staff resources and knowledge base to do these projects itself? • Can you afford to go through multiple Ch. 149 procurements in multiple buildings? • Do you have the engineering expertise and technology understanding to ensure success? • Who will provide construction oversight? • Are you prepared to guarantee that projects will be properly commissioned and fully functional?
Availability of project fundingIs the Community willing to use its financing, taxation, and budgeting powers to support projects? • Is the community’s financial rating good enough? • How much additional debt can the community take on? • Will the community approve tax rate increases to fund energy projects? • Will the community level-fund utility budgets to cover PC debt service for up to 20 years?
Is performance contracting right for us?• A PC is a good strategy for accelerating energy infrastructure renewal• Energy infrastructure projects must be paired with energy efficiency projects to fund the PC• A community must be willing and able to incur debt to finance the PC• Staff participation as well as expert support will be needed to ensure the success of the PC