Since the 2014 launch of Arkansas Energy Performance Contracting (AEPC), the program has become a key economic development tool across the state. The ADEQ-Arkansas Energy Office (AEO) estimates the total value of projects in development at over $75 million. In advance of AEPC Summit 2017 in Little Rock on June 27, AAEA executive director Katie Laning Niebaum sat down with AEO energy finance program manager Chet Howland to discuss the program’s impact on Arkansas.
Q. What is Energy Performance Contracting?
Energy performance contracting is a turnkey service, comparable to design/build construction contracting with an annual savings guarantee. This method of finance provides taxpayer-funded public entities with the opportunity to complete a comprehensive set of energy efficiency, capital infrastructure and renewable energy measures at no upfront cost. AEPC projects are required to have a positive return on investment, with savings exceeding contract amount in all instances.
Act 554 of 2013, the Guaranteed Energy Cost Savings Act, required AEO to establish rules and govern the process in which state agencies and institutions of higher education engage Energy Service Companies (ESCOs) who pursue energy performance contracts (EPCs). Act 1275 of 2015 extended the opportunity for cities, counties, and municipal utilities to opt into these rules and standards.
Q. How does the AEPC program work?
AEO provides lifecycle project support for all program participants, serving as an owner’s agent advocating on the public’s behalf with the intention of delivering the most beneficial outcomes. AEO developed AEPC from national best practices with numerous “off ramps” built in to ensure safety and transparency for public participants. To create a market, AEO pre-qualified ESCOs into the program, eliminating the need for public participants to issue in-house requests for proposals.
AEO’s relationship with program participants performing EPC projects stretches over many years. AEO acts as an advisor and the sole source of dispute resolution during selection, facility audit and evaluation, contract negotiation, financing, and performance measurement and verification. AEO has created standardized documents for all phases of the program to ensure ease of access for participants and mandates open book pricing in the procurement phase of the process to ensure transparency.
Q. Who benefits?
Participants – state agencies, colleges and universities, cities, counties and municipal utilities – benefit greatly from the facility upgrades achieved, allowing budgets to be reallocated to address other needs. The state also benefits, as taxpayer dollars are actively being spent on equipment and systems that are often outdated and inefficient. Further, many of the pre-qualified ESCOs in the AEPC Program are based in the state, provide dozens of high-paying jobs, and utilize local contractors whenever possible. AEO estimates that the economic impact of AEPC projects equals three times the total dollar amount of a project for Arkansas communities.
Q. Why do we do it?
Energy performance contracting represents a unique opportunity to leverage existing utility and operational expenditures into budget-neutral economic development projects that drastically improve public facility conditions and address pressing deferred maintenance issues. Done correctly, EPC allows for facility improvements that would otherwise be impossible to achieve through traditional procurement means.
Q. Is it worth it?
Absolutely. AEPC has been an unqualified success to date and should only be expected to grow in coming years. AEO has developed close working relationships with the pre-qualified ESCOs actively pursuing projects I the state while maintaining its duty as an objective advocate for the public interest. The explosion of interest in energy performance contracting in less than years of the AEPC program’s operation shows how valuable an economic development vehicle this program has become in a short period of time.
Join us on June 27th for AEPC Summit 2017:
Energy service providers will join representatives of Arkansas state agencies, colleges and universities, and cities, counties and municipal utilities on Tuesday, June 27, for AEPC Summit 2017. The event is hosted by the Arkansas Advanced Energy Association and the Arkansas Department of Environmental Quality – Arkansas Energy Office at the Heifer Village Conference Room from 1-5 p.m. The event is free but registrations are required (RSVP to firstname.lastname@example.org).
AEPC Summit 2017 sponsors: Clear Energy, Inc. (Presenting Sponsor); McKinstry and Performance Services (Partner Sponsors); and Bernhard Energy Solutions (Sponsor).