GUARANTEED ENERGY SAVINGS CONTRACTS Energy Savings Contracting: How

GUARANTEED ENERGY SAVINGS CONTRACTS Energy Savings Contracting: How

GUARANTEED ENERGY SAVINGS CONTRACTS Energy Savings Contracting: How to Increase Transparency and Reduce Costs GUARANTEED ENERGY SAVINGS PRICE CONTRACT What is the Product of a Performance Contract? An Energy Services Company (ESCO) proposes a project that will save $100,000 per year for an initial investment of $1 million dollars. The $100,000 annual savings is guaranteed by the ESCO. The ESCO will implement various Energy Conservation Measures (ECMs) to accomplish this savings. The ESCO will allow you to finance the initial $1 million investment by financing $100,000 payments for 10 years. After that the savings are yours to keep. GUARANTEED ENERGY SAVINGS PRICE CONTRACT

What is the Product? The product that you are buying is the $100,000 per year energy savings You are now spending $100,000 per year to create efficiency as opposed to spending it on electricity and other utilities. But GUARANTEED ENERGY SAVINGS PRICE CONTRACT what if? What if the ESCO can save the district $100,000 per year with a one time investment of $50,000 to implement building automation controls? Now the ESCO has met its contractual obligations, saved you $100,000 per year on your utility spend, collected $1 million from you, only invested $50,000, and reaped a profit of $950,000.

GUARANTEED ENERGY SAVINGS PRICE CONTRACT Key Difference Between Statute and the KPC Process GOALS FOR QUALIFIED PROVIDERS A. B. C. D. E. F. Reduce operating costs for Kentucky K-12 school districts Improve classroom environmental conditions Improve maintenance and operation of facilities Reduce carbon footprint and negative environmental factors Manage and complete the project within defined time

schedule, approved budget and quality goals. To represent the best interests of the Owner SCHOOL DISTRICT PROPOSAL SCORING CRITERIA Ability to successfully implement the project Past performance with K-12 schools as evidenced by project results in last 10 years Technical Approach Level of detailed design being offered with a strong preference toward more detailed designs and equipment lists. SCHOOL DISTRICT PROPOSAL SCORING CRITERIA Pricing Approach

The willingness to follow OPEN BOOK PRICING approach without exception Fees for various services Overhead and profit level Willingness to guarantee no change orders within agreed to scope of work SCHOOL DISTRICT PROPOSAL SCORING CRITERIA Implementation Approach The reasonableness and effectiveness of the installation approach based on past customer experience. Support Approach The effectiveness of the on-going support and training being offered with preference given to timely support at a low cost.

Construction Cost Comparison (HVAC) Traditional Plan & Spec Process School District Price Architect Fees & Allowances (10%) 63% overall price increase $2,853,238 final price to School General Contractor markup (9%) $2,593,8531 price to School before Arch fees

Mechanical Contractor markup (18%) $2,379,681 price to General Contractor Temperature Controls markup (15%) $2,016,679 price to Mech. Contractor Controls Installation Controls

Equipment $1,753,634 cost R S Means Data Construction Cost Comparison (HVAC) Traditional ESCO Process School Corporation Price ESCO OH & Profit (??%) ESCO Selected without defined scope or price ??% overall price increase

$???? final price to School $?? price to School Is ballpark without defined scope Mechanical Contractor markup (??%) $??? price to ESCO Temperature Controls & Electrical markup (??%) $?? price to Mech. Contractor

Controls Elect Install Controls Elec Equip $ cost KPC ESCO Process School District Price ESCO Self performs professional taskseng, PM, controls5 All Install Contractors

All Equipment 5% Profit Specific Scope with exact price to School prior to award. $1,753,634$ 1,753,634 Fees are cost Fixed GUARANTEED ENERGY SAVINGS CONTRACTS

Questions? GUARANTEED ENERGY SAVINGS CONTRACTS Sam Atkins Mark Ryles, AIA [email protected] [email protected] (606) 465-6572 Cell: (859) 227-4720

Kentucky Educational Development Corporation 904 Rose Road Ashland, KY 41102 (800) 737-0205 Ohio Valley Educational Cooperative P. O. Box 1249 100 Alpine Drive Shelbyville, Kentucky 40066 (502) 647-3533

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