GUARANTEED ENERGY SAVINGS Performance Contracting

FPL Group is #1 in the U.S. for solar, wind & energy efficiency Among largest U.S. electric utilities We serve approximately 4.7 million customers in Florida Largest provider in this state Turn-key energy services solutions Over 150 million dollars in PC in Florida in the past 25 years Never missed a savings guarantee in 25 years of managing projects Generation assets in 26 states NextEra Energy operates 8 nuclear power units in Florida, New Hampshire, Iowa and Wisconsin, along with 15 traditional power plants in Florida FPL Group is #1 in the U.S. for solar, wind & energy efficiency

Energy Savings Performance Contracting (ESPC) A partnership between a county and an Energy Services Co. (ESCO) FPL Services…to identify, design, guarantee, install and manage capital improvements when they create self funded opportunities by: Saving Energy, Water & Operational Costs Deferring Future Capital Expenditures

Performance Contracting For St. Lucie County How does Energy Performance Contracting Work? Current Operational Costs Energy Savings New Operational Costs Annual Capital Repayment For SLC Benefits O & M Savings Capital Avoidance Operational Costs after Project Repayment Let’s look at the cash flow of such a project. Your current costs are shown in the first orange column. The green column represents the identified savings associated with a Smart Metering system. These savings are guaranteed by the ESCO over the life of the project. The guaranteed savings are generated through increased billable revenues, energy savings, reduced O&M costs, avoided capital expenditures and possibly demand reduction costs. The annual guaranteed savings are verified through an agreed upon M&V methodology. The ESCO assists the city to arrange for project financing that is funded by these guaranteed savings. The guarantee assures the city of receiving the most attractive terms and conditions. In this way, the cost of the Smart Metering System has no impact on the budget, except that it might produce a positive cash flow. There is a true-up each year. If the savings in a given year fall short of the contract amount, the ESCO pays the city for the difference. As an example, Johnson Controls currently has just under $5B in performance contracts. Last year, we wrote about $2M in checks to clients to make up the short fall. If an ESCO is not writing checks, they aren’t properly serving their clients. Typically, the financing is structured so that annual savings are greater than the annual payments so an immediate positive cash flow is realized by the city. There are no shared savings between the City and the ESCO. The savings guarantee yields the most advantageous rate and terms from the financier. The city can continue to implement additional savings initiatives with the technology, such as Demand Response methodologies, to create an even greater positive cash flow. There are also ways the financing can be structured to yield a more positive cash flow, for example extending the project finance term beyond the simple payback. At the end of the contract period, the city then realizes the full savings of the Smart Metering System. St. Lucie County receives 100% of annual savings and revenue that exceed the guarantee!

Energy Savings Performance Contracting Governing law is FS 489.145 In effect since 1990 FPL Services has performed over 150 million dollars in performance contracting in Florida 2007 St. Lucie County contracted with FPL Services to perform a PC project at Jail Master Agreement Contract is still valid (contract # C07-05-245)

Success in Phase One – Jail

Project Name: St. Lucie County Phase 2 Feasibility STUDY leading to Implementation of phase 2   Project Name: St. Lucie County Phase 2   Service Locations: Criminal Justice Facility: Rock Road Jail Logistics Center Fairgrounds Sheriff Administration Building I.T. Bunker Agriculture Extension Building Walton Annex Mets Stadium Fenn Center County Administration Campus Pt. St. Lucie Police Building (to be repurposed to Library) Health Department

NEXT STEPS Development Implementation (Potential Financial Obligation) Detailed Feasibility Study Implementation (Cost of Feasibility Study is included in project) If Budget-neutral project is not possible, process ends and the County owes nothing!