UESC Case Studies – PG&E Project Financing UESC Basics UESC Case Studies – PG&E Chris Gillis Pacific Gas & Electric Company August 12, 2015

Opening Thoughts – UESC Solution One-stop-shop for audit, design, build, and financing energy conservation measures Government signs a single contract under the GSA Basic Ordering Agreement with PG&E PG&E subcontracts a qualified energy services company PG&E manages all phases of the project We identify and implement energy efficiency, water, renewable and capital improvement opportunities for customers. Typical projects have multiple measures for $5-20 million with paybacks from 5-15 yrs. Measure and Verify Savings Design and Implementation Source Financing Investment Grade Audit Preliminary No-Cost Audit

Opening Thoughts – UESC Solution Utility Focus on Relationships – Utilities value/focus - on the long term relationship providing service to the Facility, maintaining/building high levels of customer satisfaction, improving the sustainability of the Facility, and not on maximizing individual project profit margins. Efficiency/Sustainability Focus – Focus of scope development is on energy efficiency equipment, control/management of energy, sustainable solutions, DSM programs, smart grids, and renewable energy products, not on brick and mortar construction. Integration of projects - into existing and future utility programs – Utilities understand better than other engineering or consulting firms how a facility’s potential energy efficiency, renewable energy, and energy security projects fit within the utility’s system, rate structure, and incentive programs.

UESC Services Range of Services – Some services we offer: Audits (high level to investment grade)Energy Consulting Services Detailed Design (all disciplines) Project Management & Site Supervision Training (including O&M training) Commissioning of Systems & Equipment Retro commissioning/Re-commissioning Financing – extremely competitive interest rates due to financial strength of Utility Construction services

PG&E UESC - Overview

PG&E UESC – Overview cont’d -A Task Order is issued to PG&E to procure financing for the project and implement the Energy Conservation Measures identified in the IGA. -All measures are commissioned, O&M manuals are provided, and training is completed once all of the measures are installed. -Performance Assurance is included in the scope to ensure that equipment is operated as designed to maximize savings. -Communication and Government input is also key during this step to ensure project is completed accurately and on time. Implementation/ Construction -A Task Order is issued to PG&E for an IGA to be completed which further identifies the project scope using the Preliminary Assessment information. -The list of measures can expand and contract during this process. -Financing is discussed and determined during this stage for the potential project. -Communication is key with Government during this time to review progress and receive input/feedback on proposed project. Investment Grade Audit (IGA) -No cost, initial step for PG&E to compete and select the Subcontractor to perform the project. -The result of the PA is to identify the cost of an IGA as well as the proposed cost and savings for a UESC project. -Requires a one day site visit for PG&E Subs to walk the facilities and collect information. Preliminary Assessment (PA)

PG&E – Case Study Projects NASA Ames Research Center, Moffett Field, CA Project Scope: 128 buildings, 2,600,000 sqft. Cost: $23 million Dates: 2010–2014 Measures Lighting, boilers, chillers, steam heat, EMCS and water conservation Annual Savings Electric: 9 million kWh Gas: 1.3 million therms Water: 15.7 million gal Energy Costs: $2 million Dept. of Veteran Affairs Various cities in CA Project Scope: 5 hospitals, over 2,000,000 sqft. Cost: $9.9 million Dates: 2011–2014 Measures Lighting, boilers, HVAC, EMCS and water conservation Annual Savings Electric: 6 million kWh Gas: 355 thousand therms Water: 16 million gal Energy Costs: $1 million Internal Revenue Service (IRS), Fresno, CA Project Scope: 5 buildings, 561,800 sqft. Cost: $9 million Dates: 2010–2013 Measures Lighting, central plant upgrade, CAV to VAV, open protocol EMCS Annual Savings Electric: 7 million kWh Gas: 50 thousand therms Energy Costs: $1 million

PG&E Case Study Projects – cont’d Federal Aviation Authority Oakland Air Route Traffic Control Center Fremont, CA Project Scope: Fremont (3 permanent buildings and 5 portable buildings, 130,000 square feet) and other locations Cost: $5.3 million Timeframe: 2014 Measures: Lighting, chillers, boilers, HVAC and EMCS Estimated Annual Savings: Electric: 1.9 million kWh Gas: 25,000 therms Energy Costs: $420,000 Payback: 12 years Coast Guard Training Center Petaluma, CA Project Scope: 574,000 square feet of mission buildings and family housing Cost: $4.2 million Timeframe: 2014-2015 Measures: Lighting, boilers, HVAC, CO2 ventilation control, kitchen hood ventilation, solar thermal hot water, and EMCS Annual Savings: Electric: 1.8 million kWh Gas: 10,357 therms Energy Costs: $382,684 Payback: 11 years

Be prepared for the following - UESC – Case Study Facts Be prepared for the following - A business development cycle of 6 to 12 months Total project timeline w/o development 18 to 24 months All UESC’s started out as a simple energy project…expand the conversation “Buy-in” via Facility, Energy and Contracting are critical

UESC Solution – Best Practices I For each of the projects - Scoping Audit - based on energy & water efficiency improvements (no-cost to Federal Agency) establish an initial baseline 50% =/- energy savings vs. implementation costs The most strategic approach is “bundled” or Integrated Include = EE, DR, Small Renewable and Water solutions Identify via Title 24 what incentives and rebates apply Discuss the Performance Assurance Plan (IGA Phase)

UESC Solution – Best Practices II For each of the projects - Most contracting personnel not familiar with UESC’s UESC FEMP Training is imperative…and excellent Include Contracting from the very beginning Address preferred contracting solution Areawide Agreement & BOA Model Agreement Review Utility competitive procurement process General Contractor & Sub-contractors Identify if O&M cost savings is applicable

Questions / Answers

Contact Information Christopher Gillis Pacific Gas & Electric Co. Federal Government Segment Office: 415-973-3770 Cell: 925-457-3333 Email: CXGL@pge.com

Appendix – Contracting Overview A UESC Task Order is placed under the GSA Areawide Contract (Utility terms via the Basic Ordering Agreement) Utility GSA Areawide Contract Agency Task Order

Appendix – Market Drivers EO 13693: Planning for Federal Sustainability in the Next Decade – March 2015 Reduce building energy intensity by 2.5% annually Improve Data Center efficiency Increases Federal Government commitment to performance based contracting $4 Billion by December 2016 President’s Performance Contracting Challenge EO 13514, EISA 2007, EO 13423, EPACT 2005

Appendix – Utility Incentives Incentives Found in UESC Contracts   Initial / Preliminary Feasibility Audit (PFA) typically costs $25k to $150k as an incentive to the Government, requiring significant analysis including renewable and other extremely long payback items that would not normally be evaluated. This level of effort is not available to other Utility customer groups. Integrated Utility project design and implementation, which results in: More energy saved per project than implementing one ECM/MILCON project one at a time. “Cradle to grave” services for complete project responsibility, leaves no room for Mis-communication between project handoffs - audit to design, design to construction, interaction between multiple subs, including engineers, manufacturers and contractors Reduction of overall development & engineering fees. Faster realization of savings due to reduced implementation time frame (time = money). No Contractor Initiated Change Orders – Change Orders are typically zero dollar change orders to clean/true up scope items; other Government initiated change orders only for scope/building additions to the project. “Wrap around warranty” – Utility is responsible for ensuring the project performs as promised, regardless of why the performance is not up to standards or which subcontractor may be at fault. Extended Warranties – Utilities regularly “fix” projects after the contracted one year UESC warranties expire at no additional cost to the Navy. Reduced Government Risk and Cost – Utility is responsible for competitive procurement of all contractors, dramatically reducing the Government project management responsibilities, avoids delays/costs due to bid/award protests and results in savings from avoided scope disputes, law suits, etc. Value Engineering Eliminated – UESC projects are not susceptible to the impact of normal Navy project budget limits ensuring that the highest energy efficient equipment remains in project scopes.