STEPS TO SUCCESS WITH FCIP Ryan Freed Kansas Energy Office

What We Will Discuss… What is Performance Contracting? The Benefits of Performance Contracting Potential Projects What is the FCIP? How to Participate in the FCIP The Cost of FCIP participation

What is Performance Contracting? Provided by an Energy Service Company (ESCO) Improvements provide utility & operational savings Reduced Utility & Operational costs pay for cost of project ESCO guarantees performance of project

Performance Contracting Benefits Extends Capital Dollars Life-Cycle Cost vs. First Cost No more Weve always done it that way ESCO designs and builds project Guaranteed performance NO CHANGE ORDERS

Potential Projects Lighting: daylighting, new lamps & ballasts Heating: Replace boilers, steam traps, pumps Cooling: Replace chillers, cooling towers, etc Controls: New Energy Management Systems Water: Low-flow fixtures, waterless urinals Buildings Shell: Insulation, windows, roofs Alternative Energy: wind, solar, geothermal New Construction: All utility-impacted systems ….More

What is the FCIP? Legislative Authority (KSA 75-37,125) Streamlined State Contract Pre-approved ESCOs Technical, legal, financial oversight Customer representation throughout process

FCIP Benefits Standard Contract – no surprises Pre-negotiated Markups & Audit Costs No need for RFP FCIP Oversight FCIP Workshops for all Staff

Who Can Participate? Any Public Agency State, County, City Statute allows any Political Subdivision Non-Profit Organizations

What is the Process? Four Main Steps Preliminary Audit Investment Grade Audit Energy Performance Contract Measurement & Verification

Preliminary Audit Arrange Site Tour by Selected ESCOs No Cost to Customer FCIP Participates in all steps except selection ESCOs Present to Customer – Customer Selects ESCO for Investment Grade Audit

Investment Grade Audit Standard contract signed by Customer, ESCO and FCIP Intense site survey FCIP Reviews Audit – Workshop w/ Customer No charge if no project found

Energy Performance Contract Customer & ESCO determine final scope of project ESCO helps arrange financing FCIP Reviews Contract – Workshop w/ Customer Open-Book Pricing

Measurement & Verification (M&V) ESCO proves performance M&V period length varies – customer choice FCIP reviews M&V, provides customer assistance, settles disputes

The Cost of FCIP Participation FCIP is a fee-funded program Fee is based on formula: 4% of the first $100,000 of the project amount 3% of the next $400,000 of the project amount 2% of the next $500,000 of the project amount 1% of the next $4,000,000 of the project amount ½% of the any amount in excess of $5,000,000 Fee paid only if Performance Contract signed Fee can be part of financing

What Has Been Done? $147 Million Total Project Costs More than $11 million in Annual Savings!! 7 Cities 6 Counties 6 Community & Technical Colleges 15 State-Owned Buildings 11 University Projects 21 USDs

Summary FCIP provides budget-neutral facility upgrades FCIP oversight provides confidence to staff and public Customers staff can focus on performance, not process

Any Questions? Ryan Freed Kansas Energy Office