1. ENERGY PERFORMANCE CONTRACTING (EPC) APRIL 26, 2016 ROANOKE, VA APRIL 28, 2016 RICHMOND, VA

2. GOVERNOR’S EXECUTIVE ORDER 31 SIGNED OCTOBER 16, 2014 15% REDUCTION BY 2017 USING 2009 -2010 BASE STRONGLY ENCOURAGED TO USE EPC STATE AGENCIES AND PUBLIC BODIES ADMINISTRATION SERIOUS ABOUT ENERGY CONSERVATION BUDGET REDUCTIONS EPC IS A GREAT FINANCIAL TOOL DMME SUPPORT

3. GOVERNOR’S EXECUTIVE ORDER 31 All state agencies should proactively pursue energy efficiency measures, especially Energy Performance Contracting (EPC), to reduce energy consumption. EPC is a budget neutral, cost-effective tool that permits state agencies and publicly-owned facilities to reduce their deferred maintenance backlogs without adding any financial burden to the taxpayer. In addition, EPC is an effective mechanism to finance capital improvements using leveraged energy savings to reduce both energy costs and consumption. For agencies that have already employed EPC, overall energy consumption should be re- evaluated to identify areas for further efficiency improvements. Agencies should utilize the current process, at no cost to the agency, which provides for a general audit to assess whether EPC is appropriate for the agency. This portion of the process is managed by the Department of Mines, Minerals, and Energy (DMME), and all agencies should work with DMME to have a general audit conducted with the goal of implementing an EPC by 2016.

4. GOVERNOR’S EXECUTIVE ORDER 31 EPC MARKETING –GOVERNOR’S OFFICE SUPPORT BY PROVIDING ADDITIONAL PERSON TO MARKET EPC TO STATE AGENCIES CONTACT INFO: NICK POLIER NICK.POLIER@DMME.VIRGINIA.GOV (276) 523-8233

5. WHAT IS EPC? LEGISLATION PASSED IN 2001 PERFORMANCE CONTRACTING ALLOWS YOU TO GREEN/UPGRADE YOUR FACILITIES AND PAY FOR THE UPGRADES BY REALLOCATING EXISTING ENERGY DOLLARS USING A SELF FUNDING PROJECT FREES UP EXISTING $ TO FUND OTHER UNFUNDED NEEDS

6. OVERVIEW OF IMPLEMENTING AN EPC ENERGY PERFORMANCE CONTRACT (EPC) –DGS CONTRACT # DEB20110611 FOR ALL PUBLIC BODIES –18 PRE-QUALIFIED ESCO’S AMERESCO, ABM Building Services, Atlantic Constructors, Bay Electric Co. Inc., Comfort Systems USA, Constellation New Energy, Energy Systems Group, Honeywell, Johnson Controls, Lifecycle Construction Services, NORESCO, PEPCO, SIEMENS, Schneider Electric, Southland Industries, TRANE, US Energy Management, Wendel Energy Services LLC, –CONTACT 4 OR MORE FROM THE PRE-QUALIFIED POOL –ESCO’S MEET WITH YOU TO DISCUSS THE PROJECT (KICK OFF MEETING) –ESCO’S PERFORM A “BACK OF THE ENVELOPE” (BOE) AUDIT –INTERVIEW AND DISCUSS THE BOE AUDITS –SELECT 1 OR MORE ESCO’S AND BEGIN NEGOTIATIONS. –SELECT 1 ESCO AS YOUR ENERGY PARTNER AND SIGN THE MOU FOR THE INVESTMENT GRADE ENERGY AUDIT (IGA) –UPON COMPLETION OF IGA YOU DEFINE THE PROJECT FROM THE AUDIT –NEGOTIATE THE ENERGY CONTRACT –DMME SUPPORT THROUGHOUT THE PROCESS –**LOCAL DOLLARS CAN BE APPLIED TO PROJECT

7. OVERVIEW OF IMPLEMENTING AN EPC SUPPORT FROM ALL LEVELS OF MANAGEMENT CONSIDER YOUR FINANCING OPTIONS –STATE GOVERNMENT: TREASURY (TRS) LINE OF CREDIT ESTABLISHED FOR ESPC ESTABLISHED PROCEDURE AT TRS

8. OVERVIEW OF IMPLEMENTING AN EPC LOCAL $ CAN BE USED TO “BUY DOWN” THE PROJECT, CODE STATES: “Such contract may also provide capital contributions for the purchase and installation of energy conservation and facility and technology infrastructure upgrades and modernization measures that cannot be totally funded by the energy and operational savings.” –MAINTENANCE RESERVE (NON-BORROWED) –OUT OF POCKET –CAPITAL $

9. OVERVIEW OF IMPLEMENTING AN EPC OTHER THAN “ENERGY UPGRADES”, CODE STATES: –Such contract may also provide capital contributions for the purchase and installation of energy conservation and facility and technology infrastructure upgrades and modernization measures that cannot be totally funded by the energy and operational savings. Security issues Other technological/modernization measures VOIP

10. IMPLEMENTING AN EPC DEFINE YOUR PROJECT –WHAT ARE YOUR GREATEST NEEDS? OLD CHILLER THAT IS INEFFICIENT STEAM LINE LEAKS OR STEAM TRAPS HIGH ENERGY COSTS (ELECTRIC, HEATING FUELS, ETC.) HIGH WATER CONSUMPTION BUILDING ENVELOPE… ROOFS, WINDOWS, ETC. OLD BOILERS OLD HVAC EQUIPMENT FREQUENCY DRIVES LIGHTING CONTROLS

11. IMPLEMENTING AN EPC AFTER YOU HAVE DEFINED YOUR NEEDS AND GIVEN CONSIDERATION TO HOW YOU WOULD LIKE TO FINANCE YOUR PROJECT… – SELECT A MINIMUM OF 4 CONTRACTORS TO PERFORM THE BOE AUDIT. –REFER TO CONTRACTOR QUALIFICATIONS AND SELECT BASED ON PROJECT NEEDS. –CONTRACT ALLOWS FOR SOLE SOURCE UNDER CERTAIN CONDITIONS CONTROLS

12. IMPLEMENTING AN EPC SELECT THE FACILTIES TO INCLUDE IN THE BOE SET UP A KICK-OFF MEETING WITH THE SELECTED ESCO’S NEED TO PROVIDE THE ESCO’S CERTAIN INFORMATION ON FACILITIES IN BOE –FACILITY DATAFACILITY DATA –UTILITY DATA (3 YEARS OF ACTUAL BILLS) –MAINTENANCE HISTORY

13. IMPLEMENTING AN EPC TEMPLATES –GENERIC EMAIL INVITATIONGENERIC EMAIL INVITATION –GENERIC BOE AGENDAGENERIC BOE AGENDA –REQUEST FOR THE BOE FORMREQUEST FOR THE BOE FORM –SAMPLE EVALUATION CRITERIASAMPLE EVALUATION CRITERIA –SAMPLE SCORINGSAMPLE SCORING –MOU FOR INVESTMENT GRADE AUDIT (IGA)MOU FOR INVESTMENT GRADE AUDIT (IGA) –SAMPLE CONTRACTSAMPLE CONTRACT

14. IMPLEMENTING AN EPC SET A DEADLINE FOR THE BOE, REMEMBER THE MORE TIME YOU ALLOW THE BETTER THE INFORMATION (TYP 6-8 WEEKS) ESCO’S WILL SCHEDULE INDEPENDENT VISITS TO YOUR SITE FORM A SELECTION COMMITTEE WHEN YOU RECEIVE THE BOE’S ALLOW TIME FOR THE COMMITTEE TO REVIEW THEM AND SET UP YOUR INTERVIEWS DMME SUPPORT BOE PROCESS IS AT NO COST

15. IMPLEMENTING AN EPC NEGOTIATE WITH 1 OR MORE ESCO’S & SELECT A PARTNER BASED ON ABILITIES, APPROACH, LONGTERM PARTNERSHIP, HISTORY, ETC IMPORTANT TO REMEMBER YOU ARE SELECTING A PARTNER AT THE BOE, NOT THE FINAL PROJECT SET UP A KICK OFF MEETING TO DISCUSS THE “IGA AND WATER SAVINGS AUDIT” THE COST OF THE IGA CAN BE ROLLED INTO YOUR ENERGY CONTRACT (COST CAN BE NEGOTIATED) ESCO MUST MEET 85% OF SAVINGS/110% OF COST AS SUBMITTED IN BOE (FOR SAME SCOPE)

16. IMPLEMENTING AN EPC ALLOW TIME FOR YOUR IGA ONCE THE IGA IS COMPLETE, MAKE SURE EVERYONE IS IN AGREEMENT WITH THE APPROACH TO THE PROJECT & PROJECTED COST AVOIDANCE YOU SELECT THE PROJECT FROM THE IGA! INERACTIVE SPREADSHEET WITH ECMS/FIMS IF EVERYONE IS IN AGREEMENT PROCEED WITH THE ENERGY CONTRACT. IF YOU CHOSE NOT TO PROCEED THE ESCO IS PAID FOR THE NEGOTIATED COST OF THE IGA IF THEY MET THE “85%/110%” THRESHOLDS. DMME MUST REVIEW & APPROVE THE PROJECT FOR STATE AGENCIES. SAME REVIEW FOR PUBLIC BODIES AT NO COST DMME SUPPORT THROUGHOUT THE PROCESS

17. CONSTRUCTION CONSTRUCTION CAN TYPICALLY TAKE ANYWHERE FROM 6 MONTHS TO 18 MONTHS DEPENDING UPON THE COMPLEXITY OF THE PROJECT. –PROJECT MANAGEMENT! –WEEKLY/BIWEEKLY STATUS MEETINGS –SAFETY, SECURITY, DOCUMENTATION, ETC –THERE WILL BE “BUMPS” ALONG THE WAY AS WITH MOST CONSTRUCTION PROJECTS –ESCO PAID THROUGH SCHEDULE OF VALUES FOR COMPLETED WORK

18. CONSTRUCTION DMME OFFERS HIGH LEVEL PM SUPPORT –ATTEND PROGRESS MEETINGS (WEEKLY, BIWEEKLY, MONTHLY) –INSURE ESCO IS MEETING PROJECT SCOPE –AVAILABLE TO REVIEW ANY SUBMITTALS/CHANGES –AVAILABLE TO WORK WITH ESCO AND OWNER IF DISPUTES ARISE –SOME ONSITE SUPPORT AS AVAILABILITY ALLOWS –AVAILABLE FOR RECONCILING PUNCH LIST ITEMS –REVIEW WARRANTY & PROJECT SIGN OFF WITH OWNER –CANNOT BE “FEET ON THE GROUND” PROJECT MANAGER

19. CONSTRUCTION CONTACT INFO: WALID DANIEL, PE, CEM WALID.DANIEL@DMME.VIRGINIA.GOV WALID.DANIEL@DMME.VIRGINIA.GOV (804) 513-0071

20. Measurement and Verification (M&V) INTERNATIONAL PERFORMANCE MEASUREMENT AND VERIFICATION PROTOCOL (IPMVP) M&V OPTIONS DEPEND UPON THE SCOPE OF WORK MATCH OPTION TO RISK, YOU DO NOT WANT TO PAY $50 TO VERIFY $10 IN AVOIDED COSTS. YEARLY RECONCILIATION REQUIRED BY CODE DMME SUPPORT/REVIEW

21. EXISTING PROJECTS OVER 140 AGENCIES/PUBLIC BODIES HAVE DONE AN EPC, MANY WITH MULTIPLE PHASES TOTALS RUN OVER $785 MILLION THROUGH 2015

22. EXISTING PROJECTS EPC PROJECTS STATE AGENCIES: –UNIVERSITIES –DOC –VEC –VNG-DMA –MUSEUMS –DGS –DFS –DEPT. MENTAL HEALTH

23. EXISTING PROJECTS DEPARTMENT OF FORENSIC SCIENCE HENRY CAPRIO HENRY.CAPRIO@DFS.VIRGINIA.GOV (804) 588-4170

24. PITFALLS EARLY SUPPORT TOP TO BOTTOM UNDERSTAND GUARANTEE IS IN UNITS OF ENERGY NOT $ AVOIDED COSTS VS. SAVINGS FULLY VETTED SCOPE MASTERPLAN/RENOVATIONS –Analyze buildings scheduled for renovation before including them in project WARRANTIES… WHAT/WHEN IT STARTS/HOW LONG TRAINING COMMISSIONING/RETRO-COMMISSIONING SCHEDULES FOR COMPLETION AND PENALTIES FOR NOT MEETING THEM M&V TO MATCH SCOPE PROPER DOCUMENTATION FOR EVERYTHING! UNDERSTAND YOUR RESPONSIBILTIES VS. THE ESCO’S RESPONSIBLITIES

25. SUCCESSES ROOFTOP UNITS AHU’s VRF SYSTEMS ROOFS CEILINGS PLUMBING UPGRADES FAN COIL UNITS VFD’S CONTROLS BOILERS STEAM SYSTEMS/TRAPS CHILLERS WINDOWS SECURITY VOIP HUMIDITY ISSUES/”M” WORD LIGHTING/OCCUPANCY SENSORS OVERALL IMPROVEMENT OF THE WORKING ENVIRONMENT VERY MINIMAL INTTERUPTION TO THE WORKPLACE ESPC PROJECTS HAVE LED TO A DECREASE IN BACKLOG OF MAINTENANCE RESERVE & CAPITAL IMPROVEMENT NEEDS

26. PARTING THOUGHTS OPEN BOOK PRICING NO CHANGE ORDERS/FIRM FIXED PRICING AND “TURN KEY PROJECT” –IF THE ESCO MISSES SOMETHING, THEY PAY. NO CHANGE ORDERS OVERHEAD AND PROFIT/AUDIT FEES ARE NEGOTIATED YOU SELECT EQUIPMENT, NO LOW BID YOU HELP SELECT SUBCONTRACTORS IF YOU HAVE A VIABLE PROJECT YOU ARE ALREADY PAYING FOR AN ESPC BY PAYING THE UTILITY COMPANIES $ THAT COULD BE REALLOCATED TO UPGRADE YOUR FACILITIES. AVOIDED ENERGY COSTS ARE BONDED AND GUARANTEED BY YOUR ESCO IF THE ESCO DOES NOT MEET SAVINGS THE ESCO WRITES A CHECK DMME SUPPORT THROUGHOUT THE PROCESS AT NO COST

27. Q & A?

28. CONTACT INFO STATE AGENCIES & PUBLIC BODIES CHARLIE BARKSDALE CEM, CEP, CMVP, CEA, BEP, CSDP, VCCO UTILITIES & PERFORMANCE CONTRACTING MANAGER DEPARTMENT OF MINES, MINERALS & ENERGY CHARLIE.BARKSDALE@DMME.VIRGINIA.GOV 804-840-1689