STEPS TO SUCCESS WITH FCIP

1. STEPS TO SUCCESS WITH FCIP Ryan Freed Kansas Energy Office

2. 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

3. 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 guaranteesperformance of project

4. Performance Contracting Benefits • Extends Capital Dollars • Life-Cycle Cost vs. First Cost • No more “We’ve always done it that way” • ESCO designs and builds project • Guaranteed performance • NO CHANGE ORDERS

5. 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

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

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

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

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

10. 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

11. 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

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

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

14. 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

15. 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

16. Summary • FCIP provides budget-neutral facility upgrades • FCIP oversight provides confidence to staff and public • Customer’s staff can focus on performance, not process

17. Any Questions? Ryan Freed Kansas Energy Office 785-271-3152 r.freed@kcc.ks.gov