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Town of Merrimac Performance Contracting Initiative

h. Town of Merrimac Performance Contracting Initiative. Briefing for Pentucket Regional Schools March 21, 2013 Steven Weisman, Vice President Peregrine Energy Group, Inc., Owner ’ s Agent. Why use performance contracting?.

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Town of Merrimac Performance Contracting Initiative

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  1. h Town of MerrimacPerformance Contracting Initiative Briefing for Pentucket Regional Schools March 21, 2013 Steven Weisman, Vice PresidentPeregrine Energy Group, Inc., Owner’s Agent

  2. Why use performance contracting? • Town and District lack resources to take on necessary energy infrastructure improvements • Town wants to avoid CIP spending and tax increases • Normal processes for capital project budgeting do not address problems in timely fashion • Town and District want performance protection

  3. Who is using performance contracts? • State of Massachusetts in state buildings • MA regional schools: Blue Hill Regional Tech., Franklin Regional Tech., Greater New Bedford Voc. Tech., So. Middlesex Voc. Tech., Southeastern Regional Tech. • MA cities and towns, including: North Andover, Lawrence, Georgetown, Lowell, Revere, Swampscott, Chelsea, Springfield, Melrose, Worcester, Greenfield, Sudbury, Somerville, Newton, Framingham, West Springfield, Sunderland, Reading, Hamilton, Fall River, Orange, Wakefield…

  4. Performance contracting overview • Strategy for infrastructure renewal andenergy efficiency • Ch. 25A allows an alternative to Ch. 149 bid/design/bid/build • Allows a single contract for many projects in multiple buildings • Guaranteed annual energy savings must exceed project costs • Delivered by specialized energy services companies (ESCOs) • Integrated engineering, design, purchasing, construction, and commissioning improves project quality • Financing is arranged by Municipality • ESCO paid at the completion of construction and commissioning • Debt paid from energy savings retained in operating budget • No increase in tax rates necessary to fund projects

  5. Project Funding / Savings Guarantee • Town and District agree on cost sharing approach • Town authorizes project and secures financing • ESCO paid as sub-projects completed / commissioned • Financing repaid out of utility account using savings • Guarantee: Energy saved meets or exceeds projections • Actual savings analyzed and reconciled by ESCO annually against guarantee • Savings verified by Peregrine as Owner’s Agent

  6. Two Step Contracting Process • Step One: • Investment Grade Audit (“IGA”) agreement was executed by Town and Ameresco in 2011 • Ameresco completed preliminary assessment of potential projects for Town’s consideration • Town picked projects for detailed study • Ameresco prepared study and proposal for Town • Peregrine critiqued Ameresco proposal in detail

  7. Contracting Process [continued] • Step Two: • Town decides whether to proceed to construction or end relationship andpay for the detailed study • If Town wants to proceed • Finalizes Energy Services Agreement (ESA) scope, terms • Secures project financing (e.g., bond or lease) • Signs ESA with Ameresco • Ameresco begins design/construction, collaborating with Town and Peregrine (as owner’s agent)

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