Round-Up the Savings to Pay for Facilities Improvements

1. Round-Up the Savings to Pay for Facilities Improvements

2. Public Facilities Retrofit Program Governor’s Office of Energy Sue Stephens Energy Program Manager

3. Public Facilities Retrofit Program Grant from U.S. Department of Energy To increase energy efficiency through performance contracting For state and local governments

4. Public Facilities Retrofit Program For: • State agencies and state higher education institutions • Cities, counties, school districts, other government districts Education • Information • Visit our website: www.energy.nv.gov • Sign-up for our upcoming newsletter • Workshops • Las Vegas (February 6th) • Winnemucca (March 18th) • Reno (March or April – not yet scheduled) Technical Assistance • Best practices • Model procurement and contracting documents • Guidance to develop a successful project 4

5. Public Facilities Retrofit Program Public-Private Partnership Mission: Increase awareness and use of performance contracting in Nevada. Public Sector Participants • Nevada Governor’s Office of Energy • Project managers of successful projects • Others interested in the mission Private Sector Participants: • ESCOs • Vendors of energy efficient equipment • Performance contracting specialists/consultants • Utilities • Others Nevada Chapter N

6. Contact Us We’re here to help you get started and see you through Don’t Delay! Contact us Today! Sue Stephens Energy Program Manager Public Buildings Retrofit Program 775-687-1850 Ext. 7325 sstephens@energy.nv.gov www.energy.nv.gov 6

7. Public Facilities Retrofit Program Governor’s Office of Energy Linda Smith Program Consultant (9Kft Strategies in Energy)

8. What is Performance Contracting? …and, how does it work?

9. What Problems Do You Face at Your Facility? • Competing needs for the budget • Maintenance problems or comfort complaints • Limited expertise on technologies • Too many demands on staff time to launch new projects Yet…you want to replace equipment and modernize your facilities 9

10. If you face these problems…. you are not alone An Innovative Solution Performance Contracting Energy Savings Performance Contracting …a smart way to get better buildings 10

11. What is Energy Savings Performance Contracting? Energy Savings Performance Contracting (ESPC) Projects pay for themselves! Savings stack up over time… A way to upgrade your facilities without dipping into your capital budget… Using future cost savings to pay for projects 11

12. How It Works – Annually Each year money in your budget is freed-up to pay for equipment! 12

13. How It Works - Financing Multi-Year Lease-Purchase Agreement • Financed through lease-purchase agreement (municipal tax-exempt) • Annual cost savings exceed annual payments • Does not impact debt (common legal perspective) • Financing term is up to 15 years (per legislation) • Blend and leverage funds (savings plus utility rebates, grants, bonds, budgeted funds) 13

14. How It Works – Over the Years The long-term view 14

15. The ESCO Partner Contract with an Energy Service Company (ESCO) The ESCO brings in a team of specialists 15

16. The ESCO Partner A qualified ESCO puts many different pieces together in a turnkey approach: Identify and evaluate project opportunities Help arrange for financing and other funding sources Design, install, commission and manage projects Measure and verify savings Train staff, provide ongoing maintenance services And, guarantee that projected savings will cover all costs 16

17. How ESPC Works 2 Contractual AgreementsSecured by the ESCO Guarantee Agency/Owner Performance Contract ESCO Lease-Purchase Agreement or other funding arrangement ESCO guarantee: Savings => Payment Financier 17

18. EPC Scope Measures that save: A Broad Range of Measures: Lighting equipment replacements Building automation system upgrades HVAC system improvements Boiler replacements Plant improvements Renewable energy systems Landscape irrigation Plumbing fixture replacements Commissioning Utility rate adjustments LED traffic and street lighting systems • Energy • Water • Operational, utility, maintenance costs • And beyond (waste handling and other infrastructure improvements) 18

19. 5 Steps to Success and Program Services Decide if performance contracting is right for you (Assess your needs & potential benefits) Services:FREE engineering study, Board presentation, meetings Select an Energy Service Company, ESCO (Develop an RFP) Services: FREE RFP development, advisor ESCO identifies energy-saving opportunities (Develop an investment grade audit contract) Services: Audit contract development, negotiating tips, engineering review of audit ESCO implements projects (Negotiate an Energy Performance Contract) Services: Contract development, negotiating tips, engineering & process advisor Verify savings and enjoy the benefits (Monitor long-term performance) Services: Engineering review of results and basic follow-up monitoring

20. City of Henderson – Facilities Management Ed McGuire Kathy Ogle Nevada Success Story in Performance Contracting

21. CITY OF HENDERSON, NV City Wide Performance Energy Project

22. BACKGROUND – The City of Henderson One of America’s Premier Cities 275,000 residents 105 square miles, 817 miles of streets Over 2 Million square feet of City Buildings under roof 60 miles of trails, most have lights 11 pools 7 Recreation Centers 52 parks- 1200 plus acres Still adding amenities Population rising, use of facilities rising BUDGETS FALLING

23. BACKGROUND: Continued City owned Water and Wastewater plants BUDGETS FALLING Operational Costs are Rising All the NON-Glamorous Stuff is wearing out Out of date technology BUDGETS FALLING Annual Electricity- $10.3 Million Annual Natural Gas- $542K Annual Water- $2.3 M (includes sewer charges) Utilities are $3.3 Million a year for Facilities

24. BACKGROUND: Continued BUDGETS FALLING Las Vegas Valley Economy Sucks Residents staying home, staycationing at Rec. Centers Clients expecting more, willing to pay less Clients NEED affordable, durable, cost effective and reliable “stuff” City needs to replace or refresh the big ticket, utility consuming stuff What do we do? DO MORE WITH LESS? Can you do everything with nothing?

25. NRS CHAPTER 332 - PURCHASING: LOCAL GOVERNMENTS to the rescue! The section applies to: Every political subdivision or other entity which has the right to levy or receive money from ad valorem taxes or other taxes or from any mandatory assessments, including counties, cities, towns, school districts and LVVWD See Subsection NRS 332.300 PERFORMANCE CONTRACTS FOR OPERATING COST-SAVINGS MEASURES!

26. Performance Contracting Process RFP and ESCO Selection by owner Kickoff meeting with scope discussion Develop Financial Grade Audit with multiple workshops to determine final scope Energy Services Agreement signed Final Design completed Construction Measurement and Verification of savings Ongoing O&M

27. The City has past experience with PERFORMANCE CONTRACTS FOR OPERATING COST-SAVING MEASURES In 2006 and 2007 The City of Henderson entered into an energy performance contract with an ESCO to upgrade and retrofit a variety of items. The first Energy Savings Performance Contract (ESPC) completed by the City was a $2.8M energy savings project for the Justice Facility.  Completed in 2007, the project is saving over $250,000 per year.  Funding was a combination of 1/3 Capital Funds and 2/3 medium term bond (10 years).

28. The second project cost $20M and is saving about $2M a year! The second project was financed with a 15 year loan. The City put out a Request For Proposals for bank loans and received several inquires, with Bank of America delivering the best terms. Both projects have GUARANTEED savings, if the savings goal is not achieved either the ESCO installs further upgrades to increase savings or pays down the cost of the energy saving measure until the cost benefit is positive. Your ESCO is your business partner, select them carefully!

29. PROJECT DESCRIPTION: The selected citywide measuresinclude: Retrofitting or replacing over 4,000 building lighting fixtures Replaces 23,000 4’ T-12 lamps with T-8 28 watt high output lamps Installing over 1,500 new lighting occupancy sensors Installing/upgrading energy management system in 15 facilities Replacing 17 boilers in nine facilities Replacing 2 chillers in 2 facilities Retrofitting over 310 plumbing fixtures Installation of ultraviolet water treatment on indoor swimming pools (improves indoor air quality and decreases chemical usage)

30. Examples of sexy projects UV Water treatment 200 Ton Magnetic bearing, Frictionless McQuay Chiller ready for install

31. Old boiler after a “hard light” New high efficiency, low emission boiler

32. Honeywell 3000 Gibson Road lighting

33. PROJECT DESCRIPTION cont. Installed two 30-kilowatt photovoltaic arrays Replaced rooftop HVAC units at multiple locations Retrofit or replaced nearly 28,000HPS street lights with induction lighting technology Replaced 12 large exhaust fans at the Jail Repaired or replaced appurtenant maintenance items that don’t meet the energy saving test but are critical and failing like valves, controllers etc., paid for with energy savings. Inductive HPS

34. All old lamps, ballasts, fixtures and thermostats were recycled, all new equipment is low emission, high efficiency. Two R-22 refrigerant equipped chillers were upgraded with new R-134a compatible chillers (non ozone depleting refrigerant)

35. Coordination with 1900 full time employees Convince the Public Works, Finance, Utilities and Building Department heads the project will work and pay for itself Coordinate 15 contractors working in 36 locations plus all 817 miles of public streets Built-in conflicts with all the old valves, switches and connections. Every shutdown was an adventure! All the buildings were open for business and remained so for the term of the contract No major shutdowns, no closures

36. The City had the dream team for this project: The City selected the most qualified Energy Service Company (ESCO), they function like a Prime Contractor in a design/build. The ESCO selects “subs”, designers, engineers, suppliers and installers to complete the project. The City hired a third party energy consultant to provide project oversight. This is required by NRS 332.360, the third party must possess an AEE “Certified Energy Manager” certification. City staff managed the day to day work and helped coordinate with the occupants of all the locations, processed all payments, reviewed certified payroll and attended bi-weekly coordination/project meetings.

37. Original Contract Amount : $17,506,991.00 Change orders owner added 13%: $2,589,678.00 Contract Price after This Change $20,096,669.00 Added to the Base Contract via change orders, all owner requested changes or additional work funded by others NV Energy Rebates total approximately $845,000 American Recovery Act Funds $1,043,000 City Capital Funds $700,000 No time growth

38. Sample power bill, Residential Streetlights

39. Sample power bill, Arterial Streetlights

40. Sample power consumption, 3 Buildings Convention Center, Black Mountain Rec. Center and Emergency Services Facility. Power consumption 2008 to 2011 for June, July and August. Summer Months show 35% decrease at each location!

41. Continued Savings

42. Summary • The project reduced the City’s carbon footprint, greenhouse gas emissions and remove 240 milligrams of mercury. • The project appreciably reduced maintenance cost and effort • The project has resulted in a Cultural Change at the City of Henderson • All rebates were spent on additional related energy saving work. • The project had a $20 million dollar impact with $700,000 direct cost • All equipment was high efficiency, low emissions and low or mercury free • Most street lamps were retrofit, those that could not were replaced and recycled • All 28,000 street lamp ballasts were recycled • The project has reduced utility spending by $2.4 Million dollars a year! • Using EPA Energy Star benchmarking software, City Hall improved over 20 points (20%). • Savings has exceeded the contract based on 17% guaranteed savings

43. Public Facilities Retrofit Program Governor’s Office of Energy Chris Halpin, PE, CEM, CMVP, LEED AP Program Consultant – Technical Assistance (Celtic Energy)

44. FREE Technical Assistance to Get Started • Determine if Performance Contracting is right for you • Assessment of facility opportunities through performance contracting • On-site meetings and facility walk-throughs • Benchmarking energy use and costs • Support for your decision-making team to get the “go” decision • Competitively select an ESCO • Apply a standardized process • Help prepare the RFP • Serve as a neutral advisor 44

45. Continued Technical Assistance • Your project’s savings will pay for continued technical assistance (as referenced in statute) • Investment Grade Audit • Provide a 3rd party review of the savings projections and recommended measures • Performance Contract (implementation contract) • Educate and advise during contract negotiations • Ensure thorough documentation • Ensure reasonable project costs, markups, etc. • Ensure sound measurement and verification approaches 45

46. FREE Technical Assistance Building the Project Team • Conduct a training seminar for Agency personnel to ensure understanding of ESPC scope, financing, M&V, etc. • Discuss “Lessons Learned” from previous ESPCs • Secure commitment of all stakeholders to ESPC • Liaison with NV Energy Office 46

47. FREE Technical Assistance • Determine if Performance Contracting is right for you • Assessment of facility opportunities through performance contracting • On-site meetings and facility walk-throughs • Benchmarking energy use and costs • Support for your decision-making team to get the “go” decision • Meet with facility management staff, discuss O&M, ECM opportunities • What projects have been completed? • Are there critical infrastructure needs? • Planned projects short of funding? • Review and benchmark existing utility data. Compare facilities to peers using BTU/SF, $/SF • Create utility baseline • Helps prioritize targets 47

48. FREE Technical Assistance • Competitively select an ESCO • Apply a standardized process • Help prepare the RFP • Serve as a neutral advisor • Follow standardized RFQ/RFP process established by the energy office through this DOE grant • Help prepare the RFP • Use the energy office template, modify as needed • Assist with Technical Facility Profile • Building descriptions, utility data, plans • Serve as a neutral advisor • Discuss assembly of selection committee • Brief committee on RFP issuance, proposal review and scoring criteria, ESCO selection process,etc. • Assist with “Board” presentations 48

49. Public Facilities Retrofit Program Governor’s Office of Energy Sue Stephens Energy Program Manager

50. WHY should I consider doing a performance contracting project? 50