Congress Urged to Renew Performance Contracting Law

WASHINGTON A Sempra Energy Solutions executive testifying on behalf of the Federal Performance Contracting Coalition told a Senate committee in mid-March that reducing skyrocketing energy bills at military and federal installations goes beyond fiddling with the thermostat and that time is running out for a successful, privately funded program that has saved the government millions in energy costs.

WASHINGTON — A Sempra Energy Solutions executive testifying on behalf of the Federal Performance Contracting Coalition told a Senate committee in mid-March that reducing skyrocketing energy bills at military and federal installations goes beyond “fiddling with the thermostat” and that time is running out for a successful, privately funded program that has saved the government millions in energy costs.

“A significant amount of the $4 billion annual energy bill for the federal government’s 500,000 buildings is wasted money,” said Erbin Keith, senior vice president for Sempra Energy Solutions, at the U.S. Senate Energy and Resources Committee’s hearing on Energy Efficiency and Conservation.

Sempra Energy Solutions is the retail energy marketing subsidiary of Sempra Energy, a San Diego-based energy services firm.

The performance contracting coalition is a business trade association comprised exclusively of winners of regional or technology-specific Energy Savings Performance Contracts established under the 1992 Energy Policy Act.

Keith warned that, without timely Congressional action, a successful ESPC process financed by the private sector will end on Sept. 30, 2003, when the government’s authority to enter into these agreements ceases.

He recommended the government take immediate measures to extend the current energy performance-contracting program and expand it to include water conservation, energy transportation and power-generation programs. Keith also called on Congress to mandate that federal agencies report why they don’t use private sector financing, such as the ESPC, for energy-efficiency programs.

“From 2001 to 2002, these projects were reduced by almost half while cumulative investment was reduced by more than 25%,” Keith said. “Without action by Congress, this program is in its final months.”

He attributed the decrease to a change in agency leadership and a resultant lack of institutional experience and understanding of the programs. Contributing factors also included a cutback in federal energy-manager positions and lack of support for third-party financing.

Since the ESPC program began in 1992, the private sector has invested more than $1.2 billion in it. These investments are projected to save the government and taxpayers billions of dollars over the life of the projects.

“In 2001, every dollar spent by the Department of Energy on management of its ESPC program resulted in nearly $16 in private investment in federal facilities and about $33 in energy and operating savings to the federal government,” said Keith.

Under the ESPC program, a private company can finance the investment of installing energy-efficient equipment with no up-front costs to the government agency.