2009 DLTA PROJECT
Project Name: Regional Energy Savings Performance Contracting – Round 2
Purpose: To facilitate a regional procurement of a single professional Energy Services Company
(ESCO) to provide comprehensive energy efficiency services under an Energy Savings
Performance Contract (ESPC) for multiple municipalities and regional school districts (RSDs) in
Franklin County.
Communities Served: Six towns and two RSDs served in round 2will eventually join the sixteen
participating towns and three RSDs from round 1 for a total of 22 towns and 5 RSDs being
served by the same ESCO. Round 2 participants are receiving the same level of service at the
same rates as participants in round 1.
Summary of Scope: M.G.L. Ch. 25A §11i allows public agencies seeking to improve the energy
efficiency of their facilities to issue a Request for Qualifications (RFQ) for ESCOs that are
qualified in Massachusetts to provide energy management services. This procurement process
leads to a contract with an ESCO to design, purchase, install, operate and maintain energy
systems so that municipalities and regional school districts can purchase energy and water saving
improvements to public facilities where the basis for payments is the performance level
guaranteed in the contract.
The Franklin Regional Council of Governments (FRCOG) assembled a team of representatives from
the various municipalities and RSDs interested in joining forces to solicit a second round RFQ and
select a professional ESCO to provide comprehensive energy efficiency services under an ESPC.
By way of background, FRCOG implemented its first competitive solicitation (Round 1) for the
provision of ESPC services in December 2007. In February 2008, FRCOG received proposals from
three industry respected providers of ESPC services.
The first ESCO Selection Committee undertook a rigorous review process of the proposals including a
thorough review of submitted materials, request for additional information for clarification and
conducted interviews with each of the three ESCOs. In June 2008, the Committee determined that
Siemens Building Technologies was the most advantageous ESCO to provide ESPC services.
The FRCOG issued its second competitive solicitation (Round 2) for the provision of ESPC services
in February 2009. In March 2009, the FRCOG received one proposal from Siemens Building
Technologies. The second ESCO Selection Committee reviewed the proposal received and the
process of the first round selection committee and determined that it was advantageous to select
Siemens Building Technologies with the proviso that second round participants receive the same
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technical and financial consideration for ESPC services as first round participants. Siemens agreed to
this stipulation.
Currently, FRCOG with support of its consultant, Beth Greenblatt of Beacon Integrated Solutions, has
developed two standardized contract template agreements for use by municipalities and RSDs
interested in engaging Siemens to provide energy efficiency services. The first provides for a
Preliminary Energy Audit (PEA), offered by Siemens at no direct cost to the participating entity, to
determine the technical and economic feasibility of implementing a program on an individual basis.
Benchmarking analysis will be used. After such analysis, Siemens and the participating entity will
determine whether it is reasonable and appropriate to move to the next stage which is the Investment
Grade Audit (IGA). Under the IGA, Siemens would conduct a very thorough technical assessment of
the facilities at each Participant site, and identify the energy savings and implementation costs that
they would contractually guarantee.
Upon acceptance of the IGA final report, the Participant would engage in an Energy Services
Agreement (ESA) that governs the construction and performance period obligations of both the
participating entity and Siemens. FRCOG is also developing a standardized ESA contract template
agreement for each participating entity to execute individually.
FRCOG engaged both commercial and legal support to develop and review these three commercial
contracting vehicles. As such, these agreements were properly vetted in advance of individual town or
RSD negotiations with Siemens. Moreover, the Mohawk Trail Regional School District agreed to
share the results of its legal review of our prepared documents. Such review was, as appropriate,
integrated into the documents provided to the participating entities.
Project Budget: The project has budgeted $7,000 in DLTA funds for the services of a technical
consultant to assist through the ESCO selection and contracting process, and for the services of a
financial consultant to research and provide information to all participants on the various project
financing options available to them. The FRCOG contributed the cost of staff time to facilitate
the project, procurement expertise and the legal review of the template PEA, IGA and ESA
contracts.
Expected Cost Savings to Communities: The FRCOG’s use of DLTA funds is providing value
to the participating municipalities and RSDs through the economies of scale inherent in a
regional approach to the project as well as by the avoidance of out-of-pocket expenses and staff
time related to procurement and contracting.
Individually, few if any of the towns and RSDs participating would have attracted the interest of
an ESCO because their projects are too small to warrant the time and effort involved in
responding to an RFQ, as well as the cost of mobilization, both in terms of dollars spent and staff
time required to complete the lengthy performance contracting process. By grouping multiple
towns and RSDs to move through the process simultaneously, Siemens gains the advantage of
economies of scale and can treat all participating entities as essentially one large project.
Additionally, communities and RSDs are benefitting by virtue of one procurement process paid
for and facilitated by the FRCOG, versus eight individual procurements by each entity. Legal
review of one template contract for each of the three stages of the process has saved each entity
from needing to pay for its own legal review of the basic contract language. Participants are free
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to start with the template and focus local resources on the individual scope of work for their
entity. The value of avoided legal expenses and staff time is estimated conservatively to be at
least $5,000 per entity.
Other Benefits to Communities: Each participating entity has come to this project with varying
needs and desires for outcomes. All agree that making their public facilities as energy efficient
as possible makes sense from the budgeting standpoint of cost-avoidance. The performance
contract results in a guarantee by the ESCO of a certain level of savings. Once the financing is
paid off, that savings is available for reallocation to other budget lines or for a reduction in local
budgets and local tax assessments.
Additionally, some participants are approaching the project from the environmental benefits to
be gained by reducing energy consumption and reducing the use of greenhouse gas-emitting
fossil fuels. Other environmental benefits are being gained by incorporating renewable energy
production into the operation of public facilities, mostly in the area of solar photovoltaic
electricity production.