Vermont-VEIC Contract Extension for EEU
ATTACHMENT K
PERFORMANCE INCENTIVE MECHANISM 2003-2005
I.
Overview
The Contractor and the Board agree that a portion of payments to the Contractor shall be
based on the Contractor’s performance in achieving the Board’s objectives and successfully
delivering the strategies and initiatives described in the Scope of Work. For the period
January 1, 2003 through December 31, 2005, the Contractor can earn up to $1,280,000 in
performance incentives for successfully meeting program performance indicators that are
defined in this Attachment and detailed in Table K-2. The Contractor shall submit annual
claims for Performance Awards, according to the schedule, documentation, and verification
processes outlined in this Attachment. The Contract Administrator will verify the
Contractor’s claim for Performance Awards and make a recommendation to the Board; the
DPS will provide input for specified indicators as described in this Attachment.
If Contractor is not selected to serve as the EEU after December 31, 2005, payment of any
earned Performance Awards for the period 1/1/2003 through 12/31/2005 (up to a maximum
of $1,280,000) shall be made on June 1, 2006. If Contractor is selected to serve as the EEU
after December 31, 2005, payment of any earned Performance Awards for the period
1/1/2003 through 12/31/2005 (up to a maximum of $1,280,000) shall be made on July 1,
2006.
The performance incentive mechanism is subject to a set of three minimum performance
requirements. These are detailed in Table K-4. The final amount of Performance Awards
granted to Contractor will be subject to achievement of these minimum performance
requirements and will be adjusted in accordance with Paragraph IV, below, should the
Contractor fail to meet any of the minimum performance standards set out in Table K-4.
II.
Performance Awards: Categories
The performance incentive mechanism is designed to reward superior performance by the
Contractor in the overall administration and delivery of energy efficiency services and
initiatives. The performance mechanism provides incentives for achieving specific crosssector outcomes such as electricity savings and resource benefits, as well as incentives for
accomplishing specific goals in particular markets within the Residential Sector and the
Business Sector.
III.
Performance Awards: Overall Weights
Overall weights and dollars allocated to the various types of performance indicators are
shown in Table K-1 below.
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Table K-1: Performance Awards: Categories, Weights, and Awards
Amount of Total Award
Eligible to be Earned
In Each Year of the Agreement
Total
Amount of
Award
Overall
Weight
$512,000
$448,000
$64,000
40%
35%
5%
Total amount earned across all three years
$448,000
$64,000
35%
5%
Total amount earned across all three years
Total amount earned across all three years
$64,000
5%
Total amount earned across all three years
Business Incentives (Indicators 5 & 6)
$128,000
10%
Total amount earned across all three years
Geographic Incentive (Indicator 7)
$64,000
5%
Total amount earned across all three years
Maximum Possible Performance
Award (Cap)
$1,280,000
100%
Performance Indicator
2003
2004
2005
Cross-Sector Incentives
(Indicators 1 – 3)
1. Electricity Savings
1a. Annual Electricity Savings1
1b. Electricity Savings for
Projects under Development
2. Total Resource Benefits2
3. Summer Peak kW Demand
Savings
Residential Incentive
0
0
$64,000
(Indicator 4)
IV.
Performance Awards: Minimum Performance Requirements
The Contractor’s eligibility to earn full or partial Performance Awards is contingent on
achievement of three minimum performance standards. These standards, and associated
impacts on the Performance Awards, are specified and explained in Table K-4.
1
These are the annual electricity savings to be achieved from all strategies and initiatives except the Customer
Credit initiative from 1/1/2003 through 12/31/2005. As explained in more detail in Paragraph V.A below, if the
Contractor exceeds the specified electricity savings target and fails to achieve one or more other performance
indicators, it can earn a larger Performance Award for this indicator, except that adjustments for failure to meet the
minimum performance standards set out in Table K-4, as more fully described in Paragraph IV below, shall apply.
The maximum dollar amount the Contractor can earn for this indicator is $515,200, or 40.25% of the maximum
possible Performance Award; in no event can the Contractor’s total payment for performance incentives exceed
$1,280,000.
2
As explained in more detail in Paragraph V.C below, if the Contractor exceeds the specified total resource benefits
target and fails to achieve one or more other performance indicators, it can earn a larger Performance Award for this
indicator, except that adjustments for failure to meet the minimum performance standards set out in Table K-4, as
more fully described in Paragraph IV below, shall apply. The maximum dollar amount the Contractor can earn for
this indicator is $492,800, or 38.5% of the maximum possible Performance Award; in no event can the Contractor’s
total payment for performance incentives exceed $1,280,000.
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1. Minimum electric benefits. This requirement is intended to ensure that the
Contractor produces at least enough electricity resource savings to cover
contributions by Vermont’s electricity consumers. Failure to meet this minimum
standard of performance would disqualify the Contractor from receiving any
Performance Award.
2. Minimum low-income spending. This requirement is designed to ensure that the
Contractor devotes a minimum level of resources to serving Vermont’s low-income
population. Failure to attain this minimum standard of performance would
automatically reduce the maximum Performance Award cap of $1,280,000 by
$300,000.
3. Minimum participation by small non-residential customers. This requirement
ensures that the Contractor serves a minimum acceptable percentage of small nonresidential customers out of all non-residential participants. For this purpose, small
non-residential customers are defined as electric accounts with annual energy
consumption of 40,000 kWh or below. Failure to attain this minimum standard of
performance would automatically reduce the maximum Performance Award cap of
$1,280,000 by $300,000.
The reductions in the maximum Performance Award cap described above are cumulative.
That is, if the Contractor fails to meet both minimum performance standards two and three,
the maximum Performance Award cap will be reduced by $600,000. If the Contractor fails
to meet one or more minimum performance standards, it will not be able to earn a
Performance Award that exceeds the reduced maximum Performance Award cap, even if it
exceeds the targets for one or more performance indicators.
In determining the Contractor’s eligibility for a Performance Award, the first step will be to
assess whether the Contractor met these three minimum performance standards. If the
Contractor fails to meet a minimum performance standard and the maximum Performance
Award cap is reduced accordingly, the Contractor will only be eligible to receive the reduced
Performance Award, even if the sum of the amounts the Contractor would otherwise have
been eligible to receive exceeds this reduced amount. For example, if the Contractor fails to
meet minimum performance standard two, but meets the targets for all seven performance
indicators described in Paragraph V, below, the Contractor would only receive a
Performance Award of $980,000, even though the Contractor would have been eligible for a
Performance Award of $1,280,000 if it had met all the minimum performance standards.
A more complicated example would be if the Contractor fails to meet minimum performance
standard two, and fails to meet the target for performance indicator two, but achieves 120%
of performance indicator 1a, and meets the targets for the remaining five performance
indicators. In this situation the Contractor’s Performance Award would be calculated as
follows:
 Step 1: Reduce the maximum Performance Award cap by $300,000 to $980,000
because the Contractor failed to meet minimum performance standard two;
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

V.
Step 2: Sum the amounts the Contractor would have been eligible to earn if it had
met all minimum performance standards, including the extra amount the Contractor
would have been eligible to earn for achieving 120% of performance indicator 1a
($515,200 + $64,000 + $0 + $64,000 + $64,000 + $64,000 + $64,000 + $64,000 =
$899,200);
Step 3: Compare the results of steps one and two. The Contractor earns a
Performance Award equal to the lesser of the two amounts, in this example,
$899,200.
Description of Performance Indicators
The Contractor is eligible to earn an incentive for superior performance of specified
outcomes or effects in individual markets or across sectors. The paragraphs below provide a
more detailed description of those performance indicators, their weights as a percentage of
the total Performance Award, the documentation and verification process for each
performance indicator, and in some cases, targets and thresholds.
A. Cumulative Annual Electricity Savings (35% of total maximum award)
1. Target and Threshold
For the period January 1, 2003 through December 31, 2005, the Contractor’s
Electricity Savings Target is 120,000 MWh (at generation and net of free riders).
The Electricity Savings Target measures the cumulative total of annual savings
achieved by implementation of all EEU strategies and initiatives, except for the
Customer Credit initiative, during the period 1/1/2003 through 12/31/2005. During
the period 1/1/2003 through 12/31/2005, the Electricity Savings Target will be
changed to reflect changes in Contractor EEC Funds that might occur, including any
carry-forward from 2002 to 2003. Specifically, the Electricity Savings Target will be
increased (or decreased) by 2.96 MWh per $1,000 of increase (or decrease) in
Contractor EEC Funds.
The Contractor shall receive a Performance Award if the Board determines that the
Contractor successfully achieves and documents Electricity Savings, above a
specified savings threshold, that result from successful implementation of core
strategies and initiatives from 1/1/2003 through 12/31/2005. The savings threshold
is set at 91 2/3 % of the Electricity Savings Target.
Electricity savings from programs implemented by BED shall not be counted towards
the Contractor’s Electricity Savings for the purposes of determining this Performance
Award. In addition, electricity savings from activities implemented by the
Contractor pursuant to Paragraph II.N of Attachment I shall not be counted towards
the Contractor’s Electricity Savings for the purposes of determining this Performance
Award. Any electricity savings from activities implemented with funds from other
sources (e.g., grants, Vermont Gas Systems), except for savings from activities
implemented with funds from Vermont electric utilities pursuant to Paragraph II.N,
shall be counted toward the Contractor’s Electricity Savings for the purposes of
determining this Performance Award.
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2. Weighting
The overall weight for this performance indicator is 35% of the Contractor’s total
maximum Performance Award ($1,280,000 * 0.35 = $448,000). If the Contractor
exceeds the specified Electricity Savings Target (up to a cap of 116 2/3% of the
Electricity Savings Target) and fails to achieve one or more other performance
indicators, the Contractor can earn a larger Performance Award for this indicator (up
to a cap of $515,200).
The Contractor must achieve 91 2/3% of its Electricity Savings Target (110,000
MWh) in order to earn any Performance Award for this indicator. If the Contractor
achieves 110,000 MWh of its Electricity Savings Target, it can earn $291,200 (65%
of the amount it would earn if it achieved 100% of its Target). The Performance
Award shall be scaled linearly between 91 2/3% and 116 2/3% of the actual
Electricity Savings as detailed in Paragraph V.A.3 below.
3.
Performance Award
The Contractor’s Performance Award shall be:

$0 if verified cumulative annual Electricity Savings are less than 110,000 MWh.

$291,200 plus $15.68/MWh (Verified Electricity Savings minus 110,000 MWh)
for verified cumulative annual Electricity Savings between 110,000 MWh and
120,000 MWh.

$448,000 plus $3.36/MWh (Verified Electricity Savings minus 120,000 MWh)
for verified cumulative annual Electricity Savings over 120,000 MWh, capped at
a maximum award of $515,200 for savings of 140,000 MWh or above.
4. Documentation and Verification
In order to establish and validate achievements for this Performance Award, the
Contractor agrees to the following documentation and verification process.
a. By April 1, 2004, 2005, and 2006, the Contractor agrees to submit a report to the
Contract Administrator and DPS that establishes its claim for Annual Electricity
Savings from the previous year. The Contract Administrator and the DPS will
review the Contractor’s report and, at their own discretion, review the
Contractor’s project files in order to assess savings estimates for custom
measures, comprehensive projects, or key input assumptions. The Contract
Administrator and the DPS will then meet with the Contractor in an attempt to
resolve any differences on claimed savings. By June 1, 2004, 2005, and 2006, the
DPS will provide a technical report or memorandum to the Contract
Administrator with its recommendation on Annual Electricity Savings for the
preceding year. Following receipt of the DPS’s report, the Contract
Administrator will provide a recommendation to the Board regarding Annual
Electricity Savings for the previous year. In 2006, the Contract Administrator
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will also provide a recommendation to the Board on the appropriate Performance
Award for this category. Each year the Board will make a final determination
regarding Annual Electricity Savings from the previous year. By July 1, 2006, the
Board will make a final determination regarding cumulative Annual Electricity
Savings and the appropriate Performance Award for this category.
b. The Contractor shall work with the Contract Administrator and the DPS to
establish and maintain reasonable savings estimates for prescriptive energy
efficiency measures offered. The Contractor shall maintain its documentation of
all prescriptive measure savings assumptions in the Technical Reference Manual.
For custom measures or projects, where prescriptive measure savings assumptions
have not been established or do not apply, the Contractor shall maintain in its
files documentation of all assumptions and calculations used to establish its claim
for electricity savings. All information on savings assumptions and calculations
used shall be available for review by the DPS and Contract Administrator.
c. As part of its ongoing management and planning, the Contractor shall review and
update, as appropriate, its estimates of Electricity Savings for measures,
technologies and projects in order to reflect information obtained from
measurement and evaluation studies, experiences gained from implementation of
energy efficiency services and initiatives, and changes in building and appliance
standards and codes. The Contractor shall use these revised estimates of Annual
Electricity Savings on a prospective basis for measures installed in reporting
claims of Annual Electricity Savings in future years.
B. Electricity Savings for Projects under Development (5% of total award)
This performance incentive is designed to encourage the Contractor to continue
promoting programs and developing projects with a long sales or development cycle for
which installation may not be completed by the end of this Agreement. The goal is to
ensure sustainable and orderly development of the energy efficiency services market and
minimize disruptions in the marketplace.
1. Target and Threshold
The Contractor’s Adjusted Committed Electricity Savings Target for this
performance indicator is 6,200 MWh, which represents 25% of the annualized 2005
estimated savings for the Business New Construction, Business Existing Facilities,
and Residential New Construction services and initiatives (other services and
initiatives do not typically have any significant time lags between commitments and
completions). For purposes of meeting this performance Target, a probability factor
of 85% shall be applied to all “committed” savings (e.g., savings counted toward
Target = 0.85 * committed savings). This factor will reflect the fact that some
committed projects may ultimately not come to fruition.
The Contractor shall receive 50% of the Performance Award if the Board determines
that the Contractor successfully achieves 75% of the Target, and 110% of the award
if it achieves 120% of the Target.
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2. Weighting
The overall weight for this performance indicator is 5% of the Contractor’s total
proposed Performance Award ($1,280,000 * .05 = $64,000). The Contractor must
achieve 75% of the Adjusted Committed Savings Target in order to earn any
Performance Award for this indicator. If the Contractor achieves 75% of its Adjusted
Committed Savings Target, it shall earn $32,000 (50% of the amount it would earn if
it achieved 100% of its Target). The Performance Award shall be scaled linearly
between 75% and 120% of the Target, as detailed in Paragraph V.B.3 below.
3. Performance Award
The Contractor’s Performance Award shall be:

$0 if verified Adjusted Committed Electricity Savings are less than 4,650 MWh.

$32,000 plus $20.65/MWh (Verified Adjusted Committed Electricity Savings
minus 4,650 MWh), for Committed Electricity Savings between 4,650 MWh and
6,200 MWh.

$64,000 plus $5.16/MWh (Verified Adjusted Committed Electricity Savings
minus 6,200 MWh) for Committed Electricity Savings between 6,200 MWh and
7,440 MWh, capped at a maximum award of $70,400 for savings of 7,440 MWh
and above.
4. Documentation and Verification
The Contractor is eligible for this Performance Award if it successfully achieves and
documents annual electricity savings from projects and programs where customers
have made “commitments.” These projects are under development and there is a high
likelihood that they will be completed and produce electricity savings which can be
attributed to the Contractor’s programs. Commitments shall be defined as a written
commitment by the EEU to fund a project. Written commitments must be signed by
both the Contractor and the customer, and must define the financial offer, the specific
measures and efficiency levels that would be installed, and the term for which the
commitment is valid.
An inventory of committed projects will be compiled as of 12/31/05. For Business
New Construction and Business Existing Facilities, committed projects are those for
which there is a written commitment by Contractor to fund the project which the
customer has signed. For Residential New Construction, committed projects will be
estimated based on the number of leads adjusted by the historic percentage of projects
that are completed.
For Act 250 (10 V.S.A. §§ 6081-6092) projects which are not receiving financial
incentives, the determination of what defines a “commitment” will be mutually
agreed upon by the Contractor and the Board, in consultation with the Contract
Administrator and the DPS, by the end of 2002.
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C. Total Resource Benefits (35% of total award)
This incentive is designed to encourage the Contractor to maximize energy-related and
other resource benefits in implementing energy-efficiency measures and projects during
their economic lifetime. The Contractor shall receive this Performance Award if it
successfully achieves and documents Total Resource Benefits (“TRB”), above a specified
threshold, that result from delivery of services and initiatives in certain Core Markets.
1. Target and Threshold
For the period 1/1/2003 through 12/31/2005, a single, cumulative Target for Total
Resource Benefits of $76,200,000 (in 2000 dollars) is established for all services and
initiatives except the Customer Credit initiative. The TRB for any given service is
defined as the present value (in year-2003 dollars) of lifetime net resource savings in
electricity, fossil fuel, and water, which are valued at current projections of avoided
resource costs.3 Avoided costs do not include environmental or any other
externalities (e.g., indirect economic benefits), such as the 0.7 cents/kWh value
stipulated in ¶ 51 of the MOU.
This target and its associated lower and upper thresholds will be adjusted once in
September 2003 to allow for conversion to 2003 dollars using the actual percent
change in the regional Consumer Price Index between July 1, 2000 and July 1, 2003.
During the contract period the TRB Target will be changed to reflect changes in
Contractor EEC Funds that might occur, including any carry-forward from 2002 to
2003. Specifically, the TRB Target will be increased (or decreased) by $1,878 (in
2000 dollars) per $1,000 of increase (or decrease) in Contractor EEC Funds.
In addition, the TRB Target shall be modified prospectively to reflect updated
projections of avoided resource costs. If avoided cost projections are updated, the
following process will be used to make the appropriate adjustments to the TRB
Target and TRB already achieved:
 Recalculate the total TRB Target using the new avoided cost projections;
 Determine the percentage of the original TRB Target that Contractor has
achieved by the time the change takes affect; and
 Multiply the new TRB Target by that percentage to determine the amount of
the new TRB Target that the Contractor has already achieved as of the time of
the change in avoided costs.
TRB achieved after the revised target is adopted would be tracked using the updated
avoided electricity costs and fossil fuel prices.
The Contractor shall receive a Performance Award if the Board determines that the
Contractor successfully achieves and documents TRB, above a specified threshold,
that result from successful implementation of services and initiatives in Core Markets
3
TRB do not include measure costs, or any other costs or benefits to customers (e.g., productivity
increases, changes in O&M costs).
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Vermont-VEIC Contract Extension for EEU
(except for the Customer Credit initiative) from 1/1/2003 through 12/31/2005. The
threshold is set at 75% of the TRB Target.
2. Weighting
The overall weight for this performance indicator is 35% of the Contractor’s total
maximum Performance Award ($1,280,000 * 0.35 = $448,000). The Contractor
must achieve 75% of the TRB Target to be eligible for any Performance Award for
this indicator. If the Contractor exceeds the TRB Target (up to a cap of 120% of the
TRB Target) and fails to achieve one or more other performance indicators, the
Contractor can earn a larger Performance Award for this indicator (up to a cap of
$492,800).
If the Contractor achieves 75% of its TRB Target, it shall earn $224,000 (50% of the
amount it would earn if it achieved 100% of its Target). The Performance Award
shall be scaled linearly between 75% and 120% of the actual TRB, as detailed in
Paragraph V.C.3 below.
3. Performance Award
The Contractor’s Performance Award shall be:

$0 if verified TRB are less than $57,150,000.

$224,000 plus $0.01176/TRB$ (Verified TRB minus $57,150,000) for verified
TRB between $57,150,000 and $76,200,000.

$448,000 plus $0.00294/TRB$ (Verified TRB minus $76,200,000) for verified
TRB over $76,200,000, capped at a maximum award of $492,800 for TRB of
$91,440,000 or above.
4. Documentation and Verification
By April 1, 2004, 2005, and 2006, the Contractor agrees to submit a report to the
Contract Administrator and DPS that establishes its claim for Total Resource
Benefits from the previous year. The Contract Administrator and the DPS will
review the Contractor’s report and, at their own discretion, review the Contractor’s
project files in order to assess the reasonableness of claimed Total Resource Benefits.
The Contract Administrator and the DPS will then meet with the Contractor in an
attempt to resolve any differences on claimed total resource benefits. By June 1,
2004, 2005, and 2006, the DPS will provide a technical report or memorandum to the
Contract Administrator with its recommendation on Total Resource Benefits for the
preceding year. Following receipt of the DPS’s report, the Contract Administrator
will provide a recommendation to the Board regarding Total Resource Benefits for
the previous year. In 2006, the Contract Administrator will also provide a
recommendation to the Board on the appropriate Performance Award for this
category. Each year the Board will make a final determination regarding Total
Resource Benefits from the preceding year. By July 1, 2006, the Board will make a
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final determination regarding cumulative Total Resource Benefits and the appropriate
Performance Award for this category.
The Contractor will work with the Contract Administrator and the DPS to establish
and maintain reasonable estimates of Total Resource Benefits for prescriptive energy
efficiency measures offered in energy services and initiatives. The Contractor will
maintain its documentation of all prescriptive measure savings assumptions in the
TRM. For custom measures or projects, the Contractor shall maintain in its files
documentation of all assumptions and calculations used to establish its claim for Total
Resource Benefits. All information on assumptions and calculations used to establish
Total Resource Benefits for a project shall be available for review by the DPS and
Contract Administrator.
D. Summer Peak kW Demand Savings (5% of total award)
This performance incentive is designed to encourage the Contractor to achieve superior
levels of peak summer demand savings in addition to annual energy savings and total
resource benefits.
1. Target and Threshold
The Contractor’s Summer Peak Demand Savings Target for this performance
indicator is 15,162 kW. During the contract period the Summer Peak Savings Target
will be changed to reflect changes in Contractor EEC Funds that might occur,
including any carry-forward from 2002 to 2003. Specifically, the Summer Peak
Savings Target will be increased (or decreased) by 0.37 kW per $1,000 of increase (or
decrease) in Contractor EEC Funds.
The Contractor shall receive 50% of the Performance Award if the Board determines
that the Contractor successfully achieves 75% of the Target, and 110% of the award
if it achieves 120% of the Target.
2. Weighting
The overall weight for this performance indicator is 5% of the Contractor’s total
proposed Performance Award ($1,280,000 * .05 = $64,000). The Contractor must
achieve 75% of the Summer Peak Demand Savings Target in order to earn any
Performance Award for this indicator. If the Contractor achieves 75% of its Summer
Peak Demand Savings Target, it shall earn $32,000 (50% of the amount it would earn
if it achieved 100% of its Target). The Performance Award shall be scaled linearly
between 75% and 120% of the Target, as detailed in Paragraph V.D.3 below.
3. Performance Award
The Contractor’s Performance Award shall be:

$0 if verified Summer Peak Demand Savings are less than 11,372 kW;

$32,000 plus $8.442/kW (Verified Summer Peak Demand Savings minus 11,372
kW), for verified cumulative annual Summer Peak Demand Savings between
11,372 kW and 15,162 kW; and
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
$64,000 plus $2.110/kW (Verified Summer Peak Demand Savings minus 15,162
kW) for verified cumulative annual Summer Peak Demand Savings between
15,162 kW and 18,194 kW, capped at a maximum award of $70,400 for savings
of 18,194 kW or higher.
4. Documentation and Verification
In order to establish and validate achievements for this Performance Award, the
Contractor agrees to the following documentation and verification process.
a. By April 1, 2004, 2005, and 2006, the Contractor agrees to submit a report to the
Contract Administrator and DPS that establishes its claim for Annual Summer
Peak Demand Savings from the previous year. The Contract Administrator and
the DPS will review the Contractor’s report and, at their own discretion, review
the Contractor’s project files in order to assess savings estimates for custom
measures, comprehensive projects, or key input assumptions. The Contract
Administrator and the DPS will then meet with the Contractor in an attempt to
resolve any differences on claimed savings. By June 1, 2004, 2005, and 2006, the
DPS will provide a technical report or memorandum to the Contract
Administrator with its recommendation on Annual Summer Peak Demand
Savings for the preceding year. Following receipt of the DPS’s report, the
Contract Administrator will then provide a recommendation to the Board
regarding Annual Summer Peak Demand Savings for the previous year. In 2006,
the Contract Administrator will also provide a recommendation to the Board on
the appropriate Performance Award for this category. Each year the Board will
make a final determination regarding Annual Summer Peak Demand Savings
from the preceding year. By July 1, 2006, the Board will make a final
determination regarding cumulative Annual Summer Peak Demand Savings and
the appropriate Performance Award for this category.
b. The Contractor shall work with the Contract Administrator and the DPS to
establish and maintain reasonable Summer Peak Demand savings estimates for
prescriptive energy efficiency measures offered. The Contractor shall maintain
its documentation of all prescriptive measure savings assumptions in the
Technical Reference Manual. For custom measures or projects, where
prescriptive measure savings assumptions have not been established or do not
apply, the Contractor shall maintain in its files documentation of all assumptions
and calculations used to establish its claim for electricity savings. All information
on savings assumptions and calculations used shall be available for review by the
DPS and Contract Administrator.
c. As part of its ongoing management and planning, the Contractor shall review and
update, as appropriate, its estimates of Summer Peak Demand Savings for
measures, technologies and projects in order to reflect information obtained from
measurement and evaluation studies, experiences gained from implementation of
energy efficiency services and initiatives, and changes in building and appliance
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standards and codes. The Contractor shall use these revised estimates of Summer
Peak Demand Savings on a prospective basis for measures installed in reporting
kW savings claims in future years.
E. Performance Indicators for Residential and Business Markets (20% of total award)
The Contractor is also eligible to earn Performance Awards for superior performance as
evidenced by achievement of up to four individual or cross-market performance
indicators, which consist of programmatic outcomes and/or market indicators. Each of
the indicators is worth 5% of the total award, or $64,000.
Two of the individual or cross-market performance indicators are clearly defined, with
established targets (including minimum and maximum thresholds) and agreed-upon
approaches for documenting and verifying achievement of the indicators. These are:

Performance Indicator 4 which focuses on the market share of five-star energy
rated new homes (both single and multi-family). The target for this indicator is a
doubling of the market share for Year 2005 relative to Year 2001 of residential
units in new buildings with five-star Energy Ratings.

Performance Indicator 5 which focuses on the number of new construction,
addition, and renovation projects that participate in the Business Sector’s
Comprehensive track (either enhanced or simple). The target for this indicator is
a three-year cumulative number of new construction, additions, or renovation
projects that are 10,000 square feet and above permitted by the Vermont
Department of Labor and Industries for July 1, 2001 to June 30, 2002; July 1,
2002 to June 30, 2003; and July 1, 2003 to June 30, 2004. This cumulative
number will be equal to the sum of 9 percent of the total number of such projects
in the period July 1, 2001 to June 30, 2002, 10 percent of the total number of such
projects in the period July 1, 2002 to June 30, 2003, and 11 percent of such
projects in the period July 1, 2003 to June 30, 2004.
Additional information regarding these performance indicators, including the minimum
and maximum thresholds and the scaling of the Performance Awards for achievement
between those levels, is shown in Table K-2.
Two of the individual or cross-market performance indicators are not yet specifically
defined and thus constitute “holdback” indicators. Performance Indicator 6 will be
defined to gauge the results of Contractor’s actions to recruit greater participation among
selected groups of trade allies in the Business Sector. Performance Indicator 7 will be
defined to address geographic equity and may be an individual or cross-market indicator.
The Contractor will work with the DPS and the Contract Administrator to define these
indicators, establish targets (including minimum and maximum thresholds, if appropriate)
and agree upon approaches for documenting and verifying achievement of the indicators,
by July 1, 2003. If agreement on Performance Indicator 6 is not reached by July 1, 2003,
then this indicator will be dropped and its award amount will be applied proportionally to
all remaining performance indicators. If agreement on Performance Indicator 7 is not
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Vermont-VEIC Contract Extension for EEU
reached by July 1, 2003, then this indicator will be dropped and the maximum possible
Performance Award of $1,280,000 will be reduced by $64,000.
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