Vermont-VEIC Contract for EEU
ATTACHMENT M
COMPENSATION, PAYMENT AND PERFORMANCE PROVISIONS
2009-2012
The State shall compensate Contractor for satisfactory performance of this Agreement as
follows:
1. Total Compensation
The total compensation amount for all eligible costs, expenses and performance incentives
under this Agreement may not exceed the maximum amount set forth in Paragraph 5 of the
main body of this Agreement.
For the period of January 1, 2009 through December 31, 2011 it is agreed that the Contractor
will manage the budget for this Agreement as a single, three-year budget. However, in any
single calendar year, the Contractor shall not actually be paid more then the total EEU Funds
2009-2011 available for that year.
For the period of January 1, 2009 through December 31, 2011 this Agreement shall include a
three-year budget sub-divided into the following categories: Services and Initiatives
Supported by Contractor Electric EEU Funds (listing business and residential separately);
Services and Initiatives Supported by Contractor Unregulated Fuel Funds (listing business
and residential separately); General Administration (as defined in Paragraph 5 below); ISONE Regional Capacity Activities; VSPC participation; and Information Technology.
Any Contractor Electric EEU Funds not expended during a calendar year may be carried
over to the subsequent year of this Agreement pursuant to the terms of Paragraph 12 of this
Attachment. Any Contractor Unregulated Fuel Funds not expended during a calendar year
shall be carried over to the subsequent year of this Agreement.
2. Eligible Costs and Expenses
A. General Costs and Expenses
The Contractor shall be compensated for reasonable and appropriate services provided
and expenses incurred in order to perform the Work. Compensation for such services and
expenses shall be based on the Contractor’s actual costs incurred throughout the term of
this Agreement, except that compensation for actual costs incurred while performing
Work pursuant to Paragraph II.P of Attachment L will be made according to the
provisions of Paragraph 4 below.
Contractor’s actual costs shall include: wages or salaries of staff working directly on the
Work; fringe-benefit and payroll-related costs associated with such wages and salaries; an
equitable allocated share of the Contractor’s organization-wide indirect costs; any and all
out-of-pocket costs (e.g., telecommunications, travel, copying/printing, postage/delivery,
marketing, equipment) directly attributable to performing the Work; mileage
reimbursement at the Internal Revenue Service-approved rate only for use of a personal
motor vehicle; any and all costs to develop and produce Customized Software; any and all
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subcontractor costs directly attributable to the Work; funds disbursed to program
participants (e.g., customer or Market Actor incentives, cooperative marketing); and other
reasonable and appropriate costs that the Contractor incurs to accomplish the Work. The
State and the Contractor agree to use the guidelines established by the Federal
Government for Federal cost reimbursable grants as the basis for determining whether or
not a particular direct or indirect cost item incurred under this Agreement is reasonable
and appropriate. Such Federal guidelines are contained in OMB Circular A-122 dated
May 10, 2004.
In addition to the above costs, Contractor shall also be reimbursed its actual cost as
charged to the Contractor by its bank under the Contractor’s line of credit with its bank,
to borrow funds to finance any eligible costs and expenses incurred and paid for by the
Contractor prior to receiving its monthly payment from the Fiscal Agent or due to a
shortfall in funds available from the Fiscal Agent. Failure of the Fiscal Agent to pay an
approved Contractor invoice on a timely basis due to the lack of available funds shall not
constitute an acceptable basis on which the Contractor may terminate this Agreement;
however, a material failure of this type may (if of such magnitude and duration as to
impede or prevent expected operations) constitute grounds for modification or reduction
of Contractor’s energy efficiency activities and obligations (but only to the extent
directly required by such delay or failure of payment).
The Contractor shall also be paid an Operations Fee of 2.0% on total eligible monthly
costs and expenses incurred and funded by Contractor Unregulated Fuel Funds, and an
Operations Fee of 0.75% on all other total eligible monthly costs and expenses incurred.
The Contractor shall operate in accordance with the guidelines detailed in OMB Circular
A-122. The Contract Administrator and the Contractor shall come to agreement on the
following items:
 The types of costs that constitute the Contractor’s fringe-benefit and payroll-related
costs and the Contractor’s organization-wide indirect costs; and
 The method for allocating an equitable share of the Contractor’s fringe-benefit and
payroll-related costs and the Contractor’s organization-wide indirect costs to the
Work.
Any modifications to the above two items must be agreed upon in advance by the
Contract Administrator.
Notwithstanding the above, all eligible costs, expenses and fees paid to the Contractor
are subject to the Total Compensation limitation detailed in Paragraph 5 of the main body
of this Agreement.
B. FCM Bid and Performance Risk Sharing
The Contractor and the Board agree that the financial risks of participating in the FCM
shall be shared as follows:
 All extraordinary costs billed to the Contractor by ISO-NE, and paid by the
Contractor, that are not due to the Contractor’s non-performance shall be
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

considered eligible costs under this Agreement. One example of such an eligible
cost is ISO-NE participant “default allocation” invoices.
One-half of any penalties paid by the Contractor as a result of the Contractor not
achieving the FCM capacity requirements for each of the FCM bids that fall
within the contract period shall be considered eligible costs under this Agreement.
One-half of the cost of any bilateral contracts for capacity to mitigate financial
penalties in the event the Contractor does not achieve any FCM capacity
requirements for each of the FCM bids that fall within the contract period shall be
considered eligible costs under this Agreement.
3. Special Circumstances Due to U.S. Financial Situation
The parties acknowledge that the U.S. financial sector is experiencing difficulties, and that
credit markets have tightened considerably. It is possible that the Contractor could, through
no fault of the Contractor, lose its ability to borrow from its bank as a result of the country’s
overall financial situation, and the Contractor could be unable to obtain the ability to borrow
from another bank quickly enough to meet its ongoing obligations. If this situation were to
occur, the Contractor shall be allowed to borrow funds from those held by the Fiscal Agent
in order to pay its bills associated with delivering EEU services.
In order for the Contractor to borrow funds from those held by the Fiscal Agent, the
Contractor must notify the Contract Administrator that it is no longer able to borrow from its
bank, and provide documentation of the bank’s decision to the Contract Administrator as
soon as reasonably feasible. On an ongoing basis, the Contractor must make best efforts to
secure borrowing capability from another financial institution.
To receive a loan from the funds being held by the Fiscal Agent, the Contractor must notify
the Contract Administrator of the amount requested, the need date, and provide sufficient
detail to support the request. Loan requests shall clearly identify which amounts are
necessary to provide electric efficiency services and which amounts are necessary to provide
unregulated fuel efficiency services. Loan requests must be approved by the Contract
Administrator, who shall not unreasonably withhold approval. Funds may only be used to
meet the Contractor’s financial obligations due to its implementation of the EEU. Any
amounts loaned to the Contractor shall be shown as a credit on the Contractor’s monthly
invoice. No interest would be due from the Contractor to the Energy Efficiency Utility Fund
as a result of this loan activity.
4. Revenues From and Costs Associated With Regional Capacity Market Activities
It is expected that Contractor will receive payments from ISO-NE related to the Contractor’s
participation in the regional capacity market pursuant to Paragraph II.T of Attachment A. It
is further expected that these payments from ISO-NE will be the amount approved by ISONE for delivered capacity less any fees or charges imposed by ISO-NE. Within 10 business
days of receiving a payment from ISO-NE, Contractor shall forward the gross amount
approved by ISO-NE for delivered capacity to the Fiscal Agent. Contractor shall include any
fees deducted by ISO-NE as an expense on its monthly invoice pursuant to Paragraphs 2 and
7 of this Attachment.
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5. Reimbursement for Costs Associated with Distributed Utility Planning
In accordance with Paragraphs 38, 40, and 41 of the MOU, if a Vermont electric distribution
utility requests the Contractor to perform any Work pursuant to Paragraph II.P of Attachment
L of this Agreement, the Contractor must be directly compensated for such Work by the
requesting utility or as otherwise directed by the Board. Any such compensation is not
included in the total compensation cap in Paragraph 5 of the main body of this Agreement.
6. Limitation on Recovery of General Administrative Costs
General Administrative Costs shall include the following tasks: budgeting and financial
management; contract management; data collection and reporting; and support for resource
planning and program evaluation activities. Administrative costs associated with serving an
individual core market shall be included in the budget allocation for that core market and are
not considered General Administrative Costs for the purposes of this paragraph.
For the period of January 1, 2009 through December 31, 2011, compensation for such
General Administrative Costs identified in Attachment S, shall not exceed $858,400 by more
than 10% unless Contractor is granted prior written approval from the Board to exceed this
limit.
7. Limitation on Recovery of Information Technology Costs
The Contractor shall provide the information technology services and equipment set forth in
the Work. For the period of January 1, 2009 through December 31, 2011 compensation for
such information technology costs identified in Attachment S shall not exceed $2,502,400 by
more than 10% unless Contractor is granted prior written approval from the Board to exceed
this limit.
8. Invoice Requirements
The Contractor shall submit monthly invoices of eligible costs and expenses for payment by
the 25th day of the subsequent month, or the next business day if the 25th is not a business
day. All invoices shall, at a minimum, include the name, address, and tax I.D. number of the
Contractor; an itemized summary identifying and describing the Work performed and
expenses incurred; the amount claimed for each task or expense category; and the total
amount of the invoice. Invoices shall clearly separate requests for compensation for labor
expenses and other expenses including payments to subcontractors, and reimbursement for
funds disbursed to EEU program participants. Invoices shall clearly identify which costs are
to be funded by Contractor Electric EEU Funds, which costs are to be funded by Contractor
FCM Funds, and which costs are to be funded by Contractor Unregulated Fuel Funds. The
invoice format that has been established and approved for the period of January 1, 2003 to
December 31, 2005 by the Contract Administrator shall be used for this Agreement. This
format may be modified only with the pre-approval of the Contract Administrator.
The Contractor shall require that invoices to the Contractor from subcontractors or other
third parties shall, at a minimum, conform to the Contractor’s invoice requirements stated
above and to any format and requirements established by the Contract Administrator.
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9. Invoice Review and Approval
Unless notified of a different (or additional) address, as provided herein, the Contractor shall
submit invoices for review and approval to:
Michael Wickenden, Contract Administrator
446 Tenney Hill Road
Hyde Park, VT 05655
802-888-6231
Fax 802-888-4296
The Contract Administrator, no later than (five) 5 business days after receipt of the invoice,
shall review the invoice and either approve the invoice for payment or inform the Contractor
in writing of any disputed amount and the basis for such dispute. Any undisputed amounts
shall be approved for payment by the Contract Administrator.
If an invoice is disputed by the Contract Administrator, the Contractor shall answer the
Contract Administrator’s concerns in writing within five (5) business days of the receipt of
written notice from the Contract Administrator. If the Contractor and the Contract
Administrator cannot resolve the dispute within ten (10) working days after receipt of the
Contractor’s reply, the Board and Contractor shall attempt to resolve the dispute upon a
written request by the Contractor to the Board. If the Board and the Contractor cannot
resolve the dispute within ten (10) working days after receipt of Contractor’s request, each
party may pursue its available judicial or other remedies.
10. Payment of Invoices
Upon approval of an invoiced amount, the Contract Administrator shall immediately send
the invoice and its accompanying supporting documentation to the Fiscal Agent for payment.
Disbursements by the Fiscal Agent will be made once each month; the Fiscal Agent will pay
approved monthly invoices by the last business day of the following month.
The parties understand that the Fiscal Agent may not have collected adequate Contractor
Unregulated Fuel Funds in a particular month to pay in full the portion of Contractor’s
approved invoices to be funded from this funding source. Similarly, the parties understand
that the Fiscal Agent may not have collected adequate Contractor Electric EEU Funds and
Contractor FCM Funds in a particular month to pay in full the portion of Contractor’s
approved invoices to be funded from these funding sources. In order to be made aware of
these shortfalls, the Board will direct the Fiscal Agent to inform the Contract Administrator
(who shall then inform the Contractor) on a monthly basis of the total funds available from
each funding source to pay Contractor’s invoices. The total funds available from each
funding source shall be the Contractor Electric EEU Funds, the Contractor FCM Funds, and
the Contractor Unregulated Fuel Funds collected to date. Any unpaid portions of
Contractor invoices from prior months shall be paid first when additional funds from the
appropriate funding source are available, and then a partial payment shall be made on the
portion of the Contractor’s current monthly invoice to be paid from that funding source. All
Contractor’s approved invoices shall be paid in full, as funds become available.
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At the expiration of this Agreement, the Contractor will most likely still be due payments for
one or more monthly invoices and for any performance incentives earned pursuant to
Attachment N to this Agreement. In such a case, the Contractor’s approved unpaid invoices
shall be paid prior to any payments being made to any other contractor who has been hired
by the State to serve as the EEU.
11. Performance Incentive Mechanism
The Contractor is eligible to receive performance incentives as described in Attachment N to
this Agreement.
The parties agree that after the Contract Administrator and the Board have made a final
determination on the performance incentive award for the Contractor in accordance with the
procedures in Attachment N, any funds available for the performance incentive but not
earned by the Contractor shall not be paid to the Contractor.
12. Annual Request for Carryover of Contractor EEU Funds and Contractor Electric
EEU Funds
A.
From Year 2008 to Year 2009
On or before February 15, 2009, the Contractor shall, if necessary, file with the Board,
DPS, and each Vermont electric distribution utility a request to carry over any unspent
Contractor EEU Funds from Year 2008 to 2009. Such a request shall also identify the
amount of incentives the Contractor has committed to pay to customers, but has not yet
paid.
The Board will use the formula set forth in Board Rule 5.300(E)1.a to determine whether
the amount of unspent Contractor EEU Funds is large enough that it must be used to
reduce the amount to be collected in 2010 from ratepayers via the EEC. If the amount of
unspent Contractor EEU Funds is less than this threshold, the Board will provide the
DPS, the Vermont electric distribution utilities, and all parties on the Board’s EEU e-mail
service list an opportunity to submit comments and request a technical workshop prior to
acting on the Contractor’s request for the carry forward of unspent Contractor EEU
Funds. After comments are submitted, the Board shall review the Contractor’s request,
and reject it, approve it or approve it with modifications.
B.
From Year 2009 to Year 2010, and from Year 2010 to Year 2011
On or before February 15 of 2010 and 2011, the Contractor shall, if necessary, file with
the Board, DPS, and each Vermont electric distribution utility a request to carry over any
unspent Contractor Electric EEU Funds from the prior calendar year to the year in which
the request is filed.
Such a request to carry forward any anticipated unspent Contractor Electric EEU Funds
shall be required only if the unspent Contractor Electric EEU Funds for a year are
greater than 5% of the total Contractor Electric EEU Funds available in that year, as
shown on Attachment Q; if the unspent Contractor Electric EEU Funds for a year are
less than 5% of the total Contractor Electric EEU Funds available in that particular year,
the unspent Contractor Electric EEU Funds shall automatically be carried forward to the
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next year. In no event may such request seek a change, for a given year, in the total
annual amount to be collected from Vermont electric ratepayers as approved in any of the
corresponding Board orders or rules that sets out the EEC in each of the three years.
If the request to carryover Contractor Electric EEU Funds from one year to the next is
not approved and the result of such non-approval is that the overall three-year budget for
the Contractor is reduced, then a corresponding reduction in the overall Work as set forth
in Attachment L will be agreed upon. In addition, the Performance Incentive Mechanism
set forth in Attachment N will be adjusted to reflect the lower budget available for the
Contractor to accomplish the various milestones and goals detailed in Attachment N.
The Contractor will make such a request for a reduction in the Work and an adjustment to
the goals and milestones in writing to the Board. The Contractor and the Board will
mutually agree on such reductions and adjustments.
The Board will provide the DPS, the Vermont electric distribution utilities, and all parties
on the Board’s EEU e-mail service list an opportunity to submit comments and request a
technical workshop prior to acting on the Contractor’s request for the carry forward of
unspent Contractor Electric EEU Funds. After comments are submitted, the Board shall
review the Contractor’s request, and reject it, approve it or approve it with modifications.
13. Use of Contractor Electric EEU Funds Pursuant to the Budget Order 2009-2011
Contractor shall endeavor to use the Contractor Electric EEU Funds in a manner consistent
with the Budget Order 2009-2011 and Paragraphs II.A.1, II.A.2, and II.A.3 of Attachment L.
The performance goals set forth in Attachment N have been established with the
understanding that the Contractor Electric EEU Funds will be used consistent with the
direction provided in the Budget Order 2009-2011.
14. No Employee Benefits for Contractor
The Contractor understands that the State will not provide Contractor or Contractor’s
employees or subcontractors with any individual retirement benefits, group life insurance,
group health and dental insurance, vacation or sick leave, Workers Compensation or other
benefits or services available to State employees, nor will the State withhold any state or
federal taxes except as required under applicable tax laws, which shall be determined in
advance of execution of this Agreement. The Contractor understands that all tax returns
required by the Internal Revenue Code and the State, including but not limited to income,
withholding, sales and use, and rooms and meals, must be filed by the Contractor, and
information as to contract income will be provided by the State to the Internal Revenue
Service and Vermont Department of Taxes.
15. Reliance by State on Representations
All payments by the State under this Agreement will be made in reliance upon the accuracy
of all prior representations by the Contractor, including but not limited to bills, invoices,
progress reports and other proofs of work.
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16. Set Off
The State may set off any sums which the Contractor owes the State against any sums due
the Contractor under this Agreement; provided, however, that any set off of amounts due the
State as taxes shall be in accordance with the procedures more specifically provided
hereinafter.
17. Taxes Due to the State
a. Contractor understands and acknowledges responsibility, if applicable, for compliance
with State tax laws, including income tax withholding for employees performing services
within the State, payment of use tax on property used within the State, and corporate
and/or personal income tax on income earned within the State.
b. Contractor certifies under the pains and penalties of perjury that, as of the date this
Agreement is signed, the Contractor is in good standing with respect to, or in full
compliance with a plan to pay, any and all taxes due the State.
c. Contractor understands that final payment under this Agreement may be withheld if the
Vermont Commissioner of Taxes determines that the Contractor is not in good standing
with respect to, or in full compliance with a plan to pay, any and all taxes due to the
State.
d. Contractor also understands the State may set off taxes (and related penalties, interest
and fees) due to the State, but only if the Contractor has failed to make an appeal within
the time allowed by law, or an appeal has been taken and finally determined and the
Contractor has no further legal recourse to contest the amounts due.
18. Suspension of Payment to Contractor
In addition to other remedies, the State reserves the right to suspend all payments to
Contractor if required reports are not provided to the Board or its designated representatives
on a timely basis; if there are continuing deficiencies in Contractor’s reporting, record
keeping or invoicing responsibilities and requirements; or if the performance of the Work is
not adequately evidenced.
19. No Resale
Contractor will not buy materials for performance of this Agreement and resell to the State
at a profit, excluding the fee the Contractor will be collecting on all costs pursuant to
Paragraph 2 of this Attachment.
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