Georgia County Government - July/August 2012 - (Page 25)

Feature Energy Savings Performance Contracts: Risks and Rewards for Local Governments By David R. Cook, Jr. E utility costs. nergy efficiency has received increased attention as the public begins to recognize the tremendous benefits it provides. Among other things, energy efficiency reduces utility consumption, which ultimately reduces Georgia governments, including counties, recently acquired new authority to enter into energy efficiency contracts, called “energy savings performance contracts” under the Guaranteed Energy Savings Performance Contracting Act (the Act). These contracts may provide a politically attractive way to replace old utility systems in county buildings or property (i.e., lighting systems, HVAC, etc.) or to install or replace energy efficient projects (i.e., installing new insulation, storm windows or weather stripping) funded by future utility cost savings. Even so, before executing an energy savings performance contract, counties should review the risks involved. What are energy savings performance contracts? Energy savings performance contracts are agreements where energy service companies install or implement utility conservation measures and guarantee an agreed-upon level of utility cost savings. The amount of utility cost savings should cover the cost of installation and the company’s fee. After all costs have been recovered through savings, all future savings accrue to the benefit of the county. These contracts are typically long-term agreements (ten, fifteen or twenty years) to provide ample time for the county to realize sufficient savings. While the installation and implementation phase may last only a few months, the guaranty phase (the period during which savings accrue) lasts much longer to ensure that all costs are recovered. The projects usually involve physical construction, such as installing new insulation, storm windows or weather stripping, or upgrading or replacing HVAC systems and lighting fixtures. They also may involve services, such as utility rate analysis, labor studies or efficiency training programs. In addition to utility cost savings, they also may result in increased revenues, such as income from distributed generation (i.e., the production of energy at the county’s premises) or billing equipment upgrades. ENERGY SAVINGS continued on page 26 JULY/AUGUST 2012 www.accg.org Energy savings performance contracts are agreements where energy service companies install or implement utility conservation measures and guarantee an agreedupon level of utility cost savings. Georgia governments, including counties, recently acquired new authority to enter into such contracts. 25 http://www.accg.org

Table of Contents for the Digital Edition of Georgia County Government - July/August 2012

President’s Message
Director’s Desk
Henry County: Building Bridges to Benefit One Henry
Piedmont Henry Hospital Adds Important Healthcare Component to One Henry
Five Georgia Events that Changed History
Performance Contracting: A Creative Solution
Energy Savings Performance Contracts: Risks and Rewards for Local Governments
Georgia Legacy: Making the Economic Case for Land Conservation
Extension News: The Impact of Weatherization Programs in Georgia
News & Notes
Index of Advertisers

Georgia County Government - July/August 2012

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