69–010 

Calendar No. 98 

115TH CONGRESS REPORT " ! SENATE 1st Session 115–79 

ENERGY SAVINGS THROUGH PUBLIC-PRIVATE 

PARTNERSHIPS ACT OF 2017 

MAY 24, 2017.—Ordered to be printed 

Ms. MURKOWSKI, from the Committee on Energy and Natural 

Resources, submitted the following 

R E P O R T 

[To accompany S. 239] 

The Committee on Energy and Natural Resources, to which was 

referred the bill (S. 239) to amend the National Energy Conservation Policy Act to encourage the increased use of performance contracting in Federal facilities, and for other purposes, having considered the same, reports favorably thereon without amendment and 

recommends that the bill do pass. 

PURPOSE

The purpose of this measure is to amend the National Energy 

Conservation Policy Act (NECPA) to encourage the increased use 

of performance contracting in Federal facilities. 

BACKGROUND AND NEED

The Committee on Energy and Natural Resources has long recognized the significant benefits of energy efficiency efforts in conserving domestic resources, saving American consumers money, 

strengthening economic competitiveness, and reducing environmental impacts. The energy efficiency ‘‘resource’’ plays an increasingly important role in the nation’s energy strategy. The advancement of cost-effective efficiency programs and technologies can contribute to the nation’s goal of energy independence by reducing demand and using supplies in a more effective manner. S. 239 seeks 

to increase energy efficiency and water conservation measures in 

the Federal Government. 

According to the Energy Information Administration (EIA), the 

Federal Government is the single largest energy consumer in the 

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nation. Congress therefore expects the government to pursue its 

own energy efficiency efforts vigorously—not only to conserve energy resources and taxpayer dollars, but to lead by example. To 

that end, S.239 further encourages the federal agencies to enter 

into energy savings performance contracts (ESPCs) and utility energy service contracts (UESCs). 

ESPCs and UESCs are proven methods by which Federal agencies can increase efficiency, thereby reducing energy costs. In both 

cases, an approved contractor designs and installs systems and 

equipment to reduce the energy consumption of a Federal facility 

and gets paid back through savings on utility bills that result from 

the project over a stipulated period of time. By law, and on a negotiated basis, the government never pays more than it would have 

paid for utilities if it had not entered into the contract. Using an 

ESPC or UESC in the Federal Government eliminates the need for 

appropriated dollars for equipment replacement and for operations 

and maintenance of such energy consuming equipment. 

For over 20 years, performance-based contracts for energy savings have provided upgrades to Federal buildings, including the 

House and Senate Office Buildings and the U.S. Capitol. According 

to the Federal Energy Management Program, approximately 650 

performance contracts worth $8 billion have been awarded 

throughout 25 Federal agencies and in all 50 States. These projects 

have resulted in energy savings valued at nearly $15 billion, of 

which approximately $11 billion went to repay project investments, 

accruing a net savings of $4 billion to the Federal Government. 

Greater use of ESPCs has been impaired by administrative delay 

and process issues within Federal agencies, some of which are the 

result of ambiguity in the underlying law. S. 239 seeks to eliminate 

administrative roadblocks by clarifying certain provisions of the 

law to reduce confusion resulting from statutory ambiguities. In addition, the legislation requires additional reporting requirements, 

thus ensuring improved transparency. 

LEGISLATIVE HISTORY

S. 239 was introduced by Senators Gardner, Coons, Portman, 

and Shaheen on January 30, 2017. 

Companion legislation, H.R. 723, was introduced in the House by 

Representatives Kinzinger, Cartwright, Cole, Grijalva, Love, Perlmutter, and Welch on January 30, 2017. 

In the 114th Congress, a similar bill, S. 858, was introduced by 

Senators Gardner, Coons, Portman, and Shaheen on March 25, 

2015. The Committee on Energy and Natural Resources held a 

hearing on S. 858 on April 30, 2015. 

The measure was included in Amendment No. 2970, which the 

Senate agreed to on February 1, 2016, as an amendment to S. 

2012, the Energy Policy Modernization Act of 2016, which the Senate passed, as amended, on April 20, 2016. 

Companion legislation, H.R. 1629, was introduced in the House 

by Representatives Kinzinger, Peters, Valadao, and Welch on 

March 25, 2015. 

In the 113th Congress, a similar bill, S. 1308, was introduced by 

Senator Coons on July 16, 2013. Companion legislation, H.R. 2689, 

was introduced in the House by Representative Gardner and 55 cosponsors on July 16, 2013. The Committee on Energy and Commstockstill on DSK30JT082PROD with HEARING

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merce favorably reported H.R. 2689, as amended, on November 19, 

2014 (H. Rept. 113–627). 

The Committee met in an open business session on March 30, 

2017, and ordered S. 239 favorably reported. 

COMMITTEE RECOMMENDATION

The Senate Committee on Energy and Natural Resources, in an 

open business session on March 30, 2017, by a majority voice vote 

of a quorum present, recommends that the Senate pass S. 239, as 

described herein. 

SECTION-BY-SECTION ANALYSIS

Section 1. Short title 

Section 1 provides a short title. 

Section 2. Use of energy and water efficiency measures in Federal 

buildings 

Section 2(a) amends section 543(f)(4) of NECPA (42 U.S.C. 

8253(f)(4)) to revise requirements for ESPCs and UESCs (performance contracts). It further requires federal agencies to implement 

measures to increase energy and water efficiency in federal facilities so long as they are cost-effective. 

Subsection (b) amends section 548(b) of NECPA (42 U.S.C. 

8258(b)) to require the Department of Energy to report to the 

President and Congress on each agency’s performance contracts, including their investment value, their guaranteed compared to actual energy savings from the previous year, the plan for entering 

into new contracts in the coming year, and information explaining 

why any previously submitted plans for contracts were not implemented. 

Subsection (c) amends section 551(4) of NECPA (42 U.S.C. 

8259(4)) to expand the definition of energy conservation measures 

that may be contained in performance contracts to include those involving energy consuming devices and required support structures. 

Subsection (d) amends section 801(a)(2)(F) of NECPA (42 U.S.C. 

8287(a)(2)(F)) to state that agencies may not limit the recognition 

of operations and maintenance savings associated with energy systems that were modernized or replaced with energy and water conservation measures. 

Subsection (e) amends section 801 of NECPA (42 U.S.C. 

8287(a)(2)) to allow agencies to sell or transfer energy savings and 

apply the proceeds to fund a performance contact. 

Subsection (f) amends section 802 of NECPA (42 U.S.C. 8287a) 

to expand the category of funds a Federal agency can use to make 

payments pursuant to any contract entered into to include funds 

made available for the payment of related operations and maintenance expenses. 

Subsection (g) amends section 551(6) of NECPA (42 U.S.C. 

8259(6)) to exclude dams, reservoirs, and hydropower facilities 

owned or operated by a Federal agency from the definition of a 

Federal building. 

Subsection (h) amends section 804(2) of NECPA (42 U.S.C. 

8287c(2)) to expand the definition of energy savings that may be 

contained in performance contracts to include the use, sale, or 

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transfer of energy incentives, rebates, or credits from governments 

or utilities, and any revenue generated from a reduction in energy 

or water use, more efficient waste recycling, or additional energy 

generated from more efficient equipment. 

COST AND BUDGETARY CONSIDERATIONS

The Congressional Budget Office estimate of the costs of this 

measure has been requested but was not received at the time the 

report was filed. When the report is available, the Chairman will 

request it to be printed in the Congressional Record for the advice 

of the Senate. 

REGULATORY IMPACT EVALUATION

In compliance with paragraph 11(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee makes the following evaluation 

of the regulatory impact which would be incurred in carrying out 

the bill. 

The bill is not a regulatory measure in the sense of imposing 

Government-established standards or significant economic responsibilities on private individuals and businesses. 

No personal information would be collected in administering the 

program. Therefore, there would be no impact on personal privacy. 

Little, if any, additional paperwork would result from the enactment of the bill, as ordered reported. 

CONGRESSIONALLY DIRECTED SPENDING

S. 239, as reported, does not contain any congressionally directed 

spending items, limited tax benefits, or limited tariff benefits as defined in rule XLIV of the Standing Rules of the Senate. 

EXECUTIVE COMMUNICATIONS

Executive Communications on S. 239 were not requested by the 

Committee on Energy and Natural Resources for the 115th Congress. 

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the original 

bill, as ordered reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is 

printed in italic, existing law in which no change is proposed is 

shown in roman): 

NATIONAL ENERGY CONSERVATION POLICY ACT 

Public Law 95–619, as amended 

* * * * * * * 

TITLE V—FEDERAL ENERGY INITIATIVES 

* * * * * * * 

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PART 3—FEDERAL ENERGY MANAGEMENT 

* * * * * * * 

SEC. 543. ENERGY MANAGEMENT REQUIREMENTS. 

(f) USE OF ENERGY AND WATER EFFICIENCY MEASURES IN FED- ERAL BUILDINGS.— 

* * * * * * * 

(4) IMPLEMENTATION OF IDENTIFIED ENERGY AND WATER EFFI- CIENCY MEASURES.—Not later than 2 years after the completion of each evaluation under paragraph (3), each energy manager ømay¿ shall— (A) implement any energy- or water-saving measure that 

the Federal agency identified in the evaluation conducted 

under paragraph (3) that is life cycle cost-effective; and 

(B) bundle individual measures of varying paybacks together into combined projects. 

(5) FOLLOW-UP ON IMPLEMENTED MEASURES.—For each measure implemented under paragraph (4), each energy manager 

shall ensure that— 

* * * * * * * 

SEC. 548. REPORTS. 

* * * * * * * 

(b) REPORTS TO THE PRESIDENT AND CONGRESS.—The Secretary 

shall report, not later than April 2 of each year, with respect to 

each fiscal year beginning after November 5, 1988, to the President 

and Congress— 

(1) on all activities carried out under this part and on the 

progress made toward achievement of the objectives of this 

part, including— 

(A) a copy of the list of the exclusions made under sections 8253(a)(2) and 8253(c)(3); 

(B) the information required under section 8253(b)(2); 

and 

(C) a statement detailing the amount of funds awarded 

to each agency under section 8256(b), the energy and 

water conservation measures installed with such funds, 

the projected energy and water savings to be realized from 

installed measures, and, for each installed measure for 

which the projected energy and water savings reported in 

the previous year were not realized, the percentage of such 

projected savings that was not realized, the reasons such 

savings were not realized, and proposals for, and projected 

costs of, achieving such projected savings in the future; 

and 

(2) the number of contracts entered into by all agencies 

under title VIII of this chapter, the difficulties (if any) encountered in attempting to enter into such contracts, and proposed 

solutions to those difficulties; 

(3) the extent and nature of interagency exchange of information concerning the conservation and efficient utilization of 

energy; øand¿ 

(4) the information required under section 8262g(d)ø.¿ ; and 

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(5)(A) the status of the energy savings performance contracts 

and utility energy service contracts of each agency; 

(B) the investment value of the contracts; 

(C) the guaranteed energy savings for the previous year as 

compared to the actual energy savings for the previous year; 

(D) the plan for entering into the contracts in the coming 

year; and 

(E) information explaining why any previously submitted 

plans for the contracts were not implemented. 

(c) OTHER REPORT.—The Secretary, in consultation with the Administrator of General Services, shall— 

(1) conduct a study and evaluate legal, institutional, and 

other constraints to connecting buildings owned or leased by 

the Federal Government to district heating and district cooling 

systems; and 

(2) not later than 18 months after the date of the enactment 

of this subsection, transmit to the Congress a report containing 

the findings and conclusions of such study, including recommendations for the development of streamlined processes for 

the consideration of connecting buildings owned or leased by 

the Federal Government to district heating and cooling systems. 

* * * * * * * 

SEC. 551. DEFINITIONS. 

For the purposes of this part— 

(1) the term ‘‘agency’’ has the meaning given it in section 

551(1) of title 5; 

(2) the term ‘‘construction’’ means new construction or substantial rehabilitation of existing structures; 

(3) the term ‘‘cogeneration facilities’’ has the same meaning 

given such term in section 3(18)(A) of the Federal Power Act 

(16 U.S.C. 796(18)(A)); 

(4) the term ‘‘energy conservation measures’’ means measures that are applied to a Federal building that improve energy efficiency and are life cycle cost effective and that involve 

energy conservation, cogeneration facilities, renewable energy 

sources, improvements in operations and maintenance efficiencies, øor retrofit activities¿ retrofit activities, or energy consuming devices and required support structures; 

(5) the term ‘‘energy survey’’ means a procedure used to determine energy and cost savings likely to result from the use 

of appropriate energy related maintenance and operating procedures and modifications, including the purchase and installation of particular energy-related equipment and the use of renewable energy sources; 

(6) the term ‘‘Federal building’’ means any building, structure, or facility, or part thereof, including the associated energy 

consuming support systems, which is constructed, renovated, 

leased, or purchased in whole or in part for use by the Federal 

Government and which consumes energy; such term also 

means a collection of such buildings, structures, or facilities 

and the energy consuming support systems for such 

collectionø;¿ the term does not include a dam, reservoir, or hydropower facility owned or operated by a Federal agency; 

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(7) the term ‘‘life cycle cost’’ means the total costs of owning, 

operating, and maintaining a building over its useful life (including such costs as fuel, energy, labor, and replacement components) determined on the basis of a systematic evaluation 

and comparison of alternative building systems, except that in 

the case of leased buildings, the life cycle costs shall be calculated over the effective remaining term of the lease; 

(8) the term ‘‘renewable energy sources’’ includes, but is not 

limited to, sources such as agriculture and urban waste, geothermal energy, solar energy, and wind energy; and 

(9) the term ‘‘Secretary’’ means the Secretary of Energy. 

* * * * * * * 

TITLE VIII—ENERGY SAVINGS PERFORMANCE 

CONTRACTS 

SEC. 801. AUTHORITY TO ENTER INTO CONTRACTS. 

(a) IN GENERAL.—(1) The head of a Federal agency may enter 

into contracts under this subchapter solely for the purpose of 

achieving energy savings and benefits ancillary to that purpose. 

Each such contract may, notwithstanding any other provision of 

law, be for a period not to exceed 25 years. Such contract shall provide that the contractor shall incur costs of implementing energy 

savings measures, including at least the costs (if any) incurred in 

making energy audits, acquiring and installing equipment, and 

training personnel, in exchange for a share of any energy savings 

directly resulting from implementation of such measures during 

the term of the contract. 

(2)(A) Contracts under this subchapter shall be energy savings 

performance contracts and shall require an annual energy audit 

and specify the terms and conditions of any Government payments 

and performance guarantees. Any such performance guarantee 

shall provide that the contractor is responsible for maintenance 

and repair services for any energy related equipment, including 

computer software systems. 

(B) Aggregate annual payments by an agency to both utilities 

and energy savings performance contractors, under an energy savings performance contract, may not exceed the amount that the 

agency would have paid for utilities without an energy savings performance contract (as estimated through the procedures developed 

pursuant to this section) during contract years. The contract shall 

provide for a guarantee of savings to the agency, and shall establish payment schedules reflecting such guarantee, taking into account any capital costs under the contract. 

(C) Federal agencies may incur obligations pursuant to such contracts to finance energy conservation measures provided guaranteed savings exceed the debt service requirements. 

(D) A Federal agency may enter into a multiyear contract under 

this subchapter for a period not to exceed 25 years beginning on 

the date of the delivery order, without funding of cancellation 

charges before cancellation, if— 

(i) such contract was awarded in a competitive manner pursuant to subsection (b)(2), using procedures and methods established under this subchapter; 

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(ii) funds are available and adequate for payment of the costs 

of such contract for the first fiscal year; and 

(iii) such contract is governed by part 17.1 of the Federal Acquisition Regulation promulgated under section 1303 of title 41 

or the applicable rules promulgated under this subchapter. 

(E) FUNDING OPTIONS.—In carrying out a contract under this 

subchapter, a Federal agency may use any combination of— 

(i) appropriated funds; and 

(ii) private financing under an energy savings performance 

contract. 

(F) PROMOTION OF CONTRACTS.—In carrying out this section, a 

Federal agency shall not— 

(i) establish a Federal agency policy that limits the maximum contract term under subparagraph (D) to a period shorter than 25 years; øor¿ 

(ii) limit the total amount of obligations under energy savings performance contracts or other private financing of energy 

savings measuresø.¿; or 

(iii) limit the recognition of operation and maintenance savings associated with systems modernized or replaced with the 

implementation of energy conservation measures, water conservation measures, or any combination or energy conservation 

measures and water conservations measures. 

(G) MEASUREMENT AND VERIFICATION REQUIREMENTS FOR PRIVATE

FINANCING.— (i) IN GENERAL.—In the case of energy savings performance 

contracts, the evaluations and savings measurement and 

verification required under paragraphs (2) and (4) of section 

8253(f) shall be used by a Federal agency to meet the requirements for the need for energy audits, calculation of energy savings, and any other evaluation of costs and savings needed to 

implement the guarantee of savings under this section. 

(ii) MODIFICATION OF EXISTING CONTRACTS.—Not later than 

18 months December 19, 2007, each Federal agency shall, to 

the maximum extent practicable, modify any indefinite delivery and indefinite quantity energy savings performance contracts, and other indefinite delivery and indefinite quantity 

contracts using private financing, to conform to the amendments made by subtitle B of title V of the Energy Independence and Security Act of 2007. 

(H) MISCELLANEOUS AUTHORITY.—Notwithstanding any other 

provision of law, a Federal agency may sell or transfer energy savings and apply the proceeds of the sale or transfer to fund a contract under this title. 

(b) IMPLEMENTATION.—(1)(A) The Secretary, with the concurrence 

of the Federal Acquisition Regulatory Council established under 

section 1302(a) of title 41, not later than 180 days after October 24, 

1992, shall, by rule, establish appropriate procedures and methods 

for use by Federal agencies to select, monitor, and terminate contracts with energy service contractors in accordance with laws governing Federal procurement that will achieve the intent of this section in a cost-effective manner. In developing such procedures and 

methods, the Secretary, with the concurrence of the Federal Acquisition Regulatory Council, shall determine which existing regulations are inconsistent with the intent of this section and shall formstockstill on DSK30JT082PROD with HEARING

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mulate substitute regulations consistent with laws governing Federal procurement. 

* * * * * * * 

SEC. 802. PAYMENT OF COSTS. Any amount paid by a Federal 

agency pursuant to any contract entered into under this subchapter 

may be paid only from funds appropriated or otherwise made available to the agency for fiscal year 1986 or any fiscal year thereafter 

for the payment of energy, water, or wastewater treatment expenses ø(and related operation and maintenance expenses)¿ including related operations and maintenance expenses. 

* * * * * * * 

SEC. 804. DEFINITIONS. For purposes of this title, the following 

definitions apply: 

(1) The term ‘‘Federal agency’’ means each authority of the 

Government of the United States, whether or not it is within 

or subject to review by another agency. 

(2) The term ‘‘energy savings’’ means— 

(A) a reduction in the cost of energy, water, or wastewater treatment, from a base cost established through a 

methodology set forth in the contract, used in an existing 

øfederally owned building or buildings or other federally 

owned facilities¿ Federal building (as defined in section 

551) as a result of— 

(i) the lease or purchase of operating equipment, improvements, altered operation and maintenance, or 

technical services; 

(ii) the increased efficient use of existing energy 

sources by cogeneration or heat recovery, excluding 

any cogeneration process for other than a øfederally 

owned building or buildings or other federally owned 

facilities¿ Federal building (as defined in section 551); 

or 

(iii) the increased efficient use of existing water 

sources in either interior or exterior applications; 

(B) the increased efficient use of an existing energy 

source by cogeneration or heat recovery; 

(C) if otherwise authorized by Federal or State law (including regulations), the sale or transfer of electrical or 

thermal energy generated on-site from renewable energy 

sources or cogeneration, but in excess of Federal needs, to 

utilities or non-Federal energy usersø; and¿; 

(D) the increased efficient use of existing water sources 

in interior or exterior applicationsø.¿; 

(E) the use, sale, or transfer of energy incentives, rebates, 

or credits (including renewable energy credits) from Federal, State, or local governments or utilities; and 

(F) any revenue generated from a reduction in energy or 

water use, more efficient waste recycling, or additional energy generated from more efficient equipment. 

(3) The terms ‘‘energy savings contract’’ and ‘‘energy savings 

performance contract’’ mean a contract that provides for the 

performance of services for the design, acquisition, installation, 

testing, and, where appropriate, operation, maintenance, and 

repair, of an identified energy or water conservation measure 

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or series of measures at 1 or more locations. Such contracts 

shall, with respect to an agency facility that is a public building (as such term is defined in section 3301 of title 40), be in 

compliance with the prospectus requirements and procedures 

of section 3307 of title 40. 

(4) The term ‘‘energy or water conservation measure’’ 

means— 

(A) an energy conservation measure, as defined in section 8259 of this title; or 

(B) a water conservation measure that improves the efficiency of water use, is life-cycle cost-effective, and involves 

water conservation, water recycling or reuse, more efficient 

treatment of wastewater or stormwater, improvements in 

operation or maintenance efficiencies, retrofit activities, or 

other related activities, not at a Federal hydroelectric facility. 

Æ 

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