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[Senate Report 115-79]
[From the U.S. Government Publishing Office]

                                                       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 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 Commerce 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 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

           *       *       *       *       *       *       *

PART 3--FEDERAL ENERGY MANAGEMENT

           *       *       *       *       *       *       *

SEC. 543. ENERGY MANAGEMENT REQUIREMENTS.

    (f) Use of Energy and Water Efficiency Measures in Federal 
Buildings.--

           *       *       *       *       *       *       *

          (4) Implementation of identified energy and water 
        efficiency measures.--Not later than 2 years after the 
        completion of each evaluation under paragraph (3), each 
        energy manager [may] 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; [and]
          (4) the information required under section 
        8262g(d)[.] ; and
          (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, [or 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 collection[;] 
        the term does not include a dam, reservoir, or 
        hydropower facility owned or operated by a Federal 
        agency;
          (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;
          (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; [or]
          (ii) limit the total amount of obligations under 
        energy savings performance contracts or other private 
        financing of energy savings measures[.]; 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 formulate 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 [(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 [federally 
                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 
                        [federally 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 
                users[; and];
                  (D) the increased efficient use of existing 
                water sources in interior or exterior 
                applications[.];
                  (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 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.

                                  [all]
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