CAPITOL POWER 

PLANT

Architect of the 

Capitol Should 

Update Its Long-term 

Energy Plan before 

Committing to Major 

Energy Projects

Report to Congressional Committees

September 2015

GAO-15-436

United States Government Accountability Office
Highlights of GAO-15-436, a report to 

congressional committees

September 2015

CAPITOL POWER PLANT

Architect of the Capitol Should Update Its Long-term 

Energy Plan before Committing to Major Energy

Projects

Why GAO Did This Study

AOC’s CPP heats and cools 25

buildings in the complex, including the

Capitol and House and Senate office 

buildings. CPP does not have the

infrastructure to distribute electricity to 

the buildings it serves. CPP buys fossil 

fuels (mostly natural gas) to run boilers 

that make steam and buys electricity to 

run chillers that make chilled water. 

CPP distributes the steam and chilled 

water for heating and cooling using a 

network of tunnels. AOC seeks to 

install a ‘cogeneration’ system that 

would produce steam and electricity.

The House of Representatives report 

accompanying the Legislative Branch 

Appropriations Bill, 2014 included a 

provision for GAO to analyze potential

cost savings at CPP. GAO analyzed 

(1) measures AOC implemented since 

2008 to manage the energy-related 

costs of the complex and opportunities, 

if any, to further manage these costs, 

and (2) how AOC decided to procure a 

cogeneration system and the extent to 

which AOC followed leading capitalplanning practices. GAO analyzed 

AOC budgets and plans; reviewed 

federal guidance on capital planning;

and interviewed AOC staff and other

stakeholders, including other heating 

and cooling plant operators.

What GAO Recommends

AOC should (1) update its long-term 

energy plan while following key leading 

practices, including considering a full 

range of measures to further manage 

costs, before committing to major 

energy projects at CPP, and (2) seek 

independent review of its plan. AOC

disagreed with GAO’s 

recommendations; GAO continues to 

believe they are valid, as discussed 

further in this report.

What GAO Found

The Architect of the Capitol (AOC) implemented many measures since 2008 to 

manage the energy-related costs of the Capitol Complex (the complex) and has 

opportunities to further manage these costs. AOC updated some of the Capitol 

Power Plant’s (CPP’s) production and distribution systems to reduce energy use 

and increase efficiency. AOC also implemented measures to reduce energy

consumption in the complex, such as conservation projects improving lighting 

and air-handling systems that yielded monetary savings. AOC has opportunities 

to implement other conservation measures in the complex. For example, energy 

audits by contractors identified additional opportunities to implement similar 

measures or other upgrades to lighting, mechanical, and plumbing systems to 

achieve additional energy and monetary savings. However, AOC officials said 

they have not implemented these measures but intend to act as resources 

become available.

AOC decided to procure a cogeneration system to produce electricity and steam

based on a 2009 long-term plan and subsequent partial updates but did not 

follow key leading federal capital-planning practices. In 2009, AOC issued a longterm energy plan that stated it should pursue cogeneration to meet future steam 

demand and provide a new source of electricity for its chillers, enabling the 

agency to decrease electricity purchases. Partial updates to the plan in 2014 

sought to justify the choice of a cogeneration system. However, AOC’s planning 

did not follow key leading capital-planning practices developed by GAO and the 

Office of Management and Budget (OMB). First, though called for by leading 

federal planning practices, AOC has not fully updated the 2009 long-term plan, 

although changes in key planning assumptions, such as on fuel prices and the 

complex’s demand for energy, have occurred. Instead, AOC intends to make a 

decision on implementing an $85 million cogeneration system before updating its

long-term plan later in fiscal year 2015. Second, the 2014 partial updates to its 

2009 plan that AOC has used to justify the project did not include complete 

information on the need or problem that the project would address. Third, the 

2014 updates did not identify a full range of options for cost-effectively meeting 

projected future needs, including non-capital measures such as conservation.

Fourth, the updates did not have valid sensitivity or uncertainty analyses to test 

key assumptions about whether the system would achieve sufficient savings over 

time—from decreased electricity purchases—to justify its costs. Related to this,

AOC officials said that since upfront appropriations would likely not be available 

to procure the system, they had decided to use a third party to finance the 

project, thereby increasing its costs. These officials also said they relied on 

federal guidance for analyzing and financing energy projects. However, such 

guidance does not substitute for first completing an up-to-date capital plan. 

Finally, GAO’s prior work has recommended using independent panels of experts 

to review complex projects such as a cogeneration system, but AOC has not 

engaged such a panel to review its 2014 updates to its long-term plan. AOC 

officials said they were unaware of some of these practices and that they needed 

to sign a contract quickly to avoid the risk of losing construction and air quality 

permits. Without updating its long-term energy plan and obtaining independent 

review, AOC may pursue a project that does not cost-effectively meet its needs.

View GAO-15-436. For more information, 

contact Frank Rusco at (202) 512-3841 or 

ruscof@gao.gov or Lori Rectanus at (202) 

512-2834 or rectanusl@gao.gov.

United States Government Accountability Office
Letter 1

Background 3

AOC Has Implemented Many Measures to Manage EnergyRelated Costs and Has Opportunities to Further Manage These 

Costs 11

AOC Decided to Pursue a Cogeneration System Based on Partial 

Updates of Its 2009 Long-term Plan but Did Not Follow Key 

Leading Federal Capital-Planning Practices 21

Conclusions 43

Recommendations for Agency Action 43

Agency Comments and Our Evaluation 44

Appendix I Objectives, Scope, and Methodology 49

Appendix II Comments from the Architect of the Capitol 51

Appendix III GAO Contacts and Staff Acknowledgments 73

Tables

Table 1: Characteristics of CPP’s Steam-Generating Equipment 

(2015) 9

Table 2: Characteristics of Capitol Power Plant’s Electric-Powered 

Chilled-Water-Generating Equipment (2015) 10

Table 3: Energy Conservation Measures Installed Under Energy 

Savings Performance Contracts 15

Table 4: Capitol Power Plant’s Operating Obligations, in 2015 

Constant Dollars, Fiscal Years 2009–2014 19

Table 5: Energy Conservation Measures (ECM) Identified by AOC 

for Future Implementation 20

Table 6: Attributes of AOC’s Plans for Meeting Future Energy 

Needs 27

Table 7: District Energy Systems GAO Interviewed 50

Figures

Figure 1: Primary Capitol Power Plant Facilities 5

Contents

Page i GAO-15-436 Capitol Power Plant Costs 
Figure 2: Primary Capitol Complex Facilities Served by the Capitol 

Power Plant 7

Figure 3: Conceptual Illustration of Capitol Power Plant’s District 

Energy System 8

Figure 4: Potential Cash Flows from Energy Savings Performance 

Contracts (ESPC) 16

Figure 5: Consumption of Steam and Chilled Water by 

Capitol Complex Facilities (2010–2014) 18

Figure 6: Proposed Cogeneration System Using a Combustion 

Turbine 22

Abbreviations

AOC Architect of the Capitol 

the complex Capitol Complex 

CPP Capitol Power Plant 

DOE Department of Energy 

ECM Energy Conservation Measure 

EISA Energy Independence and Security Act of 2007

EPAct Energy Policy Act of 2005

ESPC Energy Savings Performance Contract 

GSA General Services Administration 

HVAC heating, ventilation, and air conditioning 

NRC National Research Council 

NECPA National Energy Conservation Policy Act 

NIST National Institute of Standards and Technology

NREL National Renewable Energy Laboratory 

OMB Office of Management and Budget 

PURPA Public Utility Regulatory Policies Act of 1978

RPR Refrigeration Plant Revitalization 

UESC utility energy services contract 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.

Page ii GAO-15-436 Capitol Power Plant Costs 
441 G St. N.W.

Washington, DC 20548

September 3, 2015

Congressional Committees

The Architect of the Capitol (AOC) operates the Capitol Power Plant 

(CPP) that provides heating and cooling to the U.S. Capitol and 24 

surrounding buildings, often referred to as the Capitol Complex (the 

complex). CPP is a “district energy system” that produces steam and 

chilled water at a central plant for distribution via tunnels to the complex. 

The plant has not produced electricity since 1952 and does not have the 

infrastructure to produce or distribute electricity—either for use in the 

plant itself or in the buildings in the complex.1 AOC purchases fossil fuels 

(primarily natural gas) for use in CPP’s seven boilers, and purchases 

electricity to run the plant’s eight chillers.2 The cost of operating the plant 

totaled about $63 million in fiscal year 2014.3

For more than a decade, the Congress has expressed interest in reducing 

the costs of heating and cooling the buildings served by CPP, and AOC 

currently has multiple capital projects under way that could significantly 

affect those costs. For example, AOC has undertaken major building 

renovations in the complex that could affect future demand for steam and 

chilled water, such as the renovation of the Cannon House Office 

Building. In addition, AOC has initiated a planning effort for procuring a 

cogeneration system that would generate steam and electricity, in part, to 

address a projected gap in steam-generating capacity.4 A number of 

federal leading practices exist to guide such planning efforts.

1

CPP has an emergency electricity generator capable of providing 1.5 megawatts of 

power to its steam generating equipment (a megawatt is a unit of energy equal to onemillion watts of power, and one megawatt provides enough electricity to power about 750 

homes). An AOC planning document stated the generator was not designed to run for 

long, continuous periods of time and could not be relied upon for an extended power 

outage. 

2

AOC purchases natural gas and electricity under a contract through the General Services 

Administration and purchases coal and fuel oil using the Defense Energy Support Center.

3

Total AOC obligations for operating CPP are expressed in fiscal 2015 dollars.

4

Cogeneration involves the simultaneous production of electricity and heat from a single 

fuel source. 

Letter

Page 1 GAO-15-436 Capitol Power Plant Costs 

 
The House Report accompanying the Legislative Branch Appropriations 

Bill, 2014 included a provision for GAO to examine potential cost savings 

associated with privatizing CPP.5 GAO last reported on AOC’s 

management of CPP in 2008.6 Based on discussions with the House and 

Senate Appropriations Committees, this report contains information on: 

(1) measures AOC implemented since 2008 to manage the energyrelated costs of the buildings served by CPP and opportunities, if any, to 

further manage these costs, and (2) how AOC decided to procure a 

cogeneration system and the extent to which AOC followed leading 

capital-planning practices.7

To identify measures AOC has implemented to manage heating and 

cooling costs since 2008, we examined AOC and CPP appropriations, 

obligations, and expenditures data; reviewed relevant reports; and 

interviewed AOC and CPP officials. We assessed the reliability of these 

data and found them sufficiently reliable for our purposes. To identify 

measures AOC could consider implementing to further manage the costs 

of heating and cooling the buildings served by CPP, we reviewed AOC 

reports and other documents. We also interviewed a nongeneralizable 

sample of eight operators of other district energy systems—representing 

both public and private entities—to learn about measures they have 

implemented to manage costs as well as the benefits and costs of those 

measures.8 We identified these operators based on, among other things, 

literature research; interviews with CPP staff and managers of other 

district energy systems; and selected operators of district energy systems 

with similarities to CPP, such as those located in climates similar to 

5

H. R. Rep. No. 113-173, at 19 (2013). 

6

GAO, Economic and Other Implications of Switching from Coal to Natural Gas at the 

Capitol Power Plant and at Electricity-Generating Units Nationwide, GAO-08-601R 

(Washington, D.C.: May 1, 2008).

7

Given the considerable challenges associated with privatizing CPP’s operations, we 

agreed to focus more generally on cost-savings opportunities. CPP contracts with private 

sector organizations for, among other things, some operations and maintenance, energy 

savings upgrades, and planning and analysis. We have noted these activities throughout 

this report.

8

District energy systems vary but generally involve production of electricity, steam, or 

chilled water at central plants for distribution to nearby buildings via tunnels. Buildings 

then use this energy for purposes such as cooling, heating, and electrical power. Such 

systems decrease the need for individual buildings to generate their own energy on site or 

purchase it from utilities.

Page 2 GAO-15-436 Capitol Power Plant Costs 

 
Washington, D.C. The information collected during these interviews 

cannot be generalized to all district heating or cooling systems. However, 

because of their characteristics, the select operators provide useful 

insights on a range of issues relevant to AOC’s management of CPP. To 

review the extent to which AOC has followed leading practices when 

planning to meet future steam demands, we reviewed past planning 

documents and recent updates—AOC’s 2009 strategic long-term energy 

plan and two sets of 2014 AOC planning documents, among others. To 

identify key leading capital-planning practices we identified and reviewed 

four sources of relevant federal guidance on capital planning: GAO’s 

Executive Guide: Leading Practices in Capital Decision-Making, GAO’s 

Cost Estimating and Assessment Guide, the Office of Management and 

Budget’s (OMB) Capital Programming Guide, Supplement to OMB 

Circular A-11, and the National Institute of Standards and Technology’s 

(NIST) Life-Cycle Costing Manual for the Federal Energy Management 

Program.

9 We also interviewed senior AOC officials and CPP managers.

We conducted our work from December 2013 to September 2015, in 

accordance with all sections of GAO’s Quality Assurance Framework 

relevant to our objectives. The framework requires that we plan and 

perform the engagement to obtain sufficient and appropriate evidence to 

meet our stated objectives and to discuss any limitations in our work. We 

believe that the information and data obtained, and the analysis 

conducted, provide a reasonable basis for the findings and conclusions in 

this report. Appendix I provides a more detailed description of our scope 

and methodology.

AOC manages and operates CPP to support the agency’s strategic goals 

and objectives, including stewardship of Capitol facilities and 

conservation of resources. AOC must also comply with relevant laws and 

regulations, including environmental-protection and energy-reduction 

9

GAO, Executive Guide: Leading Practices in Capital Decision-Making, GAO/AIMD-99-32 

(Washington, D.C.: Dec. 1, 1998). GAO, GAO Cost Estimating and Assessment Guide, 

GAO-09-3SP (Washington, D.C.: Mar. 2, 2009). Office of Management and Budget 

(OMB), Capital Programming Guide, Supplement to OMB Circular A-11 (Washington, 

D.C.: July 2014). National Institute of Standards and Technology, Life-Cycle Costing 

Manual for the Federal Energy Management Program, NIST Handbook 135 (Washington, 

D.C.: February 1996).

Background

Page 3 GAO-15-436 Capitol Power Plant Costs 

 
requirements.10 CPP consists of six main facilities: an administration 

building, a boiler plant, the West Refrigeration Plant, the West 

Refrigeration Plant Expansion, the East Refrigeration Plant, and a coal 

yard at a secondary site (see fig. 1).11

10Both the District of Columbia Department of the Environment and the U.S. 

Environmental Protection Agency (EPA) play regulatory roles with respect to CPP’s air 

emissions under the Clean Air Act. (Clean Air Act Amendments of 1970, Pub. L. No. 91-

604, 84 Stat. 1676 (1970) (codified as amended at 42 U.S.C. §§ 7401-7671q) (commonly 

referred to as the Clean Air Act).

11CPP no longer uses the East Refrigeration Plant, in which AOC plans to house the 

proposed cogeneration system. In its technical comments to our draft report, AOC stated 

that a Turbine Building is separate from the East Refrigeration Plant.

Page 4 GAO-15-436 Capitol Power Plant Costs 

 
Figure 1: Primary Capitol Power Plant Facilities

Page 5 GAO-15-436 Capitol Power Plant Costs 
CPP serves 25 buildings comprising about 17-million square feet, 

including the U.S. Capitol building, House and Senate office buildings, the 

Supreme Court, and five buildings not under AOC’s management, 

including Union Station and the Government Publishing Office. Figure 2 

identifies the primary Capitol Complex facilities served by CPP.

Page 6 GAO-15-436 Capitol Power Plant Costs 
Figure 2: Primary Capitol Complex Facilities Served by the Capitol Power Plant

Note: The Capitol Power Plant serves additional facilities, including parking garages and the page 

dormitory.

Page 7 GAO-15-436 Capitol Power Plant Costs 
CPP provides steam to 25 buildings and chilled water to 19 buildings. 

CPP bills non-AOC customers for its costs under arrangements in various 

statutes.12

CPP is a district energy system that generates steam and chilled water 

for distribution through tunnels and direct buried piping to heat and cool 

nearby buildings (see fig. 3). Many district energy systems exist 

throughout the country, often at universities and office parks.

Figure 3: Conceptual Illustration of Capitol Power Plant’s District Energy System

In the absence of the district energy system, AOC would likely have to 

install a more dispersed system, such as heating and cooling generation 

equipment in each building. Alternatively, AOC could potentially obtain 

steam and chilled water from another district energy provider, such as the 

12Folger Shakespeare Library: Pub. L. No. 83-663, 68 Stat. 800, 803 (1954), Pub. L. No. 

95-182, 91 Stat. 1374 (1977); Government Publishing Office and Washington City Post 

Office: Pub. L. No. 67-263, 42 Stat. 767 (1922); Thurgood Marshall Federal Judiciary 

Office Building: Pub. L. No. 107-217, 116 Stat. 1062, 1188 (2002) (codified at 40 U.S.C. § 

6502); Union Station: Pub. L. No. 107-217, 116 Stat. 1062, 1202 (2002) (codified at 40 

U.S.C. § 6909); U.S. Supreme Court: Pub. L. No. 107-217, 116 Stat. 1062, 1180 (2002) 

(codified as amended at 40 U.S.C. § 6111).

Page 8 GAO-15-436 Capitol Power Plant Costs 

 
General Services Administration (GSA), to serve some of the buildings in 

the complex, but could face challenges in doing so.13

CPP has seven fossil-fuel fired boilers that primarily burn natural gas to 

generate steam. The boilers operate primarily on natural gas, but AOC 

can burn coal in two boilers when additional steam capacity is needed or 

fuel oil in five boilers if, for example, interruptions occurred in the supply 

of natural gas (see table 1).

Table 1: Characteristics of CPP’s Steam-Generating Equipment (2015)

Boiler 

number

Installation 

date

Primary fuel 

(secondary 

fuel)

Maximum capacity when 

operating on natural gas

(lbs. of steam per hour)

Maximum 

capacity (lbs. of 

steam per hour)

1 1950 Gas/Coal 50,000 140,000a

2 1950 Gas/Coal 50,000 140,000a

3 1950 Gas/Oil 140,000 140,000

4 1964 Gas/Oil 50,000 50,000

5 1964 Gas/Oil 50,000 50,000

6 1964 Gas/Oil 50,000 50,000

7 1964 Gas/Oil 50,000 50,000

Total 440,000 620,000

Source: GAO analysis of Architect of the Capitol planning documents and CRS, The Capitol Power Plant: Background and Greening 

Options, R40433 (Washington, DC: June 3, 2010). | GAO-15-436

a

Maximum capacity when operating with coal.

As we previously reported, CPP increased its use of natural gas over coal 

and fuel oil beginning in 2008 as a result of the “Green the Capitol’

initiative,” which began at the direction of the House of Representatives.14

CPP has continued this practice for environmental and other reasons.

CPP currently has eight electricity-powered chillers to produce chilled 

water. AOC officials said CPP has experienced sporadic mechanical and 

13An AOC planning document stated that connecting the GSA’s district energy system in 

Washington, D.C. to the Capitol Complex would cost about $800 million and require 

building a mile-long tunnel.

14GAO, Economic and Other Implications of Switching from Coal to Natural Gas at the 

Capitol Power Plant and at Electricity-Generating Units Nationwide, GAO-08-601R 

(Washington, D.C.: May 1, 2008).

Page 9 GAO-15-436 Capitol Power Plant Costs 

 
electrical problems with its oldest chillers. AOC has a long-term plan to 

replace its older chillers, referred to as the Refrigeration Plant 

Revitalization (RPR) project, which calls for the replacement of several 

existing chillers and the addition of cooling towers over several phases by 

2018.15 Table 2 provides information on CPP’s chillers in the West 

Refrigeration Plant and its West Refrigeration Plant Expansion.

Table 2: Characteristics of Capitol Power Plant’s Electric-Powered Chilled-WaterGenerating Equipment (2015)

Chiller numbera Installation date

Peak capacity (tons of 

refrigeration)

Electricity use (total 

kilowatts)

1 1978 6,000 4,440 

2 1978 6,000 4,440 

4 1978 6,000 5,160 

5 2014 2,700 1,674 

6 2014 2,700 1,674 

7 2007 5,400 3,240 

8 2007 5,400 3,240 

9 2007 5,400 3,240 

Total 39,600 27,108

Source: Architect of the Capitol. | GAO-15-436

a

AOC officials stated that as of July 2015, CPP is in the process of installing new chillers numbers 3

and 10, which would bring the total number of operating chillers to ten.

15Cooling towers remove heat from condenser water as part of the process of using 

chillers to create chilled water for the complex.

Page 10 GAO-15-436 Capitol Power Plant Costs 

 
Since 2008, AOC has implemented many measures to manage the 

energy-related costs of the buildings served by CPP. AOC’s efforts have 

reduced the energy needed to cool the buildings in the complex and the 

energy-related costs of operating CPP have fallen since fiscal year 2011. 

AOC has additional opportunities to further manage its energy costs.

Since 2008, AOC has implemented many measures to manage the 

energy-related costs of the complex.

To reduce the costs of producing steam, AOC replaced some steampowered water treatment equipment at CPP with new equipment powered 

by electricity. Specifically, in fiscal year 2014, AOC replaced two of the 

pumps feeding the plant’s boilers, formerly powered by steam, with new 

electric pumps. An outside study prepared by a consultant to AOC found 

that this would reduce in-plant steam use and improve the overall 

efficiency of the system, resulting in an almost 7 percent decrease in 

annual fuel costs and a nearly 10 percent improvement in the plant’s 

steam output.

Additionally, AOC officials said they secured better terms in fiscal year 

2014 for purchasing natural gas to operate the plant’s boilers. Starting in 

fiscal year 2014, AOC paid $8.36 per thousand cubic feet of natural gas 

as opposed to the $12.95 the agency paid in fiscal year 2013, a reduction 

of approximately 35 percent. The contract expires in 2017.

AOC also completed several projects to lower the costs of providing 

chilled water. AOC officials said that in fiscal year 2012 they began a 

practice known as “free cooling” at CPP to reduce electricity costs. During 

winter months, CPP uses outside air, the plant’s cooling towers, and heat 

exchangers to chill water rather than using its electric chillers. A 2013 

study of the chilled water system shows that CPP should be able to meet 

the majority of chilled water demand in winter months using free cooling, 

AOC Has 

Implemented Many 

Measures to Manage 

Energy-Related Costs 

and Has 

Opportunities to 

Further Manage 

These Costs

AOC Has Implemented 

Many Measures to 

Manage Energy-Related 

Costs

Measures to Reduce Heating 

and Cooling Production Costs

Page 11 GAO-15-436 Capitol Power Plant Costs 
thereby lowering its electricity costs.16 The study estimated that free 

cooling would achieve about $307,000 annually in savings through 

reduced electricity use.17

Also, in fiscal year 2014, AOC installed new chillers at CPP. The 2013 

chilled-water- system audit concluded CPP could produce chilled water 

more efficiently if it increased its use of two relatively new and efficient 

chillers located in the East Refrigeration Plant, where the chillers were 

underused due to the relatively poor condition of the cooling towers there. 

AOC initially planned to move the two chillers to the West Refrigeration 

Plant Expansion. Ultimately, AOC purchased and installed two new 

chillers of similar capacity and efficiency. Additionally, in fiscal year 2014 

AOC started construction to add two new chillers and three cooling 

towers to the West Refrigeration Plant Expansion as part of the RPR 

project. AOC budget documents state the new chillers will operate 50 

percent more efficiently than the older chillers.

To better understand energy consumption, AOC installed energy meters 

at most of the buildings it serves and is installing sub-meters within 

selected buildings. Energy meters can provide information on the 

consumption of steam, chilled water, and electricity. According to AOC 

officials, metering allows the agency to identify changes in energy 

consumption that could indicate equipment problems, measure progress 

on energy conservation, assist in identifying future conservation 

measures, and evaluate energy losses during distribution. Within the last 

6 years, AOC installed meters for most of the buildings served by CPP.18

AOC does not have meters for individual office spaces, but plans to install 

meters for some energy-intensive spaces, such as kitchens and data 

centers. According to AOC officials, the agency does not generally track 

energy use at the occupant level because of the cost and instead 

16However, peak demand for chilled water occurs in summer months when relatively more 

building cooling is required.

17In technical comments responding to our draft report, AOC stated that it had achieved 

annual savings exceeding this amount, but we did not assess the validity of this 

statement.

18Prior to installing meters, AOC used models to estimate steam and chilled water needs 

and potential conservation measures. AOC has used metered data to update its models of 

building energy use.

Measures to Better Understand 

Energy Consumption and 

Identify Opportunities for 

Conservation

Page 12 GAO-15-436 Capitol Power Plant Costs 

 
encourages energy conservation within offices through education and 

awareness activities.

Select operators of other district energy systems we interviewed 

specifically mentioned the installation of energy meters to minimize the 

costs of operating their systems. Some of these operators said they 

installed meters at individual buildings served by their systems and are 

considering installing or have already installed submeters where 

appropriate.

In addition, between 2008 and 2013, AOC commissioned energy audits of 

most of the buildings served by CPP. Energy audits involve examining a 

building’s physical features and utility history to identify conservation 

opportunities. AOC officials told us they engaged an engineering

company to complete energy audits of the buildings operated by AOC, 

including the Supreme Court, and Thurgood Marshall buildings at a cost 

of $5 million. The audits produced estimates of the implementation cost, 

maximum energy and cost-savings potential, and pay-off period for 

energy conservation measures in all of the audited buildings.19

For the 16 largest buildings in the complex administered by AOC, these 

audits recommended several hundred conservation measures that could 

result in substantial energy savings. Most of the potential savings could 

stem from upgrades to heating and cooling systems. Three buildings—the 

Capitol, Madison Building, and Rayburn House Office Building–account 

for 52 percent of the potential energy savings from measures 

recommended by the contractor. Over one-third of the potential energy 

savings from these recommended measures involve the Library of 

Congress buildings, with the Madison Building—home of one of the 

Library’s largest data centers—accounting for the greatest number of 

recommendations and the highest potential energy savings. For example, 

the audits estimated that fully replacing heating, ventilation, and air 

conditioning (HVAC) control systems in the Madison Building could 

reduce the building’s cooling needs by half, and this project accounted for 

18 percent of all potential energy savings from the recommended 

19Completing many or all of the recommended measures would yield less savings than 

the sum of each individual measure because the audits estimate energy savings of each 

individual measure in isolation and the effect of some measures may decline if AOC 

implements other measures.

Page 13 GAO-15-436 Capitol Power Plant Costs 

 
measures.20 The contractor estimated that independently implementing all 

of its recommended measures could cost $115 million and that each 

measure would eventually result in dollar savings, with the payoff period 

varying for the different individual measures. As described below, AOC 

implemented some measures and intends to implement others as 

resources allow.

AOC officials subsequently evaluated the energy audits based on factors 

such as cost-effectiveness and execution difficulty and approved some 

measures for implementation. AOC staff and contractors have already 

implemented some of the measures. For example, AOC staff repaired 

and optimized some existing HVAC systems.

AOC also hired contractors to improve the energy efficiency of the Capitol 

and House and Senate office buildings through conservation measures. 

To finance these measures, AOC repays the contractors from avoided 

costs. Under Energy Savings Performance Contracts (ESPC), federal 

agencies enter into contracts—up to 25 years—with a private company in 

which the company incurs the costs of financing and installing energy 

efficiency improvements in exchange for a share of any savings resulting 

from the improvements.21 Table 3 describes the energy conservation 

measures installed under these contracts.

20Poorly calibrated or functioning HVAC systems can generally use excess energy by 

heating or cooling spaces excessively or circulating outside air in volumes greater than 

necessary.

21Shared energy savings contracts were first introduced under the Comprehensive 

Omnibus Budget Reconciliation Act of 1985 (Pub. L. 99-272, 7201, 100 Stat. 82, 142 

(1986)) which amended the National Energy Conservation Policy Act (NECPA) (Pub. L. 

No. 95-619, 92 Stat. 3206 (1978)). The Energy Policy Act of 1992 (Pub. L. No. 102-486, § 

155, 106 Stat. 2776 (1992)) further amended NECPA utilizing the phrase “energy savings 

performance contracts” in authorizing agencies to use energy savings performance 

contracts as a tool for implementing energy-efficiency improvements. Federal agencies 

may obligate for such contracts on an annual basis and do not need to obligate amounts 

for any potential cancellation charges. See 42 U.S.C. § 8287(a)(2)(D).

Measures to Reduce Energy 

Consumption

Page 14 GAO-15-436 Capitol Power Plant Costs 

 
Table 3: Energy Conservation Measures Installed Under Energy Savings Performance Contracts 

Buildings

Energy conservation measures installed by energy 

service companies 

Implementation 

completed

Capitol Building • Air handling unit replacement

• HVAC systems and controls upgrades

• Lighting retrofit and controls

• Steam trap maintenance

Nov. 2012

House Office Buildings 

(Rayburn, Cannon, Longworth, Ford)

• Energy efficient lighting upgrades

• HVAC and controls upgrades

• Steam trap replacement

• Water conservation / fixture upgrades

March 2012

Senate Office Buildings 

(Hart, Dirksen, Russell)

• HVAC systems and controls upgrades

• HVAC testing, adjusting, and balancing

• Insulation of steam system components

• Lighting retrofit and controls

• Transformer upgrades

June 2013

Source: GAO analysis of Architect of the Capitol documents. | GAO-15-436

During the contract term, agencies typically continue to budget and 

request appropriations for energy-related operations and maintenance 

based on their baseline energy needs prior to implementation of the 

improvements. Agencies repay the company for the costs—such as initial 

construction and installation costs, and the company’s borrowing costs 

and profit—from appropriations using the savings generated by the 

improvements.22 The federal statute authorizing federal agencies to enter 

into ESPCs states that the aggregate annual payments may not exceed 

the amount the agency would have paid for utilities without an ESPC.23 At 

the end of the contract, payments to the company cease and the energy 

savings may allow agencies to reduce their energy-related expenses. 

Figure 4 illustrates the potential effect of an ESPC on an agency’s cash 

flows.

22In its technical comments, AOC stated that under the ESPCs the energy savings are 

guaranteed and the agency will only make repayments if savings are measured and 

verified.

2342 U.S.C. § 8287 (a)(2)(B). 

Page 15 GAO-15-436 Capitol Power Plant Costs 

 
Figure 4: Potential Cash Flows from Energy Savings Performance Contracts (ESPC)

a

Agencies’ costs for energy, water, and related expenses for operations, maintenance, and repair and 

replacement are all generally allowable sources of ESPC cost savings under statute.

b

Savings generated after an ESPC’s performance period would generally be in the form of lower utility 

costs. Post-performance period savings are not measured and verified, and agencies do not 

generally track such savings.

We reported in 2004 that although ESPCs provide an alternative funding 

mechanism for agencies’ energy-efficiency improvements, for the cases 

we examined at that time, such funding costs more than using upfront 

appropriations. This is because the federal government can obtain capital 

at a lower financing rate than private companies.24 We also reported in 

June 2005 that vigilance is needed to ensure agencies negotiate the best 

24GAO, Capital Financing: Partnerships and Energy Savings Performance Contracts 

Raise Budgeting and Monitoring Concerns, GAO-05-55 (Washington, D.C.: Dec. 16, 

2004).

Page 16 GAO-15-436 Capitol Power Plant Costs 

 
possible contract terms and that energy savings achieved will cover 

agencies’ costs.25

To date, AOC’s contractors report that energy and cost savings have 

exceeded the guaranteed amounts.26 In fiscal year 2013, they reported 

total savings of over $9.8 million. AOC made nearly $8 million in 

payments to the contractors in 2013, resulting in a net savings of 

approximately $1.7 million. In September 2012, one of AOC’s contractors 

refinanced an ESPC project at a projected savings to the agency of $19.8 

million over the term of the project.

For the entire complex, total steam and chilled-water consumption 

declined between 2010 and 2013, and adjusting the data to account for 

yearly changes in weather shows reductions in energy use, mostly from 

greater efficiency in producing chilled water. Because changes in weather 

affect the need for steam and chilled water, energy managers evaluate 

energy consumption against a measure of the average need for heating 

or cooling services. Cooling and heating degree days measure the 

number of days with outdoor temperatures above or below, respectively, 

65 degrees Fahrenheit and the amount above or below that temperature. 

For example, a cooling degree day value of 10 indicates that the average 

temperature for the day was 75 degrees. AOC’s annual energy 

consumption of chilled water per cooling degree day fell between fiscal 

years 2010 and 2013, which shows that consumption of chilled water (i.e., 

cooling) decreased more than would be expected simply due to lower 

temperatures. AOC’s steam consumption per heating degree day during 

this period fluctuated. Figure 5 shows AOC’s annual steam and chilledwater consumption per heating and cooling degree days.

25GAO, Energy Savings: Performance Contracts Offer Benefits, but Vigilance Is Needed 

to Protect Government Interests, GAO-05-340 (Washington, D.C.: June 22, 2005).

26AOC receives quarterly reports from its ESPC contractors in addition to annual 

measurement and verification reports of the energy and cost savings.

Page 17 GAO-15-436 Capitol Power Plant Costs 

 
Figure 5: Consumption of Steam and Chilled Water by Capitol Complex Facilities 

(2010–2014)

a

One British thermal unit is the heat required to raise the temperature of one pound of water by one 

degree Fahrenheit. Steam consumption moved from a low of about 205 million BTUs per heating 

degree day in fiscal year FY2014 to a high of about 270 million BTUs per heating degree day in fiscal 

year FY2012.

AOC incurs regularly occurring costs as well as capital costs to operate 

and maintain CPP. AOC’s regularly occurring costs to operate CPP, 

which include, among other things, the fuels and electricity to power the 

plant’s generating equipment and the personnel to operate and maintain 

them, rose from fiscal year 2009 to fiscal year 2011 and then fell between 

fiscal years 2012 and 2014.27 AOC’s costs (expressed as total 

obligations) to operate CPP were about $59 million in fiscal year 2009, 

27CPP also incurs costs for capital projects to repair, replace, and improve components of 

CPP. For fiscal 2014, accounting data provided by AOC show that CPP had multi-year 

appropriation of about $33 million for, among other things, funding for the RPR project.

Page 18 GAO-15-436 Capitol Power Plant Costs 

 
rose to about $69 million in fiscal year 2011, and then fell to about $63 

million by fiscal year 2014 (see table 4).

Table 4: Capitol Power Plant’s Operating Obligations, in 2015 Constant Dollars, Fiscal Years 2009–2014

Fiscal year 2009 2010 2011 2012 2013 2014

Facility maintenance 574 1,155 1,689 - - -

Jurisdictional activities 243 234 233 221 236 211 

Misc. - - 50 - - -

Payroll 9,593 10,104 9,962 9,357 9,139 9,329 

Plant maintenance 6,723 8,450 6,627 10,342 10,164 9,226 

Projects 2,033 1,100 8,130 - - 1,551 

Safety 173 185 158 161 156 162 

Utilities – coal 3,006 0 295 881 - 588 

Utilities - electricity 14,265 13,564 12,127 10,385 9,457 8,849 

Utilities – energy savings Performance contracts - - 1,359 7,913 7,847 8,755 

Utilities - fuel oil 78 1,768 508 216 - -

Utilities - natural gas 14,929 17,829 17,974 16,206 16,343 14,991 

Utilities - other 2,915 2,891 3,361 2,820 2,758 2,253 

Utilities - water/sewer 4,475 4,372 6,303 6,865 6,256 6,785 

Total 59,009 61,652 68,776 65,365 62,357 62,699 

Source: GAO analysis of AOC accounting data. | GAO-15-436

From fiscal year 2009 to fiscal year 2014, fuel and electricity accounted 

for about 46 percent of the costs to operate CPP (in 2015 dollars). AOC’s 

total obligations on fuel and electricity for CPP rose from about $32 

million in fiscal year 2009 to a high of $33 million in fiscal year 2010, 

before declining in the subsequent years to about $24 million in fiscal 

year 2014. Changes in a variety of factors can affect CPP’s costs, 

including fuel and electricity costs, staffing levels, maintenance needs, 

efficiency in using fuels, and consumption patterns. As shown above, 

costs for individual line items have varied over time.

While AOC has implemented some conservation measures, AOC has 

additional opportunities to manage its energy-related costs. AOC’s past 

energy audits identified several hundred additional measures that could 

further reduce energy consumption in the complex and related costs and 

are expected to pay for themselves. Of these, AOC has selected some 

measures it intends to implement when resources become available (see 

table 5).

AOC Has Opportunities to 

Further Manage EnergyRelated Costs

Page 19 GAO-15-436 Capitol Power Plant Costs 
Table 5: Energy Conservation Measures (ECM) Identified by AOC for Future

Implementation

Building No. of ECMs

Cannon House Office Building 3

U.S. Capitol Building 15

Capitol Police Headquarters 4

Capitol Visitor Center 7

U.S. Botanic Garden (Conservatory) 2

Dirksen Senate Office Building 11

Ford House Office Buildinga 3

Hart Senate Office Building 10

Madison Building, Library of Congress 11

Adams Building, Library of Congress 7

Longworth House Office Building 1

Rayburn House Office Building 5

Russell Senate Office Building 8

U.S. Supreme Court 3

Jefferson Building, Library of Congress 5

Thurgood Marshall Federal Judiciary Building 16

Total 111

Source: GAO analysis of Architect of the Capitol’s planning documents. | GAO-15-436

a

Ford House Office Building not served by CPP.

These include upgrades to building lighting, plumbing, and mechanical 

systems throughout the complex. For example, such upgrades could 

include (1) replacing inefficient light fixtures with modern, more-efficient 

fixtures with occupancy sensors, (2) replacing older inefficient plumbing 

fixtures with low-flow fixtures with automatic sensors, or (3) replacing 

pneumatic air-handling controls with more modern, digital controls. The 

measures AOC selected with the largest projected energy reductions 

include upgrades to the Library of Congress buildings. AOC officials said 

they are considering entering into an ESPC for these buildings that would 

include improvements to lighting and HVAC systems, and infrastructure 

upgrades to the data center in the Madison Building.

Page 20 GAO-15-436 Capitol Power Plant Costs 
Based on a 2009 long-term plan and subsequent partial updates, AOC 

decided that it should install a cogeneration system to replace aging 

boilers, meet future demand for steam, and produce electricity. AOC 

officials said that since upfront appropriations would not likely be available 

to procure the cogeneration system, they had decided to finance the 

project. AOC’s iterative planning did not follow key leading practices we 

identified for federal capital planning. AOC officials said they were 

unaware of the relevant guidance we cited on leading practices and did 

not provide documents to support their claims that the agency needed to 

move quickly to execute a contract for the proposed cogeneration system.

In 2009, AOC issued a long-term energy plan that concluded the agency 

should install a cogeneration system to replace aging boilers, meet future 

demand for steam, produce electricity, and serve other agency objectives. 

AOC continued to justify the need to pursue cogeneration in subsequent 

partial updates to the plan. Cogeneration, also known as combined heat 

and power, involves the simultaneous production of electricity and heat 

from a single fuel source, such as natural gas. AOC has proposed a 

cogeneration system that would use a natural gas combustion turbine to

generate electricity and a recovery unit that would use excess heat from 

the turbine’s exhaust stream to heat water and create steam (see fig. 6).

AOC Decided to 

Pursue a 

Cogeneration System 

Based on Partial 

Updates of Its 2009 

Long-term Plan but 

Did Not Follow Key 

Leading Federal 

Capital-Planning 

Practices

AOC Decided That a 

Cogeneration System Was 

Needed Based on a 2009 

Long-term Plan and 

Subsequent Partial 

Updates

Page 21 GAO-15-436 Capitol Power Plant Costs 
Figure 6: Proposed Cogeneration System Using a Combustion Turbine

AOC officials stated the cogeneration system, despite initial costs that are 

significantly higher than other alternatives, will provide needed steam and 

save money over time by producing electricity to power its chillers—

thereby avoiding or decreasing the costs of purchasing electricity. In 

addition, cogeneration systems can produce excess electricity that can be 

sold to local utilities, thereby generating income that helps offset the cost 

of the system.

AOC’s 2009 long-term energy plan included a forecast showing that 

demand for steam would grow and exceed the plant’s capacity to 

Page 22 GAO-15-436 Capitol Power Plant Costs 
generate steam by fiscal year 2016.28 To address this projected gap in 

capacity, the 2009 plan assessed nearly 30 capital alternatives for 

installing new steam-generating equipment, including natural-gaspowered boilers, a cogeneration system, or nuclear capabilities. The 2009 

plan evaluated the capital alternatives using several criteria, including 

total life cycle costs, initial construction costs, air pollution emissions, 

energy efficiency, and security.29,30 AOC’s 2009 plan recommended that 

AOC continue to operate CPP as a district energy system to provide 

heating, and in that context, the best options based on life cycle costs and 

environmental impacts would involve a new cogeneration system or the 

use of synthetic coal.

31 Ultimately, citing concerns about the cost and 

availability of synthetic coal as well as environmental concerns, the plan 

recommended that AOC procure a cogeneration system.32

Specifically, the 2009 long-term plan recommended that AOC purchase a 

cogeneration system comprising one 7.5-megawatt cogeneration 

combustion turbine, which would represent the first of a three-phase 

plan.33 The 2009 plan also called for the installation (in two subsequent 

phases) of five natural gas boilers along with two other combustion 

turbines—another 7.5-megawatt turbine and a 15-megawatt turbine—and 

the equipment needed to distribute electricity throughout the complex. 

28The Architect of the Capitol, Strategic Long Term Energy Plan: Final Report

(Washington, D.C.: Sept. 30, 2009). 

29For each considered alternative AOC estimated life cycle costs, which are the expected 

costs to own and operate each alternative expressed in today’s dollars. These include the 

initial construction costs and the present value of the projected annual operating costs, 

which include, among other things, costs for operations, maintenance, and fuels. 

30For energy efficiency, the plan 2009 plan calculated, for each considered alternative, a 

regional energy efficiency rating, which took into account all the forms of energy used to 

generate and distribute utilities to the Capitol Complex.

31In this instance, synthetic coal would have involved burning a coal substitute derived 

from wood. The cogeneration alternative included the addition of three combustion 

turbines and the replacement of five natural gas boilers over several phases, while the 

synthetic coal alternative included the emissions equipment and storage facilities needed 

to use synthetic coal as well as the replacement of CPP’s seven boilers.

32AOC selected the alternative with the lowest estimated net present value of life cycle 

costs—that is, expressed in current dollars, the costs to install and operate the alternative 

over its useful life.

33A megawatt is unit of energy equal to one-million watts of power. One megawatt 

provides enough electricity to power about 750 homes.

Page 23 GAO-15-436 Capitol Power Plant Costs 

 
The 2009 plan assumed the first combustion turbine would serve only 

CPP, but that the later installation of the additional turbines would enable 

AOC to distribute electricity throughout the complex and potentially allow 

for selling excess electricity to the local utility. The estimated construction 

cost for the project was $120 million over its three phases. AOC officials 

said that it estimated the construction costs in the 2009 plan through a 

benchmarking analysis and did not reflect an actual bid from a vendor.34

AOC engaged the National Academies’ National Research Council (NRC) 

to review a draft of its 2009 long-term energy plan. In response to AOC’s 

request, the NRC organized an expert panel that identified several 

shortcomings in the draft plan, including that the energy demand 

projections were not supported by firm data and did not account for 

mandates to reduce energy consumption. In the final version of the 2009 

plan, AOC states it addressed NRC’s concerns and accounted for both 

increased utility demand from building renovations and reductions in 

demand due to the energy reduction mandates.

AOC subsequently developed the design of the cogeneration project 

throughout 2012 and 2013. AOC formally proposed the project during its 

fiscal year 2012 appropriations hearings. In 2012, AOC also received two 

consultant-authored reports assessing the feasibility of the system. These 

reports included an analysis that concluded that the value of a 

cogeneration system, which AOC officials said represented the first two 

phases of the 2009 long-term plan, was highly dependent on the price at 

which AOC could sell the excess electricity generated by the system. 

Throughout 2013, AOC worked with a vendor to further develop the 

design of a cogeneration system representing the first two phases of the 

2009 plan. In November 2013, AOC officials stated that the project’s initial 

construction-related costs would total roughly $67 million.35 The vendor 

ultimately provided a bid in late 2013 that resulted in a total project cost 

34The 2009 plan stated that AOC should further develop the cost estimates by developing 

budgetary cost estimates and funding schedule requirements for the plan’s recommended 

projects.

35The costs included the design, construction, and construction contingency costs that 

would be included in a construction contract.

Page 24 GAO-15-436 Capitol Power Plant Costs 

 
that was $100 million over AOC’s estimate.36 As a result, AOC initiated 

discussions with another vendor in January 2014.

On two occasions in 2014, during the course of the audit work for this 

report, AOC provided GAO with draft plans that concluded a cogeneration 

system was still the preferred means of meeting steam demand. In July 

2014, AOC provided GAO with a draft version of a partial update of the 

2009 plan prepared by a consultant, titled Strategic Long Term Energy 

Plan Update: Draft Final Report, that concluded new steam-generating 

capacity was needed to replace two aging boilers and meet projected 

increased future demand for steam. The draft July 2014 partial update 

included an updated long-term forecast of demand and, unlike the 2009 

plan, did not project a gap in steam capacity occurring in 2016. Instead, 

the draft recommended that AOC replace the capacity of two aging 

boilers to decrease CPP’s reliance on coal.37 The draft July 2014 partial 

update did not, however, describe the expected life of these boilers. 

Unlike the 2009 document, the draft July 2014 partial update was not 

comprehensive and reviewed adding new natural gas boilers or eight 

different configurations of a cogeneration system (which involved 

combining new gas boilers with the systems). When presenting the draft 

partial update to GAO in July 2014, AOC officials said that the agency 

had not accepted the update as final from the consultant and would likely 

ask the consultant to add information and make changes before doing so. 

The draft July 2014 update recommended the option with the lowest life 

cycle costs: that AOC install a natural gas cogeneration system with two 

5.7-megawatt turbines, as well as two natural gas boilers providing a total 

of 190,000 pounds of steam per hour.

The draft July 2014 partial update said the electricity generated by the 

cogeneration system would only be used within CPP and would not serve 

the rest of the complex or be sold to a utility; CPP does not have the 

infrastructure to provide electricity to the complex. Because of the low 

demand for electricity at CPP during winter months—due to relatively low 

chiller use—the plant would idle one of the two 5.7-megawatt units during 

36The bid called for two 7.5-megawatt combustion turbines with a maximum steam 

capacity of 200,000 pounds per hour, which AOC stated represented phases one and two 

of its 2009 plan.

37The two boilers, installed in 1950, originally burned coal as their primary fuel, but have 

since been retrofitted and now burn primarily natural gas.

Page 25 GAO-15-436 Capitol Power Plant Costs 

 
peak winter conditions. In the draft July 2014 partial update, AOC’s 

consultant estimated the initial construction-related costs for the project at 

$56 million.38

Later, in December 2014, AOC provided GAO with a draft plan, along 

with consultant-generated supporting documents, that assessed a choice 

between a cogeneration system and a single natural gas-boiler.39 Unlike 

the 2009 long-term plan and the consultant’s draft July 2014 partial 

update, the December 2014 draft plan did not include updated long-term 

forecasts of demand for steam. Instead, the draft plan used one year of 

demand—calendar year 2013—as the basis for all future years. The 

December 2014 draft plan stated CPP needed to replace the steamgenerating capacity of two of its oldest boilers, citing their age and 

increasing operations and maintenance costs and recommended that 

AOC install a natural gas cogeneration system with a single 7.5-

megawatt combustion turbine providing a maximum steam capacity of 

100,000 pounds per hour. AOC officials stated this would fulfill the first 

phase of its 2009 long-term energy plan. The December 2014 draft plan 

stated the electricity generated by the cogeneration system would power 

CPP’s electric chillers and not serve the rest of the complex.

In contrast to the draft July 2014 update, the December 2014 draft plan 

stated that AOC would sell any excess electricity to the local utility. AOC 

officials said they expect to use up to 90 percent of the electricity 

generated by the proposed system to operate the plant’s chillers, thereby 

avoiding paying for the electricity from the local utility and justifying the 

system’s relatively large upfront investment (when compared to other 

alternatives). The agency plans to sell the excess 10 percent of electricity 

at rates to be determined by a future agreement with the local utility. AOC 

officials stated this could involve CPP’s becoming a facility qualified to sell 

electricity to the grid under the Public Utility Regulatory Policies Act 

(PURPA) of 1978.40 The officials said they used electricity rates for a 

qualified facility in the analysis supporting the December 2014 draft plan 

38In its technical comments to our draft report, AOC stated the costs in the July 2014 

partial update represented a benchmarking analysis and did not reflect an actual bid from 

a vendor.

39Both the cogeneration system and the natural gas boiler would be capable of also 

operating on fuel oil. 

40Pub. L. No. 95-617, 92 Stat. 3117 (1978). 

Page 26 GAO-15-436 Capitol Power Plant Costs 

 
to use the most conservative approach. AOC officials said they are 

researching other arrangements for selling the excess electricity that 

could prove more economically favorable than as a qualified facility under 

PURPA.

Table 6 summarizes some of the key attributes of the recommended 

options in AOC’s planning since 2009 for meeting future energy needs.

Table 6: Attributes of AOC’s Plans for Meeting Future Energy Needs

Attribute noted in 

Architect of the 

Capitol plan

2009 Strategic Long 

Term Energy Plan: Final 

Report

2012-2013 Business 

Case Reviews and Bidc

July 2014 Strategic 

Long Term Energy Plan 

Update: Draft Final 

Report

December 2014 Draft: 

Cogeneration at the 

Capitol Power Plant: 

Project Summary

Scope and purpose of 

proposed cogeneration 

systems

One 7.5 MW combustion 

turbine, followed by 7.5 

MW and 15 MW 

combustion turbines, as 

well as five natural gas 

boilers, installed over 

three phases over 20 

years

Two 7.5 MW combustion 

turbines (representing the 

first and second phases 

of the 2009 plan)

Two 5.7 MW combustion 

turbines and two natural 

gas boilers, to be 

installed over 10 years 

One 7.5 MW combustion 

turbine (representing the 

first phase of the 2009 

plan)

Approximate 

construction cost 

(millions)a

$120.3 $117.0 $56.1 $57.0

Third-party financing 

costs (millions)

n/a $69.4 $18.7d $24.3

Total project cost 

(millions)b $120.3 $204.9 $74.8 $85.4

Peak steam- generating 

capacity of combustion 

turbines 

320,000 pph 200,000 pph 124,000 pph 100,000 pph

Peak steam- generating 

capacity of new natural 

gas boilers

340,000 pph n/a 190,000 pph n/a

Provides power to the 

Capitol Power Plant

   

Provides power to 

Capitol Complex



Sells Excess Power to 

Electricity Grid

  

Long-term steam 

demand forecasts

 Used 2009 forecast 

Source: GAO analysis of Architect of the Capitol’s planning documents. | GAO-15-436.

a

Approximate construction costs are in nominal dollars.

Page 27 GAO-15-436 Capitol Power Plant Costs 
b

In nominal dollars, the sum of approximate construction costs, third-party financing costs over the life 

of the utility energy services contract (if applicable), and future AOC project management costs if 

applicable. Excludes funds AOC has obligated to date. These costs do not represent the projects’

expected life cycle costs.

c

Reflects two business case reviews AOC received in 2012 and a bid received in late 2013.

d

The draft July 2014 partial update did not include an estimate of expected financing costs, but AOC 

officials estimated financing costs would add approximately a third to the estimated construction cost.

AOC officials stated the cost estimates in the December 2014 draft plan 

reflected two independent cost estimates prepared by consultants and 

aligned with a bid received in November 2014 from the second vendor, a 

bid that was closer to the original project budget than the previous bid. 

AOC informed GAO in December 2014 that the agency desired to 

execute a contract with the vendor and proceed with construction of the 

cogeneration system—consisting of one 7.5 MW combustion turbine as 

described in its December 2014 draft plan. AOC officials said they 

continued to negotiate the scope of the project, a negotiation that resulted 

in, among other things, a reduction in the interest rate for financing the 

project.41 In March 2015, GAO received updated calculations from AOC 

reflecting these changes. As of March 2015, AOC had obligated about 

$16 million on design, preliminary site work, and management of the 

project.

AOC intends to procure the cogeneration system using a utility energy 

services contract (UESC)—an agreement, similar to ESPCs described 

previously, in which, in this case, a utility arranges financing to cover the 

upfront costs of an energy project that a federal agency then repays over 

the contract term from energy cost savings achieved by the project. 

Under the UESC, AOC would pay for financing costs, such as interest 

payments to the utility, in addition to repaying the initial capital costs of 

the cogeneration project (i.e., construction and other upfront costs) over 

the contract period (AOC used an analysis period of two years for 

construction and up to a 25-year contract period). According to our 

analysis of AOC’s updated data supporting its December 2014 draft plan, 

the agency would pay about $28 million more in nominal costs under the 

UESC than if the agency acquired the system using upfront appropriated 

funds: $16 million more in initial construction costs, due to additional 

41In its technical comments, AOC stated that the interest rate for the proposed utility 

energy services contract is subject to change until the contract is awarded and is a 

significant driver of the project’s expected costs.

AOC Officials Said 

Appropriations Would Not 

Likely Be Available and 

Intend to Finance the 

Cogeneration Project

Page 28 GAO-15-436 Capitol Power Plant Costs 

 
UESC vendor overhead costs, and $12 million more in financing costs 

over the life of the contract.42 Under a typical UESC, repayments to the 

utility reflect the estimated cost savings from the project’s energy 

efficiency measures. However, under a UESC like AOC has proposed 

where the utility guarantees performance and not savings, the utility does 

not guarantee that the project will generate sufficient savings to pay for 

itself over time.

Acquiring the system using an upfront appropriation would cost less than 

using a third party to finance the project over the proposed 27-year 

analysis period. However, AOC officials said that since upfront 

appropriations would likely not be available to procure the cogeneration 

system, they had decided to pursue the project using a UESC. Because 

AOC planned to conduct the project without upfront appropriated funds, 

AOC officials stated they had not assessed the proposed cogeneration 

project using the agency’s capital-planning prioritization process, by 

which the agency ranks proposed capital projects and recommends those 

projects scoring the highest for funding through annual appropriations. As 

a result, AOC did not analyze the project and its merits relative to other 

projects using the agency’s pre-determined criteria for capital planning. 

AOC officials stated that the aforementioned ESPC projects did not go 

through the agency’s capital planning prioritization process for the same 

reason.

AOC intends to use a UESC under an arrangement established by the 

General Services Administration (GSA) that could help facilitate the 

transaction but narrows the number of entities AOC can engage to 

complete the project.43 Through its UESC arrangement, GSA has 

established basic contract terms with select utility companies, and 

agencies using this arrangement contract with one of these providers. 

GSA has contracts with two providers in the Washington, D.C., area. 

42The additional $12 million in financing costs over the life of the proposed contract 

reflects the difference between the $24 million in financing costs that AOC will owe to the 

UESC vendor, in nominal dollars, and the federal government’s cost of funds, based on 

April 2015 Treasury note rate of about 2.3 percent. This does not reflect the impact of 

UESC financing on the project’s projected savings relative to a status quo alternative, 

which AOC estimated when analyzing life cycle costs—which we discuss below. 

43While 42 U.S.C. § 8256 provides executive branch agencies, but not legislative branch 

agencies such as AOC, the authority to enter into UESCs, under 40 U.S.C. § 113(d), GSA 

services are to be made available to AOC upon request.

Page 29 GAO-15-436 Capitol Power Plant Costs 

 
While the selection of a UESC vendor is limited to two vendors, AOC 

officials said that this will not preclude competition as the selected UESC 

vendor will obtain competitive bids from subcontractors for the 

construction of the cogeneration system.

Based on independent estimates and in alignment with the bid received in 

November 2014, AOC’s latest data show that a cogeneration system 

consisting of a 7.5 MW combustion turbine and funded by a UESC would 

have a total project cost of about $85 million. This includes about $57 

million in initial construction-related costs (including contingency funds), 

another $4 million in agency project management costs, and about $24 

million in financing costs.44

AOC’s data show the project’s life cycle costs as lower than other 

alternatives, such as a natural gas boiler procured using upfront 

appropriations. These data also show that the cogeneration system 

procured using a UESC, AOC’s intended course of action, would result in 

savings, when compared to a status quo option, of about $7.3 million over 

27 years (in today’s dollars) due to the savings achieved by producing its 

own electricity for the plant.45 AOC’s data show that the project would 

repay the UESC vendor in full for the capital and financing costs in 21 

years (after the completion of construction and once payments had 

begun). By comparison, AOC’s data show that a cogeneration system 

procured with upfront appropriations would achieve savings in today’s 

dollars of $21.4 million over the analysis period when compared to the 

status quo option. Further, AOC’s data show a natural gas boiler procured 

with upfront appropriations for $9.3 million would achieve savings of 

about $2.7 million over the analysis period when compared to the status 

quo option.

AOC’s calculations on life cycle costs did not reflect the nearly $16 million 

in funds already obligated for the project. AOC officials said they relied on 

the National Institute of Standards and Technology (NIST) handbook on 

life cycle costing for federal energy management programs. AOC officials 

noted the handbook instructs federal agencies to not include sunk costs 

44The total project cost excludes the nearly $16 million AOC has already obligated for the 

project.

45AOC’s analysis covers 27 years, which includes 2 years of construction and up to a 25-

year UESC contract period.

Page 30 GAO-15-436 Capitol Power Plant Costs 

 
when estimating a project’s life cycle costs.46 Our analysis of AOC’s data 

suggest that the agency could have procured a natural gas boiler 

providing the same amount of steam for less than the $16 million the 

agency has already obligated for the cogeneration project. AOC’s data 

show a cost of about $9.3 million for procuring such a boiler. AOC officials 

said they would have had to also obligate funds to prepare the plant for a 

new boiler, but they did not identify the amount of funds this would have 

required.

Key leading capital-planning practices and other federal guidance we 

identified state that agencies should, among other things, (1) update their 

plans in response to changes in their operating environment; (2) fully 

assess their needs and identify performance gaps; (3) assess a wide 

range of potential approaches—including non-capital approaches—for 

meeting those needs; (4) conduct valid sensitivity and uncertainty 

analyses to identify and quantify the riskiest cost drivers of proposed 

projects; and (5) engage independent experts when tackling complex 

issues.47 However, AOC’s planning that led the agency to pursue a 

cogeneration system did not follow these key leading practices.

Leading organizations generally revise their decision-making process in 

response to a perception of changing needs or a changing environment. 

However, AOC did not update its 2009 long-term energy plan until late 

2014, did so only partially, and has continued to use the 2009 plan to 

justify its decision to procure a cogeneration system. In the meantime, 

major changes have occurred in key assumptions affecting AOC’s plans, 

such as the price of natural gas and the complex’s demand for steam and 

chilled water. For example, in part due to increased supplies resulting 

from the boom in domestic shale gas extraction, prices for natural gas for 

commercial customers fell by about 20 percent between 2009 and 2012 

(when AOC formally proposed the cogeneration project). Furthermore, 

since publishing its 2009 long-term plan, AOC completed energy audits of 

its buildings and implemented several energy conservation measures in 

the complex and reduced the complex’s demand for steam and chilled 

water.

46NIST handbook 135. 

47GAO/AIMD-99-32, GAO-09-3SP, OMB Capital Programming Guide, and NIST 

handbook 135.

AOC Did Not Follow Key 

Leading Federal CapitalPlanning Practices

AOC Did Not Update Its Longterm Plan in Response to 

Changes in Key Assumptions

Page 31 GAO-15-436 Capitol Power Plant Costs 

 
Despite these changes, AOC officials stated they did not believe it was 

necessary to fully update its 2009 long-term plan to implement the 

cogeneration system, which they consider to be a single energy 

conservation measure that addresses a need to replace aging boilers. 

The officials stated they updated the factors that changed since 2009 that 

could affect the choice between cogeneration and a natural gas boiler. 

AOC officials also told us they recognized the importance of fully updating 

the agency’s long-term energy plan and stated they plan to do so later in 

fiscal year 2015 after they have made a decision on implementing the 

proposed cogeneration system. However, by not fully updating its 2009 

long-term plan, AOC has continued to pursue a cogeneration system 

without up-to-date information on a variety of factors, such as the 

changes in the natural gas markets and the realized impacts of AOC’s 

demand reduction efforts, that could change the relative merits of the full 

range of alternatives available to AOC for meeting its long-term needs.

Select operators of other district energy system we spoke with stated they 

regularly conduct planning efforts to identify the needs of their systems, 

and alternatives to address them. For example, one operator said that 

although it prepares a strategic plan every 5 years, the operator also 

updates demand forecasts and conducts other planning as part of its 

annual budgeting process.

AOC did not fully assess its long-term steam needs or identify the 

performance gap the cogeneration project would address. Leading 

practices and federal guidance, including the Office of Management and 

Budget’s (OMB’s) Supplement to OMB Circular A-11 and GAO’s Leading 

Practices in Capital Decision-Making, state that agencies should 

comprehensively assess what they need to meet their goals and 

objectives, identify any gaps between current and needed capabilities 

(i.e., performance gaps), and explain how a capital project helps the 

agency address those gaps and meet its goals. However, AOC’s 

December 2014 draft plan—which the agency has used to justify the 

current cogeneration project—has not comprehensively assessed the 

agency’s needs or identified potential performance gaps. Without fully 

assessing its needs, the agency risks committing to a project that does 

not fully meet its long-term needs and thereby does not provide the 

agency with the most efficient use of its funds.

AOC Did Not Fully Assess 

Needs or Describe a 

Performance Gap It Intends to 

Address with Cogeneration

Page 32 GAO-15-436 Capitol Power Plant Costs 
Specifically, AOC’s December 2014 draft plan did not forecast the future 

demand for CPP’s heating and cooling services and instead assumed 

2013 levels of demand would continue over the 27-year contract for the 

cogeneration system.48 The agency’s 2009 long-term plan included longterm forecasts of steam and chilled water demand showing that future 

demand for steam would exceed current capabilities. However, the 

forecast for the 2009 long-term plan is outdated as it does not reflect the 

realized effects of AOC’s demand management efforts. AOC included 

long-term forecasts of steam and chilled water demand in its draft July 

2014 partial update, but AOC did not finalize it. In addition, the demand 

forecasts in the 2009 long-term plan and its draft July 2014 partial update 

may have overstated future needs as they did not fully consider the 

impact of AOC’s completed and ongoing energy conservation measures 

and only included factors that would increase overall demand for steam.

AOC’s 2009 long-term plan and draft July 2014 partial update assumed 

demand for steam and chilled water would increase due to future building 

renovations that would either increase the amount of building space 

served by CPP or increase the amount of outside air it heats or cools and 

circulates through buildings. In the 2009 long-term plan, AOC assumed 

energy reduction efforts would offset these increases. As described 

above, AOC’s chilled water use has fallen since that time and its steam 

use has fluctuated. The draft July 2014 partial update specifically states 

that it did not consider reductions in energy use.

The absence of steam demand forecasts in the December 2014 draft plan 

(1) disregards prior forecasts that are either outdated or were not 

finalized, (2) ignores the possibility of future changes in demand, and (3) 

raises questions about the purpose and sizing of the proposed 

cogeneration system and how it will meet future needs. In explaining why 

it did not forecast long-term demand for the CPP’s services, AOC officials 

said new steam-generating capacity was needed—regardless of potential 

changes in the long-term demand for steam—to decrease the plant’s 

reliance on two of its older boilers at the end of their service life. AOC’s 

December 2014 draft plan stated that doing so would thereby allow AOC 

to avoid the increased maintenance costs associated with operating the 

48AOC officials stated, per the analysis supporting its December 2014 draft plan, that the 

cogeneration system will achieve net savings sufficient to pay off the principal and 

financing costs of the UESC contract 21 years after construction is completed—four years 

prior to expiration of the 27-year contract.

Page 33 GAO-15-436 Capitol Power Plant Costs 

 
boilers infrequently. AOC officials stated that the December 2014 draft 

plan was intended to compare installing one natural gas boiler with 

installing one cogeneration system and re-validate the 2009 long-term 

plan’s recommendation, rather than re‐evaluate all long‐term technical 

options for meeting steam demand—thereby making it inappropriate to 

include a long-term forecast of demand. Furthermore, the AOC officials 

stated that expected future demand that reflects reductions due to AOC’s 

conservation measures would not reduce demand to anywhere near the 

point where a boiler replacement is not needed. However, AOC’s 

December 2014 draft plan that it is using to justify the need and scope of 

the cogeneration project does not include any such forecasts to support 

these statements.

AOC officials stated the two coal boilers needing replacement are nearly 

60 years old and are showing signs of wear.49 The officials stated the 

boilers still operate but are unreliable and suffer frequent breakdowns 

requiring emergency repairs. However, AOC has not provided documents 

that support these statements. AOC estimated that renovating the boilers, 

including the addition of currently lacking air-pollution controls, could cost 

up to $10 million per boiler. However, reports on the condition of the 

boilers provided by AOC, as well as the agency’s aforementioned 

planning documents, did not estimate the expected remaining life of the 

boilers—thereby not assessing whether a performance gap exists and 

making it unclear how the cogeneration system will meet any long-term 

needs.

Furthermore, AOC’s December 2014 draft plan did not make clear to 

what extent the proposed system would help AOC avoid the increased 

maintenance costs associated with continued operation and maintenance 

of the two older boilers which can operate on coal. AOC officials said in 

February 2015 that once it had installed the cogeneration system, CPP 

would keep at least one of the two boilers in reserve to meet peak steam 

demand. The officials added that the cogeneration system would allow 

49AOC officials said the signs of wear include bag house corrosion, antique control 

systems, boiler tube leaks, flame scanner failures, ductwork leaks, and coal scale failures.

Page 34 GAO-15-436 Capitol Power Plant Costs 

 
CPP to operate these older boilers on natural gas instead of coal.50

However, later in its technical comments, AOC noted that CPP would 

maintain only one of the older boilers for occasional use

(decommissioning the other once the cogeneration system is 

operational). Therefore, AOC will continue to incur maintenance costs 

associated with continued use of at least one of the two older boilers.

AOC’s December 2014 draft plan stated the proposed cogeneration 

system would enhance the agency’s ability to meet its environmental 

objectives but stated the system is not needed to meet current EPA 

emissions standards for hazardous air pollutants.51 The plan stated CPP 

can meet promulgated rules limiting emissions of hazardous air pollutants 

(HAP) from industrial, commercial, and institutional boilers without 

installing the cogeneration system.52

Although the cogeneration system would likely increase emissions of 

certain air pollutants from CPP due to the increased use of natural gas, 

AOC’s draft plan estimated the system would result in lower regional 

emissions overall. The electricity generated by the cogeneration system 

using natural gas would result in relatively fewer emissions than the 

equivalent amount of electricity purchased from the local utility, which 

delivers electricity produced predominantly from coal. The December 

2014 draft plan states a cogeneration system would result in 14 fewer 

metric tons of regional HAPs annually, or 18 percent less than a new 

natural gas boiler providing the same amount of steam. AOC’s draft plan 

estimates that the cogeneration system will result in lower regional 

greenhouse gas emissions, although federal regulations for limiting such 

emissions have not yet taken effect. AOC’s December 2014 draft plan 

50The proposed cogeneration system could provide a maximum steam-generating 

capacity of 100,000 pounds per hour, which is equivalent to the combined maximum 

steam-generating capacity of the two older boilers—when operating on natural gas—AOC 

intends to replace. Currently, CPP cannot meet peak demand when operating the two 

boilers on natural gas, thereby requiring AOC to occasionally operate the two boilers using 

coal—which increases the output of the boilers—to provide the extra needed steam.

51In its technical comments, AOC stated continued significant investments in the older 

boilers could trigger additional emissions requirements that would necessitate installing 

costly emissions controls.

52Hazardous air pollutants, also known as toxic air pollutants, are those pollutants that are 

known or suspected to cause cancer or other serious health effects, such as reproductive 

effects or birth defects, or adverse environmental effects.

Page 35 GAO-15-436 Capitol Power Plant Costs 

 
stated a cogeneration system would result in about 15,000 fewer metric 

tons of regional carbon dioxide emissions per year—7 percent less than a 

new natural gas-powered boiler, an amount that AOC stated is the 

equivalent of removing nearly 3,200 vehicles from local roadways each 

year.

Furthermore, the December 2014 draft plan stated meeting the agency’s 

energy reduction goals did not depend on the cogeneration project. In the 

plan, AOC stated that “due in large part to the results achieved through 

the ESPCs and other energy reduction activities, AOC will not require 

cogeneration to meet the EISA or EPAct requirements at this time.”53

However, AOC officials said that if Congress renews EISA or EPAct and 

additional annual energy reduction goals are set for federal agencies, 

cogeneration may again become key in future AOC energy reduction 

efforts.

AOC’s plans have only considered capital options for meeting its heating 

needs, and its December 2014 draft plan did not evaluate a range of 

alternatives. Federal leading planning practices state that capital plans 

should consider a wide range of alternatives for meeting agency needs, 

including non-capital alternatives, and evaluate them based on 

established criteria. GAO’s Executive Guide: Leading Practices in Capital 

Decision-Making states that managers and decision-makers in successful 

organizations consider alternatives to investing in new capital projects. 

Without considering a wide range of options, including non-capital 

options, AOC may choose a more expensive alternative for meeting its 

needs.

Specifically, AOC’s 2009 plan broadly considered capital alternatives for 

meeting long-term demand for steam, such as nuclear or geothermal 

power generation, but did not assess non-capital alternatives for meeting 

the agency’s objectives, such as implementing operational changes or 

conservation measures to decrease consumption in the buildings served 

by CPP. GAO’s capital decision-making guide calls for managers to 

consider non-capital approaches among the alternatives for meeting an 

agency need, but AOC’s plan did not explicitly examine such options. As 

53Energy Independence and Security Act of 2007 (EISA); Energy Policy Act of 2005 

(EPAct).

AOC Did Not Identify and 

Evaluate a Range of 

Alternatives for Meeting 

Heating Needs

Page 36 GAO-15-436 Capitol Power Plant Costs 

 
a result, AOC may not have identified the most cost-effective means to 

heat and cool the complex.

As we noted earlier, AOC’s 2014 planning documents assessed a 

narrower range of capital alternatives—adding a cogeneration system or 

new natural-gas powered boilers—to meet the demand for steam. AOC’s 

2014 plans also envision smaller cogeneration systems that represent a 

significantly reduced scope from the 2009 plan, which recommended the 

installation of three turbines in phases to provide power to the entire 

complex. For example, the December 2014 draft plan recommends a 

single turbine system that provides electricity to CPP and not the complex

The 2014 plans also did not fully take into account AOC’s efforts to 

reduce the demand for steam through conservation measures in the 

buildings served by CPP–which may include operational changes or 

smaller capital investments–on future steam demand. As described 

above, AOC has installed some conservation measures in the Capitol and 

House and Senate office buildings and has identified many additional 

measures that it could implement in the future. The July 2014 plan 

ignores energy savings from these measures, while the December plan 

used demand data from 2013 without adjustments for measures 

implemented since then or in the future.

AOC officials stated its latest plan was not meant to fully update the 2009 

plan and thereby assess a broad range of alternatives for meeting the 

agency’s needs. AOC officials stated that the 2014 plan was for replacing 

current equipment and is consistent with implementing the first phase of 

the 2009 plan. AOC officials stated they did not believe it was necessary 

to fully update the 2009 plan to implement a single energy conservation 

measure that replaces aging boilers—the cogeneration system. AOC 

officials added that they intend in fiscal year 2015 to fully update the 2009 

long-term plan, after the agency has made a decision on implementing 

the proposed cogeneration project.

By only considering a narrow range of alternatives, not accounting for the 

agency’s ongoing efforts to reduce its steam demand, or fully updating 

the long-term plan before undertaking a costly and risky project, AOC 

may be selecting a capital alternative that is not scaled to meet the 

agency’s long-term needs and therefore could cost more than necessary.

Page 37 GAO-15-436 Capitol Power Plant Costs 
AOC did not perform valid sensitivity or uncertainty analyses when 

assessing the cogeneration system and available alternatives for meeting 

the agency’s long-term demand for steam. The GAO Cost Estimating 

Guide calls for agencies, when considering capital projects, to conduct 

both sensitivity and uncertainty analyses to identify and quantify the cost 

drivers that pose the most risk of increasing project costs beyond 

expectations. Sensitivity analysis shows how changes in a key 

assumption affect the expected cost of a program or project, while holding 

all other assumptions constant. Uncertainty analysis captures the 

cumulative effect of various risks on the expected cost of a project by 

changing many assumptions at the same time. Such information can 

inform managers about whether their preferred choice remains superior 

among a group of alternatives.

In the case of the proposed cogeneration project, the absence of valid 

sensitivity and uncertainty analyses makes it unclear whether the project 

will generate sufficient savings to cover its costs under a range of future 

conditions—raising questions on whether the project is more costeffective than other alternatives. Furthermore, should AOC’s projections 

about the project’s expected savings prove inaccurate, Congress would 

likely need to appropriate more funds to cover a portion of AOC’s costs to 

own and operate the system—including the financing costs to be paid to 

the UESC vendor.

Specifically, in its December 2014 draft plan, AOC did not vary a key cost 

driver when it performed a sensitivity analysis on the expected life cycle 

costs of the alternatives it considered. When conducting sensitivity 

analyses, the Cost Estimating Guide calls for agencies to vary the key 

cost drivers of a project’s life cycle costs, particularly those that are most 

likely to change over time. The expected life cycle costs of operating 

either a cogeneration system or a natural gas boiler depends, in part, on 

the demand for heating and cooling over time. However, as noted above, 

AOC did not vary demand for heating and cooling in its December 2014 

draft plan and instead assumed 2013 levels throughout the forecast 

period.

The Cost Estimating Guide also states that valid sensitivity analyses vary 

assumptions about key cost drivers in ways that are well-documented, 

traceable, and based on historical data or another valid basis. However, 

neither AOC nor a laboratory it engaged presented rationales for their 

variations of forecasted natural gas and electricity prices from the 

expected case. In its December 2014 draft plan, AOC varied its 

AOC Did Not Perform Valid 

Sensitivity or Uncertainty 

Analyses

Page 38 GAO-15-436 Capitol Power Plant Costs 
assumptions by applying a subjective 25 percent change over the 27-year 

forecast period. The plan provided no rationale for using 25 percent.

In a separate analysis accompanying the December 2014 draft plan, a

Department of Energy (DOE) laboratory engaged by AOC presented 

results of a sensitivity analysis assessing the impact of varying natural 

gas and electricity prices that varied their initial values.54 The analysis

varied the starting values of both natural gas and electricity prices in a 

range based on the author’s professional judgment rather than empirical 

evidence. Furthermore, the analysis did not assess the impact of varying 

natural gas and electricity prices on the alternatives AOC considered. The 

Cost Estimating Guide states sensitivity analyses should test the 

sensitivity of the ranking of considered alternatives to changes in key 

assumptions. However, the analysis did not assess the potential impact of 

varying natural gas and electricity prices on the other considered 

alternative in AOC’s analysis—a natural gas boiler. AOC officials stated 

the laboratory is an acknowledged expert charged with administration of 

the federal government’s energy management program.

Furthermore, in its December 2014 draft plan AOC relied on DOE 

forecasts of natural gas and electricity prices in its expected case, but 

AOC did not use DOE forecasts in its sensitivity analysis. Instead, the 

agency chose to vary the prices by 25 percent as discussed above. Using 

AOC’s 25 percent adjustment, instead of available DOE forecasts, to vary 

future natural gas and electricity prices raises questions about whether 

the project remains superior to other options under a range of possible 

outcomes.

Specifically, in the Energy Information Agency’s Annual Energy Outlook 

2014, DOE created numerous forecasts of natural gas and electricity 

prices to represent a range of possible future scenarios.55 When using 

several of these DOE forecasts, we found the expected savings of the 

proposed cogeneration project, when compared to other alternatives, 

changed significantly. Specifically, in AOC’s expected case the project 

54AOC engaged the Department of Energy’s National Renewable Energy Laboratory 

(NREL) to perform a third-party review of AOC’s analysis, which included the sensitivity 

analysis discussed above. 

55Department of Energy, U.S. Energy Information Administration, Annual Energy Outlook 

2014 (Washington, D.C.: May 7, 2014).

Page 39 GAO-15-436 Capitol Power Plant Costs 

 
financed using a UESC saves about $4.6 million more over the 27-year 

period than a boiler acquired with upfront appropriations.56 Using a DOE 

scenario where natural gas is more plentiful and prices are lower than in 

the expected case, however, the cogeneration project becomes less 

advantageous—saving $1.9 million more than a boiler. Conversely, using 

a DOE forecast where natural gas is relatively less available and prices 

are higher over time, the savings of the cogeneration project increases 

slightly to $5.0 million more than a boiler.

In addition to a sensitivity analysis, the Cost Estimating Guide calls for 

agencies to perform an uncertainty analysis to capture the cumulative 

effect of various risks on the expected cost of a project. In an uncertainty 

analysis, project costs should involve a range of possible costs based on 

a specified probability, known as a confidence interval. Unlike sensitivity 

analysis, an uncertainty analysis looks at the effects of changing many 

assumptions at the same time. This involves, among other things, 

identifying key project cost drivers, modeling various types of uncertainty 

associated with the cost drivers, and using a simulation method, known 

as a Monte Carlo analysis.57

AOC performed an uncertainty analysis on the expected initial 

construction cost of the project, but did not perform a similar analysis for 

the life cycle costs of the options it considered. AOC developed an 

uncertainty analysis on the cogeneration project’s initial construction cost 

using a Monte Carlo simulation, and agency officials stated this helped 

them assess the risks that could cause the initial cost of constructing the 

cogeneration system to exceed the expected level. AOC officials also 

stated the analysis allowed them to calculate a confidence interval around 

the expected initial construction cost and therefore budget an appropriate 

amount of contingency funds. However, AOC did not present its 

estimates of the project’s savings, derived from its life cycle cost analysis, 

as a range of possible costs based on a specified probability. Instead, 

AOC presented a point estimate of the project’s life cycle cost without a 

confidence interval quantifying the degree of uncertainty.

56To calculate savings, AOC compared the life cycle costs of considered alternatives with 

a status quo scenario, discounted to today’s dollars using net present value. 

57Monte Carlo analysis is a commonly used simulation method.

Page 40 GAO-15-436 Capitol Power Plant Costs 

 
AOC officials said they did not believe an uncertainty analysis was 

required, based on their understanding of NIST’s handbook on life cycle 

costs that states uncertainty assessment is more complex and time 

consuming than sensitivity analysis and therefore the decision for doing 

so depends on an agency’s judgement of a variety factors, including the 

relative size of the project, availability of data, and availability of 

resources such as time, money, and expertise. However, the estimated 

life cycle cost of the project is determined, in part, on the forecasted 

prices for key inputs like natural gas and electricity that have historically 

been highly variable. Without a credible uncertainty analysis, AOC has 

not presented information on which cost drivers pose the most risk to the 

project’s life cycle cost.

In addition to the capital planning guidance we cite above, our prior work 

recommends that federal agencies use independent panels of experts for 

conducting comprehensive, objective reviews of complex issues, such as 

those facing AOC.58 As mentioned above, AOC engaged the National 

Academies’ National Research Council (NRC) to review a draft of its 2009 

long-term energy plan and the final version of the 2009 plan stated that it 

addressed NRC’s recommendations. However, unlike its 2009 plan, AOC 

has not engaged an independent panel like the NRC to review the 

subsequent iterations of its planning. AOC officials stated that they did not 

find it necessary to fully update its long-term plan before executing the 

contract for the cogeneration system, which the officials stated is a single 

energy conservation measure intended to replace aging boilers. However, 

the cogeneration system is relatively complex when compared to 

available alternatives such as boiler replacement and AOC has obligated 

about $16 million in design, preliminary site work, and management for 

the project—an amount that AOC’s data suggests could have procured a 

new natural gas boiler providing the same amount of steam. Using an 

independent panel to review AOC’s planning could have provided more 

assurance that AOC was positioning itself to cost-effectively meet its 

long-term energy needs.

58GAO, Aviation Security: Efforts to Validate TSA’s Passenger Screening Behavior 

Detection Program Underway, but Opportunities Exist to Strengthen Validation and 

Address Operational Challenges, GAO-10-763 (Washington, D.C.: May 20, 2010).

AOC Did Not Use an 

Independent Panel to Review a 

Full Update of a Long-term 

Energy Plan

Page 41 GAO-15-436 Capitol Power Plant Costs 

 
Since issuing its long-term energy plan in 2009, AOC has pursued an 

iterative planning approach without fully updating the long-term plan or 

following key leading practices. AOC officials said they were generally 

unaware of the applicability of the leading practices we cited. AOC 

officials said they instead relied on other sources of federal guidance, 

such as NIST’s handbook on determining the life cycle costs of energy 

conservation projects or DOE’s guidance for using UESCs to finance 

such projects, an approach that led them to believe that it was 

unnecessary to fully update the long-term energy plan before executing a 

contract for the cogeneration project since its intent is to replace aging 

boilers.59 However, the guidance AOC cited generally applies after an 

agency has conducted a needs assessment and conducted a capitalplanning process using GAO, OMB, and other relevant guidance cited 

above. Thus, the guidance AOC officials said they followed does not 

substitute for first completing an up-to-date capital plan. Without following 

key leading capital practices, AOC’s planning could commit the agency to 

a project that does not fully and cost-effectively meet its needs—thereby 

not providing taxpayers or Congress with the most efficient use of funds 

in a time when the federal government faces significant financial 

challenges.

In August 2014, we discussed with AOC shortcomings in its planning for 

the cogeneration project relative to leading practices and referred the 

agency to documents outlining these practices. AOC officials then 

provided the aforementioned set of planning documents in December 

2014 that the agency stated were intended to address our concerns.60

AOC officials also provided several reasons why they needed to continue 

planning the project and quickly execute a contract. These included (1) 

that certain existing boilers were near the end of their useful life and that 

AOC might face challenges meeting demand for steam in the near future, 

and (2) that AOC needed to start construction soon or the Washington, 

D.C. government would retract the project’s construction and air quality 

permits.

59NIST handbook 135; Office of Energy Efficiency and Renewable Energy, U.S. 

Department of Energy, Utility Energy Services Contracts: Enabling Documents

(Washington, D.C.: June 2013).

60The documents included AOC’s Project Summary, an analysis by NREL, a consultant’s 

independent cost estimate for construction costs, and a consultant’s risk and uncertainty 

analysis on construction costs.

AOC Was Unaware of 

Relevant Leading Practices 

and Did Not Support Claims on 

the Need to Quickly Execute 

Cogeneration Contract

Page 42 GAO-15-436 Capitol Power Plant Costs 

 
Our review did not identify valid support for these claims. Reports on the 

condition of the boilers provided by AOC did not identify the remaining 

useful life of the two boilers in question. Additionally, AOC did not provide 

documents supporting its statement that the permits for the project were 

at risk; AOC officials told us they believed the planning steps the agency 

had taken would be sufficient to keep the permits in effect.

AOC has implemented many measures to manage the costs of heating 

and cooling the Capitol Complex and has achieved measurable results. 

The agency has additional opportunities to manage these costs through 

conservation. AOC and its contractors have identified hundreds of 

additional energy conservation measures, and the agency intends to act 

on some of them when resources become available.

Related to this, AOC’s planning to evaluate the relative merits of the 

currently proposed cogeneration project has not followed key leading 

practices identified in OMB, GAO, and other relevant capital-planning 

guidance. These include not (1) fully updating the agency’s 2009 longterm energy plan to reflect changes in energy costs and demand that 

occurred since the plan was issued; (2) fully assessing long-term energy 

needs or the performance gap the project would address in light of 

changes in key variables that could affect its relative merits; (3) identifying 

a full range of alternatives for meeting future needs, including non-capital 

or conservation measures; (4) conducting valid sensitivity or uncertainty 

analyses; or (5) engaging an independent panel of experts to review 

AOC’s updates of its long-term plan. AOC officials said they were 

unaware of some of these leading practices and therefore did not follow 

them. AOC’s planning was insufficient for us to discern whether the 

cogeneration project would generate enough savings to cover its costs or 

prove more cost-effective than other options for meeting the agency’s 

needs. Thus, without addressing the shortcomings listed above, AOC’s 

planning does not provide confidence that the proposed project will 

decrease the need for future energy-related appropriations.

GAO is making two recommendations to the Architect of the Capitol.

We recommend that the Architect of the Capitol, prior to undertaking 

future major capital projects related to its energy needs, fully update its 

long-term energy plan while following key leading capital-planning 

practices. As part of this effort, the agency should:

Conclusions

Recommendations for 

Agency Action

Page 43 GAO-15-436 Capitol Power Plant Costs 
• fully assess the complex’s long-term needs and identify any 

performance gaps, while taking into account the effects of possible 

changes in demand—including the impacts of ongoing and planned 

energy conservation measures and other factors that could affect the 

demand for CPP’s services;

• identify and evaluate a range of alternatives for how to best meet the 

agency’s needs, including non-capital options and energy 

conservation measures that could reduce the demand for CPP’s 

services; and

• identify key assumptions and risks of the alternatives considered and 

perform valid sensitivity and uncertainty analyses to determine which 

alternatives could prove the most cost-effective under a range of 

potential future conditions.

As AOC updates its long-term energy plan, the Architect should seek a 

review of the plan by an independent panel of experts to ensure it follows 

key leading practices and provide the results of the review to Congress.

We provided a draft of this report to the AOC for review and comment. In 

its written comments, included as appendix II, the Architect disagreed 

with our findings, conclusions, and recommendations. However, AOC 

also said that the agency has effectively implemented our 

recommendations in a “manner sufficient to move forward with the 

planned cogeneration project.” As we discuss below, AOC provided two 

new reports focusing on the need to replace its oldest boilers and 

potential risks and costs associated with the proposed cogeneration 

project. We did not review these reports because AOC did not provide 

them or make us aware of them until after we had completed our work. 

We plan to review these studies in the future and discuss them with 

Congress. While these reports may expand on the justification for the 

cogeneration project, we continue to believe that AOC should first update 

its overall long-term strategic energy plan and evaluate a full range of 

alternatives for best meeting its needs prior to undertaking major energy 

projects in the future. We also acknowledge that AOC may need to 

replace certain steam-generating equipment, in part or in whole, at some 

point in the future. AOC also provided technical comments, which we 

addressed as appropriate in the report.

In its written comments, AOC stated that contrary to our 

recommendations and assertions in the draft report, AOC adhered to key 

Agency Comments 

and Our Evaluation

Page 44 GAO-15-436 Capitol Power Plant Costs 
leading capital-planning practices based on its 2009 long-term energy 

plan, 2014 revalidation efforts, and additional documentation. AOC’s 

written comments contradict statements by AOC officials in April 2015 

that they were not aware of the key leading capital-planning practices 

cited in our draft report. At that time, these officials said that AOC instead 

followed NIST guidance on performing life-cycle cost analyses for energy 

conservation projects and DOE guidance for financing energy projects 

using non-appropriated funds. Furthermore, the agency did not provide 

evidence that contradicted our finding about it not adhering to these 

practices during our review. We therefore maintain that we reached the 

correct conclusion about AOC’s adherence to key leading capitalplanning practices. 

As part of our first recommendation, we said that AOC should fully assess 

the complex’s long-term needs and identify any performance gaps. As 

part of its written comments, AOC provided additional documentation that 

the agency said fully explains how the agency has already assessed 

these needs through preparing a justification for replacing the complex’s 

aging boilers. The documentation expands on its efforts to support the 

proposed cogeneration project, including a report on the condition of two 

of its oldest boilers and an updated sensitivity analysis comparing the 

long-term benefits of installing new boilers or a cogeneration system. We 

did not assess the validity of these documents because AOC did not 

provide them or make us aware of them until after we had sent the draft 

report for comment. Moreover, AOC did not use this information as part of 

the basis for selecting the current planned cogeneration project. We 

maintain that AOC should conduct such an analysis prior to making a 

decision about energy projects, rather than as part of efforts to validate 

decisions made in 2009 and 2014. 

Another part of our first recommendation said that AOC should identify 

and evaluate a range of alternatives for how to best meet the agency’s 

needs, and identify key assumptions and risks of the alternatives. 

Regarding identifying and evaluating a range of alternatives, including 

non-capital options and energy conservation measures, AOC said that it 

did so in 2009 and selected cogeneration to replace the aging boilers. 

AOC added that it updated key assumptions used in the 2009 plan in 

2014 and further evaluated the two technically feasible options—natural 

gas boilers and cogeneration—in extensive detail, which AOC stated 

validated that cogeneration remained the best option. We agree that the 

2009 long-term energy plan broadly considered a range of alternatives for 

meeting the agency’s long-term energy needs, but the analysis conducted 

in 2014 focused solely on two options. From 2009 to the present, many 

Page 45 GAO-15-436 Capitol Power Plant Costs 
factors have changed that could potentially lead AOC to reach a different, 

more cost-effective solution to meet any future performance gaps. For 

example, the costs of fuels, electricity, and labor have changed since 

2009. In addition, the demand for AOC’s services has changed as the 

agency has pursued conservation and other energy-saving efforts. We 

therefore continue to believe that AOC should fully update its long-term 

energy plan, taking into account changes in key variables and the full 

range of options for how best to meet the agency’s needs, including noncapital options and energy conservation measures. 

The last part of our first recommendation said that AOC should identify 

key assumptions and risks and perform valid sensitivity and uncertainty 

analyses to identify cost-effective alternatives under a range of future 

scenarios. In its written comments, AOC said that it identified key 

assumptions and risks and subsequently performed valid sensitivity and 

uncertainty analyses. The Department of Energy’s National Renewable 

Energy Laboratory (NREL), as a third-party reviewer of the cogeneration 

validation effort, conducted a deterministic sensitivity analysis of the 

cogeneration project’s life-cycle cost, and AOC performed its own 

sensitivity analysis in its December 2014 draft plan. Our report identified 

shortcomings of these analyses, raising questions about their usefulness 

in identifying a cost-effective alternative. AOC also used a different third 

party to perform a probabilistic risk assessment of the project’s 

construction cost, which we acknowledged in our report. In addition, AOC 

said the agency also used another third party to complete an additional 

probabilistic risk assessment of the project’s life-cycle cost in May 2015. 

We did not assess the validity of this analysis because AOC did not 

provide it to us until after we had sent the draft report for comment. While 

AOC has conducted some sensitivity and uncertainty analyses, it did so 

to support a decision made in 2009, rather than to evaluate alternatives in 

the context of a full update of its long-term energy plan. We, therefore, 

continue to believe that AOC should fully update its long-term energy plan 

and follow leading practices for analyzing alternatives in that context. 

Our second recommendation states that, as AOC updates its long-term 

energy plan, the Architect should seek an independent review of the plan 

by an expert panel to ensure it follows key leading practices and provide 

the results of the review to Congress. In its written comments, AOC 

stated that it had engaged an outside entity to review AOC’s 2014 effort 

to validate its choice to pursue a cogeneration project. However, a review 

of a partial update to a 2009 plan does not address our recommendation 

that AOC fully update its long-term energy plan and then seek outside 

review by an independent panel of experts, as it did in 2009.

Page 46 GAO-15-436 Capitol Power Plant Costs 
AOC’s written comments included additional details about its 

disagreement with our findings, conclusions, and recommendations, 

which we address in appendix II. 

We are sending copies of this report to the appropriate congressional 

committees, the Architect of the Capitol, and other interested parties. In 

addition, the report is available at no charge on the GAO website at 

http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

Frank Rusco at (202) 512-3841 or ruscof@gao.gov or Lori Rectanus at 

(202) 512-2834 or rectanusl@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made key contributors to this report are 

listed in appendix III.

Frank Rusco

Director, Natural Resources and Environment

Lori Rectanus

Director, Physical Infrastructure

Page 47 GAO-15-436 Capitol Power Plant Costs 
List of Committees

The Honorable Thad Cochran

Chairman

The Honorable Barbara A. Mikulski

Vice Chairwoman

Committee on Appropriations

United States Senate

The Honorable Shelley Moore Capito

Chairman

The Honorable Brian Schatz

Ranking Member

Subcommittee on the Legislative Branch

Committee on Appropriations

United States Senate

The Honorable Harold Rogers

Chairman

The Honorable Nita M. Lowey

Ranking Member

Committee on Appropriations

House of Representatives

The Honorable Tom Graves

Chairman

The Honorable Debbie Wasserman Schultz

Ranking Member

Subcommittee on the Legislative Branch

Committee on Appropriations

House of Representatives

Page 48 GAO-15-436 Capitol Power Plant Costs 
Appendix I: Objectives, Scope, and 

Methodology

Our work for this report focused on the Architect of the Capitol’s (AOC) 

Capitol Power Plant (CPP) and actions taken by AOC to manage the 

costs of providing heating and cooling services to the complex. In 

particular, this report examines: (1) measures AOC implemented since 

GAO’s 2008 report to manage the energy-related costs of the buildings 

served by CPP and opportunities, if any, to further manage these costs, 

and (2) how AOC decided to procure a cogeneration system and the 

extent to which AOC followed leading capital-planning practices.

To identify measures AOC has implemented since 2008 to manage 

energy-related costs, we examined AOC and CPP appropriations, 

obligations, and expenditures data from 2009 to 2013 to identify the costs 

incurred by AOC related to production, distribution, and consumption of 

heating, cooling, and electricity by the complex. We assessed the 

reliability of these data—for example, by reviewing related documentation 

and interviewing knowledgeable AOC budget and finance officials—and 

found them sufficiently reliable for our reporting purposes. We also 

reviewed relevant AOC reports and documents, and interviewed AOC 

and CPP officials.

To identify measures AOC could potentially implement to further manage 

its energy-related costs, we reviewed AOC reports and other documents, 

such as energy audits of CPP’s steam and chilled water systems. We 

assessed the reliability of the data in these audits by reviewing related 

documentation and interviewing knowledgeable AOC officials and found 

these data sufficiently reliable for our reporting purposes. We also 

interviewed eight operators of other district energy systems to learn about 

measures they have implemented to manage costs, as well as the 

benefits and costs associated with those measures. We identified these 

operators based on, among other things, our preliminary research; 

interviews with CPP staff and managers of other district energy systems; 

we selected the operators based on similarities to the CPP, such as 

whether the operators were located in climates similar to Washington, 

D.C. We selected eight operators: five in the Washington, D.C., area and 

three in the Boston, Massachusetts, area. Four of the operators are public 

entities and the remaining four are private, two of which are private 

universities (see table 7). The information collected during these 

interviews cannot be generalized to all district heating or cooling systems.

Appendix I: Objectives, Scope, and 

Methodology

Page 49 GAO-15-436 Capitol Power Plant Costs 
Appendix I: Objectives, Scope, and 

Methodology

Table 7: District Energy Systems GAO Interviewed

Geographic area District energy system Type of entity

Boston, MA Hanscom Air Force Base Public

Boston, MA Harvard University Private (University)

Boston, MA Veolia Energy Private

Washington, DC American University Private (University)

Washington, DC U.S. Department of Defense—Pentagon Public

Washington, DC U.S. Food and Drug Administration—White Oak Public

Washington, DC U.S. General Services Administration—Central Heating and Refrigeration Plant Public

Washington, DC (Baltimore) Veolia Energy Private

Source: GAO. | GAO-15-436

To review AOC’s planning effort to further manage its energy-related 

costs, we reviewed AOC’s planning documents and recent updates, 

including (1) AOC’s 2009 Strategic Long-Term Energy Plan, (2) AOC’s 

draft Strategic Long-Term Energy Plan released in the summer of 2014, 

and (3) AOC’s draft Cogeneration at Capitol Power Plant Project 

Summary and accompanying consultant reports issued in December 

2014. We identified four sources of federal guidance on capital planning 

and alternatives analysis and compared the guidance in those documents 

to AOC’s planning documents.61 We also interviewed AOC officials to 

discuss the agency’s planning documents and efforts.

We conducted our work from December 2013 to September 2015 in 

accordance with all sections of GAO’s Quality Assurance Framework that 

are relevant to our objectives. The framework requires that we plan and 

perform the engagement to obtain sufficient and appropriate evidence to 

meet our stated objectives and to discuss any limitations in our work. We 

believe the information and data obtained, and the analysis conducted, 

provide a reasonable basis for any findings and conclusions in this 

product.

61GAO, GAO Cost Estimating and Assessment Guide, GAO-09-3SP (Washington, D.C.: 

Mar. 2, 2009); GAO, Executive Guide: Leading Practices in Capital Decision-Making, 

GAO/AIMD-99-32 (Washington, D.C.: Dec. 1, 1998); Office of Management and Budget 

(OMB), Capital Programming Guide, Supplement to OMB Circular A-11: Planning, 

Budgeting, and Acquisition of Capital Assets (Washington, D.C.: July 2013); and National 

Institute of Standards and Technology, Life-Cycle Costing Manual for the Federal Energy 

Management Program, NIST Handbook 135 (Washington, D.C.: February 1996).

Page 50 GAO-15-436 Capitol Power Plant Costs 

 
Appendix II: Comments from the Architect of Appendix II: Comments from the Capitol the Architect of 

the Capitol

Page 51 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

Page 52 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

Page 53 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

See comment 1

Page 54 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

See comment 2

Page 55 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

See comment 3

Page 56 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

Page 57 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

See comment 4

See comment 5

See comment 6

Page 58 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

Page 59 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

See comment 7

See comment 8

Page 60 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

See comment 9

See comment 10

See comment 11

Page 61 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

See comment 12

Page 62 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

See comment 13

See comment 14

Page 63 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

See comment 15

Page 64 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

See comment 16

See comment 17

See comment 18

Page 65 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

See comment 19

See comment 20

Page 66 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

Page 67 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

Comments from GAO

Comment 1: We agree that CPP has equipment that may need replacement, in part 

or in whole, at some point in the future. However, AOC has not provided information 

on the likelihood of any such failures. After we provided our draft report to AOC for 

comment, the agency provided a new report on justifying the replacement of some of 

its older boilers, dated July 17, 2015, that provides anecdotes on problems AOC has 

overcome in maintaining the boilers but did not provide information quantifying the 

operational or budget impacts of these problems or estimates of the likelihood of a 

sudden failure of the boilers in the near future. Furthermore, AOC has not provided 

us with information—other than condition reports we reviewed finding that the boilers 

were in good to fair condition for their ages—supporting AOC’s claims that the 

boilers are effectively “on life support.”

Comment 2: We agree that AOC should operate and maintain CPP with the goal of 

meeting peak steam demand. However, AOC has not quantified any negative effects 

that would occur if CPP had to meet peak steam demand while operating its boilers 

only on natural gas and experiencing a temporary boiler outage. Furthermore, as 

AOC has noted, the proposed cogeneration system would not provide enough steam 

to allow AOC to meet its peak steam demand without using one of the two older 

boilers it intends to replace. Therefore, AOC will continue to incur some of the 

increased costs associated with infrequent use of one of the two older boilers that 

the agency stated the cogeneration project was meant to address. Furthermore, it is 

not clear when the agency intends to fully replace the capacity of the two oldest 

boilers. We therefore continue to believe that AOC should fully update its long-term 

energy plan while following leading capital-planning practices to ensure the agency 

fully assesses its needs and finds the most cost-effective ways to meet them.

Comment 3: We agree that AOC’s 2009 long-term energy plan assessed a broad 

range of technical options for providing heating and cooling to the complex. 

However, given that many factors have changed that could potentially lead AOC to 

reach a different, more cost-effective solution to meet any future performance gaps, 

we continue to recommend that AOC fully update its long-term energy plan while 

following key leading capital-planning practices and seek an independent review of 

the plan and provide the results of this review to Congress. In its letter, AOC noted 

that the NRC committee that reviewed its 2009 plan stated that “electric generation 

(or Cogeneration) is the best long-term strategy for AOC to achieve its mission of 

reliable, cost-effective, efficient, and environmentally sound utility services.” 

Page 68 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

However, we did not find this statement in the NRC committee’s 2009 report;62

instead, it is an AOC statement included in its final 2009 long-term energy plan.

Comment 4: AOC sought to clarify the progression of its planning efforts, which we 

summarized in Table 6 in our report. However, it is unclear why AOC stated that we 

mischaracterized its July 2014 Strategic Long Term Energy Plan Update: Draft Final 

Report, which we described as a draft plan throughout our report. In August 2014, 

we discussed with AOC shortcomings in its planning for the cogeneration project 

relative to leading practices and referred the agency to documents outlining these 

practices. AOC officials later wrote that the agency addressed the presented 

shortcomings by completing the December 2014 draft plan and supporting 

documents, which called for a cogeneration system with a configuration that differed 

from the July 2014 draft plan.

Comment 5: AOC stated that its 2014 revalidation addressed the key leading 

capital-planning practices we cited, but this revalidation focused on two technical 

options and did not, as called for in leading practices, fully assess the complex’s 

long-term needs and identify and evaluate a full range of options for best meeting 

those needs. We continue to maintain that, prior to undertaking major energy 

projects, AOC should fully update its 2009 long-term energy plan as called for in 

leading capital-planning practices, given that key factors have changed that could 

have changed the plan’s conclusions.

Comment 6: AOC stated that it completed an evaluation and redeveloped its longterm steam demand forecasts to address the urgent need to replace its older coalfiring boilers. We did not assess the validity of this evaluation because AOC did not 

provide it, or make us aware of it, until after we had sent the draft report to the 

agency for its comments. This evaluation did not accompany the agency’s December 

2014 draft plan, which AOC used to justify the need for and scope of the proposed 

cogeneration project.

Comment 7: We agree that AOC reviewed a broad range of options for meeting its 

long-term needs in its 2009 long-term energy plan. However, AOC did not examine 

non-capital options in the 2009 plan—such as operational changes or conservation 

measures—and it is unclear how or when AOC assessed some of the capital or 

financing options it cited in its written comments. Since 2009, AOC has assessed 

two capital options—a cogeneration system or a natural gas boiler. From 2009 to the 

62National Research Council: Committee on the Evaluation of Future Strategic and Energy Efficient 

Alternatives for the U.S Capitol Power Plant, Evaluation of Future Strategic and Energy Efficient 

Options for the U.S. Capitol Power Plant (Washington, D.C.; 2009).

Page 69 GAO-15-436 Capitol Power Plant Costs 

 
Appendix II: Comments from the Architect of 

the Capitol

present, many factors have changed that could potentially lead AOC to reach a 

different, more cost-effective solution to meet its needs. Therefore, we continue to 

believe that AOC should identify and assess a wide range of options for meeting its 

needs in a full update of its long-term energy plan.

Comment 8: We have not assessed AOC’s additional sensitivity analysis, as the 

agency provided it after we had completed our draft report. We do not know the 

basis for AOC's statement that the group of energy conservation measures it 

identified would reduce the complex’s steam demand by 20 percent or the basis for 

the statement that the cost of the measures—including some or all of the costs of the 

Cannon House Office Building Renewal project—would exceed $2 billion.

Comment 9: AOC disagreed with our statement that the agency did not update its 

2009 long-term plan in response to changes in key assumptions, citing the analyses 

it performed in 2014 and 2015 on the life cycle costs of the proposed cogeneration 

system and an alternative of a natural gas boiler. However, AOC did not update the 

key assumptions in the context of a full update of its 2009 plan, which assessed a 

broad range of options for meeting the complex’s heating and cooling needs. AOC 

stated that it included updated assumptions in its spreadsheets on the life cycle costs 

of the proposed cogeneration project and a natural gas boiler alternative, and stated 

that we declined its offers to discuss these spreadsheets. However, we reviewed 

these spreadsheets containing AOC’s life cycle cost analyses and identified 

shortcomings that we describe in our report.

Comment 10: AOC stated that it completed a probabilistic risk assessment in May 

2015 that was consistent with GAO’s Cost Estimating Guide, which identifies some 

key leading capital-planning practices. However, AOC did not make us aware of or 

provide this assessment until after we had completed our review and prepared our 

draft report.

Comment 11: AOC stated that the Department of Energy’s National Renewable 

Energy Laboratory (NREL) provided an independent review of its December 2014 

draft plan, which compared the proposed cogeneration system to an alternative of a 

natural gas boiler. NREL’s review of a partial update to a 2009 plan, rather than a full 

update, does not address our recommendation. AOC needs to fully update its longterm energy plan and then seek outside review by an independent panel of experts, 

as it did in 2009.

Comment 12: We agree that cogeneration can offer benefits in certain settings. 

However, given the significantly higher upfront costs of cogeneration when compared 

to alternatives like a natural gas boiler, it is important that the planning involved in 

selecting the technology over viable alternatives exhibit the aspects of key leading 

capital-planning practices we cited—such as fully assessing needs, assessing a 

Page 70 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

range of alternatives, and using valid sensitivity and uncertainty analyses to identify 

key risks and confirm the superiority of a chosen option over its alternatives. To 

ensure that AOC’s choices for meeting its long-term energy needs result from 

planning that exhibits these leading practices, we continue to believe that AOC 

should fully update its long-term energy plan while following the key leading practices 

we cited.

Comment 13: AOC stated that the construction permit for the proposed 

cogeneration project will expire in June 2016 and that fully implementing our 

recommendations would introduce a delay of approximately two years to either 

option for obtaining additional steam generating capacity. We maintain it is important 

for AOC to make the correct decisions about its capital and long-term energy needs 

through planning that follows key leading capital-planning practices, regardless of 

when any permits may expire for a particular project. Furthermore, AOC did not 

provide a basis for its claim that fully updating its long-term energy plan would cause 

a delay of an additional two years to either option for adding new steam generating 

capacity, and if AOC’s claim is accurate then the agency should start the update as 

expeditiously as possible. Therefore, we continue to recommend that AOC fully 

update its long-term energy plan while following leading capital-planning practices 

before undertaking future major capital projects related to its energy needs.

Comment 14: We agree that AOC faces limits on its continued use of coal at CPP 

and on its emission of air pollutants, and we believe AOC should factor in such 

constraints in a full update of its long-term energy plan.

Comment 15: AOC stated in its letter that our report suggested that capital-planning 

guidance is clear and leaves no room for misunderstanding or misinterpretation by 

agencies. During the course of our review, and after receiving a preview of our 

report’s findings, AOC officials said they were generally unaware of the applicability 

of the leading practices we cited. We identify in our report GAO’s prior work that 

recommends the use of independent panels by agencies when addressing complex 

issues such as those facing AOC, and as the agency itself used in 2009 to review its 

draft long-term energy plan. As part of fulfilling our recommendation that the agency 

fully update its long-term energy plan while following leading capital-planning 

practices, we continue to believe AOC should submit the plan for review by an 

independent panel of experts and submit the results to Congress.

Comment 16: AOC did not assess the proposed cogeneration project using its 

capital planning prioritization process for projects to be funded with upfront 

appropriations, stating that it is the agency’s strategy to use a UESC to finance the 

proposed cogeneration project—thereby allowing AOC to request appropriations to 

fund other critical infrastructure projects for which AOC stated such alternative 

funding sources are not available. As we stated in our report, by not assessing the 

Page 71 GAO-15-436 Capitol Power Plant Costs 
Appendix II: Comments from the Architect of 

the Capitol

proposed project using the agency’s capital planning prioritization, AOC did not 

analyze the project relative to other projects for which the AOC was seeking 

appropriated funding using the agency’s pre-determined criteria for capital planning.

Comment 17: We agree that, like the proposed cogeneration project, AOC would 

have incurred some pre-construction obligations for design and project management 

to replace the steam-generating capacity of one or both of its older coal-firing boilers 

with a natural gas boiler. AOC’s draft December 2014 plan shows that a natural gas 

boiler providing the same amount of steam as the proposed cogeneration system 

would cost approximately $9.3 million. It is not clear to what extent this estimate 

includes pre-construction obligations, which for the cogeneration project totaled 

about $16 million as of March 2015.

Comment 18: We agree that CPP may not be able maintain adequate capacity to 

meet peak demand should both older coal-firing boilers fail at the same time, but this 

does not change the need for AOC to fully assess its long-term energy needs and 

evaluate a range of alternatives for meeting them in the context of a full update of its 

long-term energy plan.

Comment 19: AOC officials stated appropriations would likely not be available for 

the cogeneration project and therefore selected a UESC to finance the project. 

Because the agency did not intend to use upfront appropriations to acquire the 

system, AOC did not assess the project using its capital planning prioritization 

process. As we reported, acquiring the system using a UESC results in more upfront 

costs and financing costs than if the agency used upfront appropriations. AOC stated 

that it discussed its funding challenges with GAO, but it is not GAO’s role to advise 

agencies as they seek funding for their proposed capital projects.

Comment 20: AOC stated that its selection of the proposed cogeneration project 

and its revalidation efforts have followed key leading practices. However, as we state 

in our report and our response, we remain unconvinced that AOC’s planning followed 

key leading capital-planning practices and therefore AOC has not demonstrated 

whether the proposed cogeneration project will prove more cost-effective than other 

alternatives for meeting the agency’s needs. We therefore continue to recommend 

that AOC, prior to undertaking major energy projects, fully update its 2009 long-term 

energy plan while following key leading capital-planning practices, including: fully 

assessing its energy needs, identifying and evaluating a range of alternatives for 

meeting its needs, and identifying key assumptions and risks and performing valid 

sensitivity and uncertainty analyses. We also continue to recommend, given the 

complexity of the issues it is facing, that AOC seek a review by an independent panel 

of experts as it fully updates its long-term energy plan and provide the results of this 

review to Congress.

Page 72 GAO-15-436 Capitol Power Plant Costs 
Appendix III: GAO Contacts and Staff 

Acknowledgments

Frank Rusco, (202) 512-3841 or ruscof@gao.gov

Lori Rectanus, (202) 512-2834 or rectanusl@gao.gov

In addition to the individuals names above, Michael Armes (Assistant 

Director); Michael Hix (Assistant Director); John Delicath; Philip Farah; 

Cindy Gilbert; Geoff Hamilton; Dan Paepke; Mick Ray; and Shep Ryen 

made key contributions to this report.

Appendix III: GAO Contacts and Staff 

Acknowledgments

GAO Contacts

Staff 

Acknowledgments

(361538) Page 73 GAO-15-436 Capitol Power Plant Costs 
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s website (http://www.gao.gov). Each weekday 

afternoon, GAO posts on its website newly released reports, testimony, 

and correspondence. To have GAO e-mail you a list of newly posted 

products, go to http://www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s website, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537.

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube.

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts.

Visit GAO on the web at www.gao.gov.

Contact:

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-

4400, U.S. Government Accountability Office, 441 G Street NW, Room 

7125, Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs

Please Print on Recycled Paper.