{
  "id": "R45411",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R45411",
  "active": true,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 587903,
      "date": "2018-11-23",
      "retrieved": "2019-12-20T20:34:50.656696",
      "title": "Energy Savings Performance Contracts (ESPCs) and Utility Energy Service Contracts (UESCs)",
      "summary": "Many in Congress have expressed a continuing interest in improving energy efficiency and increasing the use of renewable energy. To facilitate investment in energy efficiency and renewable energy at federal facilities, Congress established alternative financing methods that utilize private sector resources and capabilities. Two such alternative financing methods are energy savings performance contracts (ESPCs) and utility energy service contracts (UESCs). \nESPCs and UESCs are contracts between a federal agency and another party\u2014an energy service company or a utility, depending upon the contract type. In general, a federal agency agrees to pay an amount not to exceed the current annual utility costs for a fixed period of time to the company or utility, which finances and installs the energy-efficiency and renewable energy projects. The costs are repaid by the agency over the length of the contract. After the end of the contract, the agency benefits from any reduced energy costs as a result of the improvements. \nThe Department of Energy\u2019s Federal Energy Management Program (FEMP) is the lead organization responsible for providing implementing rules and policies for ESPCs. FEMP also provides training, guidance, and technical assistance to aid federal agencies in achieving energy and water goals. Federal agencies are required to document progress toward energy-saving goals through annual reporting to the President and Congress.\nFEMP compiles agency data annually. Between FY2005 and FY2017, investment in federal facility energy efficiency improvements totaled nearly $21.7 billion (in constant 2017 dollars): direct obligations funded $14.5 billion, ESPCs funded $5.7 billion, and UESCs funded $1.5 billion. A lack of consistency in reporting across agencies for projects makes it challenging to document the cost savings achieved solely from ESPCs or UESCs. The available data may provide insight into broad trends in federal energy and water consumption. Over available reporting time periods, total site-delivered energy use has declined, renewable electricity use has increased as a percentage of total electricity consumption, and water use has declined.\nThe Government Accountability Office (GAO) has examined alternative financing for federal energy projects, including ESPCs and UESCs. In a 2016 study, GAO reported that the Department of Defense had identified challenges in using ESPCs and UESCs for renewable energy projects, as such financing mechanisms may not realize the federal tax benefits under requirements set by the Office of Management and Budget (OMB). Prior to 2012, the Army had structured ESPCs to allow private developers to capture federal incentives by owning renewable energy projects. The Army stopped doing so after a 2012 OMB memorandum required government ownership of such renewable energy projects to avoid obligating the full cost of the project when the contract is signed. A 2017 study by GAO examined energy projects for DOD more broadly and found that the majority of these were financed using ESPCs or UESCs.\nCongressional Budget Office (CBO) scoring policies for ESPCs and UESCs have changed over time. The 2018 House Budget Resolution (H.Con.Res. 71) directed CBO to score ESPCs and UESCs on a net present value basis with payments covering the period of the contract. The estimated net present value of the budget authority and any outlays would be classified as direct spending; it would not change the fact that federal agencies would continue to cover contractual payments through annual, discretionary appropriations. H.Con.Res. 71 also prohibited any savings estimated by CBO to be considered as an offset for purposes of budget enforcement. This prohibition applies to budget enforcement in the House of Representatives; CBO considers estimated savings to offset budget enforcement differently for the House of Representatives and the Senate. \nCongress has revised the policies enabling ESPCs and UESCs over time, and Congress may address additional changes going forward. Issues for possible consideration include reporting requirements, definitions of terminology including federal building and energy savings, and whether to expand the applicability of ESPCs and UESCs.",
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      "typeId": "REPORTS",
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      "topics": [
        {
          "source": "IBCList",
          "id": 4907,
          "name": "Energy Policy"
        },
        {
          "source": "IBCList",
          "id": 4927,
          "name": "Renewable Energy & Efficiency"
        }
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    "Appropriations",
    "Energy Policy"
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}