Energy Management

Public entities are allowed to use Energy Management Services(EMS), also known as performance contracting, for installation of capital projects that reduce facility energy costs and related operation and maintenance expenses. EMS is a set of procedures that state and local government agencies may use an alternative procurement method to contract with an energy services company (ESCO) for the provision of energy management services if the primary purpose for doing so is to reduce energy and/or water consumption.

EMS is an arrangement structured so that the cost of implementing the energy conservation measures (ECM) is recovered from savings created by the performance of those measures. Equipment purchased and installed using EMS may include any equipment or system upgrade designed to conserve energy or water. Under an EMS contract, the ESCO provides a service package that typically includes the design, engineering, financing, installation and maintenance of retrofit measures to improve energy efficiency. Moreover, an EMS contract defines the method for establishing the baseline costs, the cost savings and the distribution of the savings to the parties involved. Performance contracting simplifies the process for securing a range of services and equipment and avoids the time-consuming requirements mandated by M.G.L. c. 149 for competitive purchasing of such equipment and services, developing multiple solicitations and selecting multiple contractors. In addition, it guarantees energy and maintenance cost savings.

In Massachusetts, four agencies oversee EMS: 1) the Department of Energy Resources (DOER) presides over buildings owned by cities, towns, counties, quasi-public agencies and schools; 2) the Division of Capital Asset Management (DCAM) presides over Commonwealth-owned government buildings; 3) the Department of Housing and Community Development (DHCD) presides over housing authorities; and 4) the Massachusetts School Building Authority (MSBA) presides over school building projects. To date, agencies 1-3 above have developed an effective working relationship. Agencies 1 and 4 above have engaged in ongoing discussions to improve inclusion of school buildings in municipal energy performance projects.

Several regional planning entities in Massachusetts have procured energy management services on behalf of member communities aggregating potential savings to make potential projects more attractive to ESCOs.

For more information, visit the Energy Management Services section of the Green Communities website.

Statutory Requirements

Under M.G.L. c. 25A, sec 11C and 11I, public agencies are permitted to solicit competitive bids from energy service companies for bundled energy audit, design, construction, maintenance, and monitoring and verification services. Otherwise, under normal Massachusetts bidding laws, these services must be procured unbundled with separate bids for each phase of construction. This special exception for energy projects under M.G.L. c. 25A procurement guidelines acknowledges the unique challenge that energy projects present, specifically, that they require a holistic approach to initial energy analysis, measure selection, installation and long-term monitoring and verification. Under Section 11C, vendors respond to a specific set of pre-identified measures and provide a fixed price for the measures and guaranteed energy savings.

Types of Agreements

Municipalities and school districts must follow the five steps below to procure energy management services:

  1. Develop ESCO Request for Qualifications;
  2. Publish RFQ and select vendor;
  3. Negotiate and sign energy audit agreements;
  4. Negotiate and sign energy management service agreements’ and
  5. Maintain equipment and monitor and report energy performance.

Across Massachusetts, Regional Planning Agencies, including FRCOG, PVPC and MVPC have taken the lead on Steps 1-2 on behalf of interested municipalities/school districts. Each participating community and/or school district takes the lead on Steps 3-5. It is highly recommended that entities undertaking performance contracting engage the services of an Owner’s Agent to assist with the performance contracting process.

Resources

Energy Management Services website
Department of Energy Resources, Green Communities division
http://www.mass.gov/?pageID=eoeeaterminal&L=3&L0=Home&L1=Energy%2C+Utilities+%26+Clean+Technologies&
L2=Green+Communities&sid=Eoeea&b=terminalcontent&f=doer_green_communities_gc-ems&csid=Eoeea

EMS Guide version 2.1
Department of Energy Resources, Green Communities division
http://www.mass.gov/Eoeea/docs/doer/green_communities/pubs_reports/EMS-Guide.pdf

Examples of Energy Services Management

The Merrimack Valley Energy Management Program was formed in 2009 to help communities develop energy management strategies and conservation programs. It is administered by Merrimack Valley Planning Commission (MVPC) with technical assistance provided by the Peregrine Energy Group. MVPC facilitated ESCO services for eleven interested communities and two school districts in the region. For more information contact Dennis DiZoglio, Executive Director of MVPC at (978)374-0519

The Massachusetts Department of Energy Resources (DOER) created the Green Communities Program to help empower cities and towns to reduce energy consumption and increase energy efficiency. The program was crafted with the intent for municipalities to regionalize, therefore eliminating the potential barriers inherent in previously existing programs and services. Further description of the Program is available at http://www.mass.gov/eea/energy-utilities-clean-tech/green-communities/