The Government Accountability Office has called for
greater vigilance over Energy Savings Performance
Contracts, which allow agencies to pay for energy
efficiency improvements with money saved on utility
costs, and it has questioned how often savings actually
cover the bill.
Some agencies say the contracts, even if they don’t
offer the most favorable terms, are necessary to fund
energy efficiency improvements for which up-front
funding is often scarce, according to GAO-05-340, and
can lead to benefits not easily quantifiable such as
environmental improvements and improved equipment
reliability.
However, it said reported ESPC savings often could not
be verified in the 254 such contracts it looked at in
20 agencies from 1999 through 2003. Those contracts are
slated to pay out $2.5 billion spread over the lifetime
of the five to 25 year contracts.
It also said agency audits revealed “unfavorable contract
terms, missing documentation, and other problems” that
caused it to question how consistently savings cover costs.
“According to agency officials, they often lacked the
technical and contracting expertise and information –
such as interest rates and markups – to negotiate ESPCs
and to monitor contract performance in the long term,”
said GAO.
It said that officials also think there may be a limited
competition among finance and energy services vendors
that contribute to higher costs.
