From the Desk of Terry E. Singer, NAESCO Executive Director

National Voice of the ESCO Industry

NAESCO serves as the national voice of the ESCO industry through its national and regional advocacy efforts that support the strategic interests of its members. We are proud that our industry and our members continue to serve as a vanguard by providing the investment, the jobs, and the infrastructure improvements needed to rebuild America.

NAESCO’s advocacy work is built around growing market opportunities for ESCOS and their key providers and partners. Key priorities include the following:

  • Ensuring that federal administrative policies continue the high level of performance contracting work in the Trump administration;
  • Supporting national and state policy initiatives that will boost energy efficiency and performance contracting;
  • Proactively advocating for ESCO business friendly laws, regulations, and guidelines, such as supporting the extension of federal tax deductions and credits that boost energy efficiency and performance contracting;
  • Defending ESCO enabling legislation or policies that are under attack; and,
  • Working to relieve the bottlenecks that are crippling state buildings ESPC programs in several states with large potential ESPC markets.

Workshops, Conferences and Webinars

In 2017, NAESCO is planning to host its twelfth annual federal market workshop in Washington DC on March 15th, a dual track technology and financing focused workshop St. Louis on June 7-8th, and its national conference in Los Angeles on November 14-16th.

NAESCO re-activated its webinar offerings in 2016 offering four webinars throughout the year. The Affiliate Committee served as an outstanding resource in identifying webinar and workshop topics of interest, fostering advocacy involvement, and enhancing the NAESCO membership value proposition for our Affiliate members. As a result of the Committee input, NAESCO registered as a CEU provider with the AIA and began to offer CEU credits at its workshops, webinars, and conferences. Currently, 2017 Webinar dates are set for February 27, April 24th, September 18th and December 11th.

Communications and Outreach

The website is continuously being updated. Additional photos, video links, and case studies were added throughout the site and the website was made smartphone and tablet-user friendly. We have expanded visibility and marketing opportunities for member companies on the NAESCO website.

We introduced a NAESCO Twitter account @NAESCONews to promote the organization, its advocacy efforts and events, as well as to promote members and their projects.  To date, @NAESCONews has 560 followers and we continue to add approximately 50 followers per month.

Promotion of NAESCO Accreditation as Market Differentiator

Policy makers and program administrators are struggling to identify experienced, high-quality energy service providers and NAESCO continues to expand its efforts to communicate the value of its rigorous accreditation program as a ready-made solution. Our Accreditation program began in 1996 and we currently have 9 Accredited Energy Service Providers, 15 Accredited ESCOs, and 2 Accredited Energy Efficiency Contractors. During 2017 we are undertaking one of our periodic reviews of accreditation criteria, focusing on project Monitoring and Verification (M&V) standards; these reviews ensure that our accreditation program stays current with the needs and concerns of industry customers.

Annual Sponsorships

Annual Sponsorships provide a higher degree of member recognition throughout the year and we are very grateful for the support of our annual sponsors. Philips, Blue Energy Group, and Rexel Energy Solutions serve as Annual Platinum sponsors in 2017. Annual Gold sponsors in 2017 include Synergy Companies and UCONS, which have served as gold sponsors for the past eight years, and Walker Reid Strategies, which has served as a sponsor for the last three years. Our 2016 Silver sponsor Lutron will also be a silver sponsor in 2017.

NAESCO Policy and Advocacy Activities

Federal Issues Performance Contracting Challenge

In late December, 2016, FEMP announced that federal agencies had exceeded President Obama’s $4 billion goal with $4.2 billion of booked projects. NAESCO is now working to ensure that the Trump Administration will reinforce this ongoing federal waste reduction program by issuing a new Executive Order for a minimum of another $2 billion  of projects that focuses on both water and energy efficiency.

179D Deduction

NAESCO has worked successfully for four years with a group of interested NAESCO members and the lobbying firms Van Ness Feldman and Prime Policy Group to secure the extension of the Section 179D deductions for energy efficiency work in commercial buildings. We got extensions that covered the 2014 through 2016 tax years but were unsuccessful in obtaining a multi-year extension to start in early 2017. Unfortunately, the political situation in DC was not conducive to passage of a tax extenders package this fall. We will continue to advocate for passage of 179D in 2017 and will work to harness the momentum for inclusion in a comprehensive tax reform bill likely to be considered in 2017. 

HUD Programs and Procedures

NAESCO and a number of ESCOs met with HUD officials in mid-July 2016 to discuss several chronic problem areas in the HUD PHA ESPC program, including the difficulties of implementing ESPC projects with the Rental Assistance Demonstration (RAD) program that is changing the federal funding of PHAs, the lack of knowledge of local HUD staff and PHA managers about the HUD Rate Reduction Incentive program, and the new HUD initiative to stimulate EE projects in federally assisted multifamily housing. We were encouraged by the response of the HUD officials. They recognize the problems and are committed to working with ESCOs to solve them.

Clean Power Plan (CPP)

NAESCO has worked for three years with a group of ten ESCOs that developed a substantial White Paper and a number of formal comment documents that have been submitted to the EPA.  We expect that President Trump will move to cancel the CPP in the early days of his administration, since this was one of his major campaign pledges.

ESCO Market Survey Report

We worked with Lawrence Berkeley National Laboratory to publish the ESCO Market Survey in October 2016 which can be found on this website under industry reports. The report highlights several issues on which NAESCO and LBNL intend to conduct further research, including the increasing competition for performance contracting projects from non-ESCO companies, the role of M&V in distinguishing ESCOs from non-ESCO companies, and the political opposition to the increasing use of Non Energy Benefits in ESPC project savings calculations.

PACENation

NAESCO now has a seat on the board of PACENation, a national organization formerly called PACENow, which is promoting the adoption of high-quality PACE programs across the country.  We will work with the Trump Administration to identify opportunities to promote commercial PACE nationally as a way to stimulate EE and RE investments in commercial, non-profit and public facilities.

Measures Project

NAESCO is part of a team under a 2015 Department of Energy State Energy Program grant, to develop evaluation, measurement, and verification protocols that can be used by states as the basis for tracking the carbon emissions reductions produced by performance contracting projects.

State Issues

NAESCO state advocacy focuses on states where we defend the industry against potentially damaging legislation, and two precedent-setting states where we are working to assure that multi-year proceedings to re-vamp energy efficiency programs and utility regulation offer new opportunities for ESCOs.

Kansas

NAESCO successfully organized a group of ESCOs, who funded a Topeka-based consultant for a seven-month effort, to defeat legislation in 2016 to essentially eliminate ESPC in the K-12 market. The legislation was based on the claim that K-12 ESPC projects were expanding beyond the scope of the enabling legislation by incorporating retrofits whose cost was repaid with Non-Energy Benefits rather than energy savings.

Illinois

NAESCO organized a group of ESCOs and their lobbyists to defeat legislation that was sprung on us at the end of the state legislature's 2016 session. We expect the promoters of the 2016 legislation to introduce new legislation in 2017, which is based on their claim that recent ESCO projects have implemented retrofits, such as life safety and IAQ improvements, which are not authorized in ESPC legislation and therefore should be implemented in traditional spec-and-bid projects supervised by architects and engineers. NAESCO has organized a 2017 lobbying campaign to fight the likely 2017 legislation. Illinois also passed major energy legislation at the end of 2016 which transfers the EE programs for public facilities and non-profits from a state agency (DCEO) to the utilities, thus assuring that ratepayer EE funds will continue to flow into these market sectors. Funding had been curtailed because of the ongoing Illinois state budget crisis.

Michigan

We successfully mobilized ESCOs and their lobbyists in 2016 to defeat a last-minute amendment to major energy legislation that would have allowed utilities to offer special rates and EE programs to the K-12 and higher education market segments, which we think would subsidize a regulated utility in a competitive private marketplace. The legislation passed at the end of the year, and it provides increased support for the states EE (called “waste reduction”) and RE goals

Wyoming and Utah

In both of these states, relatively new Assistant Attorneys General have issued opinions that performance contracts may be unconstitutional, because they violate the basic principle that the state cannot enter into contracts that bind successive legislatures to appropriate funds. It now appears that the situation in Utah may be resolved, with a pending AG ruling that ESPC projects are OK if they include M&V for the full term of the contract, which will prove that the cost of the projects is paid from savings, not from annual appropriations.

Ohio

In late December, 2016, Governor Kasich vetoed legislation that would have made the suspension of the state’s EERS and RPS goals permanent. The legislature had passed a temporary suspension of the goals three years ago to allow for a special committee to study the effects of the goals. The committee recommended permanent suspension, even though the record clearly indicated that the EERS is overwhelmingly cost-effective and that the RPS has helped to develop Ohio as a hub for wind project development and wind system component manufacturing. The new legislation passed both houses with large, but not veto-proof, margins and the text of Governor Kasich’s veto message is posted on this website.

California

In California, a multi-year proceeding of the California Public Utilities Commission (CPUC) that is re-working the structure of the ratepayer-funded EE programs has reached a critical phase. Because of the complexity of the issues, and the importance of California as the largest state market for ESCOs, NAESCO has hired as a consultant to assist us in monitoring the proceeding. NAESCO has been concentrating its comments to the CPUC on the issue of how the Program Administrators, particularly the utilities, plan to meet the state’s ambitious goal to double energy efficiency and emissions reduction. NAESCO is proposing that the utilities re-instate the statewide Standard Performance Contract programs that were discontinued a decade ago, re-vamp the industrial programs to implement AB 802 and reduce the complexity of the current project reviews and savings calculations, and fully fund innovative new programs in the residential and small C/I sectors. 

New York -- Reforming the Energy Vision

The New York State Public Service Commission is in the middle of a proceeding to restructure the state's utility industry to enable customers to implement the full range of Distributed Energy Resources (DERs) -- EE, RE, DR, CHP, DG -- with utility support rather than resistance. We expect that both the pilot DER projects and the new revenue model are the first steps in what will be a long development process, and it is important to note that while the PSC is moving ahead with this development, it is maintaining its commitment to NYSERDA and utility-administered EE and R&D programs, as well as to the DER financing initiative of the Green Bank and Energize New York.

 

2017 Advocacy Priorities

Convince the Trump Administration to Support Performance Contracting

While we don’t know the specifics of the Trump Administration’s energy and tax programs, we believe that they will not threaten, and may even boost, performance contracting, for two reasons. First, Energy Performance Contracting has very strong bi-partisan support in the Congress and in state legislatures around the country. We don’t think that will change. EPC cuts government waste and re-directs money currently spent on wasted energy into a payment stream for badly-needed capital improvements in schools and other public facilities.

Second, President Trump has pledged to launch a major new program to rebuild America’s infrastructure – roads, bridges, schools, etc. We are proposing that EPC projects be used to rebuild public facilities. EPC can leverage a modest amount of federal funding (tax credits and bond interest rate buy-downs) with substantial private investment, because EPC projects pay for themselves from savings. EPC can thus complement other elements of the infrastructure program that will have to be funded from appropriations. And performance contracting has the potential to create good jobs in every community across the country.

NAESCO is making a focused effort to get the Trump administration to adopt a public buildings “Retrofit for Resiliency” program as part of its infrastructure initiative. Our proposal emphasizes performance-based tax and interest rate incentives for EPC projects, rather than direct grants, in order to leverage federal dollars. We propose that the Retrofit for Resiliency program include a comprehensive suite of measures, including EE, RE, CHP and DG, energy storage, and advanced controls and microgrids.

NAESCO is working with member ESCOs and the Federal Performance Contracting Coalition (FPCC) to ensure that retrofitting public buildings is part of the Trump program to rebuild our infrastructure.                                          

NAESCO is also working with the EE Strategy Group coalition to promote a broader list EE programs to the new administration.

Measurement and Verification

The Board of Directors recognizes that there are ongoing debates in the industry and among policy makers about the appropriate level of measurement and verification in different market sectors. The Board has formed a Measurement and Verification Subcommittee to be chaired by NAESCO Vice-Chairman Greg Collins. The goal is to set NAESCO on the path of defining a rigorous new M&V standard that will distinguish accredited companies as providers of the gold standard of M&V. The charge to the M&V Committee has been to draft a revision of the NAESCO accreditation standards to place an emphasis on the use of rigorous, long-term M&V, as a key component of a guaranteed ESPC. These standards would address some of the legislative and legal challenges we have seen over the past few years and would seek to re-establish the differentiation of ESCOs from other contractors.

Conclusion

NAESCO is proud to be the leading organization of the ESCO industry. NAESCO will continue to provide a strong and effective voice for the industry while pursuing creation of new market opportunities. We stand committed to moving industry causes forward and to promoting the good and essential work our members do to address the energy and infrastructure challenges faced by our nation.

 

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