Washington, D.C. – The Oversight and Energy Subcommittees today held a joint hearing to evaluate the benefits and shortfalls of Energy Savings Performance Contracts (ESPCs). Federal agencies, such as NASA and U.S. Department of Energy (DOE), engage in ESPCs with energy service companies at government-owned facilities.

These contracts help agencies upgrade buildings to achieve greater energy efficiency and perform major renovations without Congressional appropriations or upfront capital costs to the federal agency. ESPCs are a unique mechanism by which the private sector zpays for energy conservation measures at federal facilities, and are reimbursed for their work out of the resulting savings in utility costs. Each contract creates jobs in the private sector while the federal government benefits from valuable upgrades without putting taxpayer funds on the line. 

Oversight Subcommittee Chairman Paul Broun (R-Ga.): “During these constrained economic times, it is imperative we manage our limited funds as best we can, and be creative about accomplishing our goals while maximizing our strained resources. The most important features of these contracts are their flexibility in not relying on taxpayer dollars for the services provided, and the ability to categorically identify and measure savings.”

However, reports on ESPCs have raised some legitimate concerns about the complexity of these contracts.  A GAO report questioned whether agencies were getting the best deal possible from energy service companies, in part based on the limited number of financiers available to the private sector for such projects.  Another recent NASA Inspector General report raised specific concerns about whether NASA employees were sufficiently trained to handle ESPCs because the contract did not require annual reports to verify that the energy conservation measures were generating savings

Energy Subcommittee Chairman Cynthia Lummis (R-Wyo.): “It is important to note that while ESPCs represent a mutually beneficial, market-based approach to reducing energy costs, they contrast sharply with the heavy-handed regulatory onslaught that President Obama announced on Tuesday. The President is again pushing an agenda that will punish hard-working American families. His approach consists of worn policies already rejected by Congress in a bipartisan fashion, and doubles down on his preferred approach of expensive energy mandates, job-killing regulations and hidden energy taxes.”

One issue related to ESPCs that received a great deal of attention from witnesses and Members today is the concern that any modification to the ESPC regulations would trigger a Congressional Budget Office “score.” This raises concerns that such an action would make ESPCs less appealing to agencies, and Members on both sides of the Committee expressed an interest in pursuing the issue further.

The following witnesses testified today:

Dr. Kathleen Hogan, Deputy Assistant Secretary for Energy Efficiency, U.S. Department of Energy
Dr. Woodrow Whitlow, Jr., Associate Administrator, Mission Support Directorate, NASA
Ms. Jennifer Schafer, Executive Director, Federal Performance Contracting Coalition
Mr. Ron King, President Advisor, National Insulation Association