The Commonwealth of Kentucky has enabling legislation that covers Guaranteed Energy Savings Performance Contracting (GESPC) in four public market sectors: state agencies, local units of government, universities, and K-12 school districts. The length of contracts are determined by a life-cycle calculation.
The legislation allows for a scope of work that includes all measures that pay for themselves in energy savings, the use of operational savings, future cost avoidance, use of water savings, renewables, and allows capital funds to be added as buy-down.
The statue requires the energy service company (ESCO) provide an energy savings guarantee and an annual reconciliation statement that documents through a prescribed Measurement and Verification protocol the annual energy savings achieved versus the guarantee. The statue also provides for a payment to cover any shortfall should one occur, and for the end-user to retain any excess savings in their department budget if the savings exceed the guarantee.
In the past there have been examples where the verified savings have exceeded the guarantee:
- In 2013, University of Kentucky's $25 million GESPC cut costs by $2.4 million a year, exceeding the guarantee of $2.2 million.
- In 2009, Eastern Kentucky University entered a $27 million/12 year GESPC (the largest such contract in state history at the time). In fiscal year 2012 (July 2012-June 2013), EKU realized approximately $3.2 million in utility cost and operational savings at baseline rates (the rates at the time the contract was signed) nearly a million dollars more than the guarantee. Barry Poynter, vice president for finance and administration, reported the University was way “ahead of the curve” relative to the guaranteed savings.
There are a number of team members who serve in different roles that support the state's GESPC program. These team members are supported by an outside third-party skilled in GESPC.
The state program uses a set of standardized instruments for use with GESPC for state facilities and a separate set of standardized contract instruments for units of local government.
The state's public sector program members participate in the Kentucky Energy Services Coalition (ESC) Chapter. The Chapter has been in existence for over 10 years and is known for its outreach and education efforts and events. The Chapter conducts statewide workshops as well as provides speakers for panels at various conference throughout the state. In this education and outreach role, the organization's members help provide leadership that is key to the state's local government participation in utilizing energy and cost savings procurement and educating local officials on the benefits of performance contracting.
The Chapter meets every other month in different geographical locations throughout the state for the convenience of the members.
Although the Chapter does not have its own awards program, recognition of outstanding projects are linked to other existing state and federal programs. For example, the Auburn Elementary was recognized in January 2016 for achieving ENERGY STAR certification. Auburn Elementary received this recognition after implementing a variety of energy and maintenance savings techniques through a Performance Contract in 2001 and additional improvements earlier this year, saving the district $1,343,676 in energy usage avoidance.