COMMERCIAL AND INDUSTRIAL PERFORMANCE PROGRAM Standard Performance Contracting Program Opportunity Notice (PON) No. 695-02

The New York State Energy Research and Development Authority (NYSERDA), as administrator of the New York Energy $mart^SM program, requests applications from contractors for performance-based incentives to implement cost-effective electrical efficiency improvements or summer demand reduction for eligible customers.

Eligible customers are electricity distribution customers of Central Hudson Gas & Electric Corp., Consolidated Edison Company of New York, Inc., New York State Electric & Gas Corporation, Niagara Mohawk Power Corporation, Orange and Rockland Utilities, Inc., and Rochester Gas and Electric Corporation that pay the System Benefits Charge (SBC).

Eligible measures include lighting, motors, variable-speed drives, energy management systems, certain process equipment, packaged air conditioning and chillers (including non-electric refrigeration and chillers), and custom measures that result in electric-energy savings or demand reductions. The performance-based incentives are provided through a Standard Performance Contract (SPC) between NYSERDA and the contractor. The contract between the customer and the contractor can be an energy performance contract or a fee-for-service contract.

The application must be submitted before the contractor and the customer sign a contract for the equipment purchase or installation. The amount of the incentive passed through to the customer is negotiable between the contractor and the customer.

APPLICATION SUBMISSION: Applications must be clearly labeled and mailed to:

C/I Performance Program Administrator
New York State Energy Research and Development Authority
17 Columbia Circle
Albany, NY 12203-6399

Technical questions should be directed to Todd Baldyga at (518) 862-1090, ext. 3354 or tab@nyserda.org.

Contractual questions should be directed to Mary Sauvie at (518) 862-1090, ext. 3229 or mks@nyserda.org.

Introduction

PON 695-02 presents procedures for year five of the Commercial and Industrial (C/I) Performance Program. The program seeks to promote comprehensive efficiency projects in the commercial, industrial, institutional, and governmental sectors regardless of the underlying contract structure between the customer and the contractor.

PON 695-02 is divided into six sections:
1. Program Description
2. Eligibility
3. Program Incentives
4. Program Procedure Overview
5. Application Procedure and Forms
6. Additional Program Information

Information about other program requirements, including the SPC Agreement, measurement and verification of energy savings, and invoicing for payments, is included in the C/I Performance Program Procedures Manual. The manual may be found on NYSERDA's web site at www.nyserda.org/695pon.html or a copy may be requested by contacting NYSERDA.

Program terms offered through this PON are effective as of July 1, 2002.

If changes are made to the program terms, advance notification will be published in the New York State Contract Reporter and posted on NYSERDA's web site. No additional notice will be provided.

Highlights for Year-5 include:

• $20 million will be available initially for incentives with a customer cap of $1 million and a contractor cap of $4 million. Additional funding, up to a total of $30 million, may be added. See Sections 2 and 3 for additional information.
  
  
• The maximum incentive for custom conversion measures will be capped at 30 percent of measure cost. Chiller conversions are not custom conversion measures, and subject to Section 3.2.

Section 1: Program Description

The New York Energy $mart^SM C/I Performance Program was developed by NYSERDA to support the development of energy service providers and to encourage consumers to invest in the installation of energy efficiency equipment. This performance-based program offers incentive payments to contractors, often called energy service companies or ESCOs, that develop projects delivering verifiable annual electric energy savings. The average annual electric energy savings will be verified for up to a two-year period following project installation.

Participants in the C/I Performance Program must meet minimum eligibility criteria, comply with all program rules and procedures, submit standard forms and supplemental documentation describing their projects, and enter into a standard contract with NYSERDA. C/I Performance Program participants must also adhere to measurement and verification (M&V) guidelines and reporting requirements throughout the term of the SPC Agreement.

As of June 2002, a total of 405 projects are in various stages of completion, from project development to measurement and verification. Incentives of more than $70 million have been awarded to 93 ESCOs. When fully implemented, these projects will reduce electricity use by 452 million kilowatt-hours and reduce summer peak demand by more than 100 megawatts. The distribution of energy savings by measure and the broad participation across eligible market sectors for the 405 projects are illustrated below.

Chart 1: Energy Savings (kWh) by Measure

Chart 2: Incentive Dollars Awarded by Market Sector

Section 2: Eligibility

2.1 ESCO Eligibility

A qualifying ESCO is a business entity that provides energy engineering, energy efficiency measure design, equipment installation, equipment maintenance, and financing services on a performance contracting basis and has submitted an ESCO certification indicating work is to be performed by an ESCO and not the customer or agent of the customer. Energy marketers are encouraged to participate and offer energy efficiency as a value-added service. (See Section 5, SPC.3, Short-Form Agreement.)

To encourage broad participation, there are several limitations on the amount of incentive a single ESCO can receive:

• An ESCO is limited to receiving no more than $4 million of the annual C/I Performance Program incentive budget.
• An ESCO may not collect more than $1 million of the annual C/I Performance Program incentive budget for a project or group of projects with a single customer.

For purposes of these limitations, corporate affiliations will be aggregated, with the ESCO defined at the highest level of vertical corporate integration, including all subsidiaries.

2.2 Customer Eligibility

This program is open to facility owners or tenants currently paying the NYS System Benefits Charge (SBC) who agree to remain utility distribution customers paying SBC for the duration of the SPC Agreement. All classes of customers (commercial, industrial, and residential) that meet program requirements are eligible. A facility that generates 100% of the electricity it consumes pays no SBC and is, therefore, ineligible. The maximum award is $1 million of the annual C/I Performance Program incentive budget for a single customer. Generally, a customer is defined by its highest level of vertical corporate integration, including all subsidiaries. Contact NYSERDA with any questions regarding customer eligibility.

The incentive will be reduced if the customer fails to pay the SBC for the entire term of the SPC Agreement. Specifically, if the customer fails to pay the SPC for the entire performance phase, the incentive will be reduced by the same proportion as the period of time that the SBC is not paid is to the performance phase. If the customer fails to pay the SBC prior to the performance phase, the entire incentive will be forfeited.

In the event the customer pays the SBC on less than 50 percent of the total electric consumption at the site, only the portion of the electrical consumption at the site for which the SBC is paid will be used to calculate the incentive.

2.3 Measure Eligibility

Eligible energy efficiency measures must reduce electric energy consumption or summer peak demand at the project site, and this reduction must be measurable and verifiable. Table 1 provides a list of pre-approved measures. In addition, cost effective renewable energy measures and measures that reduce summer peak demand are eligible for funding consideration as custom measures whether or not electric energy consumption is reduced.

Table 1
Pre-Approved Measures

Table 2 provides a list of measures that are not eligible under the C/I Performance Program. Any measures that are not listed in Table 1 or Table 2 will be considered for eligibility by NYSERDA on a case-by-case basis.

Table 2
Measures Not Eligible Under the Program

2.4 Custom Measures

For measures that are not pre-approved, the ESCO must provide profile data, including the incremental cost of the measure, annual kWh savings, and, if available, summer/winter/swing, peak and off-peak energy and capacity savings (with energy, demand, and cost savings compared to code-compliant or standard-practice equipment). Also required is a brief discussion of the proposed measurement and verification method. A pre-approved measure is not eligible for higher incentives as a custom measure. Custom measures with simple payback of less than one year are ineligible for funding.

NYSERDA will review profile information provided by the ESCO to determine if a custom measure is cost effective on a resource cost basis. Cost effective measures with long lives and higher energy and demand savings produce higher cumulative present value of savings and will receive higher incentive rates. Photovoltaics, and other renewable technologies, may be eligible for incentives that reflect a higher percentage of the cumulative present value of savings.

An ESCO may submit the profile data for a custom measure to NYSERDA with the application, or prior to the application to obtain an earlier determination of the incentive rate. Contact NYSERDA for additional information about custom measures and expected incentive rates.

Effective with applications received under PON 695-02, the maximum incentive for custom conversion measures will be capped at 30 percent of measure cost.

2.5 Project Eligibility

Except as provided below in Section 2.6 for aggregation of sites, only projects that have estimated savings that yield an incentive of at least $5,000 are eligible.

For the purpose of meeting the eligibility requirements, a project consists of all energy efficiency measures and any associated equipment or improvements that are installed, maintained, or operated by a particular ESCO to achieve the energy savings claimed within a single SPC Agreement. A site may consist of one or several adjacent buildings owned or operated by a single customer. Buildings owned or operated by a single electric customer on a contiguous site may not be treated as separate sites, although they may be treated as separate projects at the ESCO's option. One project may include multiple sites with different owners.

2.6 Aggregation of Sites

Aggregation of sites on one application are encouraged. Applications may be submitted for:

• Up to five sites with different measures and energy usage profiles that meet the minimum incentive threshold of $5,000; or
  
  
• An unlimited number of sites with identical measures, energy use profiles, and M&V plans designated as one project; or
  
  
• Five or more aggregated sites with different measures and energy usage usage profiles, or five or more aggregated sites with identical measures, energy use profiles, and M&V plans, that do not meet the $5000 threshold level.

2.7 Existing Commitments Ineligible

An energy efficiency measure is ineligible if there is an existing or prior commitment or obligation (e.g., a contract or purchase order, or material is on hand) for the purchase/installation of a measure included in the Project Application at the time such application is received by NYSERDA.

2.8 Other Limitations

Measures receiving funds from NYSERDA's New Construction Program, Peak Load Reduction Program, Smart Equipment Choices, or other SBC-funded load management program are ineligible for C/I Performance Program incentives.

2.9 State Environmental Quality Review Act (SEQRA)

NYSERDA is subject to the provisions of the State Environmental Quality Review Act (SEQRA), implementing regulations of the New York State Department of Environmental Conservation (DEC), and implementing regulations of NYSERDA. Funding will not be released for a Project that has not complied with SEQRA.

Activities may qualify as Type I, Type II, or unlisted actions. A Type I activity is likely to have a significant effect on the environment and requires an environmental impact statement (EIS); a Type II action has been determined not to have a significant effect on the environment; an unlisted action must be reviewed to determine if an EIS is appropriate.

The pre-approved measures in the C/I Performance Program, except chillers rated over 5 million BTUs per hour, are generally eligible to be treated as Type II actions. NYSERDA will require the ESCO to provide an Environmental Assessment Form (EAF) with the Detailed Energy Analysis for any unlisted action included in the Project.

Section 3: Program Incentives

$20 million will be available initially in the current year for the C/I Performance Program, of which $1 million is set aside exclusively for sites with annual consumption of less than one million kWh. A premium of 20% will be added to energy efficiency incentives awarded to defray the higher transaction costs associated with aggregating sites with annual consumption of less than 1 million kWh. An additional $10 million may be added at NYSERDA's discretion to this year's funding based on the demand.

Applications for year-five funding will be accepted from ESCOs on a first-come, first-served basis until available funds are fully committed or June 30, 2003, whichever occurs first.

3.1 Energy Efficiency and Demand Reduction Incentives

Energy Efficiency Incentives
Energy efficiency incentive rates are shown in Table 3. A project's total incentive is calculated by multiplying these rates by one full year of energy savings achieved by the project.

Table 3
Energy Efficiency Incentive Rates

Individual sites with consumption of one million kWh per year or more ("large sites") are eligible for the incentives listed in Table 3. Prior to project approval and installation, the ESCO estimates the energy efficiency incentive based on the estimated energy savings. The estimated energy savings amount will be included in the SPC Agreement upon project approval. Multiplying the energy savings by the appropriate incentive rate will yield the estimated energy efficiency incentive. For projects consisting of a mix of different measures, the savings associated with each measure will be multiplied by the appropriate rate and the results will be added together to estimate the total incentive.

Small Site Bonus
Individual sites with consumption below one million kWh per year ("small sites") are eligible for an additional 20% over the incentives listed in Table 3. The total electrical consumption for all buildings at a site (not only the buildings included in the application) is used to determine if a site is eligible for the additional 20% incentive. Aggregated projects may include both large and small sites. In such cases, only the incentives for the small sites will be calculated with the 20% increase.

Electric Chiller and A/C Bonus
An additional incentive of $300 per kW will be paid for summer peak demand reductions resulting from the installation of higher efficiency electric chillers and unitary A/C units used for space conditioning. Summer peak is the period June 1 to September 30 and the hours between 11 AM and 6 PM, Monday to Friday, excluding holidays. The additional incentive is based on the kW savings under standard rating (full load) conditions for the new equipment compared to the existing equipment.
Any electric chiller and A/C bonus will be paid in a single payment following approval of the Project Installation Report in a single payment. Only a site consuming less than one million kWh per year is eligible for an electric chiller and A/C bonus 20% higher than the rates described in this section.

Nitrogen Oxide Emission Reduction
Documented Nitrogen Oxide (NOx) emission reductions achieved by energy efficiency projects receiving incentive funds are eligible to receive additional incentives. Incentives will be provided to ESCOs for documented NOx emissions reductions occurring during the months of May through September of each year. NYSERDA will provide an incentive equal to $4,000 per ton of NOx emission reductions for each year of savings up to five years (up to $20,000 of total incentive per ton). NOx emissions reductions are based on kWh savings during the five-month period, multiplied by .0015 pounds of NOx reduction per kWh saved to convert kWh to pounds of emission reduction. A site consuming less than one million kWh per year is eligible for a NOx reduction incentive 20% higher than the rates described in this section.

3.2 Total Project Incentive

The total contracted project incentive is the sum of the energy efficiency incentive, and any small site bonus, electric chiller and A/C bonus, and NOx incentives, included in the SPC Agreement. The total contracted project incentive also includes any demand reduction incentive approved for a custom demand reduction measure. The total contracted project incentive paid to an ESCO may not exceed 50% of the total project cost. If a project includes a custom conversion measure, the incentive will be capped at 30% of the measure cost. For these purposes, total project cost includes all costs directly associated with the energy savings of the project including, but not limited to: the Detailed Energy Analysis; energy efficiency measure design, procurement and installation; measurement and verification of energy savings (where the ESCO is responsible for M&V); and ESCO overhead and profit. Where a project includes more than one customer, the 50% limit applies to each customer individually.

Any electric chiller and A/C bonus incentive will be paid in a single payment following approval of the Project Installation Report. The balance of the total contracted project incentive will be paid to an ESCO in installments. After NYSERDA's approval of the Detailed Energy Analysis, the ESCO may request a progress payment after the project installation is underway and the ESCO has incurred expenses for materials and equipment. This progress payment can be for up to 40% of the total project incentive, not to exceed 50% of the documented expenditures. Progress and installation payments will be based on the lesser of the approved Detailed Energy Analysis amount or the total contracted project incentive in the SPC Agreement.

The installation payment will be issued after the project is installed by the ESCO and the Project Installation Report is reviewed and approved by NYSERDA. The payment amount will be based on 60% of the total project incentive less any progress payment, unless estimated savings in the Project Installation Report have been reduced.

Based on the duration of the M&V period and the required reports in the approved M&V plan, either one or two performance payments will be made for the actual verified energy savings. These payments will be made after the ESCO's M&V reports have been approved by NYSERDA. Depending on the M&V results, the performance payment(s) will be for up to the balance of the total project incentive in the SPC Agreement. Incentives will not be paid for energy savings in excess of 100% of the total contracted project incentive.

A detailed discussion of the incentive payment calculation and process is provided in Part B, Section 6, of the Procedures Manual.

Section 4: Program Procedure Overview

The New York Energy $mart^SM C/I Performance Program includes two basic phases: project planning/installation, which occurs prior to and just after installation of the energy efficiency measures; and project measurement and verification (M&V) activities, which occur after the energy-efficient equipment is installed and operating. An overview of the C/I Performance Program process is shown in Figure 1, which also includes a relative timeline for all tasks. The C/I Performance Program Procedures Manual provides a detailed discussion of program steps 2 to 9.

1. Application. The first step in the C/I Performance Program process is for the ESCO to submit a completed Project application for its proposed project. The application includes information about the facility where the proposed project will be installed and a general project description, including estimated energy savings and incentive payments.

By submitting an application, the ESCO requests that funding be reserved for a proposed project at a specified customer site. The application also informs NYSERDA that the ESCO has gained approval from the customer to pursue project development.

Applications will be accepted until June 30, 2003 or when the funding for the year has been committed, whichever comes first. See NYSERDA's web site at www.nyserda.org to determine remaining funds.

2. Responsibility for Measurement and Verification. The ESCO must indicate in the application whether the ESCO or NYSERDA will be responsible for M&V. If NYSERDA is responsible for M&V, the total incentive will be reduced by 25% and payments to the ESCO will remain performance-based. An ESCO that is considering having NYSERDA take responsibility for M&V should discuss this with NYSERDA before selecting this option. M&V requirements and sample plans are presented in Part B of the Procedures Manual, and NYSERDA will assist an ESCO in developing an M&V plan.

3. SPC Agreement. C/I Performance Program incentive funds for a project are reserved only upon NYSERDA's written approval of the ESCO's Project Application and offer of an SPC Agreement. Continued reservation of the incentive funding is contingent upon the ESCO signing the SPC Agreement within 30 days and submitting an acceptable Detailed Energy Analysis within 60 or 90 days after Project Application approval, depending on the type of project.

The SPC Agreement, signed by both the ESCO and NYSERDA, specifies the total contracted project incentive.

4. Detailed Energy Analysis (DEA). The Detailed Energy Analysis contains detailed information about the existing and proposed equipment, including equipment counts, efficiencies, operating schedules, nameplate data, building occupancy, and engineering calculations used to estimate energy and demand savings.

Unless the ESCO elects to have NYSERDA take responsibility for M&V, the Detailed Energy Analysis must also include an M&V plan developed by the ESCO detailing how savings will be verified, including who will do the work, what type of metering equipment will be used, when the metering will be done, and the calculation and calibration methods to be used.

NYSERDA, or its Technical Consultant, will conduct a pre-installation project site inspection to verify the accuracy of the information in the Detailed Energy Analysis with regard to both existing conditions
and the feasibility of installing the proposed equipment. The Detailed Energy Analysis must be approved by NYSERDA. NYSERDA's approval is limited to the reasonableness of the savings estimates for the identified measures and the M&V plan if the ESCO is responsible for M&V.

5. Progress Payment. Following the approval of the Detailed Energy Analysis and after equipment costs are incurred, the ESCO may submit an invoice for up to 40% of the total contracted project incentive, not to exceed 50% of the documented expenditures.

6. Project Installation Report (PIR). After approval of the Detailed Energy Analysis, the ESCO has 12 months to install the contracted energy efficiency measures at the customer's site. After the measures have been installed, the ESCO submits a Project Installation Report to NYSERDA. The Project Installation Report contains a detailed description of the installed energy efficiency equipment and operating conditions at the customer's site. Any changes to the estimated energy savings are also documented. Once the ESCO has submitted its Project Installation Report, NYSERDA's Technical Consultant will conduct a post-installation inspection of the customer's site to verify that the energy efficiency equipment specified in the approved Detailed Energy Analysis has been installed properly and is operating according to its design intent. NYSERDA's approval of the PIR is contingent upon the results of this post-installation inspection.

7. Installation Payment. Once NYSERDA approves the Project Installation Report, the ESCO may submit an installation invoice for the balance of up to 60% of the estimated energy efficiency, small site bonus, NOx, and any custom measure demand incentive amounts, and the balance of up to 100% of any electric chiller and A/C bonus incentive, based on the energy and demand savings in the Project Installation Report, provided they do not exceed the total contracted project incentive. NYSERDA will then process the invoice and provide the ESCO with its installation payment.

8. M&V Reporting. During the performance period, the ESCO or NYSERDA must conduct M&V activities as specified in the M&V Plan. Within 60 days following the end of the performance period, the responsible party must prepare an M&V Report. The M&V Report must include clear and verifiable data and describe the baseline assumptions and calculations used to calculate actual energy savings. The M&V Report results will become the basis for the performance payment amounts.

9. Performance Payments. NYSERDA will issue performance incentive payments after reviewing, verifying, and approving the M&V Report(s). Each payment will be based on 20% of the total verified energy savings, after adjusting for differences between the estimated and verified energy savings. The sum of the progress payment, the installation payment, and the performance payments may not exceed 100% of the total contracted project incentive included in the SPC Agreement.

Section 5: Application Procedures and Forms

This section presents the procedures for submitting the incentive application and a discussion of its content.

The application must be received by NYSERDA before the customer and the ESCO make a commitment for the purchase/installation of the equipment. See Section 2.7.

5.1 Submitting the Application

The submittal of an application is an ESCO's first step in becoming involved in the program. By submitting the application, an ESCO is asking NYSERDA for approval to proceed with the development of an energy efficiency project that may be eligible for inclusion in the program. The application also demonstrates to NYSERDA that the ESCO has approval from the customer to develop the project at the customer's site. If the application is approved, NYSERDA will reserve funding for the project for a specified period of time.

Submittal and Notification Schedule

NYSERDA will accept applications until the C/I Performance Program is fully subscribed or until June 30, 2003, whichever is sooner. The terms of this PON are effective as of July 1, 2002 and will apply to applications received on or after that date. NYSERDA will post the availability of funds for the program on its web site, www.nyserda.org/695pon.html, on a regular basis to allow potential ESCOs to determine if funds are still available and to allow for longer-term planning. NYSERDA will not reserve funds for any project if funds have already been reserved by another ESCO for the same project. For subsequent program years, NYSERDA will post funding availability information and future deadlines on its web site. NYSERDA will accept applications and reserve funding on a first-come, first-served basis. Applications received on the same day will be randomly selected for inclusion if it appears that the combined potential incentive of those applications will exceed remaining Program funds. Projects that are wait-listed during a program year because funds are exhausted will be eligible to participate in the subsequent program year, with the original application date establishing the date after which the ESCO and customer may proceed to contract for installation. All other program requirements and provisions for the new program year will apply.

An original and a copy of the application must be submitted. (See Section 6.1 for additional instructions.)

ESCOs that submit an application for a single-site project can expect to receive a written acceptance or rejection notice from NYSERDA within 45 days of NYSERDA's receipt of the application. Multiple-site projects may require more time. NYSERDA will not review or approve applications for a multiple-site project if the documentation for each of the sites is not complete. No partial reviews or approvals will be made.

Application Approval or Rejection

NYSERDA will review the contents of the application to determine the following: (a) the program is in effect and funding is still available (b) the project meets all Program requirements and (c) all required information is properly documented and presented as specified in this PON.

If the application is approved, NYSERDA will reserve a finite amount of funds for either a 60-day or a 90-day period, depending on the project. During this time period, the ESCO must execute the SPC Agreement and prepare a Detailed Energy Analysis and M&V plan, if the ESCO has not elected to have NYSERDA do the M&V. The Detailed Energy Analysis must be submitted to NYSERDA within 60 days for lighting only projects or 90 days for all other projects. (Procedures for submitting the Detailed Energy Analysis are discussed in detail in the program Procedures Manual.) Unless the deadline to submit the Detailed Energy Analysis is extended in writing by the NYSERDA project manager, failure to submit the Detailed Energy Analysis within the specified time frame will be considered a default under the SPC Agreement.

If NYSERDA deems the application complete but incorrect, NYSERDA may make adjustments to the savings and incentive estimates and will notify the ESCO of any adjustments in writing.

NYSERDA may reject an application for a variety of reasons, including, but not limited to, the following:

• NYSERDA's receipt of an application occurs after the deadline or after the C/I Performance Program is fully subscribed for the current program year.
• ESCO fails to meet C/I Performance Program requirements.
• ESCO fails to submit all of the required supporting documentation, or application forms.
• ESCO willfully misrepresents the project or energy savings.

If NYSERDA deems the application incomplete or insufficient, NYSERDA will request clarification or additional information and the ESCO will have five days to respond to such request. If a timely response is not received, or the response is insufficient, NYSERDA may discontinue its review and reject the application. NYSERDA will notify the ESCO in writing, and release any incentive funding that may have been reserved for the project.

5.2 Parts of the Application

The application includes the four forms listed in Table 4. Each of these forms is discussed in the following sub-sections and a copy of each form is provided in Section 7. Electronic versions of the forms that will simplify completion can be obtained from NYSERDA's web site at www.nyserda.org.

Table 4
Application Forms

* If the application contains more than one building, the electronic SPC.1 form will generate the required additional SPC.1 and SPC.2 forms.

SPC.1: Project Summary

This standard form is used at each stage of the project, from the application through the M&V reporting. This form provides identifying information for the ESCO, customer and site information, and information on the proposed efficiency measures. The electronic SPC.1 form for multi-building projects includes a forms generator to prepare the correct number of SPC.1 and SPC.2 forms for projects with from 1 to 40 buildings. If the customer purchases electricity from a company other than a distribution utility, you must list both the electricity supplier and the distribution utility and provide a copy of recent bills for both.

Above the ESCO signature line is a box that the ESCO will check if it elects to have NYSERDA take responsibility for M&V. The total incentive will be reduced by 25% for projects where NYSERDA is responsible for M&V, and payments to the ESCO will remain performance-based. NYSERDA will assist an ESCO in developing an M&V plan and an ESCO is encouraged to discuss this with NYSERDA before deciding this issue.

SPC.2: Energy Efficiency Measure Information

This standard form is required for each building included in the project and is updated at later stages of the project. For a project that involves a campus-type facility, the ESCO may contact NYSERDA to discuss completing the application on an energy efficiency measure basis rather than a building basis.

Information entered on an electronic version of an SPC.2 is automatically transferred to the appropriate SPC.1 summary form. For multiple building projects, an SPC.2 Summary form is automatically updated as information on individual buildings is inputted on the SPC.2 Building forms.

Table 1, Incentive Summary, includes the estimated project cost, cost savings, energy savings, and summer peak demand savings. Summer Peak Demand Savings (kW) is the highest total demand savings that the proposed measures will achieve during a single summer month. The electronic version of SPC.2 will calculate the appropriate incentives after the kWh and kW savings (electric chiller/AC only) are entered.

Table 2, Measure Description on SPC.2, provides summary information about the existing equipment and the scope of the proposed retrofit, and its energy savings potential. Actual conditions are used to determine the energy use baseline. At the application stage, the information is based on a preliminary audit of the site, and is approximate. This information will be refined at the Detailed Energy Analysis stage. The example below shows a project description table completed for a project with three typical Energy Efficiency Measures. Use additional lines for a measure that includes multiple equipment types.

Table 2: Measure Description

For lighting measures, the Lighting Survey form, EF.L, can be used at the application stage to calculate savings by entering information on a single line for the total population of fixtures of a single type. (The identifying information in columns before the column for the "number of fixtures before retrofit" is not needed.)

In the space provided below Table 2, provide additional information on the existing and proposed equipment operation. If the electric chiller and AC bonus incentive is applicable, show calculation of kW savings.

For a custom measure that was not approved by NYSERDA prior to application submittal, the ESCO must provide profile data, including the incremental cost of the measure, annual kWh savings, and if available, summer/winter, peak energy and capacity savings (with both energy and cost savings compared to code-compliant or standard-practice equipment). Briefly discuss the proposed M&V option and method for the custom measure. NYSERDA will review the profile information and determine the incentive rate for the custom measure.

SPC.3: Short-Form Agreement

The Short-Form Agreement must be completed and signed by an authorized representative of the ESCO to demonstrate to NYSERDA that the ESCO acknowledges and understands the key requirements for participating in the Program.

The proposer must disclose any indictment for an alleged felony, or any conviction for a felony within the past five years, under the laws of the United States or any state or territory of the United States, and must describe the circumstances for each. When a proposer is an association, partnership, corporation, or other organization, this disclosure requirement includes the organization and its officers, partners, and directors, or members of any similarly governing body. If an indictment or conviction should come to the attention of NYSERDA after the award of the contract, NYSERDA may exercise its stop-work right pending further investigation, or terminate the agreement; the contractor may be subject to penalties for violation of any law that may apply in the particular circumstances. Proposers must also disclose if they have ever been debarred or suspended by any agency of the U.S. Government or the New York State Department of Labor.

SPC.4: Site Control Letter

This form letter must be completed and signed by the customer to demonstrate to NYSERDA that:

• The customer intends to move forward with a project by allowing the ESCO to conduct a comprehensive energy audit and analysis.
• If the proposed project is acceptable, the customer intends to enter into a contract with the ESCO to complete the project.
• The customer acknowledges that, if they plan to enter into a contract with the ESCO under this Program, NYSERDA will require access to the customer's facilities to inspect relevant equipment and conduct M&V activities.
  The customer acknowledges that NYSERDA will make program incentive payments to the ESCO only as long as the customer continues to pay the SBC as part of its electric bill.

A copy of a recent electric bill, or other documentation from the distribution utility of payment of the SBC, must be attached to the Site Control Letter for each building included in the project.

Sample forms: (SPC1 - Project Summary, SPC2 Energy Efficiency Measure Information, SPC3 - ESCO Short-form Agreement, SPC4 - Site Control Letter)

Section 6: Additional Program Information

6.1 Preparing and Submitting Materials

All submissions for NYSERDA's C/I Performance Program must be sent to the address listed below.

C/I Performance Program Administrator
New York State Energy Research and Development Authority
17 Columbia Circle
Albany, NY 12203-6399

NYSERDA will date-stamp and log all program materials as they are received. NYSERDA recommends that ESCOs send all program materials via certified or registered mail. It is the sole responsibility of the ESCOs to ensure that NYSERDA receives applicable program materials at the designated address by close of business on or before the applicable due date. ESCOs should retain proof of delivery (such as a return receipt for certified, registered, or overnight mail) for all program materials submitted.

In the Application approval letter to the ESCO, NYSERDA will name the Technical Consultant assigned to the project. The Detailed Energy Analysis, Project Installation Report and M&V reports should be sent to NYSERDA with a copy sent directly to the Technical Consultant. (For the Project Application submission, the original and copy are sent to NYSERDA.)

6.2 Requests for Clarification

NYSERDA, or the assigned Technical Consultant, may request clarification or additional information about any item within an ESCO's application or Detailed Energy Analysis. An ESCO will have five days to respond to such requests during the application review. If the clarification or additional information is not forthcoming, or is insufficient, NYSERDA may choose to discontinue its evaluation of the application and reject the application. If NYSERDA discontinues its review, NYSERDA will notify the ESCO in writing.

An ESCO will have up to 30 days to respond to an initial request for clarification or additional information during NYSERDA's review of the Detailed Energy Analysis. The ESCO will have only 10 days to respond to any subsequent request for clarification or information made by NYSERDA, whether the request is a follow-up request on the ESCO's response to NYSERDA's initial request or an additional request. However, the ESCO is allowed only two such subsequent requests by NYSERDA. If after an initial request and two subsequent requests the information needed is either not provided or is insufficient, NYSERDA may elect to declare the ESCO in default under the SPC Agreement.

6.3 Proprietary Information

The NYS Freedom of Information Law, Article 6, provides for public access to information NYSERDA possesses. Public Officers Law, Section 87(2)(d), provides for exceptions to disclosure for records or portions thereof that are "trade secrets or are submitted to an agency by a commercial enterprise or derived from information obtained from a commercial enterprise and which if disclosed would cause substantial injury to the competitive position of the subject enterprise." Information that the proposer wishes to have treated as proprietary, and confidential trade information, should be identified and labeled "Confidential" or "Proprietary" on each page at the time of disclosure. This information should include a written request to except it from disclosure, including a written statement of the reasons why the information should be excepted. Such information will be treated in accordance with the provisions of Public Officers Law, Section 89(5) and the procedures set forth in 21 NYCRR Part 501.

6.4 False, Misleading, or Incorrect Information

NYSERDA reserves the right to discontinue its evaluation of all submittals from any ESCO that NYSERDA determines has submitted false, misleading, or incorrect information.

6.5 Omnibus Procurement Act of 1992
It is the policy of New York State to maximize opportunities for the participation of New York State business enterprises, including minority- and women-owned business enterprises, as bidders, subcontractors, and suppliers on its procurement Agreements.

Information on the availability of New York subcontractors and suppliers is available from the NYS Department of Economic Development, Division for Small Business, 30 South Pearl Street, Albany, NY 12245. A directory of certified minority- and women-owned business enterprises is available from the NYS Department of Economic Development, Minority and Women's Business Development Division, 30 South Pearl Street, Albany, NY 12245.

6.6 Time Extensions
Time extensions beyond the standard program deadline of 60 or 90 days for completion of the Detailed Energy Analysis will be granted at the sole discretion of NYSERDA upon review of documentation of progress by the ESCO. Time extensions will not be granted without evidence of substantial progress in completing the Detailed Energy Analysis and a satisfactory explanation of the cause of the delay. Requests for extensions must be accompanied by a proposed revised schedule for completion of the Detailed Energy Analysis.

Time extensions beyond other standard program deadlines will be addressed in accordance with the SPC Agreement.

6.7 Measurement and Verification Options

The options and methods used in NYSERDA's C/I Performance Program are adapted from those defined in the 2000 International Performance Measurement and Verifications Protocol (IPMVP) and the 1996 Federal Energy Management Program (FEMP) M&V Guideline. Four basic options are outlined in the IPMVP:

Option A – Partially Measured Retrofit Isolation: Savings are predicted using engineering or statistical methods that do not involve long-term measurement. This option will generally be accepted only where other methods are not cost effective and the savings are very predictable and reliable.

Option B – Retrofit Isolation: Involves short-term or continuous metering during the performance period to determine energy consumption. Measurements are usually taken at the device or system level. NYSERDA prefers this option because of its higher accuracy level.

Option C – Whole Facility: Involves (1) comparing monthly billing data recorded for the whole building or project site by a utility meter or sub-meters, before and after project installation, and (2) analyzing that data to account for any variables, such as weather or occupancy levels. Energy savings can be determined once the variables are recognized and adjusted to match pre-installation conditions.

Option D – Calibrated Simulation: Involves using software to create a simulated model of a building based on blueprints and site surveys. The model is calibrated by comparing it with billing or end-use monitored data. Models of the project are typically constructed for (1) the existing base case, (2) a base case complying with minimum standards, and (3) a case with the energy measures installed.

The choice of an M&V option and method depends on the specific equipment being installed, the complexity and interaction of the energy efficiency measures, and the value of the incentive payments. Each available method is discussed in detail in Part B of the C/I Performance Program Procedures Manual.

6.8 Limitations on M&V Costs

NYSERDA intends to require only cost-effective M&V requirements, incremental to those M&V activities called for in an ESCO/customer contract. If the incremental cost to conduct C/I Performance Program-specific M&V activities is equal to or less that 15% of the total estimated incentive payment as defined in the Detailed Energy Analysis, the M&V cost is considered to be cost-effective. If, while preparing an M&V plan, an ESCO estimates that its C/I Performance Program M&V costs will exceed 15% of the estimated incentive payment, the ESCO may contact NYSERDA to discuss how best to reduce costs.

For the purpose of discussing cost-effectiveness, C/I Performance Program M&V costs are those costs directly associated with M&V activities and reporting and are necessary to meet the M&V requirements set forth in the SPC Agreement. Costs associated with energy audits, site surveys, program non-M&V submittals, and regular inspections are not considered M&V costs since they would be required for any energy retrofit project. In addition, costs associated with M&V activities required for a ESCO/customer performance contract cannot be counted towards the 15% cost-effectiveness guideline. All claims that the costs of M&V activities are excessive must be verifiable through documentation and are subject to NYSERDA's review.

6.9 Duration of M&V Period

The standard M&V period is up to two years. However, for measures where the reliability and persistence of savings is high, a single year of M&V may be appropriate. It is useful to distinguish between efficiency measures and control measures in assessing the appropriate duration for M&V.

Efficiency measures involve the replacement of existing equipment with more efficient equipment on a one-for-one basis where the basic function, control and operation remain the same. Levels of persistence of savings are expected to be high based on demonstrated quality of installation and a single year of M&V. Examples include:

Lighting efficiency
Motors
Unitary air conditioning
Chillers
Process equipment

For more complex measures, and those with significant interaction or dependence on customer interaction, the persistence of savings is less certain. These measures are often control related. Control measures involve a change in the control of the end-use and the persistence of savings is less certain. These projects require M&V to extend for up to two years. Examples include:

Occupancy sensors/lighting control
Variable-speed drives
Energy management and control systems
Economizers/free cooling cycles
Process equipment control

To accommodate the different M&V requirements of these two categories of measures, NYSERDA has developed an accelerated M&V approach where a single M&V period is required. For projects that utilize the accelerated M&V approach, 60% of the total incentive will be paid after installation of the efficiency measures. The final incentive payment of 40% of the total incentive will be paid after the first year of savings verification. As with the standard M&V approach, the incentive payment will be reduced if verified savings are lower than the contracted amount.

NYSERDA's acceptance of an accelerated M&V approach will be determined on a case-by-case basis. NYSERDA and its consultants will review details of each measure and general facility characteristics with the participant prior to the determination of the approved M&V approach. Factors that will be considered include:

• Does the measure have a high level of anticipated persistence (certainty of savings)?
• Are the building and efficiency measure usage stable and consistent from year to year?
• Is there low interaction or dependency on other equipment at the facility?
• Would a two-year M&V period be cost-effective relative to the incentive?
• How well are the savings parameters supported within the detailed energy savings analysis and other documentation?
• Is the proposed M&V procedure thorough?

Examples of anticipated M&V approaches are:

Note that these are examples of anticipated levels of M&V. NYSERDA will make a final determination of the required M&V approach based on the specifics of each application, the proposed retrofits, and the facility.

6.10 ESCO Delegation of Responsibility for M&V to NYSERDA

An ESCO may elect to have NYSERDA take responsibility for M&V. If NYSERDA is responsible for M&V, the total incentive will be reduced by 25% and payments to the ESCO will remain performance-based. NYSERDA will develop the M&V plan for ESCO approval following ESCO submission of the Detailed Energy Analysis. The M&V plan will follow the guidelines presented above and in Part B of the Procedures Manual.

An ESCO should discuss assistance available from NYSERDA in developing M&V plans before it selects this option.

Manual and Forms

The text of the C/I Program Manual is available in Adobe Acrobat .pdf format. For navigation ease, the manual is presented in sections.

Application Forms - Year 5

ESCO List (last updated 4/21/03) (or download the list in WordPerfect)

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