CBO Examines Cost Implications of Energy Savings Performance Contracts for Agencies

CBOA Congressional Budget Office report indicates federal agencies can use energy savings performance contracts to save on their electricity bills as budget appropriations decline.

Under an ESPC, a contractor shoulders upfront costs to install energy conservation appliances in a federal building and is repaid with money saved on energy costs over time, CBO said Feb. 5.

Energy Department analysts estimated that systems acquired through ESPCs cut agencies’ energy usage by approximately 20 percent, the report states.

CBO believes that any agency that signs an ESPC is assuming an obligation on government’s behalf for equipment acquisition costs with no appropriations needed.

“Legislation authorizing ESPCs creates the authority to make such obligations, and in the absence of appropriations sufficient to cover the contractual costs, that authority is a form of mandatory rather than discretionary spending,” CBO stated.

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