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Utility Energy Service Contracts for Federal Agencies

Utility Energy Service Contracts for Federal Agencies

By participating in available incentive programs, federal agencies can leverage their utility budgets to implement energy, water, and renewable measures that are essential to meeting federal mandates, facility goals, and operations and maintenance objectives. 

Authorized by the Energy Policy Act of 1992, P.L. 102-486 (codified as 42 U.S.C. 8256), a utility energy service contract (UESC) is a limited-source contract between a federal agency and its serving utility for energy- and water-efficiency improvements and demand-reduction services. 

A UESC between a customer agency and a franchised serving utility can be put in place for the utility to provide energy management services such as:

  • Assessing project potential
  • Designing solutions
  • Providing project financing
  • Installing the measures
  • Providing performance assurance.  

A UESC is developed with a design-build team approach. An agency establishes an internal team that is composed of technical, acquisition, and legal staff. Typically, technical staff identifies the need and initial scope and work with the utility to ensure the assessed potential and recommended solution are technically and economically feasible and meet the agency mission and facility functionality. The contracting officer, acquisition staff, and legal counsel ensure that the project is developed in accordance with laws and regulations at a fair and reasonable price. 

To help agencies and their serving utilities implement UESCs, the Federal Energy Management Program (FEMP) offers regional and customized training, technical assistance, and these comprehensive publications:

Utility Partnerships Program

FEMP’s Utility Partnerships Program fosters effective partnerships between federal agencies and their serving utilities.

Accomplishments: Since 1994, $2.8 billion have been leveraged through utility partnerships. More than 1,800 projects, ranging from small single-measure to large comprehensive projects, have been reported.

Project Data: FEMP tracks agency-wide progress toward federal goals using information reported through the UESC data collection template. Agencies executing UESC task orders under General Services Administration (GSA) areawide contracts (AWCs) are also required to report to GSA their use of the AWC exhibit.

Utility Partners: Many utilities offer energy management incentives and services in to improve availability and reliability, manage new generation needs, and provide equipment and system improvements and cost-saving services to their customers. FEMP’s utility partners list includes utilities with established incentive programs, including UESCs. If a serving utility is not on the list, FEMP will investigate interest, provide training, and link new utilities with experienced ones as they consider developing their own programs.

Meetings: To foster utility partnerships, FEMP hosts strategic partnership meetings that both help utilities understand agency customer needs and help agencies understand opportunities offered by serving utilities. These meetings promote long-term partnerships with the common goals of reducing costs and mitigating the environmental impacts of government facilities.

Working Group: FEMP facilitates the Federal Utility Partnership Working Group (FUPWG) to nurture established partnerships, encourage new partnerships, identify current and common project obstacles, and work collaboratively to develop solutions that enhance the implementation of cost-effective energy-efficiency and water-conservation projects. The group meets twice a year at FUPWG Seminars.

What Success Looks Like

Photo of U.S. Department of Energy Fermi National Accelerator Laboratory.Read case studies about agencies that have successfully used utility energy service contracts to implement energy-saving projects.