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Audit Report: IG-0499

April 2, 2001

Department of Energy's Super Energy Savings Performance Contracts

As you recently noted in both testimony before the Congress and in public statements, the United States is facing the most serious energy supply situation since the 1970s. And, current forecasts suggest that the demand for energy is increasing. As one of the largest energy consumers in the United States, the Federal Government has established several programs to reduce demand, specifically, by moderating energy consumption in Federal buildings. Private financing of energy improvements through what are referred to as Super Energy Savings Performance Contracts (super ESPCs) is one such mechanism. Under super ESPCs, energy service contractors use private financing to make energy-savings improvements in Federal facilities. As compensation for their investment, they receive a share of the cost savings. Thus, super ESPCs represent a way to achieve Federal sector energy savings at no capital cost to the Government.