WASHINGTON, D.C. - The recently issued Government Accountability Office (GAO) report on Energy Savings Performance Contracts (ESPCs) and public/private partnership arrangements is a misleading presentation of the federal government's experience with alternative financing according to Terry E. Singer, executive director of the National Association of Energy Service Companies (NAESCO).

Singer said the report focused too much on how these projects should be funded in an ideal world where everyone has access to unlimited capital rather than on the success of the ESPCs in delivering energy savings in the real world. Singer said the report "focuses on an issue which was decided by the Congress in 1986 rather than celebrating a program that is working well and delivering upon its promises."

ESPC projects are energy retrofits implemented by energy service companies at federal facilities. The total capital cost of installing the energy efficiency technologies are paid by the government through energy savings generated.

The GAO report, titled Capital Financing: Partnerships and Energy Savings Performance Contracts Raise Budgeting and Monitoring Concerns, examines the experience of 11 alternative financing arrangements including six ESPCs and five public/private partnerships. Singer said the report is predicated on an ideological preference for the traditional appropriations process of paying cash for capital improvements like energy-efficiency projects.

She added, "Everyone who has ever bought a house understands that it costs more if you have a mortgage than if you pay cash. We don't need a 140-page GAO report to tell us that. Unfortunately, most people can't pay cash for their homes."

The GAO report, Singer explained, ignores the critical fact that Congress recognized, nearly two decades ago, the lack of direct appropriations available for energy retrofits and infrastructure upgrades and responded by authorizing alternative financing. Singer noted that private industry responded and provided the capital improvements and energy savings that Congress envisioned.

Publication date: 03/07/2005