Amit,

Concord, CA recently entered into an agreement with an energy service company (ESCO) where the ESCO funded the study, design, and construction of energy saving improvements and the ESCO is being reimbursed through the energy savings that are actually realized. I have attached a copy of the agreement the Council considered. I hope this helps.

Energy performance contracts are very common and can be structured in a variety of ways. I strongly recommend joining ICLEI-USA (http://www.ICLEIUSA.org) if your city is making ongoing investments in energy efficiency. They provide top notch technical assistance and resources. An easy place to start on this topic is at EPA and DOE's EnergyStar site. Here's the link to their finance page: http://www.energystar.gov/index.cfm?c=business.bus_financing . Also there is, of course, a P3 coalition working on these issues: http://www.energyservicescoalition.org .

Washtenaw County entered into a performance contract with Chevron several years ago and we've been satisfied with the results. You have to be very attentive in your contract to the bases for evaluation and repayment. For example, I recommend that you ensure that any presumed labor savings from maintenance are exempted from the determination of total savings because they are too difficult to directly correlate (e.g. are you really going to reduce staff costs because you've saved a thousand hours of maintenance? probably not since your staff is likely overworked anyway!). Shoot me a note at smithco@ewashtenaw.org if you have trouble tracking down the info you need.