Appendix O
Federal Building Initiative – Energy Management
Published September 8, 1997. 
1.	General
1.1	The Federal Building Initiative is designed to help departments make investments to improve energy efficiency in their buildings. Canadian utility companies are promoting demand side management programs to reduce electrical consumption. Financial incentives are aimed at various consumer groups including the federal government.
1.2	Custodian departments have contract entry authority needed to enter into agreements with utility companies and the private sector to make energy efficiency improvements to federal buildings.
1.3	Efficiency improvements may include installation of high efficiency lights and motors, modification of heating, ventilation and air conditioning systems, upgrading building envelopes, better design for new construction, and changes to operating and maintenance practices. Cogeneration of electricity may be possible in some cases 
2.	Policy
2.1	The Treasury Board has authorized any contracting authority to enter into and amend a service contract to acquire energy services, which may include energy supply, energy efficiency improvements, management services, energy management monitoring and training, if the total under the contract, including any amendments does not exceed $25 million on condition that the first energy management contract over $1 million be submitted to the Treasury Board for approval.
2.2	The supply of energy as well as management and efficiency improvements should be obtained through the use of energy management contracts, as follows:
(a)	An energy management firm will be responsible for acquiring the initial capital required. Incentives from the utility company will accrue to the management firm and reduce the length of the playback period for the custodian department.
(b)	The management firm will invoice the custodian department for energy bills and make physical and operational improvements in the buildings. The firm will recover its costs and profit over the term of the contract from an energy management service fee which is equal to the energy savings or the difference between the pre-improvement energy bills and the actual energy bills.
(c)	The energy services bill paid by the custodian department will be equivalent to the energy bills before improvements, adjusted for rate increases and any supplemental fluctuation in energy demand such as a major change in the use of the building or to health and safety standards.
(d)	At the end of the contract period the custodian department resumes its regular relationship with the utility company. At that point, its energy costs would drop. In the meantime, it would not be paying any more than it would have had it not entered into this agreement.

2.3	Each energy management contract presents a specific situation that must be evaluated on its own merits. Where economically feasible, energy management contracts may be structured for a partial sharing of the savings over a prolonged pay back period. Cost/benefit analyses should be carried out to determine the most appropriate pay back period.
2.4	The contracts will include goods procurement related to the energy services. As well, the total package must meet the requirements set out in the North American Free Trade Agreement, in the World Trade Organization Agreement on Government Procurement and in the Agreement on Internal Trade.
2.5	Under the Federal Buildings Initiative, Natural Resources Canada will assist federal government departments to improve the energy efficiency of their facilities without compromising the work environment of employees. The services available will include model agreements for savings financing and utility incentives; health and safety guidelines; training packages for building operators and managers; information packages for federal employees; model long-term energy management plans; technical specification guidelines; model contract and bid packages; and qualified bidders list for firms to conduct energy efficiency improvements.