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A Guaranteed Energy Savings Contract (GESC) is an agreement between a qualified provider and a building owner to reduce the energy and operating costs of a building, or a group of buildings, by a specified amount. Indiana Code 36-1-12.5 stipulates which governing bodies are able to enter into a Guaranteed Energy Savings Contract. This list is exclusive to what is defined by IC 36-1-12.5: schools, libraries, municipal water or wastewater utilities operated by a political subdivision, and other governing bodies.
As schools and other governing bodies consider building new, or improving existing facilities, making energy efficiency a central part of the planning process has become more important than ever as energy costs rise and budgets decline. By utilizing GESCs, schools and governing bodies in Indiana can benefit from the economic and performance benefits from increasing energy efficiency. The main advantage of these agreements is that the building owner can participate in the project without a large upfront investment of capital. The savings are used to pay for the investment over a period not to exceed the lesser of 20 years or the payback period of the project. If the guaranteed savings are not achieved, the provider must reimburse the building owner for the difference between the guaranteed and cost savings.
A governing body participating in a GESC must choose from a pre-authorized Qualified Provider list. Additionally, local governments are required by IC 36-1-12.5 to provide a copy of the executed guaranteed energy savings contract, pre-project energy costs and documentation of stipulated costs to the Department of Local Government Fiannce (DLGF) not more than sixty (60) days after the date of execution of the contract. The governing body must also report the savings resulting from the contract annually to the DLGF for the life of the contract.
To learn more about the GESC process, to find a qualified provider, or to learn how to become a qualified provider, please visit the GESC webpage on the Department of Local Government Finance's website.