1. Qualified Energy
Conservation Bonds
Pete Westerholm
Program Manager
TDEC Office of Energy Programs

2. 2
QECB Background
Low interest bonds for qualified energy projects
• Attractive borrowing rates: 1%-5% effective interest rate
• Issuer gets 3%-4% subsidy from Treasury
• 15 to 22-year term
Initially created by Congress in 2008; greatly expanded
by ARRA
Total national allocation is $3.2 billion; Tennessee
allocation is $64,676,000
Issued for qualified energy efficiency, renewable energy,
and energy conservation capital expenditures; qualified
projects are broadly defined

3. 3
QECB Qualified Projects
Capital expenditures incurred for purposes of:
• Reducing energy consumption in publicly-owned buildings by at
least 20 percent
• Implementing green community programs (including the use of
loans, grants, or other repayment mechanisms to implement such
programs)
• Rural development involving electricity produced from renewable
energy resources
• Energy-related research facilities and research grants
• Mass commuting facilities
• Demonstration projects (for energy-related processes)
In Tennessee, bonds can only be issued if physical asset
development or improvement is critical component of project

4. 4
QECB Criteria
1. 100% of the available project proceeds from issuance must
be used for one or more qualified conservation purposes,
2. Bond is issued by a state or local government, and
3. Issuer designates such bond for the eligible purposes.
Also:
Up to 30% of Tennessee’s QECB allocation may be used for
private activity
Federal Davis-Bacon (prevailing) wage and benefit requirements
apply to projects funded with QECBs. Other ARRA
requirements, such as Buy American, monitoring and audits,
may apply
Issued as revenue bonds or general obligation bonds

5. 5
Large Local Jurisdictions Allocations
Large Local Jurisdictions in TN received a share of the $64.7
million based on their percentage of the population
• Cities with populations of 100,000 or more
• Counties with populations of 100,000 or more, not including any cities within
the county that are large local governments
15 entities in TN received allocations, totaling $35.9 million.
Blount County, Chattanooga, Clarksville, Hamilton County, Knox County, Knoxville,
Memphis, Metro Nashville, Rutherford County, Shelby County, Sullivan County,
Sumner County, Washington County, Williamson County, Wilson County
“Allocation designees” may:
• Authorize an eligible public entity such as a Development Authority to issue
QECBs
• Allocate all or a portion to an unrelated political subdivision within its
jurisdiction (such as a city in a county – conduit issuer relationship)
• Reallocate to the State

6. 6
Large Local Jurisdiction Utilization:
Examples in TN
Nashville, TN
$6,440,000 allocation on energy efficiency upgrades for
downtown Arena (Aug 2012)
Chattanooga, TN
$1.7 M for streetlight upgrades (expected Fall/Winter 2013)
This represents over $8.1 million already utilized or planned
from the original $35.9 million total for LLJs in TN
Additional $9.9 million from original LLJ total intended for
issuance, for total of $18 million

7. 7
QECB Utilization:
Examples Elsewhere
Manchester, NH
$1.1 M for energy efficiency in schools; $450,900 year one
savings
Littleton, CO
$1 M for hockey arena (HVAC, lighting, ice machines); 25%
annual savings
Louisiana
$31 M energy efficiency upgrades (boilers, chillers, etc) for 9
state prisons, paid back over 20 years

8. 8
Yolo County, CA:
Solar Power at Correctional Facilities
• 1 MW solar photovoltaic (PV) supplies power to both a jail and
juvenile center
• Finance was a mix of new CREBs, QECBs, a California Energy
Commission (CEC) loan, a Pacific Gas and Electric (PG&E)
rebate, and a Tax Exempt Lease Program (TELP) loan
• 3.9 percent interest rate with a 15 year tenor for QECBs
• Anticipating net positive cash flow of $100,000 per year starting
year 1 and up to $600,000 per year starting in year 16 in utility
expenditures

9. 9
Las Vegas, NV:
Streetlight Retrofit Project
• Las Vegas received $5.8 million for facilities upgrades, large
portion of which was used for 42,000 streetlights
• $2.0 million annual savings in operation and maintenance

10. 10
Allegheny County, PA (Pittsburgh):
Municipal Building Efficiency Improvements
• $9.3 million QECB for energy efficiency improvements to
County Jail and Regional Center = positive cash flow of $1.56
million annually
• Lighting & HVAC, new waste disposal system and domestic
water pumping upgrades for jail, water upgrades and new high
efficiency boilers for the regional center
Initial guaranteed energy savings agreement project (both
buildings)
$14,186,509
EECBG (Energy Efficiency and Conservation Block Grant) $4,848,602
QECB $9,337,907
1st year annual guaranteed energy savings (Starting 2012) $2,107,866
1st year payment (Starting 2012) ($523,994)
Measurement and verification service payment ($24,219)
1st year annual positive cash flow $1,559,653

11. 11
Next Steps:
Utilization and Competitive Sub-Allocation
• OEP requested that all 15 Large Local Jurisdictions
determine usage of QECB allocation by June 30, 2013.
• Allocations not utilized by LLJs and reallocated to the
State will be combined with state government allocation.
• Total allocation will be available to all qualified local
governments, public universities, and private entities
through a competitive sub-allocation process.
• OEP is currently evaluating the level of funding to be
dedicated to the competitive round of sub-allocations;
anticipated total is $45,295,100

12. 12
Next Steps (continued):
Utilization and Competitive Sub-Allocation
• OEP will evaluate requests for QECB allocations through
a competitive process; guidelines in development.
• RFP will be released in Fall 2013.
• Competitive sub-allocation process will still require
adherence to appropriate regulations and conditions of
original allocation.
• End result: more places across TN saving money!

13. 13
Next Steps:
Workshops to Assist Eligible Entities
• Workshops will be held showcasing QECBs:
– September 3: Nashville
– September 6: Knoxville
– September 11: Jackson
– September 12: Chattanooga
All workshops will be from 10:30-1:30 local time. Locations and
registration will be available at http://tnenergy.org/events/

14. Thank You
14
OEP Energy Hotline: 615-741-2994
TDEC OEP Website
http://www.tn.gov/environment/energy/qualified-energy-conservation-bonds.shtml
Pete Westerholm
Program Manager
TDEC Office of Energy Programs
Katie Southworth
Program Manager
TDEC Office of Energy Programs