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
• 1%-5% effective interest rate for issuer
• Issuer gets 3%-4% subsidy from Treasury
• 15 to 22-year term
Initially created by Congress in 2008; greatly expanded
by ARRA in 2009
Total national allocation is $3.2 billion; Tennessee
allocation is $64,676,000
Issued for qualified energy efficiency 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 the production of electricity from
renewable energy resources
• Certain research facilities and research grants
• Mass commuting facilities
• Demonstration projects
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 wage and benefit requirements apply to
projects funded with QECBs. Other ARRA requirements, such
as Buy American, monitoring and audits, may apply

5. 5
Large Local Jurisdictions Allocations
Large Local Jurisdictions in TN receive 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

7. 7
Large Local Jurisdiction 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
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

9. 9
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
in year 1 and $600,000 per year starting in year 16 in utility
expenditures

10. 10
Las Vegas, NV:
Streetlight Retrofit Project
• Las Vegas received $5.8 million for facilities upgrades, large
portion of which was used for 52,000 streetlights
• $1.7 million in annual operational savings
• $1.0 million in annual maintenance savings, $2.7 M total

11. 11
Next Steps:
Utilization and Competitive Sub-Allocation
• OEP has 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 unused state government
allocation.
• State allocation not used for State building projects will be
available to qualified local governments, state educational
institutions, 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.

12. 12
Next Steps (continued):
Utilization and Competitive Sub-Allocation
• OEP will evaluate requests for QECB allocations through
a competitive application process in October 2013.
• Rules for the sub-allocation process are in development.
• Competitive sub-allocation process will still require
adherence to appropriate regulations and conditions of
original allocation.

13. Thank You
13
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