A Standard Energy Service Contract That Would Work for All Types of Customers Would Be Impossible to Draft

30 june 2016

The Analytical Center has held a round table on the preparation of recommended forms of bidding documentation and energy services contracts for budget funded organizations, housing and utilities.

The experts discussed the preparation of draft documentation for the holding of biddings for energy service contracts that is being developed in accordance with clause 29 of the Action Plan for Better Public Regulation of Energy Services. Also discussed were the issues pertaining to the drafting of approximate energy service contract forms being developed in accordance with Clause 2 of Section II of Minutes No 1 dated February 29, 2016 of a meeting of the interdepartmental work group on housing utilities. The specialists noted that such documents should be developed but the problems and difficulties that their impact on the market and on customers may bring about had also to be borne in mind.

“It is clear that a standard energy service contract that would work for all types of customers would be impossible to draft. The terms and conditions would be too different depending on the type of customer. These differences are especially obvious for some categories of projects: there are energy services for heat, indoor and outdoor lighting,” believes deputy CEO of the Russian Association of Energy Service Companies Aleksey Tulikov. The principles, approaches, end customers, contract terms and procurement requirements in the budget funded sector and in apartment blocks are also different, the expert explained.

The specialists noted the huge amount of work that the Analytical Center has done to draft energy service contracts. “But the market is always changing and energy services companies have already entered into a large number of contracts using their own forms,” Mr. Tulikov said. “These forms have already been tried and tested in practice so we cannot just start drafting new forms without consulting with the expert community and taking into account what they have to offer.” There are several stages to this work. First of all, a draft energy service contract for outdoor lighting needs to be made because today outdoor lighting is one area where we have the largest number of projects and experience, where we know the problems and thus know how to best word the contractual terms and conditions. Subsequently, other forms will be developed as well.

In addition to the issue of contractual terms there is also a serious problem with the procedure for implementing energy conservation measures as a result of the performance of energy services contracts, the specialists noted. These are issues having to do with measuring and verifying energy efficiency. The experts are confident that development of standard and draft contract forms will help solve the problems that exist in this area.