Energy Services Acquisition Program: Committee of the Whole—July 8, 2020
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Context
On June 4, 2019, the Government of Canada announced that on May 31, 2019 it entered into a contract with a public-private partner (P3) for the modernization of the district energy system in the National Capital Region (NCR). Innovate Energy will complete the design and construction by 2025 and will operate the system until 2055.
Suggested response
- The Government of Canada is committed to reducing greenhouse gas emissions which includes leading by example to green its own operations
- This initiative aims to improve the overall efficiency and cost-effectiveness of the heating and cooling infrastructure that supplies federal buildings in the NCR
- The project is expected to reduce operating costs for the Government of Canada over the 35 year life of the operations and maintenance contract
- Modernizing the district energy system will reduce greenhouse gas (GHG) emissions in 80 buildings located in the NCR by over 60% compared to our 2005 baseline
If pressed on timelines and budget:
- construction began in May 2020 and is expected to end in October 2025
- at present, the phase I modernization project is on time and on budget despite the fact that work started one month later than planned due to the COVID-19 Ontario ban on construction
- the project is expected to reduce operating costs for the Government of Canada over the 35 year life of the operations and maintenance contract
Background
As the federal authority for real property, Public Services and Procurement Canada (PSPC) is responsible for the delivery of essential heating services to 80 federal buildings in the NCR and cooling services to 67 of these buildings, including mission-critical sites within the Parliamentary Precinct. As such, PSPC operates 5 central heating and cooling plants (CHCPs) which were designed and built from 1916 to 1971.
In 2009, Energy Services Acquisition Program (ESAP) was established to explore potential new business models for the provision of energy services in the NCR. In 2018, PSPC issued a request for proposal for the modernization of the heating and cooling energy service capability.
Budget 2016 reaffirmed Canada’s commitment to modernizing the delivery of heating and cooling services by implementing more efficient technologies. This will reduce both long-term costs for Canada and greenhouse gas (GHG) emissions. In addition, the new technology will enable Canada to explore the feasibility of using alternative “low or no carbon” sources of energy, the adoption of which could further reduce GHG emissions.
For this project, Canada selected Innovate Energy through competitive tender, to be the private partner that will deliver a technologically superior and efficient solution on time and in a manner that ensures the best value for Canadians.
The contract is valued at $2.6 billion and is broken down into 2 parts. The first, valued at $1.1 billion, is for the design and construction of the new system, to be completed by 2025. The second portion is for the operation and maintenance, which includes energy and fuel costs, of the new system over a 35 year period, valued at $1.5 billion.
Design has been initiated, construction began in May 2020 and is expected to end in October 2025. At present, the phase I modernization project is on time and on budget despite the fact that work started 1 month later than planned due to the COVID-19 Ontario ban on construction. The project is expected to reduce operating costs for the Government of Canada over the 35 year life of the operations and maintenance contract. Precise cost savings will be recalculated once phase II determines greener sources of energy for the District Energy System and after the phase I construction period is completed.
Canada has taken all steps necessary to ensure that the procurement process for the Project was open, fair and transparent. The public private partnership contract with Innovate Energy was finalized in May 2019.
Due to the modernization of the NCR heating and cooling plants under ESAP, several plant employees’ services are no longer required due to discontinuance of their particular functions.
PSPC is following the guidelines outlined in the work force adjustment (WFA) agreement and will support all employees through their transition to new roles emerging within the service management areas.
Each employee will have the support of their union and human resource services in PSPC to ensure that they have all the information necessary to understand their available options based on their career objectives and specific circumstances.
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