Supporting the Federal Sector
Military and other federal government agencies/facilities are an important customer segment and growth area for AEP. In 2017, we expanded our team to include a dedicated resource to pursue business development opportunities within this sector. Our focus is on three areas of interest –Utility Energy Services Contracts (UESC) within our regulated footprint; various business development opportunities outside of our regulated service territory with our competitive utilities (e.g., AEP Energy Partners); and Utilities Privatization (UP) of military facilities both within and outside our regulated footprint.
In all, AEP provides electric service through our regulated business to over 3,500 federal accounts. Thirty of those accounts are associated with larger facilities, which may present opportunities for UESC-type work. UESC provides federal customers with comprehensive energy and water efficiency improvements and demand reduction services. UESC projects can encompass a broad range of energy conservation measures (ECM), including system upgrades and recommissioning, deep retrofit projects, renewable energy, cogeneration plants and microgrids. The work is performed through third-party energy service companies (ESCOs). AEP has Master Service Agreements with six energy services companies (ESCOs) – Ameresco, Brewer-Garrett, Energy Systems Group, Honeywell, Noresco and Siemens. AEP is tracking several UESC opportunities that may be released in 2018.
Identifying and bidding on federal opportunities outside our regulated service area is a key business development focus. This initiative competitively aligns AEP with its peers. In collaboration with AEP’s competitive affiliates, our strategy is to identify federal acquisitions supporting AEP Energy’s overall business goals and objectives while maximizing their core strengths. An example of this collaboration strategy was the award of a $362 million contract with the Defense Logistics Agency (DLA) Energy in February 2018 to provide over 6.5 terrawatts (TW) of electricity to various U.S. government and military installations operating in the PJM Interconnection over a five year period beginning in 2019.
We are also partnering with military facilities to offer solutions to privatize their on-base utility systems (electricity, natural gas, water, and wastewater). These opportunities allow AEP to operate and maintain the facilities electricity systems. Privatization of such utility systems is important because it results in safe, reliable and efficient utility services for military installations and relieves installation commanders of activities performed more efficiently and effectively by AEP. Two examples of existing UP contracts are with Goodfellow Air Force Base, San Angelo, TX and Red River Army Depot, Texarkana, TX.