In a performance contract, the ESCO guarantees energy or financial savings for the project, which means ESCOs only make money if the project performs as promised.

FORBES: Energy Services Sector Sustained by "MUSH" Markets

Severely strained government budgets have convinced state and local governments across the United States to embrace a new form of performance-based investments in energy efficiencyoffered by energy services companies, or ESCOs.

FORBES: Energy Services Sector Sustained by "MUSH" Markets

Rather than shifting or shedding load, the principal response strategy for customers receiving service under MHP rates has been to enter power-supply contracts with third-party ESCOs that limit their exposure to daily price fluctuations.

FORBES: As Power Grid Gets Smart, New Yorkers Scramble to Stay Dumb