BILL ANALYSIS



C.S.H.B. 1839
By: Hirschi
April 18, 1995
Committee Report (Substituted)


BACKGROUND

In FY 1992, the Legislature authorized higher education
institutions to enter into performance contracts to reduce energy
consumption and operating costs at institutional facilities. These
contracts provide a cost-effective way to fund facilities
improvements without increasing the need for state appropriations
or relying on limited state-funded loan programs.  Energy
performance contracts do not require the institutions to cover
initial costs; the contractor pays for all project engineering,
equipment and construction, and is paid back from annual energy
cost savings within a ten year period.

Texas law does not guarantee that universities can use the savings
resulting from energy efficiencies to pay for these improvements.
Many energy performance contracts are promulgated on cost savings
with reimbursement derived from the savings.  Some contracts
contain clauses which obligate the contractor to pay the difference
between the estimated savings calculated as a payment and the
actual savings obtained.


PURPOSE

C.S.H.B. 1839 statutorily creates an appropriation formula for
energy costs.  It provides for the estimated energy costs for the
fiscal year, plus 100% of the annualized net savings for
universities with a current energy savings contract.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 51.927, Education Code, by adding
           Subsection (j) directing the Legislature to base an
           institution's appropriations for energy costs on the
           institutions estimated annual energy costs for the
           fiscal year that a performance contract is in effect,
           plus the estimated yearly savings resulting from that
           contract.

           Amends Section 51.927, Education Code, by adding
           Subsection (k)  directing the Legislative Budget Board
           to establish guidelines and an approval process for
           projects under this section.

SECTION 2. Effective date and clause limiting effect of this bill
           to appropriations enacted after September 1, 1995.

SECTION 3. Emergency Clause

COMPARISON OF ORIGINAL TO SUBSTITUTE

HB 1839, as filed, allows the institutions to retain 100% of the
estimated savings in energy costs resulting from a contract and
allows the institutions to retain 50% of the estimated savings in
energy costs after the contract has expired.  CSHB 1839 allows the
institutions to retain 100% of the estimated savings in energy
costs but does not allow the schools to retain any savings after
the contract expires. The substitute also adds language requiring
the LBB to set up guidelines and an approval process for energy
conservation projects.


RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency or institution.


SUMMARY OF COMMITTEE ACTION

H.B. 1839 was taken up in a public hearing on April 5, 1995.  The
Chair recognized Representative Hirschi to lay out the bill. 
Representative Delisi laid out a committee substitute to H.B. 1839. 
The Chair recognized Edward Whalen from the University of Houston
to testify on the bill and Joe Kaveski of Johnson Controls, Inc. to
testify for the bill.  The Chair referred the substitute to
subcommittee.  C.S.H.B. 1839 was taken up in a public hearing on
April 10, 1995 in subcommittee and was amended.  The Chair
instructed staff to incorporate the amendment into the substitute. 
The substitute was reported back to the full committee with a vote
of 5 ayes, 0 nays, 0 p-n-v, and 0 absent.   The Committee
substitute was taken up in full committee in a public hearing on
April 12, 1995.  Representative Heflin moved to adopt the Committee
Substitute without objection the substitute was adopted. 
Representative Heflin moved to send C.S.H.B 1839 be sent to the
Committee on Calendars with the recommendation it do pass.  The
motion prevailed on the record vote of 17 ayes, 0 nays, 0 p-n-v,
and 10 absent.