BILL ANALYSIS



C.S.S.B. 726
By: Sibley (Hirschi)
May 17, 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.S.B. 726 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 amending
           Subsection (g) requiring the institutions to submit
           energy conservation proposals to the energy management
           center instead of the governors office who may then
           provide a cost-benefit analysis of the proposal and
           analysis of the guaranteed savings and authorizes the
           center to charge a fee for this service.

           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 Texas Higher Education
           Coordinating Board and the energy management center 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


RULEMAKING AUTHORITY

It is the committee's opinion that this bill grants additional
rulemaking authority to the Texas Higher Education Coordinating
Board and the Energy Management Center.

SUMMARY OF COMMITTEE ACTION

S.B. 726 was taken up in a public hearing on May 8, 1995.  The bill
was laid out by Representative McDonald.  The Chair laid out
committee substitute S.B. 726.  The Chair moved the adoption of
C.S.S.B. 726.  The substitute was adopted without objection. 
Representative Harris moved C.S.S.B 726 be sent to the Committee on
Calendars with the recommendation it do pass.  The motion prevailed
with the record vote of 16 ayes, 0 nay, 0 pnv, and 11 absent.