BILL ANALYSIS


                                                         S.B. 744
                                                         By: Cain
                                      Intergovernmental Relations
                                                          3-23-95
                                     Committee Report (Unamended)
BACKGROUND

In 1992, the legislature authorized higher education institutions
to enter into performance contracts for energy conservation
measures 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 10-year period.  Also, the
contractor guarantees that a certain level of energy savings will
be achieved; if not, the contractor must return the difference.

PURPOSE

As proposed, S.B. 744 authorizes the local governments to enter
into energy conservation contracts; sets forth contract bidding
procedures.

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Title 9C, Local Government Code, by adding
Chapter 302, as follows:

CHAPTER 302.  ENERGY CONSERVATION MEASURES FOR LOCAL GOVERNMENTS

     Sec. 302.001.  DEFINITION.  Defines "local government."
     
     Sec. 302.002.  CONTRACT FOR ENERGY CONSERVATION MEASURES.  (a) 
     Authorizes the governing body of a local government to enter
     into a contract for energy conservation measures to reduce
     energy consumption or operating costs of governmental
     facilities in accordance with this chapter.
     
     (b)  Provides that a contract authorized under this chapter
       includes a contract for the installation of certain
       electrical systems and fixtures.
       
       (c)  Requires the person contracted by the governing body to
       be experienced in the design, implementation, and
       installation of energy conservation measures.
       
       Sec. 302.003.  BOND.  Requires the providers of the energy
     conservation measures to file with the local government a
     performance bond in an amount that covers the value of the
     guaranteed savings on the contract and is conditioned on the
     faithful execution of the terms of the contract before
     entering into a contract for energy conservation measures.
     
     Sec. 302.004.  LENGTH OF CONTRACT.  (a)  Authorizes the
     governing body to enter into a contract for a period of more
     than one year for energy conservation measures with a person
     if the governing body finds that the potential amount the
     local government would spend will not exceed the amount
     estimated to be saved in energy and operating costs during the
     10-year period beginning on the date the installation is
     complete.
     
     (b)  Prohibits the local government's contractual obligation
       in any year during the term of the contract, if the term of
       a contract for energy conservation measures exceeds one
       year, from exceeding the total estimated energy and
       operating cost savings divided by the number of years in the
       contract term.  Requires the governing body to consider all
       costs of the energy conservation measures.
       
     Sec. 302.005.  LEASE-PURCHASE CONTRACT AUTHORIZED.  Authorizes
     a contract for energy conservation measures to be a lease-purchase contract that meets federal tax requirements for tax-free municipal leasing or long-term financing with a term not
     to exceed 10 years.
     
     Sec. 302.006.  BIDDING PROCEDURES; AWARD OF CONTRACT.  (a) 
     Authorizes a contract under this chapter to be let under
     competitive proposal procedures.  Requires notice of the
     request for proposals to be published in the manner provided
     for competitive bidding.  Requires requests for proposals to
     solicit quotations and specify the relative importance of
     certain evaluation factors.
     
     (b)  Requires the contract to be awarded to the responsible
       offeror whose proposal, following negotiations, is
       determined to be the most advantageous to the local
       government considering the guaranteed savings and other
       evaluation factors set forth in the request for proposals.
       
       (c)  Authorizes the local government to conduct discussions
       with offerors who submit proposals and who the local
       government determines to be reasonably qualified for the
       award of the contract.  Requires offerors to be treated
       fairly and equally with respect to any opportunity for
       discussion and revision of proposals.  Authorizes the local
       government, to obtain the best final offers, to allow
       proposal revisions after submissions and before the award of
       the contract.
       
       (d)  Requires proposals to be opened in a manner that avoids
       disclosure of the contents to competing offerors and keeps
       the proposals secret during negotiations, if provided in a
       request for proposals under Subsection (a).
       
       (e)  Requires the board to give notice of intent to award a
       contract to the selected offeror on completion of all
       negotiations.  Requires the notice of intent to be published
       in the same manner as the notice of request for proposals. 
       Provides that all proposals are open for public inspection
       after the notice of intent to award is published, but trade
       secrets and proprietary information identified in the
       proposals are not open for public inspection.
       
       SECTION 2.   Emergency clause.
           Effective date: upon passage.