HLP C.S.H.B. 1243 75(R)BILL ANALYSIS


ENERGY RESOURCES
C.S.H.B. 1243
4-11-97
Committee Report (Substituted)



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, C.S.H.B. 1243 would allow a county, municipality, or other
political subdivision of this state to also enter into a contract for
energy conservation measures. 


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. 

SECTION BY SECTION ANALYSIS

SECTION 1: Amends Subtitle C, Title 9, Local Government Code, by adding
Chapter 302 to read as follows: 
 Sec. 302.001. Defines "local government".

 Sec. 302.002. CONTRACT FOR ENERGY CONSERVATION MEASURES
     
     (a) states that a local government may enter into an energy
conservation   contract in accordance with this chapter. 

     (b) states that the contract authorizes the installation of:
  1) insulation of the building structures and systems;
  2) window or door modifications that reduce energy consumption; 
  3) automatic energy control systems;
  4) heating, ventilating, or air-conditioning system modifications or
replacements; 
  5) energy efficient lighting fixtures;  
  6) energy recovery systems;
  7) electric systems improvements; or
  8) other energy conservation-related improvements or equipment
(including improvements or equipment related to renewable energy). 

     (c) states that all energy conservation measures must comply with
current local, state, and federal construction and environmental codes and
regulations.  Adds a restriction against any use of nonpotable water in
any condensing, cooling or industrial process that the public water supply
system officials do not have control over, to be returned to the potable
water supply. 
  
 Sec. 302.003. PAYMENT AND PERFORMANCE BOND.  Allows the governing body of
the local government, at its option, to require a payment and performance
bond for the installation of energy conservation measures.  The bond may
also cover the value of the guaranteed savings on the contract. 

 Sec. 302.004. LEASE-PURCHASE CONTRACT AUTHORIZED.  States that a contract
may be a lease/purchase contract with a term up to 10 years, that meets
federal tax requirements for tax-free municipal leasing or long-term
financing.  The contract must guarantee the amount of savings.  Requires
that no one year's cost to the local government will exceed the year's
savings. 

 Sec. 302.005 BIDDING PROCEDURES; AWARDS OF CONTRACT. 
     
     (a) states that contracts under this chapter may be let under
competitive  bidding procedures. Requires notice of request to be
published in a manner of competitive bidding and that such requests
solicit quotations and specify the relative importance of certain
evaluation factors. 

     (b) states that following negotiations the contract shall be awarded
to the offerer whose proposal is determined most advantageous to the local
government. 

     (c) states that the local government may allow proposal revisions
before   awarding the contract.  

SECTION 2. Emergency Clause.
           Effective Date: Upon Passage.




COMPARISON OF ORIGINAL TO SUBSTITUTE

SECTION 1.  302.001  Adds language excluding school districts from this
act. 

302.002  (b)(8) is added to authorize installation of other energy
conservation-related improvements including renewable energy sources.   
 Adds (c) which requires compliance with local, state, and federal laws
and regulations, and excludes devices that use and then return potable
water from the public water supply for nonpotable uses. 

302.003  Makes the payment and performance bond optional and provides for
the option of bonding the savings and/or the installation of the measures. 

302.004  Adds language requiring that the contract contain provisions
guaranteeing the amount of savings.  Also adds language requiring yearly
reconciliation, and specifies that the contract term begins after the date
of final installation. 

302.005  (a)  Adds the relative importance of the guaranteed savings to
the list of criteria.  
 (b)  No change.
 New (c), (d), and (e) are added to provide for the opening of and
negotiation of proposals prior to the awarding of a contract. 
 (c) changed to (f).

SECTION 2.  No change.