HLP C.S.H.B. 3530 75(R)BILL ANALYSIS
ENERGY RESOURCES
C.S.H.B. 3530
By: Holzheauser
4-2-97
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.
The existing law, however, does not allow for electrical system
improvements which would be more energy efficient. Also, certain points
in the contracting process are inefficient or cumbersome and need to be
addressed. In addition, state agencies are not allowed to contract for
energy conservation measures as higher educational institutions are
allowed to do.
PURPOSE
As proposed, H.B. 3530 would include electrical system improvements in
performance contracts for energy conservation measures and remove certain
inefficient and cumbersome barriers which impede the contracting process.
The bill also includes state agencies to enter into performance contracts
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 Section 44.901, Subchapter Z, Title 2, Education Code,
to add contracts for:
(7) electric systems improvements, or
(8) other energy conservation-related improvements or equipment
(including improvements or equipment relating to renewable energy).
(c) is added to require all energy conservation measures to 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.
(d) requires the person with whom the board contracts to be experienced
in the design, implementation and installation of energy conservation
measures.
(e) allows the board, 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.
(f) states that a lease/purchase contract begins after the final date of
installation. Requires the contract to guarantee the amount of the savings
to be realized by the school district. If the term of a contract exceeds
one year, the school district's yearly payments may not exceed the energy
and operating costs savings for the year.
(g) is amended to add the importance of return on investment to request
for proposals.
Makes conforming changes.
SECTION 2. Amends Section 51.927, Subchapter Z, Title 3, Education Code,
to add contracts for:
(8) energy conservation improvements, including improvements or
equipment related to renewable energy.
(c) is added to require that all energy conservation measures 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.
(d) changes "person" to "entity".
(e) is amended to state that the bond required by the board be a payment
and performance bond.
(f) changes "person" to "entity". Changes the period of consideration
of energy savings from 10 years to the life of the contract.
(g) states that a lease/purchase contract begins after the final date of
installation. Requires the contract to guarantee the amount of savings to
be realized by the institution.
(h) is amended to require that notice of the request for proposals
follow the manner of Chapter 2156, Government Code, and deletes the
requirement to follow the manner of Sec. 3.12, Article 601b, Revised
Statutes. Transfers duties under this section from the energy management
center to the State Energy Conservation Office and the Texas Energy
Coordination Council.
existing subsection (k) is deleted.
Makes conforming changes.
SECTION 3. Amends Subchapter I, Chapter 2166, Title 10, Government Code,
by adding Section 2166.406. ENERGY CONSERVATION MEASURES.
(a) allows the governing body of a state agency, without the consent of
the commission, to enter into a contract for energy conservation measures
to reduce energy consumption or operating costs of governmental
facilities.
(b) states that the contract authorizes the installation of:
1) insulation of the building structure and systems within the building;
2) window or door system 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.
(c) requires that all energy conservation measures 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 over which the public water
supply system officials do not have sanitary control over, to be returned
to the potable water supply.
(d) requires the person with whom the board contracts to be experienced
in the design, implementation, and installation of energy conservation
measures.
(e) allows the board, at its option, to require a payment and performance
bond from the provider of the energy conservation measures.
(f) allows the board to enter into a contract for more than one year if
the savings from the conservation measures over 10 years outweigh the cost
of installation.
(g) allows a contract for energy conservation measures, with respect to
existing buildings or facilities, to be a lease/purchase contract with a
term not to exceed 10 years. Requires the provider of the energy
conservation measures to guarantee the amount of savings to be realized by
the agency. If the term of a contract exceeds one year, the agency's
yearly payments may not exceed the energy and operating costs savings for
the year.
(h) allows for a contract under this chapter to be let under competitive
sealed proposal procedures. The manner of notice for proposals is given
in Chapter 2156, Government Code. States that the State Energy
Conservation Office and the Texas Energy Coordination Council will review
and comment before the institution awards the contract. Allows the State
Energy Conservation Office and the Texas Energy Coordination Council to
charge a fee for analysis of the proposals and the guaranteed savings.
States that the contract will be awarded to the offeror with the proposal
most advantageous to the state agency, unless the agency finds none
acceptable, in which case the agency may refuse all proposals.
(i) allows the institution to conduct discussions with offerors who
submit proposals and who are determined to be reasonably qualified for the
award of the contract. Requires that offerors be treated fairly and
equally with respect to any opportunity for discussion and revision of
proposals.
(j) states that proposals will be opened in a manner that maintains
secrecy during negotiations. States that all proposals are open for
public inspection after a contract is awarded, unless the information is
excepted from disclosure under Chapter 552, Government Code.
(k) allows the state agency to allow proposal revisions after submissions
and before the award of the contract. Final review and approval of the
contract will be provided by the State Energy Conservation Office.
(l) states that the legislature shall base an agency's appropriation for
energy costs during a fiscal year on the sum of the agency's estimated
energy costs and, if a contract under this section is in effect, the
agency's estimated net average yearly savings.
SECTION 4. Effective date, on passage.
Emergency clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
SECTION 1. CSHB 3530 adds language which excludes devices that use and
then return potable water from the public water supply for nonpotable
uses. Requires the contractor to be experienced in the design,
implementation and installation of energy conservation measures, and
reletters subsequent subsections accordingly. Adds the option of bonding
the installation and/or the guaranteed savings. Adds language requiring
yearly reconciliation and specifies the contract term to begin after final
installation. Makes conforming changes.
SECTION 2. Adds language that excludes devices that use and return
potable water from the public water supply for nonpotable uses. Changes
the term "person" to "entity". Restores existing language requiring a
bond that is sufficient to protect the institution's interests. Deletes
the language referring to proof of financial responsibility, and changes
the term "person" to "entity". Specifies the savings should be realized
for the term of the contract. Adds language contained in 51.927(k)
relating to the establishment of guidelines and includes the Texas Energy
Coordination Council in that process.
SECTION 3. Adds language that excludes devices that use and then return
potable water from the public water supply for nonpotable uses. Language
is changed to require a bond that is determined to protect the interests
of the agency. Changes "board" to "state agency", and deletes language
referring to proof of financial responsibility. Language is added
requiring yearly reconciliation. Changes "institution" to "state agency",
provides for contract pre-review by the State Energy Conservation Office
and by the Texas Energy Coordination Council, and directs TECC to aid in a
cost-benefit analysis. Reference to subsection (g) is deleted. Language
is added to provide for contract pre-approval by the State Energy
Conservation Office. Adds (l) to direct the legislature to base an
agency's appropriation for energy on estimated cost and the agency's net
savings on energy costs.
SECTION 4. No change.