1-1     By:  Holzheauser (Senate Sponsor - Cain)              H.B. No. 3530

 1-2           (In the Senate - Received from the House May 7, 1997;

 1-3     May 8, 1997, read first time and referred to Committee on State

 1-4     Affairs; May 18, 1997, reported favorably by the following vote:

 1-5     Yeas 13, Nays 0; May 18, 1997, sent to printer.)

 1-6                            A BILL TO BE ENTITLED

 1-7                                   AN ACT

 1-8     relating to energy savings projects for school districts,

 1-9     institutions of higher education, and state agencies.

1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-11           SECTION 1.  Section 44.901, Education Code, is amended to

1-12     read as follows:

1-13           Sec. 44.901.  ENERGY CONSERVATION MEASURES.  (a)  The board

1-14     of trustees of a school district may enter into a contract for

1-15     energy conservation measures to reduce energy consumption or

1-16     operating costs of school facilities in accordance with this

1-17     section.

1-18           (b)  A contract to which this section applies includes a

1-19     contract for the installation of:

1-20                 (1)  insulation of the building structures and systems

1-21     within the building;

1-22                 (2)  storm windows or doors, caulking or

1-23     weatherstripping, multiglazed windows or doors, heat absorbing or

1-24     heat reflective glazed and coated window or door systems, or other

1-25     window or door system modifications that reduce energy consumption;

1-26                 (3)  automatic energy control systems, including

1-27     computer software and technical data licenses;

1-28                 (4)  heating, ventilating, or air-conditioning system

1-29     modifications or replacements;

1-30                 (5)  lighting fixtures that increase energy efficiency;

1-31     [or]

1-32                 (6)  energy recovery systems;

1-33                 (7)  electric systems improvements; or

1-34                 (8)  other energy conservation-related improvements or

1-35     equipment (including improvements or equipment relating to

1-36     renewable energy).

1-37           (c)  All energy conservation measures must comply with

1-38     current local, state, and federal construction and environmental

1-39     codes and regulations.  Notwithstanding anything to the contrary in

1-40     Subsection (b), a contract for energy conservation measures shall

1-41     not include improvements or equipment that allow or cause water

1-42     from any condensing, cooling, or industrial process or any system

1-43     of nonpotable usage over which the public water supply system

1-44     officials do not have sanitary control, to be returned to the

1-45     potable water supply.

1-46           (d)  The person with whom the board contracts must be

1-47     experienced in the design, implementation, and installation of

1-48     energy conservation measures.

1-49           (e) [(c)]  Before entering into a contract for energy

1-50     conservation measures, the board shall require the provider of the

1-51     energy conservation measures to file with the board a payment and

1-52     performance bond relating to the installation of energy

1-53     conservation measures that is in an amount the board finds

1-54     reasonable and necessary to protect the interests of the school

1-55     district and that may also cover [covers] the value of the

1-56     guaranteed savings on the contract and is conditioned on the

1-57     faithful execution of the terms of the contract.

1-58           (f) [(d)]  A contract for energy conservation measures, with

1-59     respect to existing buildings or facilities, may be a

1-60     lease/purchase contract, with a term not to exceed 10 years, that

1-61     meets federal tax requirements for tax-free municipal leasing or

1-62     long-term financing.  The contract shall contain provisions

1-63     pursuant to which the provider of the energy conservation measures

1-64     guarantees the amount of the savings to be realized by the school

 2-1     district under the contract.  If the term of a contract for energy

 2-2     conservation measures exceeds one year, the school district's

 2-3     contractual obligations in any one year during the term of the

 2-4     contract may not exceed the total energy and operating cost

 2-5     savings, including but not limited to electrical, gas, or other

 2-6     utility cost savings and operating cost savings resulting from

 2-7     automatic monitoring and control as determined by the school

 2-8     district in this subsection, divided by the number of years in the

 2-9     contract term.

2-10           (g) [(e)]  A contract under this section may be let under

2-11     competitive proposal procedures.  Notice of the request for

2-12     proposals shall be published in the manner provided for competitive

2-13     bidding.  Requests for proposals must solicit quotations and must

2-14     specify the relative importance of guaranteed savings, price,

2-15     return on investment, financial performance and stability, quality,

2-16     technical ability, experience, and other evaluation factors.  The

2-17     contract shall be awarded to the responsible offeror whose

2-18     proposal, following negotiations, is determined to be the most

2-19     advantageous to the school district considering the guaranteed

2-20     savings and other evaluation factors set forth in the request for

2-21     proposals.

2-22           (h) [(f)]  To obtain the best final offers, the school

2-23     district may allow proposal revisions after submissions and before

2-24     the award of the contract.

2-25           SECTION 2.  Section 51.927, Education Code, is amended to

2-26     read as follows:

2-27           Sec. 51.927.  Energy Conservation Measures.  (a)  The

2-28     governing board of an institution of higher education may enter

2-29     into a contract for energy conservation measures to reduce energy

2-30     consumption or operating costs of institutional facilities in

2-31     accordance with this section.

2-32           (b)  A contract to which this section applies includes a

2-33     contract for the installation of:

2-34                 (1)  insulation of a building structure and systems

2-35     within a building;

2-36                 (2)  storm windows of doors, caulking or weather

2-37     stripping, multiglazed windows or doors, heat-absorbing or

2-38     heat-reflective glazed and coated window or door systems, or other

2-39     window or door system modifications that reduce energy consumption;

2-40                 (3)  automatic energy control systems, including

2-41     computer software and technical data licenses;

2-42                 (4)  heating, ventilating, or air conditioning system

2-43     modifications or replacements;

2-44                 (5)  lighting fixtures that increase energy efficiency;

2-45                 (6)  energy recovery systems;

2-46                 (7)  electric systems improvements; or

2-47                 (8)  other energy conservation-related improvements or

2-48     equipment (including improvements or equipment related to renewable

2-49     energy).

2-50           (c)  All energy conservation measures must comply with

2-51     current local, state, and federal construction and environmental

2-52     codes and regulations.  Notwithstanding anything to the contrary in

2-53     Subsection (b), a contract for energy conservation measures shall

2-54     not include improvements or equipment that allow or cause water

2-55     from any condensing, cooling, or industrial process or any system

2-56     of nonpotable usage over which the public water supply system

2-57     officials do not have sanitary control, to be returned to the

2-58     potable water supply.

2-59           (d) [(c)]  The entity [person] with whom the board contracts

2-60     must be experienced in the design, implementation, and installation

2-61     of energy conservation measures.

2-62           (e) [(d)]  Before entering into a contract for energy

2-63     conservation measures, the board shall require the provider of the

2-64     energy conservation measures to file with the board a payment and

2-65     performance bond that is in an amount the board finds reasonable

2-66     and necessary to protect the interests of the institution and is

2-67     conditioned on the faithful execution of the terms of the contract.

2-68           (f) [(e)]  The board may enter into a contract for a period

2-69     of more than one year for energy conservation measures with an

 3-1     entity [a person] if the board finds that the amount the

 3-2     institution would spend on the energy conservation measures will

 3-3     not exceed the amount to be saved in energy and operating costs

 3-4     over 10 years from the date of installation.  If the term of a

 3-5     contract for energy conservation measures exceeds one year, the

 3-6     board's contractual obligation in any year during the term of the

 3-7     contract may not exceed the total energy and operating cost

 3-8     savings, including but not limited to electrical, gas, or other

 3-9     utility cost savings and operating cost savings resulting from

3-10     automatic monitoring and control, as determined by the board in

3-11     this subsection, divided by the number of years in the contract

3-12     term.  The board shall consider all costs of the energy

3-13     conservation measures, including costs of design, engineering,

3-14     installation, maintenance, repairs, and debt service.

3-15           (g) [(f)]  A contract for energy conservation measures may be

3-16     a lease/purchase contract, with a term not to exceed 10 years, that

3-17     meets federal tax requirements for tax-free municipal leasing or

3-18     long-term financing.  The contract shall contain provisions

3-19     pursuant to which the provider of the energy conservation measures

3-20     guarantees the amount of the savings to be realized by the

3-21     institution of higher education under the contract.

3-22           (h) [(g)]  A contract under this section may be let under

3-23     competitive sealed proposal procedures.  Notice of the request for

3-24     proposals shall be given in the manner provided for in Chapter

3-25     2156, Government Code [Sec. 3.12, Article 601b, Revised Statutes].

3-26     The Texas Higher Education Coordinating Board, in consultation with

3-27     the State Energy Conservation Office and the Texas Energy

3-28     Coordination Council, shall establish guidelines and an approval

3-29     process for contracts awarded under this section.  The State Energy

3-30     Conservation Office and the Texas Energy Coordination Council shall

3-31     review the selected proposal before a contract is awarded [The

3-32     institution shall submit the proposals to the energy management

3-33     center for review and comment before awarding the contract].  The

3-34     State Energy Conservation Office [energy management center] may

3-35     provide a cost-benefit analysis of the proposals and analysis of

3-36     the guaranteed savings projected by offerors and may charge a fee

3-37     for this service.   The contract shall be awarded to the

3-38     responsible offeror whose proposal, following negotiations, is

3-39     determined by the institution to be the most advantageous to the

3-40     institution considering the guaranteed savings and other evaluation

3-41     factors set forth in the request for proposals, except that if the

3-42     institution finds that no offer is acceptable, it shall refuse all

3-43     offers.

3-44           (i) [(h)]  In accordance with regulations adopted by the

3-45     institution, the institution may conduct discussions with offerors

3-46     who submit proposals and who are determined to be reasonably

3-47     qualified for the award of the contract.  Offerors shall be treated

3-48     fairly and equally with respect to any opportunity for discussion

3-49     and revision of proposals.  To obtain the best final offers, the

3-50     institution may allow proposal revisions after submissions and

3-51     before the award of the contract.

3-52           (j) [(i)]  If provided in a request for proposals under

3-53     Subsection (g) of this section, proposals shall be opened in a

3-54     manner that avoids disclosure of the contents to competing offerors

3-55     and keeps the proposals secret during negotiations.  All proposals

3-56     are open for public inspection after a contract is awarded unless

3-57     the information is excepted from disclosure under Chapter 552,

3-58     Government Code.

3-59           (k) [(j)]  The legislature shall base an institution's

3-60     appropriation for energy costs during a fiscal year on the sum of:

3-61                 (1)  the institution's estimated energy costs for that

3-62     fiscal year; and

3-63                 (2)  if a contract under this section is in effect, the

3-64     institution's estimated net savings resulting from the contract

3-65     during the contract term, divided by the number of years in the

3-66     contract term.

3-67           [(k)  The Texas Higher Education Coordinating Board, in

3-68     consultation with the energy management center, shall establish

3-69     guidelines and an approval process for energy conservation

 4-1     measures.]

 4-2           SECTION 3.  Subchapter I, Chapter 2166, Government Code, is

 4-3     amended by adding Section 2166.406 to read as follows:

 4-4           Sec. 2166.406.  ENERGY CONSERVATION MEASURES.  (a)

 4-5     Notwithstanding any other provisions of this chapter, the governing

 4-6     body of a state agency, without the consent of the commission, may

 4-7     enter into a contract for energy conservation measures to reduce

 4-8     energy consumption or operating costs of governmental facilities in

 4-9     accordance with this section.

4-10           (b)  A contract authorized under this chapter includes a

4-11     contract for the installation of:

4-12                 (1)  insulation of the building structure and systems

4-13     within the building;

4-14                 (2)  storm windows or doors, caulking or weather

4-15     stripping, multiglazed windows or doors, heat absorbing or heat

4-16     reflective glazed and coated window or door systems, or other

4-17     window or door system modifications that reduce energy consumption;

4-18                 (3)  automatic energy control systems, including

4-19     computer software and technical data licenses;

4-20                 (4)  heating, ventilating, or air-conditioning system

4-21     modifications or replacements;

4-22                 (5)  lighting fixtures that increase energy efficiency;

4-23                 (6)  energy recovery systems;

4-24                 (7)  electric systems improvements; or

4-25                 (8)  other energy conservation-related improvements or

4-26     equipment (including improvements or equipment related to renewable

4-27     energy).

4-28           (c)  All energy conservation measures must comply with

4-29     current local, state, and federal construction and environmental

4-30     codes and regulations.  Notwithstanding anything to the contrary in

4-31     Subsection (b), a contract for energy conservation measures shall

4-32     not include improvements or equipment that allow or cause water

4-33     from any condensing, cooling, or industrial process or any system

4-34     of nonpotable usage over which the public water supply system

4-35     officials do not have sanitary control to be returned to the

4-36     potable water supply.

4-37           (d)  The entity with whom the board contracts must be

4-38     experienced in the design, implementation, and installation of

4-39     energy conservation measures.

4-40           (e)  Before entering into a contract for energy conservation

4-41     measures, the governing body of the state agency shall require the

4-42     provider of the energy conservation measures to file with the

4-43     governing body  a payment and performance bond that is in an amount

4-44     the governing body finds reasonable and necessary to protect the

4-45     interests of the state agency and that is conditioned on the

4-46     faithful execution of the terms of the contract.

4-47           (f)  The state agency may enter into a contract for a period

4-48     of more than one year for energy conservation measures with an

4-49     entity if the state agency finds that the amount the state agency

4-50     would spend on the energy conservation measures will not exceed the

4-51     amount to be saved in energy and operating costs over 10 years from

4-52     the date of installation.

4-53           (g)  A contract for energy conservation measures, with

4-54     respect to existing buildings or facilities, may be a

4-55     lease/purchase contract with a term not to exceed 10 years, that

4-56     meets federal tax requirements for tax-free municipal leasing or

4-57     long-term financing.  The contract shall contain provisions

4-58     pursuant to which the provider of the energy conservation measures

4-59     guarantees the amount of the savings to be realized by the state

4-60     agency under the contract.  If the term of a contract for energy

4-61     conservation measures exceeds one year, the agency's contractual

4-62     obligation in any year during the term of the contract may not

4-63     exceed the total energy and operating cost savings, including but

4-64     not limited to electrical, gas, or other utility cost savings and

4-65     operating cost savings resulting from automatic monitoring and

4-66     control, as determined by the state agency in this subsection,

4-67     divided by the number of years in the contract term.

4-68           (h)  A contract under this chapter may be let under

4-69     competitive sealed proposal procedures.  Notice of the request for

 5-1     proposals shall be given in the manner provided for in Chapter

 5-2     2156, Government Code.  Before awarding the contract, the state

 5-3     agency shall submit the selected proposal to the State Energy

 5-4     Conservation Office and the Texas Energy Coordination Council for

 5-5     review and comment before awarding the contract.  The State Energy

 5-6     Conservation Office and the Texas Energy Coordination Council will

 5-7     provide a cost-benefit analysis of the proposals and an analysis of

 5-8     the guaranteed savings projected by offerors and may charge a fee

 5-9     for this service.  The contract shall be awarded to the responsible

5-10     offeror whose proposal, following negotiations, is determined to be

5-11     the most advantageous to the state agency considering the savings

5-12     and other evaluation factors set forth in the request for proposals

5-13     except that if the state agency finds that no offer is acceptable,

5-14     it shall refuse all offers.

5-15           (i)  In accordance with regulations adopted by the state

5-16     agency, the state agency may conduct discussions with offerors who

5-17     submit proposals and who are determined to be reasonably qualified

5-18     for the award of the contract.  Offerors shall be treated fairly

5-19     and equally with respect to any opportunity for discussion and

5-20     revision of proposals.

5-21           (j)  If provided in a request for proposals, proposals shall

5-22     be opened in a manner that avoids disclosure of the contents to

5-23     competing offerors and keeps the proposals secret during

5-24     negotiations.  All proposals are open for public inspection after a

5-25     contract is awarded unless the information is excepted from

5-26     disclosure under Chapter 552, Government Code.

5-27           (k)  To obtain the best final offers, the state agency may

5-28     allow proposal revisions after submissions and before the award of

5-29     the contract.  Final review and approval of the contract will be

5-30     provided by the State Energy Conservation Office.

5-31           (l)  The legislature shall base an agency's appropriation for

5-32     energy costs during a fiscal year on the sum of:

5-33                 (1)  the agency's estimated energy costs for that

5-34     fiscal year; and

5-35                 (2)  if a contract under this section is in effect, the

5-36     agency's estimated net savings resulting from the contract during

5-37     the contract term, divided by the number of years in the contract

5-38     term.

5-39           SECTION 4.  The importance of this legislation and the

5-40     crowded condition of the calendars in both houses create an

5-41     emergency and an imperative public necessity that the

5-42     constitutional rule requiring bills to be read on three several

5-43     days in each house be suspended, and this rule is hereby suspended,

5-44     and that this Act take effect and be in force from and after its

5-45     passage, and it is so enacted.

5-46                                  * * * * *