1-1     By:  Lewis of Orange (Senate Sponsor - Brown)         H.B. No. 3286
 1-2           (In the Senate - Received from the House April 23, 2001;
 1-3     April 24, 2001, read first time and referred to Committee on
 1-4     Natural Resources; May 4, 2001, reported favorably, as amended, by
 1-5     the following vote:  Yeas 6, Nays 0; May 4, 2001, sent to printer.)
 1-6     COMMITTEE AMENDMENT NO. 1                                By:  Brown
 1-7           Amend H.B. 3286 by adding new SECTIONS 11-13 to read as
 1-8     follows and renumber the subsequent section appropriately:
 1-9           SECTION 11.  Sec. 44.901, Education Code, is amended by
1-10     adding subsection (j) to read as follows:
1-11           (j)  Prior to entering into a contract under this section,
1-12     the board must require that the cost savings projected by an
1-13     offeror be reviewed by a licensed professional engineer who is not
1-14     an officer or employee of an offeror for the contract under review
1-15     or otherwise associated with the contract or the offeror.  An
1-16     engineer who reviews a contract shall maintain the confidentiality
1-17     of any proprietary information the engineer acquires while
1-18     reviewing the contract.  Section 19, The Texas Engineering Practice
1-19     Act (Article 3271a, Vernon's Texas Civil Statutes), applies to work
1-20     performed under the contract.
1-21           SECTION 12.  Sec. 302.005, Local Government Code, is amended
1-22     by adding subsection (d) to read as follows:
1-23           (d)  Prior to entering into a contract under this section,
1-24     the governing body must require that the cost savings projected by
1-25     an offeror be reviewed by a licensed professional engineer who is
1-26     not an officer or employee of an offeror for the contract under
1-27     review or otherwise associated with the contract or the offeror.
1-28     An engineer who reviews a contract shall maintain the
1-29     confidentiality of any proprietary information the engineer
1-30     acquires while reviewing the contract.  Section 19, The Texas
1-31     Engineering Practice Act (Article 3271a, Vernon's Texas Civil
1-32     Statutes), applies to work performed under the contract.
1-33           SECTION 13.  Sec. 2166.406 (i), Government Code, is amended
1-34     to read as follows:
1-35           (i)  A contract under this section may be let under
1-36     competitive sealed proposal procedures.  Notice of the request for
1-37     proposals shall be given in the manner provided for in Chapter
1-38     2156.  The State Energy Conservation Office shall establish
1-39     guidelines and an approval process for contracts awarded under this
1-40     section.  The guidelines adopted under this subsection must require
1-41     that the cost savings projected by an offeror be reviewed by a
1-42     licensed professional engineer who is not an officer or employee of
1-43     an offeror for the contract under review or otherwise associated
1-44     with the contract.  An engineer who reviews a contract shall
1-45     maintain the confidentiality of any proprietary information the
1-46     engineer acquires while reviewing the contract.  Section 19, The
1-47     Texas Engineering Practice Act (Article 3271a, Vernon's Texas Civil
1-48     Statutes), applies to work performed under the contract [Before
1-49     awarding the contract, the state agency shall submit the selected
1-50     proposal to the State Energy Conservation Office and the Texas
1-51     Energy Coordination Council for review and comment before awarding
1-52     the contract.  The State Energy Conservation Office and the Texas
1-53     Energy Coordination Council will provide a cost benefit analysis of
1-54     the proposals and an analysis of the guaranteed savings projected
1-55     by offerors and may charge a fee for this service].  The contract
1-56     shall be awarded to the responsible offeror whose proposal,
1-57     following negotiations, is determined to be the most advantageous
1-58     to the state agency considering the savings and other evaluation
1-59     factors set forth in the request for proposals except that if the
1-60     state agency finds that no offer is acceptable, it shall refuse all
1-61     offers.
 2-1                            A BILL TO BE ENTITLED
 2-2                                   AN ACT
 2-3     relating to water conservation measures by state agencies and local
 2-4     governments.
 2-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 2-6           SECTION 1. The heading to Section 44.901, Education Code, is
 2-7     amended to read as follows:
 2-8           Sec. 44.901.  ENERGY OR WATER CONSERVATION MEASURES.
 2-9           SECTION 2. Sections 44.901(a)-(g), Education Code, are
2-10     amended to read as follows:
2-11           (a)  The board of trustees of a school district may enter
2-12     into a contract for energy or water conservation measures to reduce
2-13     energy or water consumption or operating costs of school facilities
2-14     in accordance with this section.
2-15           (b)  A contract to which this section applies includes a
2-16     contract for the installation of:
2-17                 (1)  insulation of the building structures and systems
2-18     within the building;
2-19                 (2)  storm windows or doors, caulking or
2-20     weatherstripping, multiglazed windows or doors, heat absorbing or
2-21     heat reflective glazed and coated window or door systems, or other
2-22     window or door system modifications that reduce energy consumption;
2-23                 (3)  automatic energy control systems, including
2-24     computer software and technical data licenses;
2-25                 (4)  heating, ventilating, or air-conditioning system
2-26     modifications or replacements that reduce energy or water
2-27     consumption;
2-28                 (5)  lighting fixtures that increase energy efficiency;
2-29                 (6)  energy recovery systems;
2-30                 (7)  electric systems improvements; [or]
2-31                 (8)  water-conserving fixtures, appliances, and
2-32     equipment or the substitution of non-water-using fixtures,
2-33     appliances, and equipment;
2-34                 (9)  water-conserving landscape irrigation equipment;
2-35                 (10)  landscaping measures that reduce watering demands
2-36     and capture and hold applied water and rainfall, including:
2-37                       (A)  landscape contouring, including the use of
2-38     berms, swales, and terraces; and
2-39                       (B)  the use of soil amendments that increase the
2-40     water-holding capacity of the soil, including compost;
2-41                 (11)  rainwater harvesting equipment and equipment to
2-42     make use of water collected as part of a storm-water system
2-43     installed for water quality control;
2-44                 (12)  equipment for recycling or reuse of water
2-45     originating on the premises or from other sources, including
2-46     treated municipal effluent;
2-47                 (13)  equipment needed to capture water from
2-48     nonconventional, alternate sources, including air conditioning
2-49     condensate or graywater, for nonpotable uses;
2-50                 (14)  metering equipment needed to segregate water use
2-51     in order to identify water conservation opportunities or verify
2-52     water savings; or
2-53                 (15)  other energy or water conservation-related
2-54     improvements or equipment (including improvements or equipment
2-55     relating to renewable energy or nonconventional water sources or
2-56     water reuse).
2-57           (c)  All energy or water conservation measures must comply
2-58     with current local, state, and federal construction, plumbing, and
2-59     environmental codes and regulations.  Notwithstanding anything to
2-60     the contrary in Subsection (b), a contract for energy or water
2-61     conservation measures shall not include improvements or equipment
2-62     that allow or cause water from any condensing, cooling, or
2-63     industrial process or any system of nonpotable usage over which the
2-64     public water supply system officials do not have sanitary control,
2-65     to be returned to the potable water supply.
2-66           (d)  The person with whom the board contracts must be
2-67     experienced in the design, implementation, and installation of the
2-68     energy or water conservation measures addressed by the contract.
 3-1           (e)  Before entering into a contract for energy or water
 3-2     conservation measures, the board shall require the provider of the
 3-3     energy or water conservation measures to file with the board a
 3-4     payment and performance bond relating to the installation of energy
 3-5     or water conservation measures that is in an amount the board finds
 3-6     reasonable and necessary to protect the interests of the school
 3-7     district and that may also cover the value of the guaranteed
 3-8     savings on the contract and is conditioned on the faithful
 3-9     execution of the terms of the contract.
3-10           (f)  Energy or water conservation measures with respect to
3-11     existing buildings or facilities may be financed:
3-12                 (1)  under a lease/purchase contract that has a term
3-13     not to exceed 15 years from the final date of installation and that
3-14     meets federal tax requirements for tax-free municipal leasing or
3-15     long-term financing;
3-16                 (2)  with the proceeds of bonds; or
3-17                 (3)  under a contract with the provider of the energy
3-18     or water conservation measures that has a term not to exceed 15
3-19     years from the final date of installation.
3-20           (g)  A contract for energy or water conservation measures
3-21     shall contain provisions pursuant to which the provider of the
3-22     energy or water conservation measures guarantees the amount of the
3-23     savings to be realized by the school district under the contract.
3-24     If the term of a contract for energy or water conservation measures
3-25     exceeds one year, the school district's contractual obligations in
3-26     any one year during the term of the contract beginning after the
3-27     final date of installation may not exceed the total energy, water,
3-28     wastewater, and operating cost savings, including but not limited
3-29     to electrical, gas, water, wastewater, or other utility cost
3-30     savings and operating cost savings resulting from automatic
3-31     monitoring and control as determined by the school district in this
3-32     subsection, divided by the number of years in the contract term.
3-33           SECTION 3. The heading to Section 51.927, Education Code, is
3-34     amended to read as follows:
3-35           Sec. 51.927.  ENERGY OR WATER CONSERVATION MEASURES.
3-36           SECTION 4. Sections 51.927(a)-(h) and (l), Education Code,
3-37     are amended to read as follows:
3-38           (a)  The governing board of an institution of higher
3-39     education may enter into a contract for energy or water
3-40     conservation measures to reduce energy or water consumption or
3-41     operating costs of institutional facilities in accordance with this
3-42     section.
3-43           (b)  A contract to which this section applies includes a
3-44     contract for the installation of:
3-45                 (1)  insulation of a building structure and systems
3-46     within a building;
3-47                 (2)  storm windows or [of] doors, caulking or weather
3-48     stripping, multiglazed windows or doors, heat-absorbing or
3-49     heat-reflective glazed and coated window or door systems, or other
3-50     window or door system modifications that reduce energy consumption;
3-51                 (3)  automatic energy control systems, including
3-52     computer software and technical data licenses;
3-53                 (4)  heating, ventilating, or air conditioning system
3-54     modifications or replacements that reduce energy or water
3-55     consumption;
3-56                 (5)  lighting fixtures that increase energy efficiency;
3-57                 (6)  energy recovery systems;
3-58                 (7)  electric systems improvements; [or]
3-59                 (8)  water-conserving fixtures, appliances, and
3-60     equipment or the substitution of non-water-using fixtures,
3-61     appliances, and equipment;
3-62                 (9)  water-conserving landscape irrigation equipment;
3-63                 (10)  landscaping measures that reduce watering demands
3-64     and capture and hold applied water and rainfall, including:
3-65                       (A)  landscape contouring, including the use of
3-66     berms, swales, and terraces; and
3-67                       (B)  the use of soil amendments that increase the
3-68     water-holding capacity of the soil, including compost;
3-69                 (11)  rainwater harvesting equipment and equipment to
 4-1     make use of water collected as part of a storm-water system
 4-2     installed for water quality control;
 4-3                 (12)  equipment for recycling or reuse of water
 4-4     originating on the premises or from other sources, including
 4-5     treated municipal effluent;
 4-6                 (13)  equipment needed to capture water from
 4-7     nonconventional, alternate sources, including air conditioning
 4-8     condensate or graywater, for nonpotable uses;
 4-9                 (14)  metering equipment needed to segregate water use
4-10     in order to identify water conservation opportunities or verify
4-11     water savings; or
4-12                 (15)  other energy or water conservation-related
4-13     improvements or equipment (including improvements or equipment
4-14     related to renewable energy or nonconventional water sources or
4-15     water reuse).
4-16           (c)  All energy or water conservation measures must comply
4-17     with current local, state, and federal construction, plumbing, and
4-18     environmental codes and regulations.  Notwithstanding anything to
4-19     the contrary in Subsection (b), a contract for energy or water
4-20     conservation measures shall not include improvements or equipment
4-21     that allow or cause water from any condensing, cooling, or
4-22     industrial process or any system of nonpotable usage over which the
4-23     public water supply system officials do not have sanitary control,
4-24     to be returned to the potable water supply.
4-25           (d)  The entity with whom the board contracts must be
4-26     experienced in the design, implementation, and installation of the
4-27     energy or water conservation measures addressed by the contract.
4-28           (e)  Before entering into a contract for energy or water
4-29     conservation measures, the board shall require the provider of the
4-30     energy or water conservation measures to file with the board a
4-31     payment and performance bond that is in an amount the board finds
4-32     reasonable and necessary to protect the interests of the
4-33     institution and is conditioned on the faithful execution of the
4-34     terms of the contract.
4-35           (f)  The board may enter into a contract for a period of more
4-36     than one year for energy or water conservation measures with an
4-37     entity if the board finds that the amount the institution would
4-38     spend on the energy or water conservation measures will not exceed
4-39     the amount to be saved in energy, water, wastewater, and operating
4-40     costs over 15 years from the date of installation.  If the term of
4-41     a contract for energy or water conservation measures exceeds one
4-42     year, the board's contractual obligation in any year during the
4-43     term of the contract beginning after the final date of installation
4-44     may not exceed the total energy, water, wastewater, and operating
4-45     cost savings, including but not limited to electrical, gas, water,
4-46     wastewater, or other utility cost savings and operating cost
4-47     savings resulting from automatic monitoring and control, as
4-48     determined by the board in this subsection, divided by the number
4-49     of years in the contract term beginning after the final date of
4-50     installation.  The board shall consider all costs of the energy or
4-51     water conservation measures, including costs of design,
4-52     engineering, installation, maintenance, repairs, and debt service.
4-53           (g)  Energy or water conservation measures may be financed:
4-54                 (1)  under a lease/purchase contract that has a term
4-55     not to exceed 15 years from the final date of installation and that
4-56     meets federal tax requirements for tax-free municipal leasing or
4-57     long-term financing;
4-58                 (2)  with the proceeds of bonds; or
4-59                 (3)  under a contract with the provider of the energy
4-60     or water conservation measures that has a term not to exceed 15
4-61     years from the final date of installation.
4-62           (h)  A contract for energy or water conservation measures
4-63     shall contain provisions pursuant to which the provider of the
4-64     energy or water conservation measures guarantees the amount of the
4-65     savings to be realized by the institution of higher education under
4-66     the contract.  The Master Equipment Lease Purchase Program operated
4-67     by the Texas Public Finance Authority may be utilized by an
4-68     institution to fund a contract for energy or water conservation
4-69     measures so long as the costs of the energy or water conservation
 5-1     measures, including costs of design, engineering, installation,
 5-2     maintenance, repairs, and anticipated debt service requirements of
 5-3     the Master Equipment Lease Purchase Program, do not exceed the
 5-4     total energy and operating cost savings, as described in Subsection
 5-5     (f), beginning after the final date of installation.
 5-6           (l)  The legislature shall base an institution's
 5-7     appropriation for energy, water, and wastewater  costs during a
 5-8     fiscal year on the sum of:
 5-9                 (1)  the institution's estimated energy, water, and
5-10     wastewater costs for that fiscal year; and
5-11                 (2)  if a contract under this section is in effect, the
5-12     institution's estimated net savings resulting from the contract
5-13     during the contract term, divided by the number of years in the
5-14     contract term.
5-15           SECTION 5. The heading to Chapter 302, Local Government Code,
5-16     is amended to read as follows:
5-17             CHAPTER 302. ENERGY OR WATER CONSERVATION MEASURES
5-18                            FOR LOCAL GOVERNMENTS
5-19           SECTION 6. Sections 302.001-302.004, Local Government Code,
5-20     are amended to read as follows:
5-21           Sec. 302.001.  DEFINITION. In this chapter, "local
5-22     government" means a county, municipality, or other political
5-23     subdivision of this state.  The term local government does not
5-24     include a school district authorized to enter into a contract for
5-25     energy or water conservation measures under  Section 44.901,
5-26     Education Code.
5-27           Sec. 302.002.  ENERGY OR WATER CONSERVATION MEASURES. (a)
5-28     The governing body of a local government may enter into a contract
5-29     for energy or water conservation measures to reduce energy or water
5-30     consumption or operating costs of governmental facilities in
5-31     accordance with this chapter.
5-32           (b)  A contract authorized under this chapter includes a
5-33     contract for the installation of:
5-34                 (1)  insulation of the building structure and systems
5-35     within the building;
5-36                 (2)  storm windows or doors, caulking or weather
5-37     stripping, multiglazed windows or doors, heat-absorbing or
5-38     heat-reflective glazed and coated window or door systems, or other
5-39     window or door system modifications that reduce energy consumption;
5-40                 (3)  automatic energy control systems, including
5-41     computer software and technical data licenses;
5-42                 (4)  heating, ventilating, or air conditioning system
5-43     modifications or replacements that reduce energy or water
5-44     consumption;
5-45                 (5)  lighting fixtures that increase energy efficiency;
5-46                 (6)  energy recovery systems;
5-47                 (7)  electric systems improvements; [or]
5-48                 (8)  water-conserving fixtures, appliances, and
5-49     equipment or the substitution of non-water-using fixtures,
5-50     appliances, and equipment;
5-51                 (9)  water-conserving landscape irrigation equipment;
5-52                 (10)  landscaping measures that reduce watering demands
5-53     and capture and hold applied water and rainfall, including:
5-54                       (A)  landscape contouring, including the use of
5-55     berms, swales, and terraces; and
5-56                       (B)  the use of soil amendments that increase the
5-57     water-holding capacity of the soil, including compost;
5-58                 (11)  rainwater harvesting equipment and equipment to
5-59     make use of water collected as part of a storm-water system
5-60     installed for water quality control;
5-61                 (12)  equipment for recycling or reuse of water
5-62     originating on the premises or from other sources, including
5-63     treated municipal effluent;
5-64                 (13)  equipment needed to capture water from
5-65     nonconventional, alternate sources, including air conditioning
5-66     condensate or graywater, for nonpotable uses;
5-67                 (14)  metering equipment needed to segregate water use
5-68     in order to identify water conservation opportunities or verify
5-69     water savings; or
 6-1                 (15)  other energy or water conservation-related
 6-2     [energy-conservation-related] improvements or equipment (including
 6-3     improvements or equipment related to renewable energy or
 6-4     nonconventional water sources or water reuse).
 6-5           (c)  All energy or water conservation measures must comply
 6-6     with current local, state, and federal construction, plumbing, and
 6-7     environmental codes and regulations.  Notwithstanding anything to
 6-8     the contrary in Subsection (b), a contract for energy or water
 6-9     conservation measures shall not include improvements or equipment
6-10     that allow or cause water from any condensing, cooling, or
6-11     industrial process or any system of nonpotable usage over which
6-12     public water supply system officials do not have sanitary control
6-13     to be returned to the potable water supply.
6-14           Sec. 302.003.  PAYMENT AND PERFORMANCE BOND. Notwithstanding
6-15     any other law to the contrary, before entering into a contract for
6-16     energy or water conservation measures, the governing body of the
6-17     local government may, at its option:
6-18                 (1)  require the provider of the energy or water
6-19     conservation measures to file with the governing body a payment and
6-20     performance bond relating to the installation of energy or water
6-21     conservation measures that is in an amount the governing body finds
6-22     reasonable and necessary to protect the interests of the local
6-23     government and that may also cover the value of the guaranteed
6-24     savings on the contract and is conditioned on the faithful
6-25     execution of the terms of the contract; or
6-26                 (2)  choose not to require a payment and performance
6-27     bond in connection with the contract.
6-28           Sec. 302.004.  METHOD OF FINANCING;  TERMS OF CONTRACT. (a)
6-29     Energy or water conservation measures with respect to existing
6-30     buildings or facilities may be financed:
6-31                 (1)  under a lease-purchase contract that has a term
6-32     not to exceed 15 years from the final date of installation and that
6-33     meets federal tax requirements for tax-free municipal leasing or
6-34     long-term financing;
6-35                 (2)  with the proceeds of bonds; or
6-36                 (3)  under a contract with the provider of the energy
6-37     or water conservation measures that has a term not to exceed 15
6-38     years from the final date of installation.
6-39           (b)  The contract shall contain provisions pursuant to which
6-40     the provider of the energy or water conservation measures
6-41     guarantees the amount of the savings to be realized by the local
6-42     government under the contract.  If the term of a contract for
6-43     energy or water conservation measures exceeds one year, the local
6-44     government's contractual obligations in any one year during the
6-45     term of the contract beginning after the final date of installation
6-46     may not exceed the total energy, water, wastewater, and operating
6-47     cost savings, including but not limited to electrical, gas, water,
6-48     wastewater, or other utility cost savings and operating cost
6-49     savings resulting from automatic monitoring and control as
6-50     determined by the local government in this subsection, divided by
6-51     the number of years in the contract term.
6-52           SECTION 7. Section 2166.402, Government Code, is amended to
6-53     read as follows:
6-54           Sec. 2166.402.  ENERGY OR WATER CONSERVATION STANDARDS FOR
6-55     ENTITIES OTHERWISE EXCLUDED FROM CHAPTER. (a)  The governing body
6-56     of a state agency, commission, or institution that is exempt from
6-57     this chapter under Section 2166.003 shall adopt and publish energy
6-58     or water conservation design standards as provided by Section
6-59     447.004 for a new building under the entity's authority.  The
6-60     standards must be:
6-61                 (1)  consistent with those adopted by the commission
6-62     for other state buildings; and
6-63                 (2)  prepared in cooperation and consultation with the
6-64     state energy conservation [management center of the governor's]
6-65     office.
6-66           (b)  The state energy conservation [management center of the
6-67     governor's] office shall assist a governing body of a state agency,
6-68     commission, or institution subject to Subsection (a) in preparing
6-69     energy conservation standards by providing technical assistance and
 7-1     advice.
 7-2           (c)  The Texas Water Development Board shall assist the
 7-3     governing body of a state agency, commission, or institution
 7-4     described by Subsection (a) in preparing water conservation
 7-5     standards by providing technical assistance and advice.
 7-6           SECTION 8. The heading to Section 2166.406, Government Code,
 7-7     is amended to read as follows:
 7-8           Sec. 2166.406.  ENERGY OR WATER CONSERVATION MEASURES.
 7-9           SECTION 9. Sections 2166.406(a)-(h), (l), and (m), Government
7-10     Code, are amended to read as follows:
7-11           (a)  Notwithstanding any other provisions of this chapter,
7-12     the governing body of a state agency, without the consent of the
7-13     commission, may enter into a contract for energy conservation
7-14     measures to reduce energy or water consumption or operating costs
7-15     of governmental facilities in accordance with this section.
7-16           (b)  A contract authorized under this section includes a
7-17     contract for the installation of:
7-18                 (1)  insulation of the building structure and systems
7-19     within the building;
7-20                 (2)  storm windows or doors, caulking or weather
7-21     stripping, multiglazed windows or doors, heat absorbing or heat
7-22     reflective glazed and coated window or door systems, or other
7-23     window or door system modifications that reduce energy consumption;
7-24                 (3)  automatic energy control systems, including
7-25     computer software and technical data licenses;
7-26                 (4)  heating, ventilating, or air-conditioning system
7-27     modifications or replacements that reduce energy or water
7-28     consumption;
7-29                 (5)  lighting fixtures that increase energy efficiency;
7-30                 (6)  energy recovery systems;
7-31                 (7)  electric systems improvements;  [or]
7-32                 (8)  water-conserving fixtures, appliances, and
7-33     equipment or the substitution of non-water-using fixtures,
7-34     appliances, and equipment;
7-35                 (9)  water-conserving landscape irrigation equipment;
7-36                 (10)  landscaping measures that reduce watering demands
7-37     and capture and hold applied water and rainfall, including:
7-38                       (A)  landscape contouring, including the use of
7-39     berms, swales, and terraces; and
7-40                       (B)  the use of soil amendments that increase the
7-41     water-holding capacity of the soil, including compost;
7-42                 (11)  rainwater harvesting equipment and equipment to
7-43     make use of water collected as part of a storm-water system
7-44     installed for water quality control;
7-45                 (12)  equipment for recycling or reuse of water
7-46     originating on the premises or from other sources, including
7-47     treated municipal effluent;
7-48                 (13)  equipment needed to capture water from
7-49     nonconventional, alternate sources, including air conditioning
7-50     condensate or graywater, for nonpotable uses;
7-51                 (14)  metering equipment needed to segregate water use
7-52     in order to identify water conservation opportunities or verify
7-53     water savings; or
7-54                 (15)  other energy or water conservation-related
7-55     improvements or equipment (including improvements or equipment
7-56     related to renewable energy or nonconventional water sources or
7-57     water reuse).
7-58           (c)  All energy or water conservation measures must comply
7-59     with current local, state, and federal construction, plumbing, and
7-60     environmental codes and regulations.  Notwithstanding anything to
7-61     the contrary in Subsection (b), a contract for energy or water
7-62     conservation measures shall not include improvements or equipment
7-63     that allow or cause water from any condensing, cooling, or
7-64     industrial process or any system of nonpotable usage over which the
7-65     public water supply system officials do not have sanitary control
7-66     to be returned to the potable water supply.
7-67           (d)  The entity with whom the board contracts must be
7-68     experienced in the design, implementation, and installation of the
7-69     energy or water conservation measures addressed by the contract.
 8-1           (e)  Before entering into a contract for energy or water
 8-2     conservation measures, the governing body of the state agency shall
 8-3     require the provider of the energy or water conservation measures
 8-4     to file with the governing body a payment and performance bond that
 8-5     is in an amount the governing body finds reasonable and necessary
 8-6     to protect the interests of the state agency and that is
 8-7     conditioned on the faithful execution of the terms of the contract.
 8-8           (f)  The state agency may enter into a contract for a period
 8-9     of more than one year for energy or water conservation measures
8-10     with an entity if the state agency finds that the amount the state
8-11     agency would spend on the energy or water conservation measures
8-12     will not exceed the amount to be saved in energy, water,
8-13     wastewater, and operating costs over 15 years from the date of
8-14     installation.
8-15           (g)  Energy or water conservation measures with respect to
8-16     existing buildings or facilities may be financed:
8-17                 (1)  under a lease/purchase contract that has a term
8-18     not to exceed 15 years from the final date of installation and that
8-19     meets federal tax requirements for tax-free municipal leasing or
8-20     long-term financing;
8-21                 (2)  with the proceeds of bonds; or
8-22                 (3)  under a contract with the provider of the energy
8-23     or water conservation measures that has a term not to exceed 15
8-24     years from the final date of installation.
8-25           (h)  A contract for energy or water conservation measures
8-26     shall contain provisions pursuant to which the provider of the
8-27     energy or water conservation measures guarantees the amount of the
8-28     savings to be realized by the state agency under the contract.  If
8-29     the term of a contract for energy or water conservation measures
8-30     exceeds one year, the agency's contractual obligation in any year
8-31     during the term of the contract beginning after the final date of
8-32     installation may not exceed the total energy, water, wastewater,
8-33     and operating cost savings, including but not limited to
8-34     electrical, gas, water, wastewater, or other utility cost savings
8-35     and operating cost savings resulting from automatic monitoring and
8-36     control, as determined by the state agency in this subsection,
8-37     divided by the number of years in the contract term.
8-38           (l)  To obtain the best final offers, the state agency may
8-39     allow proposal revisions after submissions and before the award of
8-40     a [the] contract for energy or water conservation measures. Final
8-41     review and approval of the contract will be provided by the State
8-42     Energy Conservation Office.
8-43           (m)  The legislature shall base an agency's appropriation for
8-44     energy, water, and wastewater costs during a fiscal year on the sum
8-45     of:
8-46                 (1)  the agency's estimated energy, water, and
8-47     wastewater costs for that fiscal year; and
8-48                 (2)  if a contract under this section is in effect, the
8-49     agency's estimated net savings resulting from the contract during
8-50     the contract term, divided by the number of years in the contract
8-51     term.
8-52           SECTION 10. Chapter 447, Government Code, is amended to read
8-53     as follows:
8-54         CHAPTER 447.  STATE ENERGY CONSERVATION OFFICE [MANAGEMENT
8-55                                   CENTER]
8-56           Sec. 447.001.  ESTABLISHMENT OF OFFICE [CENTER]. The state
8-57     energy conservation office [management center] is established in
8-58     the General Services Commission and shall be authorized to promote
8-59     those policies of the state enumerated in this chapter.
8-60           Sec. 447.002.  INFORMATION;  RULES;  PROGRAMS. The state
8-61     energy conservation office [management center] shall develop and
8-62     provide energy and water conservation information for the state.
8-63     The office [center] may make rules relating to the adoption and
8-64     implementation of energy and water conservation programs applicable
8-65     to state buildings and facilities.  The office [center] may act in
8-66     such other capacities as otherwise authorized by state or federal
8-67     law.  The office's [center's] rules for programs and energy and
8-68     water conservation, adopted under Chapter 2001, may include
8-69     provisions relating to the retrofitting of existing state
 9-1     structures with energy-saving and water-saving devices and to the
 9-2     energy-related and water-related renovation of such structures.  To
 9-3     the extent that the office of the governor receives money
 9-4     appropriated for energy and water efficiency programs, the office
 9-5     of the governor, through the state energy conservation office
 9-6     [management center], shall implement programs that the state energy
 9-7     conservation office [center] identifies as encouraging energy and
 9-8     water conservation by state government.  Unless money is available
 9-9     for the implementation of such a program, a state agency is not
9-10     required to spend money for an energy or water conservation program
9-11     under this section. The state energy conservation office shall
9-12     coordinate all water conservation-related activities with the Texas
9-13     Water Development Board.  The Texas Water Development Board shall
9-14     evaluate and help develop all proposed water conservation and reuse
9-15     requirements and provide training and expertise to the staff of the
9-16     state energy conservation office regarding water conservation
9-17     issues.
9-18           Sec. 447.003.  LIAISON TO FEDERAL GOVERNMENT. The state
9-19     energy conservation office [management center] shall serve as the
9-20     state liaison to the federal government for the implementation and
9-21     administration of federal programs relating to state agency energy
9-22     and water matters.  In that capacity, the office [center] shall
9-23     administer state programs established under:
9-24                 (1)  Part D, Title III, Energy Policy and Conservation
9-25     Act (42 U.S.C. 6321 et seq.);
9-26                 (2)  Part G, Title III, Energy Policy and Conservation
9-27     Act (42 U.S.C. 6371 et seq.); and
9-28                 (3)  [the National Energy Extension Service Act (42
9-29     U.S.C. 7001 et seq.); and]
9-30                 [(4)]  other federal energy and water conservation
9-31     programs as may be assigned to the state energy conservation office
9-32     [management center] by the governor or legislature.
9-33           Sec. 447.004.  DESIGN STANDARDS. (a)  The state energy
9-34     conservation office [management center] shall adopt and publish
9-35     energy and water conservation design standards, under Chapter 2001,
9-36     that all new state buildings and major renovation projects,
9-37     including buildings and major renovation projects of
9-38     state-supported institutions of higher education, are required to
9-39     meet.  The office [center] shall define what constitutes a major
9-40     renovation project under this section and shall review and update
9-41     the standards biennially.
9-42           (b)  The standards must include performance and procedural
9-43     standards for the maximum energy and water conservation allowed by
9-44     the latest and most cost-effective technology that is consistent
9-45     with the requirements of public health, safety, and economic
9-46     resources.
9-47           (c)  The standards must be adopted in terms of energy and
9-48     water consumption levels and must take into consideration the
9-49     various classes of building uses and must allow for design
9-50     flexibility.  Procedural standards must be directed toward specific
9-51     design and building practices that produce good thermal resistance
9-52     and low infiltration and toward requiring practices in the design
9-53     of mechanical and electrical systems that maximize energy and water
9-54     efficiency.  The procedural standards must concern, as applicable:
9-55                 (1)  insulation;
9-56                 (2)  lighting;
9-57                 (3)  ventilation;
9-58                 (4)  climate control;
9-59                 (5)  water-conserving fixtures, appliances, and
9-60     equipment or the substitution of non-water-using fixtures,
9-61     appliances, and equipment;
9-62                 (6)  water-conserving landscape irrigation equipment;
9-63                 (7)  landscaping measures that reduce watering demands
9-64     and capture and hold applied water and rainfall, including:
9-65                       (A)  landscape contouring, including the use of
9-66     berms, swales, and terraces; and
9-67                       (B)  the use of soil amendments that increase the
9-68     water-holding capacity of the soil, including compost;
9-69                 (8)  rainwater harvesting equipment and equipment to
 10-1    make use of water collected as part of a storm-water system
 10-2    installed for water quality control;
 10-3                (9)  equipment for recycling or reuse of water
 10-4    originating on the premises or from other sources, including
 10-5    treated municipal effluent;
 10-6                (10)  equipment needed to capture water from
 10-7    nonconventional, alternate sources, including air conditioning
 10-8    condensate or graywater, for nonpotable uses;
 10-9                (11)  metering equipment needed to segregate water use
10-10    in order to identify water conservation opportunities or verify
10-11    water savings;
10-12                (12)  special energy and water requirements of
10-13    health-related facilities of higher education and state agencies;
10-14    and
10-15                (13) [(6)]  any other item that the center considers
10-16    appropriate that is adopted under Chapter 2001.
10-17          (d)  In order to demonstrate compliance with the requirement
10-18    to adopt and update the conservation design standards, each agency
10-19    and institution of higher education shall submit a copy of its
10-20    design and construction manuals to the office [center] on request.
10-21          (e)  Prior to construction, agencies and institutions of
10-22    higher education shall have the design architect or engineer on the
10-23    project certify to the agency or institution, with a copy to the
10-24    state energy conservation office [management center], that all new
10-25    building construction and major building renovation projects comply
10-26    with the energy and water conservation design standards required
10-27    under this section.
10-28          Sec. 447.005.  ENERGY AND WATER EFFICIENCY PROJECTS. Subject
10-29    to applicable state and federal laws or guidelines, the state
10-30    energy conservation office [management center] may implement energy
10-31    and water efficiency projects at state agencies or may assist those
10-32    agencies in implementing the projects through energy and water
10-33    efficiency programs financed through state or federal grants or
10-34    loans.
10-35          Sec. 447.006.  OBTAINING DATA. The state energy conservation
10-36    office [management center] shall obtain semiannually from each
10-37    state agency information relating to the cost of heating and
10-38    cooling buildings owned by the state.
10-39          Sec. 447.007.  MODEL CODES. The state energy conservation
10-40    office [management center] may recommend model energy and water
10-41    conservation building codes to municipalities for use in enacting
10-42    or amending municipal ordinances.
10-43          Sec. 447.008.  ADDITIONAL ENERGY AND WATER SERVICES. (a)  The
10-44    state energy conservation office [management center] may provide
10-45    additional energy and water services, including:
10-46                (1)  training of designated state employees in energy
10-47    and water management, energy-accounting techniques,
10-48    water-accounting techniques, and energy-efficient and
10-49    water-efficient [energy efficient] design and construction;
10-50                (2)  technical assistance regarding energy-efficient
10-51    and water-efficient [energy efficient] capital improvements,
10-52    energy-efficient and water-efficient [energy efficient] building
10-53    design, and cogeneration and thermal storage investments;
10-54                (3)  technical assistance to the State Auditor and to
10-55    state agencies regarding conducting energy and water management
10-56    performance audits and monitoring of utility bills to detect
10-57    billing errors;
10-58                (4)  technical assistance to state agencies regarding
10-59    third-party financing of energy-efficient and water-efficient
10-60    [energy efficient] capital improvement projects; and
10-61                (5)  other energy-related and water-related assistance
10-62    requested by agencies, other legislatively created entities of the
10-63    state, institutions of higher education, and consortiums of
10-64    institutions of higher education that the office [center] considers
10-65    appropriate.
10-66          (b)  Using available state, federal, or oil overcharge funds,
10-67    the state energy conservation office [management center] may assist
10-68    state agencies and institutions of higher education in analyzing
10-69    and negotiating rates for electricity and natural gas supplies from
 11-1    locally certificated electric suppliers, natural gas suppliers, or
 11-2    state-owned energy and water resources, including transportation
 11-3    charges for natural gas.  The provisions of this section shall not
 11-4    be construed to empower the state energy conservation office
 11-5    [management center] to negotiate rates for natural gas supplies on
 11-6    behalf of state agencies or institutions but rather to provide
 11-7    technical assistance as needed.
 11-8          (c)  Agencies and institutions of higher education may seek
 11-9    the assistance of the state energy conservation office [management
11-10    center] before negotiating or contracting for the supply and
11-11    transportation of natural gas and electricity that will result in
11-12    an anticipated annual expenditure of more than $100,000.
11-13          (d)  Any state agency or institution of higher education with
11-14    expertise in rate analysis, negotiation, or any other matter
11-15    related to the procurement of electricity and natural gas supplies
11-16    from locally certificated electric suppliers, natural gas
11-17    suppliers, or state-owned energy and water resources may assist the
11-18    state energy conservation office [management center] whenever
11-19    practicable.  The attorney general on request shall assist the
11-20    state energy conservation office [management center] and other
11-21    state agencies and institutions of higher education in negotiating
11-22    rates for electricity and other terms of electric utility service.
11-23          (e)  Using available funds from any source where permitted,
11-24    the state energy conservation office [management center] may assist
11-25    state agencies, legislatively created entities of the state,
11-26    institutions of higher education, and consortiums of institutions
11-27    of higher education to further the goals and pursue the policies of
11-28    the state in energy and water research as may be determined by the
11-29    governor or the legislature.  The state energy conservation office
11-30    [management center] may assist state agencies, which are hereby
11-31    authorized to act in accordance with this section, in implementing
11-32    federal energy and water policy as expressed in Pub. L. No.
11-33    102-486, 106 Stat. 2776 (1992).
11-34          (f)  The state energy conservation office [management center]
11-35    on request may negotiate rates for electricity and other terms of
11-36    electric utility service for a state agency or institution of
11-37    higher education.  The state energy conservation office [management
11-38    center] may also negotiate the rates and the other terms of service
11-39    for a group of agencies and institutions together in a single
11-40    contract.
11-41          (g)  The state energy conservation office [management center]
11-42    shall analyze the rates for electricity charged to and the amount
11-43    of electricity used by state agencies and institutions of higher
11-44    education to determine ways the state could obtain lower rates and
11-45    use less electricity.  State agencies, including the Public Utility
11-46    Commission of Texas, and institutions of higher education shall
11-47    assist the state energy conservation office [management center] in
11-48    obtaining the information the office [center] requires to perform
11-49    its analysis.
11-50          (h)  The state energy conservation office [management center]
11-51    and the attorney general shall cooperate in monitoring efforts to
11-52    deregulate the electric utility industry and in reporting on the
11-53    ways in which deregulation would affect state government as a
11-54    purchaser of electricity.  The state energy conservation office
11-55    [management center], represented by the attorney general, may
11-56    intervene in proceedings before the Public Utility Commission of
11-57    Texas that are related to deregulating all or part of the electric
11-58    utility industry to represent the interests of state government as
11-59    a purchaser of electricity in those proceedings.
11-60          Sec. 447.009.  ENERGY AND WATER AUDITS. (a)  The state energy
11-61    conservation office [management center] shall conduct audits of
11-62    state-owned buildings used by state agencies.  The audits shall be
11-63    designed to assist state agencies in reducing energy and water
11-64    consumption and costs through improved energy and water efficiency.
11-65          (b)  Based on the audit performed under Subsection (a)  of
11-66    this section, the office of the governor may recommend changes to
11-67    improve energy and water efficiency.
11-68          (c)  The state energy conservation office [management center]
11-69    may provide training, technical assistance, and funding, if
 12-1    available, to the State Auditor's office or the office charged with
 12-2    performing management audits of state agencies to conduct energy
 12-3    and water management audits in state agencies and institutions of
 12-4    higher education.
 12-5          (d)  State agencies and institutions of higher education
 12-6    shall conduct reviews and audits of utility billings and contracts
 12-7    to detect billing errors.  Contracts with private sector firms must
 12-8    comply with all applicable provisions of Chapter 2254 [654]
 12-9    regarding professional services contracts and may not be awarded on
12-10    a contingent fee basis unless a finding that the contract is
12-11    necessary, reasonable, and prudent is obtained from the office of
12-12    the governor.
12-13          Sec. 447.010.  ENERGY-SAVING AND WATER-SAVING DEVICES OR
12-14    MEASURES. (a)  On approval by the state energy conservation office
12-15    [management center], a state agency that reduces its energy or
12-16    water expenses may use any funds saved by the agency from
12-17    appropriated utility funds for the purchase of energy-saving or
12-18    water-saving devices or measures.  For purposes of this section,
12-19    "energy-saving or water-saving device or measure" means a device or
12-20    measure that directly reduces energy or water costs or the
12-21    consumption of a lighting, heating, ventilating, or air
12-22    conditioning system or of other equipment that uses electricity,
12-23    natural gas, fuel oil, or any other energy or water source without
12-24    materially altering the quality of such lighting, heating,
12-25    ventilating, air conditioning, or other energy or water consuming
12-26    system.
12-27          (b)  A state agency, in accordance with the recommendations
12-28    of an energy and water audit, may purchase energy-saving and
12-29    water-saving devices or measures from appropriated utility funds if
12-30    the savings in utility funds projected by the audit will offset the
12-31    purchase within four years. A copy of the recommendation and
12-32    repayment schedule must be attached to the purchase voucher as
12-33    evidence of the projected savings.
12-34          Sec. 447.011.  ENERGY AND WATER MANAGEMENT PLANNING. (a)  The
12-35    state energy conservation office [management center] shall provide
12-36    energy and water management planning assistance to state agencies
12-37    and institutions of higher education, including:
12-38                (1)  preparation of a long-range plan for the delivery
12-39    of reliable, cost-effective utility services for state agencies,
12-40    institutions of higher education, boards, and commissions in Travis
12-41    County.  This plan shall be presented to the affected agencies for
12-42    use in preparing their five-year construction and major
12-43    rehabilitation plans.  After other energy-saving and water-saving
12-44    alternatives are considered, district heating and cooling and
12-45    on-site generation of electricity may be considered in planning for
12-46    reliable, efficient, and cost-effective utility services;
12-47                (2)  assistance to the Department of Public Safety for
12-48    energy and water emergency contingency planning, using state or
12-49    federal funds when available; and
12-50                (3)  assistance to state agencies and institutions of
12-51    higher education in preparing comprehensive energy and water
12-52    management plans.  The state energy conservation office [management
12-53    center] shall prepare guidelines for the preparation of these
12-54    plans.  State agencies and institutions of higher education that
12-55    expend more than $250,000 annually for heating, lighting, and
12-56    cooling and that occupy state-owned buildings shall prepare and
12-57    submit a five-year energy and water management plan to the center.
12-58    Agencies and institutions of higher education with smaller usage
12-59    may be required to submit such plans.  Updated plans shall be
12-60    submitted biennially when requested by the office [center].
12-61          (b)  The energy and water management plan required in
12-62    Subsection (a)(3) shall be included in the five-year construction
12-63    and major rehabilitation plans for institutions of higher education
12-64    as required under Sections [Section] 61.058 and 61.0651, Education
12-65    Code.
12-66          SECTION 11.  This Act takes effect September 1, 2001.
12-67                                 * * * * *