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AN ACT
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relating to energy savings performance contracts. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subsections (f) and (i), Section 44.901, |
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Education Code, are amended to read as follows: |
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(f) An energy savings performance contract may be financed: |
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(1) under a lease/purchase contract that has a term |
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not to exceed 20 [15] years from the final date of installation and |
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that meets federal tax requirements for tax-free municipal leasing |
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or long-term financing; |
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(2) with the proceeds of bonds; or |
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(3) under a contract with the provider of the energy or |
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water conservation measures that has a term not to exceed the lesser |
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of 20 years from the final date of installation or the average |
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useful life of the energy or water conservation or usage measures |
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[15 years from the final date of installation]. |
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(i) Before entering into an energy savings performance |
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contract, the board must require that the cost savings projected by |
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an offeror be reviewed by a licensed professional engineer who has a |
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minimum of three years of experience in energy calculation and |
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review, is not an officer or employee of an offeror for the contract |
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under review, and is not otherwise associated with the contract. In |
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conducting the review, the engineer shall focus primarily on the |
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proposed improvements from an engineering perspective, the |
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methodology and calculations related to cost savings, increases in |
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revenue, and, if applicable, efficiency or accuracy of metering |
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equipment [is not an officer or employee of an offeror for the
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contract under review or otherwise associated with the contract or
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the offeror]. An engineer who reviews a contract shall maintain the |
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confidentiality of any proprietary information the engineer |
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acquires while reviewing the contract. Sections 1001.053 and |
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1001.407, Occupations Code, apply to work performed under the |
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contract. |
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SECTION 2. Subsections (f), (g), and (i), Section 51.927, |
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Education Code, are amended to read as follows: |
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(f) The board may enter into an energy savings performance |
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contract for a period of more than one year only if the board finds |
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that the amount the institution would spend on the energy or water |
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conservation measures will not exceed the amount to be saved in |
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energy, water, wastewater, and operating costs over 20 [15] years |
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from the date of installation. If the term of the contract exceeds |
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one year, the institution's contractual obligation in any year |
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during the term of the contract beginning after the final date of |
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installation may not exceed the total energy, water, wastewater, |
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and operating cost savings, including electrical, gas, water, |
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wastewater, or other utility cost savings and operating cost |
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savings resulting from the measures, as determined by the board in |
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this subsection, divided by the number of years in the contract term |
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beginning after the final date of installation. The board shall |
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consider all costs of the energy or water conservation measures, |
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including costs of design, engineering, installation, maintenance, |
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repairs, and debt service. |
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(g) An energy savings performance contract may be financed: |
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(1) under a lease/purchase contract that has a term |
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not to exceed 20 [15] years from the final date of installation and |
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that meets federal tax requirements for tax-free municipal leasing |
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or long-term financing, including a lease/purchase contract under |
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the master equipment lease purchase program administered by the |
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Texas Public Finance Authority under Chapter 1232, Government Code; |
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(2) with the proceeds of bonds; or |
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(3) under a contract with the provider of the energy or |
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water conservation measures that has a term not to exceed the lesser |
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of 20 years from the final date of installation or the average |
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useful life of the energy or water conservation or usage measures |
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[15 years from the final date of installation]. |
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(i) An energy savings performance contract shall be let |
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according to the procedures established for procuring certain |
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professional services by Section 2254.004, Government Code. Notice |
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of the request for qualifications shall be given in the manner |
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provided by Section 2156.002, Government Code. The Texas Higher |
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Education Coordinating Board, in consultation with the State Energy |
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Conservation Office with regard to energy and water conservation |
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measures, shall establish guidelines and an approval process for |
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awarding energy savings performance contracts. The guidelines must |
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require that the cost savings projected by an offeror be reviewed by |
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a licensed professional engineer who has a minimum of three years of |
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experience in energy calculation and review, is not an officer or |
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employee of an offeror for the contract under review, and is not |
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otherwise associated with the contract. In conducting the review, |
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the engineer shall focus primarily on the proposed improvements |
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from an engineering perspective, the methodology and calculations |
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related to cost savings, increases in revenue, and, if applicable, |
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efficiency or accuracy of metering equipment [is not an officer or
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employee of an offeror for the contract under review or otherwise
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associated with the contract]. An engineer who reviews a contract |
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shall maintain the confidentiality of any proprietary information |
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the engineer acquires while reviewing the contract. A contract is |
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not required to be reviewed or approved by the State Energy |
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Conservation Office. Sections 1001.053 and 1001.407, Occupations |
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Code, apply to work performed under the contract. |
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SECTION 3. Subsections (f), (g), and (i), Section 2166.406, |
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Government Code, are amended to read as follows: |
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(f) The state agency may enter into an energy savings |
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performance contract for a period of more than one year only if the |
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state agency finds that the amount the state agency would spend on |
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the energy or water conservation measures will not exceed the |
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amount to be saved in energy, water, wastewater, and operating |
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costs over 20 [15] years from the date of installation. |
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(g) An energy savings performance contract with respect to |
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existing buildings or facilities may be financed: |
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(1) under a lease/purchase contract that has a term |
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not to exceed 20 [15] years from the final date of installation and |
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that meets federal tax requirements for tax-free municipal leasing |
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or long-term financing, including a lease/purchase contract under |
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the master equipment lease purchase program administered by the |
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Texas Public Finance Authority under Chapter 1232; |
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(2) with the proceeds of bonds; or |
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(3) under a contract with the provider of the energy or |
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water conservation measures that has a term not to exceed the lesser |
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of 20 years from the final date of installation or the average |
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useful life of the energy or water conservation or usage measures |
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[15 years from the final date of installation]. |
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(i) An energy savings performance contract shall be let |
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according to the procedures established for procuring certain |
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professional services by Section 2254.004. Notice of the request |
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for qualifications shall be given in the manner provided by Section |
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2156.002. The State Energy Conservation Office shall establish |
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guidelines and an approval process for awarding energy savings |
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performance contracts. The guidelines adopted under this |
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subsection must require that the cost savings projected by an |
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offeror be reviewed by a licensed professional engineer who has a |
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minimum of three years of experience in energy calculation and |
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review, is not an officer or employee of an offeror for the contract |
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under review, and is not otherwise associated with the contract. In |
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conducting the review, the engineer shall focus primarily on the |
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proposed improvements from an engineering perspective, the |
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methodology and calculations related to cost savings, increases in |
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revenue, and, if applicable, efficiency or accuracy of metering |
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equipment [is not an officer or employee of an offeror for the
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contract under review or otherwise associated with the contract]. |
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An engineer who reviews a contract shall maintain the |
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confidentiality of any proprietary information the engineer |
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acquires while reviewing the contract. An energy savings |
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performance contract may not be entered into unless the contract |
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has been approved by the State Energy Conservation Office. |
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Sections 1001.053 and 1001.407, Occupations Code, apply to work |
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performed under the contract. |
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SECTION 4. Section 302.001, Local Government Code, is |
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amended to read as follows: |
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Sec. 302.001. DEFINITIONS. In this chapter: |
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(1) "Baseline" means a calculation or set of |
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calculations in an energy savings performance contract that may be |
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based on historical costs, revenues, accuracy, or related |
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components and used for determining: |
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(A) the costs for energy or water usage by a local |
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government and related net operating costs; |
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(B) the billable revenues from providing energy, |
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water, or other utilities to users; or |
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(C) the efficiency or accuracy of metering or |
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related equipment, systems, or processes or procedures. |
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(2) "Energy or water conservation or usage measures" |
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means: |
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(A) the installation or implementation of any of |
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the items, equipment, modifications, alterations, improvements, |
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systems, and other measures described by Subdivision (4) that are |
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intended to provide: |
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(i) estimated energy savings; |
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(ii) an estimated increase in billable |
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revenues; or |
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(iii) an estimated increase in meter |
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accuracy; or |
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(B) the training for, or services related to, the |
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operation of the items, equipment, modifications, alterations, |
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improvements, systems, or other measures described by Paragraph |
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(A). |
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(3) "Energy savings" means an estimated reduction in |
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net fuel costs, energy costs, water costs, stormwater fees, other |
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utility costs, or related net operating costs from or as compared to |
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an established baseline of those costs. The term does not include |
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an estimated reduction due to a decrease in energy rates that is not |
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derived from increased conservation or reduced usage. |
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(4) "Energy savings performance contract" means a |
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contract between a local government and a provider for energy or |
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water conservation or usage measures [to reduce energy or water
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consumption or operating costs of local government facilities] in |
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which the estimated energy savings, increase in billable revenues, |
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or increase in meter accuracy [in utility costs] resulting from the |
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measures is subject to guarantee [guaranteed] to offset the cost of |
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the energy or water conservation or usage measures over a specified |
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period. The term includes a contract for the installation or |
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implementation of the following, including all causally connected |
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work: |
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(A) insulation of a building structure and |
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systems within the building; |
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(B) storm windows or doors, caulking or weather |
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stripping, multiglazed windows or doors, heat-absorbing or |
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heat-reflective glazed and coated window or door systems, or other |
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window or door system modifications that reduce energy consumption; |
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(C) automatic energy control systems, including |
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computer software and technical data licenses; |
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(D) heating, ventilating, or air-conditioning |
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system modifications or replacements that reduce energy or water |
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consumption; |
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(E) lighting fixtures that increase energy |
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efficiency; |
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(F) energy recovery systems; |
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(G) electric systems improvements; |
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(H) water-conserving fixtures, appliances, and |
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equipment or the substitution of non-water-using fixtures, |
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appliances, and equipment; |
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(I) water-conserving landscape irrigation |
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equipment; |
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(J) landscaping measures that reduce watering |
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demands and capture and hold applied water and rainfall, including: |
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(i) landscape contouring, including the use |
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of berms, swales, and terraces; and |
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(ii) the use of soil amendments that |
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increase the water-holding capacity of the soil, including compost; |
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(K) rainwater harvesting equipment and equipment |
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to make use of water collected as part of a storm-water system |
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installed for water quality control; |
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(L) equipment for recycling or reuse of water |
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originating on the premises or from other sources, including |
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treated municipal effluent; |
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(M) equipment needed to capture water from |
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nonconventional, alternate sources, including air-conditioning |
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condensate or graywater, for nonpotable uses; |
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(N) metering or related equipment or systems that |
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improve the accuracy of billable-revenue-generation systems |
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[equipment needed to segregate water use in order to identify water
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conservation opportunities or verify water savings]; or |
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(O) other energy or water conservation-related |
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improvements or equipment, including improvements or equipment |
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relating to renewable energy or nonconventional water sources or |
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water reuse. |
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(5) "Guarantee" means a written guarantee of a |
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provider that the energy savings, increase in billable revenues, or |
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increase in meter accuracy from the energy or water conservation or |
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usage measures will at least equal the cost of the energy or water |
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conservation or usage measures, all causally connected work, and |
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ancillary improvements provided for in an energy savings |
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performance contract. |
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(6) "Increase in billable revenues" means an estimated |
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increase in billable revenues as compared to an established |
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baseline of billable revenues. |
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(7) "Increase in meter accuracy" means an estimated |
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increase in efficiency or accuracy of metering or related |
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equipment, systems, or processes or procedures that is calculated |
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or determined by using applicable industry engineering standards. |
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(8) [(2)] "Local government" means a county, |
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municipality, or other political subdivision of this state. The |
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term does not include a school district authorized to enter into an |
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energy savings performance contract under Section 44.901, |
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Education Code. |
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(9) "Meter guarantee" means a guarantee of a |
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stipulated or agreed upon increase in billable revenues to result |
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from the estimated increase in meter accuracy, based on stipulated |
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or agreed upon components of a billable revenue calculation in an |
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energy savings performance contract. |
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(10) "Provider" means an entity in the business of |
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designing, implementing, and installing of energy or water |
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conservation or usage measures or an affiliate of such an entity. |
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SECTION 5. Subsection (b), Section 302.002, Local |
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Government Code, is amended to read as follows: |
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(b) Each energy or water conservation or usage measure must |
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comply with current local, state, and federal construction, |
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plumbing, and environmental codes and regulations. |
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Notwithstanding Section 302.001 [302.001(1)], an energy savings |
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performance contract may not include improvements or equipment that |
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allow or cause water from any condensing, cooling, or industrial |
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process or any system of nonpotable usage over which public water |
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supply system officials do not have sanitary control to be returned |
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to the potable water supply. |
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SECTION 6. Section 302.003, Local Government Code, is |
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amended to read as follows: |
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Sec. 302.003. PAYMENT AND PERFORMANCE BOND. |
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Notwithstanding any other law, before entering into an energy |
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savings performance contract, the governing body of the local |
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government shall require the provider of the energy or water |
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conservation or usage measures to file with the governing body a |
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payment and performance bond relating to the installation of the |
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measures in accordance with Chapter 2253, Government Code. The |
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governing body may also require a separate bond to cover the value |
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of the guarantee [guaranteed savings on the contract]. |
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SECTION 7. Section 302.004, Local Government Code, is |
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amended to read as follows: |
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Sec. 302.004. METHOD OF FINANCING; TERMS OF CONTRACT. |
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(a) An energy savings performance contract may be financed: |
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(1) under a lease-purchase contract that has a term |
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not to exceed 20 [15] years from the final date of installation and |
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that meets federal tax requirements for tax-free municipal leasing |
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or long-term financing; |
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(2) with the proceeds of bonds; or |
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(3) under a contract with the provider of the energy or |
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water conservation or usage measures that has a term not to exceed |
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the lesser of 20 years from the final date of installation or the |
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average useful life of the energy or water conservation or usage |
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measures [15 years from the final date of installation]. |
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(b) An energy savings performance contract shall contain |
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provisions requiring the provider of the energy or water |
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conservation or usage measures to provide a guarantee [the amount
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of the savings to be realized by the local government under the
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contract]. If the term of the contract exceeds one year, the local |
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government's contractual obligations in any one year during the |
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term of the contract beginning after the final date of installation |
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may not exceed the total energy and[,] water savings, the net[,
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wastewater, and] operating cost savings, and the stipulated or |
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agreed upon increase in billable revenues resulting from the |
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estimated increase in meter accuracy [including electrical, gas,
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water, wastewater, or other utility cost savings and operating cost
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savings resulting from the measures as determined by the local
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government in this subsection], divided by the number of years in |
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the contract term. |
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SECTION 8. Section 302.005, Local Government Code, is |
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amended by amending Subsection (b) and adding Subsection (c) to |
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read as follows: |
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(b) Before entering into an energy savings performance |
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contract, the governing body must require that the energy savings, |
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increase in billable revenues, or increase in meter accuracy |
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estimated or [cost savings] projected by a provider [an offeror] be |
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reviewed by a licensed professional engineer who: |
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(1) has a minimum of three years of experience in |
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energy calculation and review; |
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(2) is not an officer or employee of a provider [an
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offeror] for the contract under review; and |
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(3) is not [or] otherwise associated with the |
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contract. |
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(c) In conducting the review, the engineer shall focus |
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primarily on the proposed improvements from an engineering |
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perspective, the methodology and calculations related to cost |
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savings, increases in revenue, and, if applicable, efficiency or |
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accuracy of metering equipment [or the offeror]. An engineer who |
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reviews a contract shall maintain the confidentiality of any |
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proprietary information the engineer acquires while reviewing the |
|
contract. Sections 1001.053 and 1001.407, Occupations Code, apply |
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to work performed under the contract. |
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SECTION 9. Chapter 302, Local Government Code, is amended |
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by adding Section 302.006 to read as follows: |
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Sec. 302.006. METER GUARANTEES. (a) This section applies |
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to any energy savings performance contract that: |
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(1) provides for any metering or related equipment, |
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system, or process or procedure; and |
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(2) includes a meter guarantee by the provider, |
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regardless of whether the meter guarantee is a part of a broader |
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guarantee applicable to other energy or water conservation or usage |
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measures or causally connected work. |
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(b) Not later than the fifth anniversary of the effective |
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date of an energy savings performance contract, an engineer shall |
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test a statistically relevant sample of the meters installed or |
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implemented under the contract to determine or calculate the actual |
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average accuracy and shall compare the actual average accuracy to |
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the baseline average accuracy of those tested meters. |
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(c) A meter guarantee applies if the engineer reports to the |
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local government and the provider that the average accuracy of the |
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tested meters as of the testing date is less than the baseline |
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average accuracy of the tested meters as of the testing date. |
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(d) The amount payable under the meter guarantee must be |
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determined for each year subject to the engineer's report and is |
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equal to the difference between: |
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(1) the agreed increase in billable revenues based on |
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the estimated accuracy of all of the meters for each year, according |
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to the energy savings performance contract; and |
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(2) the revenues for the same year that would result |
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from applying the engineer's reported actual average accuracy of |
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the tested meters to all of the meters subject to the energy savings |
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performance contract, using the same contract components that were |
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used to calculate the agreed increase in billable revenues for that |
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year, assuming the annual decrease in actual average accuracy of |
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all the meters was a pro rata percentage of the reported total |
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decrease in actual average accuracy. |
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(e) Notwithstanding Subsection (d), if the meter guarantee |
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in the contract is part of a broader guarantee applicable to other |
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energy or water conservation or usage measures or causally |
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connected work under the contract, the amount payable under the |
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meter guarantee for any year during the measurement period is |
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reduced or offset by the difference between: |
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(1) the sum of the energy savings and the increase in |
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billable revenues resulting from the other energy or water |
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conservation or usage measures or causally connected work for that |
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year during the measurement period; and |
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(2) the guaranteed amount of the energy savings and |
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the increase in billable revenues from the other energy or water |
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conservation or usage measures or causally connected work for that |
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year during the measurement period. |
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(f) A test conducted under this section must be performed in |
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accordance with the procedures established by the International |
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Performance Measurement and Verification Protocol or succeeding |
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standards of the United States Department of Energy. |
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(g) An engineer conducting a test under this section shall: |
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(1) verify that the tested meters have been properly |
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maintained and are operating properly; and |
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(2) comply with Section 302.005(c). |
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SECTION 10. Section 39.107, Utilities Code, is amended by |
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adding Subsection (i) to read as follows: |
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(i) Notwithstanding Subsection (b), a nonresidential |
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customer may have a meter installed and metering services provided |
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on a competitive basis as part of an energy savings performance |
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contract. |
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SECTION 11. The changes in law made by this Act apply only |
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to an energy savings performance contract entered into on or after |
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the effective date of this Act. An energy savings performance |
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contract entered into before the effective date of this Act is |
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governed by the law in effect at the time the contract was entered |
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into, and the former law is continued in effect for that purpose. |
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SECTION 12. This Act takes effect immediately if it |
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receives a vote of two-thirds of all the members elected to each |
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house, as provided by Section 39, Article III, Texas Constitution. |
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If this Act does not receive the vote necessary for immediate |
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effect, this Act takes effect September 1, 2007. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I hereby certify that S.B. No. 831 passed the Senate on |
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March 28, 2007, by the following vote: Yeas 30, Nays 0; and that |
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the Senate concurred in House amendment on May 24, 2007, by the |
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following vote: Yeas 30, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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I hereby certify that S.B. No. 831 passed the House, with |
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amendment, on May 17, 2007, by the following vote: Yeas 143, |
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Nays 0, two present not voting. |
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______________________________ |
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Chief Clerk of the House |
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Approved: |
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______________________________ |
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Date |
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______________________________ |
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Governor |