81R10811 YDB-F

By: Ellis S.B. No. 1973

A BILL TO BE ENTITLED

AN ACT

relating to the creation and duties of the state energy savings performance contract advisory council.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle D, Title 10, Government Code, is amended by adding Chapter 2178 to read as follows:

CHAPTER 2178. STATE ENERGY SAVINGS PERFORMANCE CONTRACT ADVISORY

COUNCIL

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2178.001. DEFINITIONS. In this chapter:

(1) "Advisory council" means the state energy savings performance contract advisory council.

(2) "Energy savings" means an estimated reduction in net fuel costs, energy costs, water costs, storm-water fees, other utility costs, or related net operating costs from, or as compared to, an established baseline of those costs. The term does not include an estimated reduction due to a decrease in energy rates that is not derived from increased conservation or reduced usage.

(3) "Energy savings performance contract" means a contract between a state agency and a provider for energy or water conservation or usage measures in which the estimated energy savings, increase in billable revenues, or increase in meter accuracy resulting from the measures is subject to guarantee to offset the cost of the energy or water conservation or usage measures over a specified period. The term includes a contract for the installation or implementation of the following, including all causally connected work:

(A) insulation of a building structure and systems within the building;

(B) storm windows or doors, caulking or weather stripping, multiglazed windows or doors, heat-absorbing or heat-reflective glazed and coated window or door systems, or other window or door system modifications that reduce energy consumption;

(C) automatic energy control systems, including computer software and technical data licenses;

(D) heating, ventilating, or air-conditioning system modifications or replacements that reduce energy or water consumption;

(E) lighting fixtures that increase energy efficiency;

(F) energy recovery systems;

(G) electric systems improvements;

(H) water-conserving fixtures, appliances, and equipment or the substitution of non-water-using fixtures, appliances, and equipment;

(I) water-conserving landscape irrigation equipment;

(J) landscaping measures that reduce watering demands and capture and hold applied water and rainfall, including:

(i) landscape contouring, including the use of berms, swales, and terraces; and

(ii) the use of soil amendments that increase the water-holding capacity of the soil, including compost;

(K) rainwater harvesting equipment and equipment to make use of water collected as part of a storm-water system installed for water quality control;

(L) equipment for recycling or reuse of water originating on the premises or from other sources, including treated municipal effluent;

(M) equipment needed to capture water from nonconventional, alternate sources, including air-conditioning condensate or graywater, for nonpotable uses;

(N) metering or related equipment or systems that improve the accuracy of billable-revenue-generation systems; or

(O) other energy or water conservation related improvements or equipment, including improvements or equipment relating to renewable energy or nonconventional water sources or water reuse.

(4) "Institution of higher education" has the meaning assigned by Section 61.003, Education Code.

(5) "State agency" means an office, department, commission, or board of any branch of state government.

Sec. 2178.002. ADMINISTRATIVELY ATTACHED TO COMPTROLLER'S OFFICE. The advisory council is administratively attached to the comptroller's office. The comptroller shall provide the staff and facilities necessary to assist the advisory council in performing its duties.

[Sections 2178.003-2178.050 reserved for expansion]

SUBCHAPTER B. ADVISORY COUNCIL

Sec. 2178.051. ESTABLISHMENT OF ADVISORY COUNCIL. (a) The comptroller shall establish the state energy savings performance contract advisory council as an independent council separate from the State Energy Conservation Office.

(b) Chapter 2110 does not apply to the advisory council.

Sec. 2178.052. APPOINTMENT OF ADVISORY COUNCIL MEMBERS. (a) The comptroller shall appoint the members of the advisory council. The advisory council must include:

(1) at least one representative from each of the following:

(A) an institution of higher education;

(B) a state agency, other than an agency already represented on the advisory council;

(C) the State Energy Conservation Office;

(D) the Texas Higher Education Coordinating Board;

(E) the Bond Review Board;

(F) the Texas Public Finance Authority;

(G) the attorney general's office; and

(H) the Texas Engineering Experiment Station;

(2) a licensed professional mechanical engineer, who is licensed in this state and is proficient in monitoring and verification techniques; and

(3) a representative from the energy savings performance contract industry.

(b) The advisory council members serve four-year terms. An advisory council member may be reappointed for a second term.

(c) Not later than the 90th day after the date the comptroller receives notice of a member's resignation, the comptroller shall fill the vacancy on the advisory council.

Sec. 2178.053. PRESIDING OFFICER. The members of the advisory council by majority vote shall appoint a presiding officer.

Sec. 2178.054. COMPENSATION AND REIMBURSEMENT. An advisory council member is not entitled to compensation but is entitled to reimbursement for actual travel expenses incurred by the member while conducting the business of the advisory council, as provided in the General Appropriations Act.

Sec. 2178.055. MEETINGS. The advisory council shall meet at the call of the presiding officer or comptroller.

[Sections 2178.056-2178.100 reserved for expansion]

SUBCHAPTER C. DUTIES OF ADVISORY COUNCIL

Sec. 2178.101. GENERAL DUTIES. The advisory council shall advise the comptroller and assist state agencies and institutions of higher education with:

(1) optimizing energy savings;

(2) complying with the requirements for energy savings performance contracts;

(3) verifying energy savings; and

(4) overseeing contracts for energy services and energy conservation measures under performance contracts that guarantee savings.

Sec. 2178.102. BEST PRACTICES AND GUIDELINES. (a) The advisory council shall identify strategies for state agencies to use in measuring and verifying savings from energy, water, improved operations and maintenance, retro-commissioning, renewable energy, and cogeneration projects implemented through energy savings performance contracts.

(b) The advisory council shall base the strategies identified under Subsection (a) on best practices identified by other entities, including:

(1) ASHRAE Guideline 14: Measurement of Energy and Demand Savings;

(2) the International Performance Measurement and Verification Protocol; and

(3) the Federal Energy Management Program Guidelines for Measurement and Verification.

(c) The advisory council, with the approval of the comptroller, shall develop and publish uniform contracts, guidelines, and procedures to be used by state agencies, institutions of higher education, the State Energy Conservation Office, the Bond Review Board, and the Texas Public Finance Authority for monitoring and verifying savings derived from the use of energy savings performance contracts. The guidelines and procedures must:

(1) require each contract to contain provisions that require the contractor to undertake measurement and verification activities and provide documentation adequate to demonstrate that the savings guarantee will be met over the contract period and will minimize financial risk for all parties;

(2) require uniform monitoring and verification plans to be approved by the comptroller with the advice of the advisory council;

(3) establish guidelines that require all costs associated with an energy savings performance contract, including actual equipment costs, interest, management fees, monitoring and verification fees, and commissioning and default obligations, to be fully disclosed before the contract is executed;

(4) require that savings must exceed payments in every year of an energy savings performance contract;

(5) require all monitoring and verification plans to contain a statement issued by a provider attesting that the project savings will meet or exceed all costs of the projects implemented by an energy savings performance contract; and

(6) establish procedures to ensure that life-cycle cost analysis be conducted and that replacement costs for equipment with a useful life expectancy that is less than the term of the contract be accounted for and that the contract addresses ongoing maintenance and commissioning.

(d) The advisory council, with the approval of the comptroller, shall annually update the terminology, guidelines, and procedures developed under Subsection (c) to harmonize with the latest techniques and technologies for monitoring and verification of energy and water savings.

(e) The advisory council, with the approval of the comptroller, shall establish cost guidelines for efficient monitoring and verification of savings by energy savings performance contract contractors and require that any proposed contractor costs for measurement and verification that exceed the guidelines must be preapproved by the comptroller with the advice of the advisory council.

(f) The advisory council may provide special contract provisions for institutions of higher education if required by statute.

Sec. 2178.103. OPTIMIZATION OF SAVINGS AND REDUCTION OF RISK; TRAINING. (a) The advisory council may enlist a state agency or institution of higher education with expertise in monitoring and verification to provide services and expertise to optimize savings and reduce risk from inadequate savings, including short-course training, testing, and certification to increase the proficiency of independent, third-party providers and their employees related to energy savings performance contracts for monitoring and verification services under this chapter.

(b) The advisory council may collect reasonable fees to conduct the training described by Subsection (a).

Sec. 2178.104. ADVISORY COUNCIL DUTIES RELATED TO RULES. The advisory council shall advise the comptroller on the development of rules and guidelines relating to energy savings performance contracts under Section 2166.406 and Section 44.901, Education Code.

Sec. 2178.105. CONTRACT WITH STATE AGENCY OR INSTITUTION OF HIGHER EDUCATION. The advisory council may contract with a state agency or institution of higher education with expertise in monitoring and verifying energy savings to oversee energy savings performance contract plans and reporting under this chapter.

Sec. 2178.106. REPORTS. (a) Not later than January 1 of each odd-numbered year, the advisory council shall submit a report to the governor and both houses of the legislature on:

(1) the savings or lack of savings of all energy savings performance contracts entered into by a state agency during the preceding two years and on the performance of contractors under the contracts; and

(2) the fulfillment of state agency energy savings reduction goals under Section 2166.406 and of institutions of higher education under Section 44.901, Education Code.

(b) The report required under Subsection (a) may also contain recommendations for increased savings by state agencies and institutions of higher education, including the use of energy savings performance contracts and other forms of financing.

(c) Each state agency and institution of higher education shall provide to the advisory council adequate, timely information necessary to prepare the report.

(d) Each state agency and institution of higher education shall provide a list of all energy savings performance contracts to the governor, both houses of the legislature, and the Legislative Budget Board that includes:

(1) a summary of the savings and operational performance under the contract;

(2) a statement that the savings guarantee is or is not being met annually; and

(3) a statement on the impact of the contract:

(A) for a state agency, on the agency's request to the legislature for utility funding; or

(B) for institutions of higher education, on student fees and tuition.

Sec. 2178.107. FUNDING. The advisory council may use funds from interest collected by the loanstar program established under Section 2305.032 to perform the functions assigned under this chapter and for training.

SECTION 2. Section 2166.406, Government Code, is amended by amending Subsection (i) and adding Subsection (k) to read as follows:

(i) An energy savings performance contract shall be let according to the procedures established for procuring certain professional services by Section 2254.004. Notice of the request for qualifications shall be given in the manner provided by Section 2156.002. The State Energy Conservation Office shall establish guidelines and an approval process for awarding energy savings performance contracts. The guidelines adopted under this subsection must require that the cost savings projected by an offeror be reviewed by a licensed professional engineer who has a minimum of three years of experience in energy calculation and review, has successfully completed the monitoring and verification training required under Chapter 2178, is not an officer or employee of an offeror for the contract under review, and is not otherwise associated with the contract. In conducting the review, the engineer shall focus primarily on the proposed improvements from an engineering perspective, the methodology and calculations related to cost savings, increases in revenue, and, if applicable, efficiency or accuracy of metering equipment. An engineer who reviews a contract shall maintain the confidentiality of any proprietary information the engineer acquires while reviewing the contract. An energy savings performance contract may not be entered into unless the contract has been approved by the State Energy Conservation Office. Sections 1001.053 and 1001.407, Occupations Code, apply to work performed under the contract.

(k) An energy savings performance contract must comply with the requirements and guidelines established under Chapter 2178.

SECTION 3. Section 2305.032, Government Code, is amended by adding Subsections (g) and (h) to read as follows:

(g) All loans, including energy savings performance contract loans, made under this section for state agencies, institutions of higher education, local governments, and school districts must comply with the uniform measurement and verification plans and mandatory monitoring and verification guidelines established under Chapter 2178.

(h) A portion of the interest earned on a loan made under this section shall be used to fund the state energy savings performance contract advisory council established under Chapter 2178.

SECTION 4. Section 44.901, Education Code, is amended by amending Subsection (i) and adding Subsection (j) to read as follows:

(i) Before entering into an energy savings performance contract, the board must require that the cost savings projected by an offeror be reviewed by a licensed professional engineer who has a minimum of three years of experience in energy calculation and review, has successfully completed the monitoring and verification training required under Chapter 2178, Government Code, is not an officer or employee of an offeror for the contract under review, and is not otherwise associated with the contract. In conducting the review, the engineer shall focus primarily on the proposed improvements from an engineering perspective, the methodology and calculations related to cost savings, increases in revenue, and, if applicable, efficiency or accuracy of metering equipment. An engineer who reviews a contract shall maintain the confidentiality of any proprietary information the engineer acquires while reviewing the contract. Sections 1001.053 and 1001.407, Occupations Code, apply to work performed under the contract.

(j) An energy savings performance contract must comply with the requirements and guidelines established under Chapter 2178, Government Code.

SECTION 5. (a) As soon as practicable after the effective date of this Act, the comptroller shall appoint members to the state energy savings performance contract advisory council.

(b) Not later than September 1, 2010, the state energy savings performance contract advisory council, with the approval of the comptroller, shall develop and publish the uniform contracts, guidelines, and procedures as required under Chapter 2178, Government Code, as added by this Act.

(c) All existing regulations, policies, and guidelines established by the State Energy Conservation Office on the effective date of this Act remain in force until the date any conflicting guidelines are adopted under Subsection (b) of this section.

(d) An existing energy savings performance contract must conform to the guidelines developed under Chapter 2178, Government Code, as added by this Act, if the contract is materially amended or extended on or after the date any conflicting guidelines are adopted under Subsection (b) of this section.

SECTION 6. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2009.