Reference Title: guaranteed energy cost savings contracts

AN ACT
AMENDING SECTION 15-213.01, ARIZONA REVISED STATUTES; REPEALING LAWS 1996, CHAPTER 212, SECTION 4; REPEALING LAWS 1997, CHAPTER 85, SECTIONS 3, 16 AND 17; RELATING TO GUARANTEED ENERGY COST SAVINGS CONTRACTS.

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 15-213.01, Arizona Revised Statutes, is amended to read:

15-213.01 . Procurement practices; guaranteed energy cost savings contracts; definitions

A. Notwithstanding section 15-213, subsection A, a school district may contract for the procurement of a guaranteed energy cost savings contract with a qualified provider through a competitive sealed proposal process as provided by the procurement practices adopted by the state board of education. To the extent the qualified provider subcontracts with contractors who will be involved in any construction associated with the guaranteed energy cost savings contract, the qualified provider must follow the provisions of section 41-2533 in selecting these contractors.

B. A school district may enter into a guaranteed energy cost savings contract with a qualified provider if it determines that the amount it would spend on the energy cost savings measures recommended in the proposal would not exceed the amount to be saved in energy and operational costs within ten years after the date installation is complete, if the recommendations in the proposal are followed. In evaluating the proposals, the school district shall retain an independent registered professional engineer with experience in energy efficiency to review the top three proposals if the guaranteed energy savings contract is more than fifty thousand dollars. The engineer shall review each of the proposals to verify that the methodology for computing energy savings and the computations for baseline performance conform with generally accepted engineering principles and are accurate. In addition, the engineer shall review the proposals for the reasonableness of the energy savings devices suggested in each proposal, the extent of the qualified provider's guarantee, comprehensiveness, the existence of sufficient documentation of estimated costs, and savings projections. The qualified provider shall pay for the cost of this evaluation and shall include the cost as part of the cost of the guaranteed energy savings contract. The qualified providers PROVIDER shall submit to the independent registered professional engineer all energy audit information acquired in developing its proposal and any other relevant data requested by the engineer that may assist the engineer in evaluating the proposals. If the school district receives fewer than three proposals, it shall submit all proposals received to the independent registered professional engineer for review.

C. The school district shall use objective criteria in selecting the qualified provider including the cost of the contract, the energy and operational cost savings, the net projected energy savings, the quality of the technical approach, the quality of the project management plan, the financial solvency of the qualified provider and the experience of the qualified provider with projects of similar size and scope. The school district shall set forth each criterion with its respective numerical weighting in the request for proposal.

D. In selecting a contractor to perform any construction work related to performing the guaranteed energy cost savings contract, the qualified provider may develop and use a prequalification process for contractors wishing to bid on this work. These prequalifications may require the contractor to demonstrate that the contractor is adequately bonded to perform the work and that the contractor has not failed to perform on a prior job. The qualified provider may use performance specifications in soliciting bids from contractors.

E. An in-depth feasibility study shall be performed by the selected qualified provider in order to establish the exact scope of the guaranteed energy cost savings contract, the fixed cost savings guarantee amount and the methodology for verifying actual savings. This report shall be reviewed and approved by the independent registered professional engineer and school district prior to the actual installation of any equipment.

F. The guaranteed energy savings contract shall require that an independent professional engineer perform an energy audit of the facility or facilities one year after the energy cost savings measures are installed and every year THREE YEARS thereafter for the length of the contract. The qualified provider shall pay the cost of the audit. In determining whether the projected energy savings calculations have been met, the energy or operational cost savings shall be computed by comparing the energy baseline before installation of the energy cost savings measures with the energy consumed and operational costs avoided after installation of the energy cost savings measures. The qualified provider and the school district may agree to make modifications to the energy baseline only for any of the following:

1. Changes in utility rates.

2. Changes in the number of days in the utility billing cycle.

3. Changes in the square footage of the facility.

4. Changes in the operational schedule of the facility.

5. Changes in facility temperature.

6. Significant changes in the weather.

7. Significant changes in the amount of equipment or lighting utilized in the facility.

G. The information to develop the energy baseline shall be derived from actual energy measurements or shall be calculated from energy measurements at the facility where energy cost savings measures are to be installed. The measurements shall be taken in the year preceding the installation of energy cost savings measures.

H. When submitting a proposal, the qualified provider shall include information on the projected energy savings associated with each proposed energy cost savings measure.

I. A school district, or two or more school districts, may enter into an installment payment contract or lease-purchase agreement with a qualified provider for the purchase and installation of energy cost savings measures. The guaranteed energy cost savings contract may provide for payments over a period of not more than ten years. The contract shall provide that all payments, except obligations on termination of the contract before its expiration, shall be made over time.

J. The guaranteed energy cost savings contract shall include a written guarantee of the qualified provider that either the energy or operational costs savings, or both, will meet or exceed the costs of the energy cost savings measures within ten years. The qualified provider shall reimburse the school district for any shortfall of guaranteed energy cost savings on an annual basis.

K. The school district may obtain any required financing as part of the original competitive sealed proposal process.

L. A qualified provider that is awarded the contract shall give a sufficient bond to the school district for its faithful performance of the equipment installment.

M. When selecting subcontractors to perform construction work, the qualified provider is required to make public information in the subcontractor's bids only if the qualified provider is awarded the guaranteed energy savings contract by the school district.

N. This section does not apply to the construction of new buildings.

O. For purposes of this section:

1. "Construction" means the process of building, altering, repairing, improving or demolishing any school district structure or building, or other public improvements of any kind to any school district real property. Construction does not include the routine operation, routine repair or routine maintenance of existing structures, buildings or real property.

2. "Energy baseline" means a calculation of the amount of energy used in an existing facility if the energy cost savings measures had not been installed.

3. "Energy cost savings measure" means a training program or facility alteration designed to reduce energy consumption or operating costs and may include one or more of the following:

(a) Insulating the building structure or systems in the building.

(b) Storm windows or doors, caulking or weather stripping, multi-glazed windows or door systems, additional glazing, reductions in glass area, or other window and door system modifications that reduce energy consumption.

(c) Automated or computerized energy control systems.

(d) Heating, ventilating or air conditioning system modifications or replacements.

(e) Replacing or modifying lighting fixtures to increase the energy efficiency of the lighting system without increasing the overall illumination of a facility unless an increase in illumination is necessary to conform to the applicable state or local building code for the lighting system after the proposed modifications are made.

(f) Indoor air quality improvements to increase air quality that conforms CONFORM to the applicable state or local building code requirements.

(g) Energy recovery systems.

(h) Installing new or retrofitting an existing day lighting system.

(i) Any life safety measures that provide long-term operating cost reductions and that comply with state and local codes.

(j) Building operation programs that reduce the operating costs.

4. "Guaranteed energy cost savings contract" means a contract for implementing one or more energy cost savings measures.

5. "Independent registered professional engineer" means an engineer who has experience in energy efficiency, who is registered pursuant to title 32, chapter 1 A CERTIFIED ENERGY MANAGER OR POSSESSES AN ENGINEERING DEGREE FROM A FOUR YEAR ACCREDITED COLLEGE OR UNIVERSITY and who has not been employed in the five years preceding the award of the contract by any of the qualified providers submitting a proposal for a guaranteed energy cost savings contract.

6. "Operational savings" means reductions in actual budget line items currently being expended or already committed for operations, maintenance, repair and replacement of energy cost savings measures.

7. "Qualified provider" means a person or a business experienced in designing, implementing and installing energy cost savings measures.

Sec. 2. Repeal

A. Laws 1996, chapter 212, section 4 is repealed.

B. Laws 1997, chapter 85, sections 3, 16 and 17 are repealed.

APPROVED BY THE GOVERNOR APRIL 26, 1999.

FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 26, 1999.