Bill Text: HI HB2255 | 2014 | Regular Session | Amended

Hawaii House Bill 2255 (Prior Session Legislation)

Bill Title: Energy Efficiency Retrofitting; State Agencies

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2014-03-06 - Referred to ENE/EGH, WAM. [HB2255 Detail]

Download: Hawaii-2014-HB2255-Amended.html

HOUSE OF REPRESENTATIVES	H.B. NO.	2255
TWENTY-SEVENTH LEGISLATURE, 2014		H.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO ENERGY PERFORMANCE CONTRACTING FOR PUBLIC BUILDINGS.

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

SECTION 1. The legislature finds that energy performance contracting offers significant opportunities for agencies to improve their facilities and operations. Energy performance contracting is a method of paying for facility improvements using energy and operational savings through a contracting vehicle that provides an opportunity to install more efficient equipment, address deferred maintenance, use renewable energy technologies, and reduce operating costs. The legislature further finds that state agencies have seen the value of using energy performance contracting to improve the energy efficiency of their facilities, thereby addressing deferred maintenance and reduced facility life cycle operating costs.

SECTION 2. Section 36-41, Hawaii Revised Statutes, is amended to read as follows:

"§36-41 Energy retrofit and performance contracting for public facilities. (a) All agencies shall evaluate and identify for implementation energy efficiency retrofitting through energy performance contracting. Agencies that perform energy efficiency retrofitting may continue to receive [~~budget appropriations for energy expenditures at an amount that shall not fall below the pre-retrofitting energy budget but shall rise in proportion to any increase in the agency's overall budget~~] annual operating budget appropriations in an amount equal to the greater of: (1) the pre-retrofit budget with escalation or (2) actual financing costs plus an annual estimated amount for energy cost escalation needed to repay annual project financing costs for implemented energy performance contracting projects and pay for actual annual energy usage costs plus applicable maintenance operations for the duration of the energy performance contract or project payment term.

(b) Any agency may enter into a multi-year energy performance contract for the purpose of undertaking or implementing energy conservation or alternate energy measures in a facility or facilities. An energy performance contract may include but shall not be limited to financing options such as leasing, lease-purchase, financing agreements, third-party joint ventures, guaranteed-savings plans, or energy service contracts, or any combination thereof; provided that in due course the agency may receive title to the energy system being financed. Except as otherwise provided by law, the agency that is responsible for a particular facility shall review and approve energy performance contract arrangements for the facility.

(c) Notwithstanding any law to the contrary relating to the award of public contracts, any agency desiring to enter into an energy performance contract shall do so in accordance with the following provisions:

(1) The agency shall issue a public request for proposals, advertised in the same manner as provided in chapter 103D, concerning the provision of energy efficiency services or the design, installation, operation, and maintenance of energy equipment or both. The request for proposals shall contain terms and conditions relating to submission of proposals, evaluation and selection of proposals, financial terms, legal responsibilities, and other matters as may be required by law and as the agency determines appropriate;

(2) Upon receiving responses to the request for proposals, the agency may select the most qualified proposal or proposals on the basis of the experience and qualifications of the proposers, the technical approach, the financial arrangements, the overall benefits to the agency, and other factors determined by the agency to be relevant and appropriate;

(3) The agency thereafter may negotiate and enter into an energy performance contract with the person or company whose proposal is selected as the most qualified based on the criteria established by the agency;

(4) The term of any energy performance contract, including construction period, entered into pursuant to this section shall not exceed [~~twenty~~] twenty-five years;

(5) Any contract entered into shall contain the following annual allocation dependency clause:

"The continuation of this contract is contingent upon the appropriation of funds to fulfill the requirements of the contract by the applicable funding authority. If that authority fails to appropriate sufficient funds to provide for the continuation of the contract, the contract shall terminate on the last day of the fiscal year for which allocations were made";

(6) Any energy performance contract may provide that the agency shall ultimately receive title to the energy system being financed under the contract;

(7) Any energy performance contract shall provide that total payments shall not exceed total savings; and

(8) For any guaranteed-savings plan:

(A) The payment obligation for each year of the contract, [~~including the year of~~] commencing the first year after the final date of installation, shall be guaranteed by the private sector person or company to be less than the annual energy cost savings attributable under the contract to the energy equipment and services. Such guarantee, at the option of the agency, shall be a bond or insurance policy, or some other guarantee determined sufficient by the agency to provide a level of assurance similar to the level provided by a bond or insurance policy; and

(B) In the event that the actual annual verified savings are less than the annual amount guaranteed by the energy service company, the energy service company, within thirty days of being invoiced, shall pay the agency, or cause the agency to be paid, the difference between the guaranteed amount and the actual verified amount.

(d) Any agency implementing an energy performance contract shall report, on an annual basis and in a form acceptable to the energy resources coordinator, information on the energy performance contract, including energy use, energy savings, annual cost savings, amount of investment, amount of incentives, and other information to be developed in consultation with various agencies.

[~~(d)~~] (e) For purposes of this section:

"Agency" means any executive department, independent commission, board, bureau, office, or other establishment of the State or any county government, the judiciary, the University of Hawaii, or any quasi-public institution that is supported in whole or in part by state or county funds.

"Energy cost savings" means an estimated reduction in fuel costs, maintenance costs, energy costs, water costs, sewer costs, other utility costs, or related net operating costs from or as compared to an established baseline of those costs. The term also includes the difference between the lower cost of energy generated from on-site renewable energy technologies, such as photovoltaic and wind, and the corresponding energy costs baseline. 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.

"Energy performance contract" means an agreement for the provision of energy services and equipment, including but not limited to commissioning and retro-commissioning, building or facility energy conservation enhancing retrofits, water saving technology retrofits, and alternate energy technologies, in which a private sector person or company agrees to finance, design, construct, install, maintain, operate, or manage energy systems or equipment to improve the energy efficiency of, or produce energy in connection with, a facility in exchange for a portion of the cost savings, lease payments, or specified revenues, and the level of payments is made contingent upon the verified energy savings, energy production, avoided maintenance, avoided energy equipment replacement, or any combination of the foregoing bases. Energy conservation retrofits also include energy saved off-site by water or other utility conservation enhancing retrofits.

"Facility" means a building or buildings or similar structure, including the site owned or leased by, or otherwise under the jurisdiction of, the agency.

"Financing agreement" shall have the same meaning as in section 37D-2.

"Guaranteed-savings plan" means an agreement under which a private sector person or company undertakes to design, install, operate, and maintain improvements to an agency's facility or facilities and the agency agrees to pay a contractually specified amount of verified energy cost savings.

"Verified" means the technique used in the determination of baseline energy use, post-installation energy use, and energy and cost savings by the following measurement and verification techniques: engineering calculations, metering and monitoring, utility meter billing analysis, computer simulations, mathematical models, and agreed-upon stipulations by the customer and the energy service company."

SECTION 3. Section 196-19, Hawaii Revised Statutes, is amended to read as follows:

"[[]§196-19[]] Life-cycle cost analysis. Agencies shall use life-cycle cost analysis in making decisions about their investments in products, services, construction, and other projects to lower the State's costs and to reduce energy and water consumption. Where appropriate, agencies shall consider the life-cycle costs of combinations of projects, particularly to encourage bundling of energy efficiency projects with renewable energy projects.

Agencies shall retire inefficient equipment on an accelerated basis where replacement results in lower life-cycle costs. [~~Agencies that minimize life-cycle costs with efficiency measures shall be recognized in their scorecard evaluations established under section 196-17(a).~~]"

SECTION 4. Section 196-21, Hawaii Revised Statutes, is amended to read as follows:

"§196-21 Financing mechanisms. [~~(a)~~] Agencies shall maximize their use of available alternative financing contracting mechanisms, including [~~energy-savings~~] energy performance contracts, when life-cycle cost-effective, to reduce energy use and cost in their facilities and operations. [~~Energy-savings~~] Energy performance contracts shall include:

[~~(1)~~ ~~Energy performance contracts~~;

~~(2)~~] (1) Municipal lease and purchase financing; and

[~~(3)~~] (2) Utility energy-efficiency service contracts.

[~~Energy-savings contracts shall provide significant opportunities for making state facilities more energy efficient at no net cost to taxpayers.~~

(b) Agencies that perform energy efficiency and renewable energy system retrofitting may continue to receive budget appropriations for energy expenditures at an amount that will not fall below the pre-retrofitting energy budget but will rise in proportion to any increase in the agency's overall budget for the duration of the performance contract or project payment term. A portion of the moneys saved through efficiency and renewable energy system retrofitting shall be set aside to pay for any costs directly associated with administering energy efficiency and renewable energy system retrofitting programs incurred by the agency.

~~(1)~~ The agency shall issue a public request for proposals, advertised in the same manner as provided in chapter 103D, concerning the provision of energy-efficiency services or the design, installation, operation, and maintenance of energy equipment. The request for proposals shall contain terms and conditions relating to submission of proposals, evaluation, and selection of proposals, financial terms, legal responsibilities, and other matters as may be required by law and as the agency determines appropriate;

~~(2)~~ Upon receiving responses to the request for proposals, the agency shall select the most qualified proposal or proposals and may base its determination on the basis of the experience and qualifications of the proposers, the technical approach, the financial arrangements, the overall benefits to the agency, or other factors determined by the agency to be relevant and appropriate;

~~(3)~~ The agency thereafter may negotiate and enter into an energy performance contract with the person or company whose proposal is selected as the most qualified based on the criteria established by the agency;

~~(4)~~ ~~The term of any energy performance contract entered into pursuant to this section shall not exceed twenty years;~~

~~(5)~~ ~~Any energy performance contract may provide that the agency ultimately shall receive title to the energy system being financed under the contract; and~~

~~(6)~~ ~~Any energy performance contract shall provide that total payments shall not exceed total savings.~~]"

SECTION 5. Section 196-30, Hawaii Revised Statutes, is amended to read as follows:

"[[]§196-30[]] Public buildings; benchmarks; retro-commissioning [~~guidelines~~]; energy [~~savings~~] performance contracts. (a) By December 31, 2010, each state department with responsibilities for the design and construction of public buildings and facilities shall benchmark every existing public building that is either larger than five thousand square feet or uses more than eight thousand kilowatt-hours of electricity or energy per year and shall use the benchmark as a basis for determining the State's investment in improving the efficiency of its own building stock. Benchmarking activities shall be reported to the energy resources coordinator and shall be conducted using the ENERGY STAR portfolio [~~management~~] manager or equivalent tool. The energy resources coordinator shall provide training to affected departments on the ENERGY STAR portfolio [~~management~~] manager or equivalent tool.

(b) Public buildings shall be retro-commissioned no less often than every five years. [~~The energy resources coordinator shall establish retro-commissioning guidelines by January 1, 2010.~~] Agencies shall report retro-commissioning efforts to the energy resources coordinator.

(c) Departments may enter into energy [~~savings~~] performance contracts with a third party to cover the capital costs of energy-efficiency measures and distributed generation provided the terms of the energy [~~savings~~] performance contracts conform to the benchmark standard. The comptroller may review and exempt specific projects as appropriate to take into account cost-effectiveness.

[~~Energy savings performance contracts shall be executed according to state guidelines issued by the comptroller, and the contracts shall be reviewed by the comptroller.~~] To expedite energy [~~savings~~] performance contracting for public buildings, the department of accounting and general services shall develop a master energy [~~savings~~] performance contracts agreement that any department may use to contract with an energy [~~savings~~] performance contracts provider for energy-efficiency and renewable energy services.

[(d) For existing public buildings that undergo a major retrofit or renovation, the department or departments responsible for design and construction shall make investments in efficiency; provided that the cost of the measures shall be recouped within twenty years.]"

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2030.

Report Title:

Energy Efficiency Retrofitting; State Agencies

Description:

Provides that agencies entering into energy performance contracts may continue to receive budget appropriations and have access to financing options; that an energy performance contract has a maximum term of 25 years, including the construction period; and that agencies implementing performance contracts provide annual reports to the Energy Resources Coordinator. Includes housekeeping measures. Effective July 1, 2030. (HB2255 HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.