2001 Legislation
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HOUSE BILL NO. 251 – Energy saving performance contracts


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H0251......................................................by STATE AFFAIRS
ENERGY SAVING PERFORMANCE CONTRACTS - Amends and adds to existing law to
provide for energy saving performance contracts; to provide that certain
sections of the Idaho Code shall not apply to energy savings contracts; to
define terms; to provide for requests for qualification; to provide for
notice; to provide for public inspection; to provide for awards of
performance contracts; to provide for installment payment agreements and
lease-purchase agreements; to provide for terms of performance contracts;
and to provide for monitoring and reports.
02/14    House intro - 1st rdg - to printing
02/15    Rpt prt - to St Aff
02/26    Rpt out - rec d/p - to 2nd rdg
02/27    2nd rdg - to 3rd rdg
02/28    3rd rdg - PASSED - 66-1-3
      AYES -- Barraclough, Barrett, Bedke, Bell, Bieter, Black, Boe, Bolz,
      Bradford, Bruneel, Callister, Campbell, Chase, Clark, Collins, Crow,
      Cuddy, Deal, Denney, Ellis, Ellsworth, Eskridge, Field(13),
      Field(20), Gagner, Gould, Hadley, Hammond, Harwood, Henbest, Higgins,
      Hornbeck, Jaquet, Jones, Kellogg, Kendell, Kunz, Lake, Loertscher,
      Mader, Marley, McKague, Meyer, Montgomery, Mortensen, Moss, Moyle,
      Pearce, Pischner, Pomeroy, Raybould, Ridinger, Roberts, Robison,
      Sali, Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson, Stone,
      Trail, Wheeler, Wood, Young
      NAYS -- Langford
      Absent and excused -- Swan, Tilman, Mr. Speaker
    Floor Sponsor -- Kunz
    Title apvd - to Senate
03/01    Senate intro - 1st rdg - to St Aff
03/08    Rpt out - rec d/p - to 2nd rdg
03/09    2nd rdg - to 3rd rdg
03/20    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Boatright, Branch, Brandt, Bunderson, Burtenshaw,
      Cameron, Danielson, Darrington, Davis, Deide, Dunklin, Frasure,
      Geddes, Goedde, Hawkins, Ingram, Ipsen, Keough, King-Barrutia, Lee,
      Lodge, Noh, Richardson, Risch, Sandy, Schroeder, Sims, Sorensen,
      Stegner, Stennett, Thorne, Wheeler, Whitworth, Williams,
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor -- Sandy
    Title apvd - to House
03/21    To enrol
03/22    Rpt enrol - Sp signed - Pres signed - to Gov
03/28    Governor signed
         Session Law Chapter 213
         Effective: 07/01/01

Bill Text

  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  First Regular Session - 2001
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 251
                                 BY STATE AFFAIRS COMMITTEE
  1                                        AN ACT
 13    Be It Enacted by the Legislature of the State of Idaho:
 14        SECTION  1.  That  Section 67-5711, Idaho Code, be, and the same is hereby
 15    amended to read as follows:
 17    PUBLIC  BUILDINGS AND WORKS. The director of the department of administration,
 18    or his designee, of the state of Idaho, is authorized and  empowered,  subject
 19    to the approval of the permanent building fund advisory council, to provide or
 20    secure all plans and specifications for, to let all contracts for, and to have
 21    charge  of and supervision of the construction, alteration, equipping and fur-
 22    nishing, repair, maintenance other than preventive maintenance of any and  all
 23    buildings,  improvements  of  public  works of the state of Idaho, the cost of
 24    which construction, alteration, equipping and furnishing, repair,  maintenance
 25    other  than  preventive maintenance exceeds the sum of thirty thousand dollars
 26    ($30,000) for labor, materials and equipment, which sum shall  exclude  design
 27    costs, bid advertising and related bidding expenses, provided, that the direc-
 28    tor  or  his  designee, and permanent building fund advisory council shall, in
 29    the letting of contracts under this section, comply with the procedure for the
 30    calling of bids provided in section 67-5711C, Idaho Code;  provided,  however,
 31    that  this  section shall not apply to the construction, alteration, equipping
 32    or furnishing or repair or maintenance other than  preventive  maintenance  of
 33    public buildings under the jurisdiction and control of the board of regents of
 34    the  Uuniversity  of  Idaho;  provided  further,  that  the bidding procedures
 35    required by this section and section 67-5711C, Idaho Code, shall not apply  to
 36    performance  contracts  as  provided in section 67-5711D, Idaho Code; provided
 37    further, that public  works  for  the  Idaho  transportation  department,  the
 38    department  of  fish and game, the department of parks and recreation, and the
 39    department of lands, except for administrative office buildings and all  asso-
 40    ciated  improvements,  are  exempt  from  the  provisions of this section that
 41    relate to the administration and review of such projects by  the  director  of
 42    the department of administration or his designee and by the permanent building
 43    fund  advisory council. This exemption shall not relieve the Idaho transporta-
  1    tion department, the department of fish and game, the department of parks  and
  2    recreation, and the department of lands in the letting of contracts for public
  3    works,  from  complying  with  the procedures of section 67-5711C, Idaho Code,
  4    related to the advertising and bidding for contracts. The  permanent  building
  5    fund  advisory council may adopt rules consistent with existing law, including
  6    rules for a program of inspection and maintenance, to carry out the provisions
  7    of this act.
  8        SECTION 2.  That Section 67-5711C, Idaho Code, be, and the same is  hereby
  9    amended to read as follows:
 11    (1) All construction contracts for public works shall be awarded to the lowest
 12    responsible and responsive bidder after receipt of competitive sealed  bidding
 13    except  as  otherwise  provided in sections 67-57131B, 67-5711D and 67-5711B3,
 14    Idaho Code.
 15        (2)  An invitation for bids shall be issued and shall  include  a  project
 16    description  and all contractual terms and conditions applicable to the public
 17    works.
 18        (3)  Adequate public notice of the invitation for bids shall be  given  at
 19    least  fourteen  (14) days prior to the date set forth therein for the opening
 20    of bids. Such notice shall include publication at  least  fourteen  (14)  days
 21    prior  to  bid opening in a newspaper of general circulation in the area where
 22    the work is located.
 23        (4)  Bids shall be opened publicly at the time and place designated in the
 24    invitation for bids. The amount of each bid and such other  relevant  informa-
 25    tion  as  may  be  specified  by rules, together with the name of each bidder,
 26    shall be entered on a record and the record shall be open  to  public  inspec-
 27    tion.  After the time of the award all bids and bid documents shall be open to
 28    public inspection in accordance with the provisions of sections 9-337  through
 29    9-347 and 67-5725, Idaho Code.
 30        (5)  With  respect  to a project having a written cost estimate of greater
 31    than two thousand five hundred dollars ($2,500) but less than the public works
 32    limit established in section 67-5711, Idaho Code, the agency, if it  does  not
 33    perform the work with existing physical plant staff, must award a written con-
 34    tract  to  the  lowest  responsible  and responsive bidder after soliciting at
 35    least three (3) documented informal bids from contractors licensed in Idaho to
 36    perform public works  contracts,  if  reasonably  available.  Adequate  public
 37    notice  of  the invitation for informal bids shall be given at least seven (7)
 38    days prior to the date set forth therein for the receipt of the informal bids.
 39    Such notice may include publication at least seven (7) days prior to bid open-
 40    ing in a newspaper of general circulation  in  the  area  where  the  work  is
 41    located;  or  the  agency may advertise the invitation for bids in appropriate
 42    trade journals, and otherwise notify persons believed to be interested in  the
 43    award  of  a  contract.  Informal  bids must be submitted by the contractor in
 44    writing in response to a prepared written document  describing  the  project's
 45    scope  of work in sufficient detail so as to enable a contractor familiar with
 46    such work to prepare a responsible bid. Nothing herein exempts an agency  from
 47    the  responsibility  of  utilizing formal plans and specifications if the work
 48    involves the public health or safety as described in chapters 3 and 12,  title
 49    54,  Idaho  Code. The agency must document receipt of the informal bids in the
 50    project file.
 51        (6)  Any personal property including goods, parts, supplies and  equipment
 52    which  is  to  be supplied or provided by a state agency for use in any public
 53    work, project, or preventive maintenance programs, whether  the  public  work,
  1    project,  or preventive maintenance program is constructed, undertaken or per-
  2    formed by agency in-house personnel, or  by  delegation  pursuant  to  section
  3    67-5710A,  Idaho  Code,  or  otherwise provided or supplied by the agency to a
  4    contractor, the personal property, goods, parts, supplies  or  equipment  sup-
  5    plied  or  provided  by the agency must be purchased or procured by the agency
  6    through the division of purchasing in accordance with the Idaho Code.
  7        SECTION 3.  That Chapter 57, Title 67, Idaho Code, be, and the  same    is
  8    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
  9    ignated as Section 67-5711D, Idaho Code, and to read as follows:
 10        67-5711D.  ENERGY SAVINGS PERFORMANCE CONTRACTS. (1) Definitions. As  used
 11    in this section:
 12        (a)  "Cost-savings  measure"  means  any  facility  improvement, repair or
 13        alteration, or any equipment, fixture or furnishing to be added or used in
 14        any facility that is designed to  reduce  energy  consumption  and  energy
 15        operating  costs or increase the energy efficiency of facilities for their
 16        appointed  functions  that  are  cost  effective.  "Cost-savings  measure"
 17        includes, but is not limited to, one (1) or more of the following:
 18             (i)    Procurement of low-cost energy supplies of all types,  includ-
 19             ing electricity, natural gas and water;
 20             (ii)   Insulating the building structure or systems in the building;
 21             (iii)  Storm   windows  or  doors,  caulking  or  weather  stripping,
 22             multiglazed  windows  or  door  systems,  heat-absorbing   or   heat-
 23             reflective  glazed  and  coated  window  and door systems, additional
 24             glazing, reductions in glass area or other  window  and  door  system
 25             modifications that reduce energy consumption;
 26             (iv)   Automated or computerized energy control systems;
 27             (v)    Heating,  ventilation or air conditioning system modifications
 28             or replacements;
 29             (vi)   Replacing or  modifying  lighting  fixtures  to  increase  the
 30             energy efficiency of the lighting system;
 31             (vii)  Energy recovery systems;
 32             (viii) Cogeneration  systems  that  produce  steam or forms of energy
 33             such as heat, as well as electricity,  for  use  primarily  within  a
 34             building or complex of buildings;
 35             (ix)   Installing new or modifying existing day lighting systems;
 36             (x)    Installing  or modifying renewable energy and alternate energy
 37             technologies;
 38             (xi)   Building operation programs that reduce energy  costs  includ-
 39             ing,  but  not  limited to, computerized programs, training and other
 40             similar activities;
 41             (xii)  Steam trap improvement programs that reduce energy costs;
 42             (xiii) Devices that reduce water consumption; and
 43             (xiv)  Any additional building infrastructure improvements that  pro-
 44             duce  energy cost savings, significantly reduce energy consumption or
 45             increase the energy efficiency of the facilities for their  appointed
 46             functions  and  are  in compliance with all applicable state building
 47             codes.
 48        (b)  "Director" means the director of the department of administration  or
 49        the director's designee.
 50        (c)  "Energy  cost  savings"  means  any  expenses  that are eliminated or
 51        avoided on a long-term basis as a result of equipment installed  or  modi-
 52        fied,  or  services  performed  by a qualified energy service company or a
 53        qualified provider, but does not include merely shifting  personnel  costs
  1        or similar short-term cost savings.
  2        (d)  "Financial  grade energy audit" means a comprehensive building energy
  3        systems audit performed by a professional engineer licensed in  the  state
  4        of  Idaho  for  the purpose of identifying and documenting feasible energy
  5        and resource conservation measures and cost-savings factors.
  6        (e)  "Performance contract" means a contract between the  director  and  a
  7        qualified   provider or a qualified energy service company for evaluation,
  8        recommendation and implementation of one (1)  or  more  cost-savings  mea-
  9        sures. A performance contract may be structured as either:
 10             (i)   A  guaranteed  energy savings performance contract, which shall
 11             include, at a minimum, the design and installation of equipment  and,
 12             if  applicable,  operation  and  maintenance  of  any of the measures
 13             implemented. Guaranteed annual savings must meet or exceed the  total
 14             annual  contract payments made by the director or the user agency for
 15             such contract, including financing charges to be  incurred  over  the
 16             life of the contract; or
 17             (ii)  A shared savings contract, which shall include provisions mutu-
 18             ally agreed upon by the director and the qualified provider or quali-
 19             fied  energy  service  company  as to the rate of payments based upon
 20             energy cost savings and a stipulated maximum energy consumption level
 21             over the life of the contract;
 22        (f)  "Person" means an individual, corporation, partnership, firm, associ-
 23        ation, limited liability company, limited liability partnership  or  other
 24        such entity as recognized by the state of Idaho.
 25        (g)  "Qualified  energy  service  company" means a person with a record of
 26        established projects or with demonstrated technical,  operational,  finan-
 27        cial  and  managerial  capabilities to implement performance contracts and
 28        who currently holds an Idaho public works contractor license.
 29        (h)  "Qualified provider" means a person who is experienced in the design,
 30        implementation and installation of energy efficiency and facility improve-
 31        ment measures, who has the ability to secure necessary financial  measures
 32        to  support  energy  savings  guarantees and the technical capabilities to
 33        ensure such measures generate energy cost savings, and who currently holds
 34        an Idaho public works contractor license.
 35        (2)  Performance contracts. The director of the department of  administra-
 36    tion, subject to the approval of the permanent building fund advisory council,
 37    may  enter  into a performance contract with a qualified provider or qualified
 38    energy service company to reduce energy consumption or energy operating costs.
 39    Cost-savings measures implemented under such contracts shall comply  with  all
 40    applicable state building codes.
 41        (3)  Requests for qualifications. The director of the department of admin-
 42    istration  shall request qualifications from qualified providers and qualified
 43    energy service companies inviting them to submit information describing  their
 44    capabilities in the areas of:
 45        (a)  Design, engineering, installation, maintenance and repairs associated
 46        with performance contracts;
 47        (b)  Experience  in  conversions  to a different energy or fuel source, so
 48        long as it is associated with a comprehensive energy efficiency retrofit;
 49        (c)  Postinstallation project monitoring, data collection and reporting of
 50        savings;
 51        (d)  Overall project experience and qualifications;
 52        (e)  Management capability;
 53        (f)  Ability to assess the availability of  long-term financing;
 54        (g)  Experience with projects of similar size and scope; and
 55        (h)  Other factors determined by the director to be relevant and appropri-
  1        ate relating to the ability of the qualified provider or qualified  energy
  2        service company to perform the project.
  3        (4)  Notice.  Adequate  public  notice  of  the request for qualifications
  4    shall  be given at least fourteen (14)  days  prior  to  the  date  set  forth
  5    therein  for  the  opening of the responses to the request for qualifications.
  6    Such notice may be provided electronically or by publication in a newspaper of
  7    general circulation in the area where the work is located.
  8        (5)  Public inspection. All records of the department or an agency  relat-
  9    ing  to the award of a performance contract shall be open to public inspection
 10    in accordance with the provisions of sections 9-337 through 9-347 and 67-5725,
 11    Idaho Code.
 12        (6)  Award of performance contract.
 13        (a)  The director shall select up to  three  (3)  qualified  providers  or
 14        qualified  energy  service companies who have responded to the request for
 15        qualifications. Factors to be considered in selecting the successful qual-
 16        ified provider or qualified energy service company shall include, but  not
 17        be limited to:
 18             (i)   Fee structure;
 19             (ii)  Contract terms;
 20             (iii) Comprehensiveness of the proposal and cost-savings measures;
 21             (iv)  Experience  of  the qualified provider or qualified energy ser-
 22             vice company;
 23             (v)   Quality of the technical approach of the qualified provider  or
 24             qualified energy service company; and
 25             (vi)  Overall benefits to the state.
 26        (b)  Notwithstanding  the  provisions of section 67-5711C, Idaho Code, the
 27        director may, following the request for qualifications and the  expiration
 28        of  the  specified  notice  period,  award the performance contract to the
 29        qualified provider or qualified energy service company  which  best  meets
 30        the  needs  of the project and whose proposal may or may not represent the
 31        lowest cost among the proposals submitted pursuant to this section.
 32        (c)  Upon award of the performance contract, the successful qualified pro-
 33        vider or qualified energy service company shall prepare a financial  grade
 34        energy  audit  which, upon acceptance by the director, shall become a part
 35        of the final performance contract.
 36        (7)  Installment payment and lease-purchase agreements. Pursuant  to  this
 37    section,  the  director  may  enter  into a performance contract, payments for
 38    which shall be made by the user agency.  Such  performance  contracts  may  be
 39    financed as installment payment contracts or lease-purchase agreements for the
 40    purchase  and  installation  of  cost-savings  measures. Financing implemented
 41    through another person other than the qualified provider or  qualified  energy
 42    service company is authorized.
 43        (8)  Terms of performance contract.
 44        (a)  Each  performance  contract  shall  provide that all payments between
 45        parties, except obligations upon termination of the  contract  before  its
 46        expiration, shall be made over time and that the objective of such perfor-
 47        mance  contract  is the implementation of cost-savings measures and energy
 48        cost savings.
 49        (b)  A performance contract, and payments provided thereunder, may  extend
 50        beyond  the  fiscal  year in which the performance contract becomes effec-
 51        tive, subject to appropriation by the legislature, for costs  incurred  in
 52        future fiscal years. The performance contract may extend for a term not to
 53        exceed  twenty-five (25) years. The permissible length of the contract may
 54        also reflect the useful life of the cost-savings measures.
 55        (c)  Performance contracts may provide for payments over a period of  time
  1        not  to  exceed  deadlines  specified in the performance contract from the
  2        date of the final installation of the cost-savings measures.
  3        (d)  Performance contracts entered pursuant to this section may be amended
  4        or modified, upon agreement by the director and the qualified provider  or
  5        qualified energy service company, on an annual basis.
  6        (9)  Monitoring and reports. During the term of each performance contract,
  7    the  qualified  provider or qualified energy service company shall monitor the
  8    reductions in energy consumption and cost savings attributable  to  the  cost-
  9    savings  measures  installed  pursuant  to  the performance contract and shall
 10    annually prepare and provide a report to the director documenting the  perfor-
 11    mance of the cost-savings measures.

Statement of Purpose / Fiscal Impact

                      STATEMENT OF PURPOSE
                           RS 10776C2
The purpose of this legislation is to add a new section code
allowing the Director of the Department of Administration, or her
designee, to enter into a new type of contract, an energy savings
performance contract. A new bidding process is also provided for.

An energy savings performance contract is an affordable way for
the Department of Administration, a university, or other public
building manager to make investments in new energy-efficient
equipment. The upgrades are made now--with no up front capital -and
are paid for later through the energy savings that result. The
benefits are immediate, getting new equipment expertise from energy
service professionals, ongoing maintenance services and the ability to
accomplish many projects all at once. Best of all, these savings can
be guaranteed.
                         FISCAL IMPACT
There will be no negative impact to the General Fund. In fact, a
positive impact may be achieved as capital improvement projects are
financed through energy savings rather than through appropriations
from the General Fund.

     Name:     Representative Kent Kunz
       Phone: (208) 332 1000

STATEMENT OF PURPOSE/FISCAL NOTE                                                                    H 251