2008 Legislation
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HOUSE BILL NO. 556<br /> – Energy savings performance contrct


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Bill Status

H0556......................................................by STATE AFFAIRS
ENERGY SAVINGS - Amends existing law relating to energy savings performance
contracts to revise definitions of "cost-savings measure," "qualified
energy service company" and "qualified provider."

02/25    House intro - 1st rdg - to printing
02/26    Rpt prt - to Bus
03/04    Rpt out - rec d/p - to 2nd rdg
03/05    2nd rdg - to 3rd rdg
03/07    3rd rdg - PASSED - 64-1-5
      AYES -- Anderson, Andrus, Barrett, Bayer, Bell, Bilbao, Black, Bock,
      Boe, Bolz, Bowers, Brackett, Bradford, Chadderdon, Chavez, Chew,
      Clark, Collins, Crane, Durst, Eskridge, Hagedorn, Hart, Henbest,
      Henderson, Jaquet, Killen, King, Kren, Labrador, LeFavour,
      Loertscher, Marriott, Mathews, McGeachin, Mortimer, Nielsen, Nonini,
      Pasley-Stuart, Patrick, Pence, Raybould, Ringo, Roberts, Ruchti,
      Rusche, Sayler, Schaefer, Shepherd(02), Shepherd(08), Shirley,
      Shively, Smith(30), Smith(24), Snodgrass, Stevenson, Thayn, Thomas,
      Trail, Vander Woude, Wills, Wood(27), Wood(35), Mr. Speaker
      NAYS -- Harwood
      Absent and excused -- Bedke, Block, Lake, Luker, Moyle
    Floor Sponsor - Black
    Title apvd - to Senate
03/10    Senate intro - 1st rdg - to St Aff
03/17    Rpt out - ref'd to Com/HuRes
03/19    Rpt out - rec d/p - to 2nd rdg
03/20    2nd rdg - to 3rd rdg
03/24    3rd rdg - PASSED - 27-0-8
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Cameron,
      Coiner, Darrington, Davis, Fulcher, Gannon(Gannon), Geddes, Hammond,
      Heinrich, Hill, Jorgenson, Kelly, Langhorst, Little, Lodge,
      Malepeai(Sagness), McGee, McKague, Richardson, Siddoway, Stennett,
      NAYS -- None
      Absent and excused -- Burkett, Corder, Goedde, Keough, McKenzie,
      Pearce, Schroeder, Stegner
    Floor Sponsor - Broadsword
    Title apvd - to House
03/25    To enrol - Rpt enrol - Sp/Pres signed
03/26    To Governor
04/01    Governor signed
         Session Law Chapter 366
         Effective: 07/01/08

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008


                              IN THE HOUSE OF REPRESENTATIVES

                                     HOUSE BILL NO. 556

                                 BY STATE AFFAIRS COMMITTEE

  1                                        AN ACT

  5    Be It Enacted by the Legislature of the State of Idaho:

  6        SECTION 1.  That Section 67-5711D, Idaho Code, be, and the same is  hereby
  7    amended to read as follows:

  8        67-5711D.  ENERGY  SAVINGS PERFORMANCE CONTRACTS. (1) Definitions. As used
  9    in this section:
 10        (a)  "Cost-savings measure" means  any  facility  improvement,  repair  or
 11        alteration  to an existing facility, or any equipment, fixture or furnish-
 12        ing to be added or used in any  existing  facility  that  is  designed  to
 13        reduce  energy  consumption  and  energy  operating  costs or increase the
 14        energy efficiency of facilities for their  appointed  functions  that  are
 15        cost  effective.  "Cost-savings  measure" includes, but is not limited to,
 16        one (1) or more of the following:
 17             (i)    Procurement of low-cost energy supplies of all types,  includ-
 18             ing electricity, natural gas and water;
 19             (ii)   Insulating the building structure or systems in the building;
 20             (iii)  Storm   windows  or  doors,  caulking  or  weather  stripping,
 21             multiglazed  windows  or  door  systems,  heat-absorbing   or   heat-
 22             reflective  glazed  and  coated  window  and door systems, additional
 23             glazing, reductions in glass area or other  window  and  door  system
 24             modifications that reduce energy consumption;
 25             (iv)   Automated or computerized energy control systems;
 26             (v)    Heating,  ventilation or air conditioning system modifications
 27             or replacements;
 28             (vi)   Replacing or  modifying  lighting  fixtures  to  increase  the
 29             energy efficiency of the lighting system;
 30             (vii)  Energy recovery systems;
 31             (viii) Cogeneration  systems  that  produce  steam or forms of energy
 32             such as heat, as well as electricity,  for  use  primarily  within  a
 33             building or complex of buildings;
 34             (ix)   Installing new or modifying existing day lighting systems;
 35             (x)    Installing  or modifying renewable energy and alternate energy
 36             technologies;
 37             (xi)   Building operation programs that reduce energy  costs  includ-
 38             ing,  but  not  limited to, computerized programs, training and other
 39             similar activities;
 40             (xii)  Steam trap improvement programs that reduce energy costs;
 41             (xiii) Devices that reduce water consumption; and
 42             (xiv)  Any additional building infrastructure improvements that  pro-
 43             duce  energy cost savings, significantly reduce energy consumption or


  1             increase the energy efficiency of the facilities for their  appointed
  2             functions  and  are  in compliance with all applicable state building
  3             codes.
  4        (b)  "Director" means the director of the department of administration  or
  5        the director's designee.
  6        (c)  "Energy  cost  savings"  means  any  expenses  that are eliminated or
  7        avoided on a long-term basis as a result of equipment installed  or  modi-
  8        fied,  or  services   performed by a qualified energy service company or a
  9        qualified provider, but does not include merely shifting  personnel  costs
 10        or similar short-term cost savings.
 11        (d)  "Financial  grade energy audit" means a comprehensive building energy
 12        systems audit performed by a professional engineer licensed in  the  state
 13        of  Idaho  for  the purpose of identifying and documenting feasible energy
 14        and resource conservation measures and cost-savings factors.
 15        (e)  "Performance contract" means a contract between the director  or  the
 16        public  entity and a qualified provider or a qualified energy service com-
 17        pany for evaluation, recommendation and implementation of one (1) or  more
 18        cost-savings measures. A performance contract may be structured as either:
 19             (i)   A  guaranteed  energy savings performance contract, which shall
 20             include, at a minimum, the design and installation of equipment  and,
 21             if  applicable,  operation  and  maintenance  of  any of the measures
 22             implemented. Guaranteed annual savings must meet or exceed the  total
 23             annual  contract  payments made by the director or the user agency or
 24             the public entity for such contract, including financing  charges  to
 25             be incurred over the life of the contract; or
 26             (ii)  A shared savings contract, which shall include provisions mutu-
 27             ally agreed upon by the director and the qualified provider or quali-
 28             fied  energy  service  company  as to the rate of payments based upon
 29             energy cost savings and a stipulated maximum energy consumption level
 30             over the life of the contract.
 31        (f)  "Person" means an individual, corporation, partnership, firm, associ-
 32        ation, limited liability company, limited liability partnership  or  other
 33        such entity as recognized by the state of Idaho.
 34        (g)  "Public  entity"  means  the cities, counties and school districts or
 35        any political subdivision within the state of Idaho.
 36        (h)  "Qualified energy service company" means a person with  a  record  of
 37        established  projects  or with demonstrated technical, operational, finan-
 38        cial and managerial capabilities to implement  performance  contracts  and
 39        who  currently  holds an Idaho public works contractor license appropriate
 40        for the work being performed.
 41        (i)  "Qualified provider" means a person who is experienced in the design,
 42        implementation and installation of energy efficiency and facility improve-
 43        ment measures, who has the ability to secure necessary financial  measures
 44        to  support  energy  savings  guarantees and the technical capabilities to
 45        ensure such measures generate energy cost savings, and who currently holds
 46        an Idaho public works contractor license appropriate for  the  work  being
 47        performed.
 48        (2)  Performance  contracts. The director of the department of administra-
 49    tion, subject to the approval of the permanent building fund advisory council,
 50    or any Idaho public entity may enter into a performance contract with a quali-
 51    fied provider or qualified energy service company to reduce energy consumption
 52    or energy operating costs. Cost-savings measures implemented under  such  con-
 53    tracts shall comply with all applicable state and local building codes.
 54        (3)  Requests for qualifications. The director of the department of admin-
 55    istration  or  the  public  entity shall request qualifications from qualified


  1    providers and qualified energy  service  companies  inviting  them  to  submit
  2    information describing their capabilities in the areas of:
  3        (a)  Design, engineering, installation, maintenance and repairs associated
  4        with performance contracts;
  5        (b)  Experience  in  conversions  to a different energy or fuel source, so
  6        long as it is associated with a comprehensive energy efficiency retrofit;
  7        (c)  Postinstallation project monitoring, data collection and reporting of
  8        savings;
  9        (d)  Overall project experience and qualifications;
 10        (e)  Management capability;
 11        (f)  Ability to assess the availability of  long-term financing;
 12        (g)  Experience with projects of similar size and scope; and
 13        (h)  Other factors determined by the director or the public entity  to  be
 14        relevant and appropriate relating to the ability of the qualified provider
 15        or qualified energy service company to perform the project.
 16        (4)  Notice.  Adequate  public  notice  of  the request for qualifications
 17    shall be given at least fourteen (14) days prior to the date set forth therein
 18    for the opening of the responses  to  the  request  for  qualifications.  Such
 19    notice may be provided electronically or by publication in a newspaper of gen-
 20    eral circulation in the area where the work is located.
 21        (5)  Public  inspection. All records of the department or an agency or the
 22    public entity relating to the award of a performance contract shall be open to
 23    public inspection in accordance with the provisions of sections 9-337  through
 24    9-347 and 67-5725, Idaho Code.
 25        (6)  Award of performance contract.
 26        (a)  The  director or public entity shall select up to three (3) qualified
 27        providers or qualified energy service companies who have responded to  the
 28        request for qualifications. Factors to be considered in selecting the suc-
 29        cessful  qualified  provider  or  qualified  energy  service company shall
 30        include, but not be limited to:
 31             (i)   Fee structure;
 32             (ii)  Contract terms;
 33             (iii) Comprehensiveness of the proposal and cost-savings measures;
 34             (iv)  Experience of the qualified provider or qualified  energy  ser-
 35             vice company;
 36             (v)   Quality  of the technical approach of the qualified provider or
 37             qualified energy service company; and
 38             (vi)  Overall benefits to the state or the public entity.
 39        (b)  Notwithstanding the provisions of section 67-5711C, Idaho  Code,  the
 40        director  or  the  public entity may, following the request for qualifica-
 41        tions and the expiration of the specified notice period, award the perfor-
 42        mance contract to the qualified provider or qualified energy service  com-
 43        pany  which  best meets the needs of the project and whose proposal may or
 44        may not represent the lowest cost among the proposals  submitted  pursuant
 45        to this section.
 46        (c)  Upon award of the performance contract, the successful qualified pro-
 47        vider  or qualified energy service company shall prepare a financial grade
 48        energy audit which, upon acceptance by the director or the public  entity,
 49        shall become a part of the final performance contract.
 50        (7)  Installment  payment  and lease-purchase agreements. Pursuant to this
 51    section, the director or the public entity may enter into a  performance  con-
 52    tract,  payments  for which shall be made by the user agency or public entity.
 53    Such performance contracts may be financed as installment payment contracts or
 54    lease-purchase agreements for the purchase and  installation  of  cost-savings
 55    measures.  Financing  implemented through another person other than the quali-


  1    fied provider or qualified energy service company is authorized.
  2        (8)  Terms of performance contract.
  3        (a)  Each performance contract shall provide  that  all  payments  between
  4        parties,  except  obligations  upon termination of the contract before its
  5        expiration, shall be made over time and that the objective of such perfor-
  6        mance contract is the implementation of cost-savings measures  and  energy
  7        cost savings.
  8        (b)  A  performance contract, and payments provided thereunder, may extend
  9        beyond the fiscal year in which the performance  contract  becomes  effec-
 10        tive, subject to appropriation by the legislature or by the public entity,
 11        for  costs  incurred  in future fiscal years. The performance contract may
 12        extend for a term not to exceed twenty-five (25)  years.  The  permissible
 13        length  of  the  contract  may  also  reflect the useful life of the cost-
 14        savings measures.
 15        (c)  Performance contracts may provide for payments over a period of  time
 16        not  to  exceed  deadlines  specified in the performance contract from the
 17        date of the final installation of the cost-savings measures.
 18        (d)  Performance contracts entered pursuant to this section may be amended
 19        or modified, upon agreement by the director or the public entity  and  the
 20        qualified  provider  or  qualified  energy  service  company, on an annual
 21        basis.
 22        (9)  Monitoring and reports. During the term of each performance contract,
 23    the qualified provider or qualified energy service company shall  monitor  the
 24    reductions  in  energy  consumption and cost savings attributable to the cost-
 25    savings measures installed pursuant to  the  performance  contract  and  shall
 26    annually  prepare  and  provide  a report to the director or the public entity
 27    documenting the performance of the cost-savings measures.

Statement of Purpose / Fiscal Impact


                       STATEMENT OF PURPOSE

                             RS 17978

The proposed legislation clarifies that energy savings performance
contracting is applicable only to existing facilities.  This
performance contracting methodology is not applicable to new
facilities to be constructed.  New facilities are already required
to comply with the provisions of the International Energy
Conservation Code, and legislation is being considered that will
encourage new facilities to surpass code requirements.  The need
for this clarification results from public entities attempting to
construct new facilities under the performance contracting

                           FISCAL NOTE

No fiscal impact to the state.

Name:     David Bennion 
Phone:    (208) 867-2338

STATEMENT OF PURPOSE/FISCAL NOTE                         H 556