HBA-SEP H.B. 2277 77(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 2277 By: Carter Energy Resources 7/25/2001 Enrolled BACKGROUND AND PURPOSE Energy Performance Contracting is a financing method that allows a facility to complete energy-saving improvements within an existing budget by financing them with money saved through reduced utility expenditures. Over the past five legislative sessions, the legislature has passed and improved upon measures to allow state agencies, state universities, and local political subdivisions to enter into multi-year energy performance contracts. However, prior to the 77th Legislature, no state agency had taken advantage of this mechanism to finance energy efficiency retrofits. The State Energy Conservation Office projects that $100,000 per day could be saved through this financing method while improving state facilities. House Bill 2277 clarifies the authority of state agencies to use the Master Equipment Lease Purchase Program administered by the Texas Public Finance Authority to finance energy efficiency programs, and makes other changes to encourage state agencies to utilize performance contracting. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 2277 amends the Education, Government, and Local Government codes to authorize the board of trustees of a school district, the governing board of an institution of higher education, and the governing body of a state agency or local government (entities), to enter into a contract for the installation or implementation of energy conservation measures (SECTIONS 1-4). The bill specifies that these entities are required, before entering into a contract for energy conservation measures, to require the provider of the measures to file with the entity a payment and performance bond in accordance with provisions regarding public work performance and payment bonds rather than in an amount found by the entity to be reasonable. The entities are authorized to require a separate bond to cover the value of the guaranteed savings on the contract. Such a contract is authorized to be let according to provisions regarding professional services rather than under competitive proposal procedures (SECTIONS 1-3, 5, and 7). The bill authorizes a governing body of a state agency to finance energy conservation measures with respect to existing buildings or facilities through a lease or purchase contract under the Master Equipment Lease Purchase Program administered by the Texas Public Finance Authority. The bill provides that the contractual obligation of a state agency participating in an energy conservation measures contract includes costs of design, engineering, installation, and anticipated debt service. The bill requires the State Energy Conservation Office to establish guidelines and an approval process for state agency energy conservation measures contracts. The guidelines must require that the cost savings projected by an offeror be reviewed by a licensed professional engineer who is not associated with the contract and provide that The Texas Engineering Practice Act applies to work performed under the contract. The bill requires an engineer who reviews a contract to maintain the confidentiality of any proprietary information the engineer acquires while reviewing the contract. The bill removes provisions regarding review and approval of such a contract by the State Energy Conservation Office (SECTION 3). EFFECTIVE DATE September 1, 2001.