Office of House Bill AnalysisH.B. 2277
By: Carter
Energy Resources


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.   


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. 


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).  

September 1, 2001.