HBA-JLV H.B. 3286 77(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 3286 By: Lewis, Ron Natural Resources 7/18/2001 Enrolled BACKGROUND AND PURPOSE Prior to the 77th Legislature, state law permitted state and local governments, school districts, and institutions of higher education to enter into performance contracts for energy conservation projects, but did not specifically extend this to water conservation projects. In a performance contract, a company enters into an agreement with an entity such as a school district and provides up front capital to pay for improvements that will result in reduced energy or water use. The company is reimbursed out of the revenue stream based on conservation savings. The benefit is that conservation improvements can be done without having to issue debt instruments. House Bill 3286 authorizes state and local entities, school districts and institutions of higher education to enter into a performance contract for water conservation measures to reduce water consumption. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the state energy conservation office in SECTION 10 (Section 447.002, Government Code) of this bill. ANALYSIS House Bill 3286 amends the Education, Local Government, and Government codes to authorize state entities, the governing body of local governments, the boards of trustees of school districts, and the governing board of institutions of higher education to enter into contracts for water conservation measures to reduce water consumption. The bill sets forth provisions identifying the types of contracts the entities are authorized to enter (Secs. 44.901 and 51.927, Education Code), (Secs. 302.001-301.004, Local Government Code), (Secs. 2166.402 and 2166.406, Government Code). The bill requires the Texas Water Development Board to assist the governing body of a state agency, commission, or institution in preparing water conservation standards by providing technical assistance and advice (Sec. 2166.402, Government Code). The bill changes the name of the energy management center to the state energy conservation office (office) and sets forth provisions enumerating the powers and duties of the office and authorizes the office to establish rules relating to the adoption and implementation of water conservation programs. The bill requires the office to coordinate all water conservation related activities with the Texas Water Development Board. The Texas Water Development Board is required to evaluate and help develop all proposed water conservation and reuse requirements and to provide training and expertise to the office staff regarding water conservation issues (Secs. 447.001-447.011, Government Code). The bill removes provisions requiring the office to administer state programs established under the National Energy Extension Service Act (Sec. 447.003, Government Code). The bill amends the Education and Local Government codes to provide that prior to entering into a contract, the board of trustees of a school district and the governing body of a local government must require that the cost savings projected by an offeror be reviewed by a licensed professional engineer who is not an officer or employee of an offeror for the contract under review or otherwise associated with the contract or the offeror. The bill requires an engineer who reviews a contract to maintain the confidentiality of any proprietary information the engineer acquires while reviewing the contract (Sec. 44.901, Education Code and Sec. 302.005, Local Government Code). The bill amends the Government Code to require the State Energy Conservation Office to establish guidelines and an approval process for contracts. The bill provides that the adopted guidelines must require that the cost savings projected by an offeror be reviewed by a licensed professional engineer who is not an officer or employee of an offeror for the contract under review or otherwise associated with the contract. The engineer who reviews a contract is required to maintain the confidentiality of any proprietary information the engineer acquires while reviewing the contract. The bill removes provisions requiring the state agency to submit the proposal to the State Energy Conservation Office and the Texas Energy Coordination Council and provisions authorizing the State Energy Conservation Office and the Texas Energy Coordination Council to charge a fee for providing a cost benefit analysis of the proposals (Sec. 2166.406, Government Code). EFFECTIVE DATE September 1, 2001.