HBA-SEP C.S.H.B. 2277 77(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2277
By: Carter
Energy Resources
4/5/2001
Committee Report (Substituted)



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, no state agency has 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.   C.S.H.B. 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

C.S.H.B. 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 required to be
let according to provisions regarding professional services rather than
authorized to be let 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.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2277 modifies the original by requiring 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),
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 substitute authorizes the entities to require a
separate bond to cover the value of the guaranteed savings on the contract.
The substitute provides that such a contract is required to be let
according to provisions regarding professional services and removes
provisions regarding proposals for contracts (SECTIONS 1-3, 5 and 7).  The
substitute removes the provision that would have allowed facility repairs
or modifications necessary for the installation of energy conservation
measures to be included in a contract (SECTION 1).