CHAPTER 10-C. PERFORMANCE-BASED ENERGY

EFFICIENCY CONTRACTS

§4547.1. Authorization; performance-based energy efficiency contracts

A. Any political subdivision may enter into a performance-based energy efficiency contract for services and equipment. Such a contract shall be considered a contract for services and shall be exempt from the provisions of R.S. 38:2212 but shall be subject to the provisions of this Chapter.

B.(1) For the purposes of this Chapter, a performance-based energy efficiency contract shall be defined as a contract for energy efficiency services and equipment in which the payment obligation for each year of the contract is:

(a) Set as a percentage of the annual energy cost savings attributable to the services or equipment under the contract; or

(b) Guaranteed by the person under contract to be less than the annual energy cost savings attributable to the services or equipment under the contract.

(2) Energy efficiency contracts shall be contracts that are utilized for purposes that include but are not limited to the following:

(a) Insulation and reduced air infiltration of the building structure, including walls, ceilings, and roofs or systems within the building.

(b) Storm windows or doors, caulking or weather-stripping, multi-glazed windows or doors, heat absorbing or heat reflective glazed and coated window or door systems, additional glazing, reductions in glass area, or other window and door system modifications that reduce energy consumption.

(c) Automated or computerized energy control systems, including computer software and technical data licenses.

(d) Heating, ventilating, or air conditioning system modifications or replacements.

(e) Replacement or modification of lighting fixtures to increase the energy efficiency of the lighting system without increasing the overall illumination of a facility, unless an increase in illumination is necessary to conform to the applicable state or local building code for the lighting system after the proposed modifications are made.

(f) Indoor air quality improvements.

(g) Energy recovery systems.

(h) Electric system improvements.

(i) Building operation programs that reduce operating costs.

(j) Other energy conservation-related improvements or equipment, including improvements or equipment related to renewable energy.

(k) Water and other natural resource conservation, including accuracy and measurement of water distribution and consumption.

(l) An alteration or measure identified through a comprehensive audit or assessment of new or existing facilities.

(3) For the purposes of this Section, the following terms shall be defined as follows:

(a) "Energy efficiency" shall mean an alteration to an existing facility that is designed for the reduction of the consumption of energy or natural resources or the reduction of operating costs as a result of changes that meet the following criteria:

(i) They do not degrade the level of service or working conditions below recognized acceptable standards.

(ii) They are measurable and verifiable under the International Performance Measurement and Verification Protocol as it existed on January 1, 2006, or subsequently amended verification protocols or alternative protocols and verification standards and methodologies acceptable to political subdivisions.

(b) "Reduction of operating costs" shall mean the elimination of operating expenses or the avoidance of future capital replacement expenditures as a result of new equipment installed or services performed by the performance contractor. A contract which otherwise satisfies the requirements of this Section shall satisfy the requirements allowing use of a performance-based energy efficiency contract even if the sole cost being eliminated or reduced is cost related to maintenance, or as otherwise defined as "Annual energy savings" below.

C. "Annual energy savings" shall mean, when calculating annual energy cost savings attributable to the services or equipment installed pursuant to a performance-based energy efficiency contract as defined in R.S. 39:1484(14), the savings in electricity, gas, water, propane, oil, diesel, steam or other like utility costs increased revenues obtained from upgrades or modifications to a water, wastewater, gas or electric utility infrastructure, systems or accounting and billing systems and shall include future capital expenditures avoided and maintenance savings. Capital replacement expenditures avoided and maintenance savings shall be itemized separately.

D. "Performance contracting" shall mean all programs designed to save energy that are guaranteed by a company or contractor for the political subdivision. The company or contractor guaranteeing such programs may include, but are not limited to, lighting, water conservation, water management companies, or contractors that specialize in servicing such energy savings equipment such as mechanical or electrical systems and energy services companies (hereinafter referred to ESCO).

E.(1) Prior to award of any performance-based energy efficiency contract, the political subdivision shall select an energy efficiency independent third-party evaluation consultant to review and evaluate the submitted proposals.

(2) No person, entity, or ESCO which assists the political subdivision in the development of the request for proposals shall be the respondent to the request for proposals.

(3) The energy efficiency independent third-party evaluation consultant shall submit the results of his evaluation in an open meeting to the political subdivision for its review. The political subdivision shall require that the consultant selected pursuant to this Subsection participate on its behalf in the negotiation of the contract.

(4) An energy efficiency independent third-party evaluation consultant shall have no conflict of interest as to the political subdivision, the proposals which the consultant is to evaluate, or to any proposer. Prior to the selection of such consultant, the consultant shall certify that there is no conflict of interest as to the political subdivision, the proposals which the consultant is to evaluate, or to any proposer.

(5) In order to fund the cost of the evaluation, review, approval, oversight, and performance audits as provided in this Section, the request for proposals for the award of a performance-based energy efficiency contract shall require the proposer to pay a sum not to exceed two and one-half percent of the total value of the performance-based energy efficiency contract at the time that a contract is executed by that proposer.

(6) An energy efficiency independent third-party evaluation consultant shall, at a minimum, be licensed by the state of Louisiana as a professional engineer or a professional architect with experience in energy efficiency contracting. Each political subdivision shall be responsible for verifying the credentials of the consultant to ensure that he possesses the minimum qualifications and has no conflict of interest to the political subdivision or the proposers.

F.(1) Any performance-based energy efficiency contract entered into shall be for a period equal to the lesser of twenty years or the average life of the equipment installed by the performance contractor and shall contain a guarantee of energy savings. The guarantee of energy savings shall, at a minimum, ensure a total annual savings sufficient to fully fund any financing arrangement entered into to fund the contract. In addition, any performance-based energy efficiency contract shall contain the following clause:

"The continuation of this contract is contingent upon the appropriation of funds by the political subdivision to fulfill the requirements of the contract. If the political subdivision fails to appropriate sufficient monies to provide for the continuation of the contract, the contract shall terminate on the last day of the fiscal year for which funds have been appropriated. Such termination shall be without penalty or expense to the political subdivision except for payments which have been earned prior to the termination date."

(2) Any contract entered into pursuant to this Chapter shall include the total units of energy saved, the method, device or financial arrangement to establish a firm amount for the savings, the cost per unit of energy, and, if applicable, the basis for any adjustment in the stated cost for the term of the contract, and for each energy saving measure included in the contract, shall also provide the following:

(a) Detailed scope of work.

(b) Price to be paid by the political subdivision as the initial cost.

(c) Annual energy cost savings.

(d) Annual maintenance savings including any maintenance and operational savings associated with installation, including but not limited to services, parts, materials, labor, and equipment.

(e) Annual new maintenance cost including operating expenses added as a result of new equipment installed or services performed by the contractor.

(f) Total annual savings, which shall be determined by adding annual energy cost savings to annual maintenance savings and subtracting any annual new maintenance costs.

(g) All savings shall be guaranteed and measured on an annual basis.

(h) A schedule for submission of the annual savings audit reports.

(3) Except for proprietary company financial information, the responses to a request for proposals shall be public records pursuant the Public Records Law, R.S. 44:1 et seq.

Acts 1988, No. 592, §1; Acts 2006, No. 814, §1, eff. July 1, 2006; Acts 2008, No. 881, §1.