A. The governing board of a political subdivision of this state, in compliance with the provisions of this section, may enter into an energy conservation contract for the purpose of implementing energy conservation measures designed to reduce the energy consumption of facilities of the political subdivision.

B. 1. The governing board shall require the provider of the energy conservation measures to file with the governing board a performance bond that is in an amount the governing board finds reasonable and necessary to protect the interests of the political subdivision and that covers the value of the guaranteed savings on the contract and is conditioned on the faithful execution of the terms of the contract.

2. If bonding industry limitations prevent execution of a performance bond which covers guaranteed savings for the entire term of the lease-purchase agreement the contract may allow an option for:

a.a performance bond which covers guaranteed savings for a shorter bond term. At the completion of the bond term, a new bond may be executed which covers guaranteed savings for an additional period of years. This process may be continued in like manner for the duration of the lease-purchase agreement as specified in subsection D of this section, or

b.a performance bond which covers guaranteed savings for a shorter term. At the completion of the bond term, if the bond cannot be renewed as provided in subparagraph a of this paragraph and if there has been a guaranteed savings shortfall during the last twelve (12) months, the governing board may assume a continued annual shortfall of the same amount and request repayment from the contractor of the net present value of the shortfall through the end of the lease repayment period. The discount factor to calculate the net present value shall be the annual percentage rate of the lease-purchase agreement.

C. 1. The governing board may enter into an energy conservation contract for a period of more than one (1) year for the implementation of energy conservation measures with a person or business entity if:

a.the governing board finds that the amount the political subdivision would spend on the energy conservation measures, excluding any initial partial payment, will not exceed the total savings in energy costs over the repayment period from the date of installation, and

b.the contract contains a provision that such contract will continue for the next fiscal year of the political subdivision only if the governing board appropriates adequate and sufficient funds for the contract for the next fiscal year.

2. The term of the energy conservation contract and the lease-purchase agreement shall include the installation period and the lease repayment period.

3. If the term of an energy conservation contract exceeds one (1) year, the contractual obligation of the political subdivision, excluding any initial partial payment, in any year during the term of the energy conservation contract may not exceed the total savings, including, but not limited to, electrical, gas, or other utility cost savings and savings from lowered maintenance as determined by the governing board.

4. Maintenance for energy conservation measures may be a part of the energy conservation contract.

5. The governing board shall consider all costs of the energy conservation measures, including, but not limited to, costs of design, engineering, installation, maintenance, maintenance tools and equipment, spare parts, repairs, and debt service.

D. 1. An energy conservation contract, with respect to existing buildings or facilities, may be funded through a lease-purchase agreement that meets federal tax requirements for tax-free municipal leasing or long-term financing.

2. The repayment period of the lease-purchase agreement shall not exceed the greater of twenty (20) years or the weighted average equipment life of equipment to be installed under the energy conservation contract.

E. Prior to entering into an energy conservation contract, the governing board shall solicit a request for qualification from one or more energy service company providers. Requests for qualification must solicit quotations and must specify the relative importance of guaranteed savings, price, financial performance and stability, quality, technical ability, experience and other evaluation factors.

F. In accordance with the terms of a request for qualification under subsection E of this section and with rules promulgated by the governing board, the governing board may conduct discussions with offerors who submit proposals and who are determined to be reasonably qualified for the award of the contract. Offerors shall be treated fairly and equally with respect to any opportunity for discussion and revision of proposals. To obtain the best final offers, the governing board may allow proposal revisions after submissions and before the award of the contract.

G. Proposals shall be opened in a manner that avoids disclosure of the contents to competing offerors and keeps the proposals confidential during negotiations.

H. The governing body and the offeror selected through the request for qualification procedures shall enter into a memorandum of understanding, which shall require the provider to perform preliminary analysis regarding the physical features and operating history of the facilities under consideration. There shall be no financial obligation to the political subdivision for this analysis.

I. After completion of the preliminary analysis, the energy service provider shall perform a detailed energy performance audit on the specific buildings or facilities as agreed to by the political subdivision. This audit shall provide a cost basis for operating the existing building or facilities and the detailed information necessary to make a financial decision regarding a long-term performance-based efficiency contract. The cost of this audit may be rolled into the terms of a performance-based efficiency contract. If the political subdivision decides not to enter into a long-term performance-based efficiency contract with the provider, the political subdivision must pay the sum stipulated in the performance audit contract.

J. Trade secrets and proprietary information clearly identified in the proposals shall not be open for public inspection.

K. Energy conservation contracts shall contain a baseline calculation and energy savings calculation methodology. The calculations shall be performed in accordance with the procedures used by the International Protocol for Measurement and Verification Procedures (IPMVP) or succeeding standard of the United States Department of Energy.

Added by Laws 1998, c. 391, § 12, emerg. eff. June 10, 1998. Amended by Laws 2000, c. 164, § 3, emerg. eff. April 28, 2000; Laws 2018, c. 296, § 2, eff. Nov. 1, 2018.