Section R7-2-1069. Guaranteed Energy Cost Savings Contracts

A.      A school district may procure a guaranteed energy cost sav- ings contract with a qualified provider through competitive sealed proposals in accordance with R7-2-1041 through R7-2- 1050.

1.        The request for proposal evaluation factors required by R7-2-1042(A)(1)(h) shall include objective criteria for selecting the qualified provider, including the cost of the contract, the energy cost savings, the net projected energy savings, the quality of the technical approach, the quality of the project management plan, the financial solvency of the qualified provider and the experience of the qualified provider with projects of similar size and scope.

2.        Notwithstanding R7-2-1042(A)(1)(h), the request for proposals shall set forth the respective numerical weight- ing for each evaluation criterion.

3.        At the qualified provider's expense, the proposal shall include an independent third-party validation of cost sav- ings calculations associated with each proposed energy cost savings measure by a licensed, registered profes- sional engineer, with credentials from the national associ- ation of energy engineers, who has demonstrated experience in energy analysis. The school district shall approve the selection of the independent third party.

4.        A school district may enter into a guaranteed energy cost savings contract with a qualified provider if the school district determines that the energy savings project will pay for itself within the expected life of the energy cost savings measures implemented (according to the manu- facturer’s equipment standards), the term of the financial agreement or twenty-five years, whichever is shortest, if the recommendations in the proposal are followed. The school district shall retain the cost savings achieved by a guaranteed energy cost saving contract, and these cost savings may be used to pay for the contract and project implementation.

5.        A qualified provider is a person that is experienced in designing, implementing or installing energy cost savings measures, that has a record of established projects or measures of similar size and scope, that has demonstrated technical, operational, financial and managerial capabili- ties to design and operate cost savings measures and proj- ects and that has the financial ability to satisfy guarantees for energy cost savings.

B.       In selecting a contractor to perform any construction work related to performing the guaranteed energy cost savings con- tract, the qualified provider may:

1.        Develop and use a prequalification process for contrac- tors.

2.        Require the contractor to demonstrate that the contractor is adequately bonded to perform the work and that the contractor has not failed to perform on a prior job.

C.      At the selected qualified provider’s expense, a study shall be performed by the selected qualified provider in order to estab- lish the exact scope of the guaranteed energy cost savings con-

tract, the fixed cost savings guarantee amount and the methodology for determining actual savings. The selected qualified provider will provide the school district with a final study report which validates that the fixed cost savings guaran- tee amount will meet or exceed the cost savings calculations contained within the original proposal. The study report shall be reviewed and approved by the school district before the actual installation of any equipment. The qualified provider shall transmit a copy of the approved study report to the school facilities board and the governor's office of energy policy.

D.      The information to develop the energy baseline shall be derived from historical energy costs or actual energy measure- ments or shall be calculated from energy measurements at the facility where energy cost savings measures are to be installed or implemented. The baseline shall be established before the installation or implementation of energy cost savings mea- sures.

E.       One or more school districts may enter into a financing agree- ment with a qualified provider or a financial institution, trustee or paying agent for the purchase and installation or implemen- tation of energy cost savings measures. Any required financing may be obtained as part of the original competitive sealed pro- posal process from the qualified provider, or from a third-party financing institution that is procured separately in accordance with Articles 10 and 11.

F.       The selected qualified provider shall provide a performance bond in accordance with R7-2-1103(A)(1)(c).

G.      The selected qualified provider shall make public information in the subcontractor’s bids.

H.      The guaranteed energy cost savings contract shall include the following:

1.        A requirement that, in determining whether the projected energy savings calculations have been met, the energy savings shall be computed by comparing the energy base- line before installation or implementation of the energy cost savings measures with the energy consumed after installation or implementation of the energy cost savings measures. The qualified provider and the school district may agree to make modifications to the energy baseline only for any of the following:

a.         Changes in utility rates.

b.        Changes in the number of days in the utility billing cycle.

c.         Changes in the square footage of the facility.

d.        Changes in the operational schedule of the facility.

e.         Changes in facility temperature.

f.         Significant changes in the weather.

g.        Significant changes in the amount of equipment or lighting utilized in the facility.

h.        Significant changes in the nature or intensity of energy use such as the change of classroom space to laboratory space.

2.        A payment schedule, with payments over a period of not more than the expected life of the energy cost savings measures implemented (according to the manufacturer's equipment standards), the term of the financial agreement or twenty-five years, whichever is shortest.

3.        A requirement that all payments, except obligations on termination of the contract before its expiration, be made pursuant to the terms of the financing agreement.

4.        A written guarantee from the qualified provider that the energy savings will meet or exceed the costs of the energy cost savings measures over the expected life of the energy cost savings measures implemented (according to the manufacturer’s equipment standards), the term of the financial agreement or twenty-five years, whichever is

shortest. The school district shall ensure that the contrac- tor:

a.         For the term of the guaranteed energy savings con- tract, prepares a measurement and verification report on an annual basis in addition to an annual reconcili- ation of savings.

b.        Reimburses the school district for any shortfall of guaranteed energy cost savings on an annual basis.

c.         Uses the  international performance and measure- ment and verification protocol standards or the fed- eral energy management program standards to validate the savings guarantee.

I.        A school district may utilize a simplified energy perfor- mance contract for projects less than $500,000. Simpli- fied energy performance contracts are not required to include an energy savings guarantee and shall comply with all requirements in this Section except for subsec- tions (D), (H)(1)(a) through (h) and (H)(4)(a) through (c).

J.        This Section does not apply to the construction of new buildings.

K.      For all projects under this Section, the school district shall report to the governor's office of energy policy and the school facilities board:

1.        The name of the project.

2.        The qualified provider.

3.        The total cost of the project.

4.        The expected energy cost savings and relevant esca- lators.

5.        The agreed on baseline in the measurement and veri- fication agreement in both kilowatt hours and dol- lars.

L.       For all projects under this Section, the school district shall annually report the actual energy cost savings to the school facilities board no later than October 15.

Historical Note

New Section made by final exempt rulemaking at 21

A.A.R. 1525, effective July 1, 2015 (Supp. 15-3).