SB1050 - Relating to energy savings performance contracts for local governments; creating criminal offenses; authorizing a fee.

  89R3775 CMO-D     By: Hinojosa of Hidalgo S.B. No. 1050       A BILL TO BE ENTITLED   AN ACT   relating to energy savings performance contracts for local   governments; creating criminal offenses; authorizing a fee.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 302, Local Government Code, is amended   by designating Section 302.001 as Subchapter A and adding a   subchapter heading to read as follows:   SUBCHAPTER A. GENERAL PROVISIONS          SECTION 2.  Section 302.001, Local Government Code, is   amended by amending Subdivisions (5) and (8) and adding   Subdivisions (8-a), (11), (12), and (13) to read as follows:                (5)  "Guarantee" and "written guarantee" mean [ means ] a   written guarantee of a provider that the energy savings, increase   in billable revenues, or increase in meter accuracy , as applicable,   from the energy or water conservation or usage measures will at   least equal the cost of the energy or water conservation or usage   measures, all causally connected work, and ancillary improvements   provided for in an energy savings performance contract.                (8)  "Local government" means a county, municipality,   school district, or other political subdivision of this state. [ The   term does not include a school district authorized to enter into an   energy savings performance contract under Section 44.901,   Education Code. ]                 (8-a)     "Measurement and verification" means a method of   confirming whether a guaranteed energy savings, an increase in   billable revenues, or an increase in meter accuracy resulting from   an energy or water conservation or usage measure is being met as   specified under an energy savings performance contract and this   chapter.                 (11)     "Request for qualifications" means a competitive   selection process achieved by a multistep negotiated procurement   process that involves sequential steps for the evaluation of   submissions by prospective providers.                 (12)     "Subcontractor" means a person, other than an   employee of a provider, who contracts with the provider to furnish   labor or materials to fulfill an obligation to the provider who is   acting as a general contractor or prime contractor for any of the   authorized work, including installation, required by an energy   savings performance contract.   The term includes a subcontractor of   any tier, supplier, vendor, fabricator, or manufacturer.                 (13)     "Third-party engineer" means a professional   engineer who is selected or designated by a local government under   Section 302.0031.          SECTION 3.  Section 302.007, Local Government Code, is   transferred to Subchapter A, Chapter 302, Local Government Code, as   added by this Act, and redesignated as Section 302.0021, Local   Government Code, to read as follows:          Sec.  302.0021   [ 302.007 ].  EXEMPTION FROM OTHER CONTRACTING   LAW.  Chapter 2269, Government Code, does not apply to this   chapter.          SECTION 4.  Subchapter A, Chapter 302, Local Government   Code, as added by this Act, is amended by adding Section 302.0031 to   read as follows:           Sec.   302.0031.     THIRD-PARTY ENGINEER.   (a)   A local   government shall select or designate a third-party engineer to:                 (1)     act as the local government's representative, and   serve as the local government's consultant, throughout the energy   savings performance contract procurement process and the duration   of the measurement and verification services under Section 302.301;                 (2)     assist the local government in evaluating the   qualifications, proposals, and change orders of, and any related   presentations by, a provider;                 (3)     provide to the local government a written report   containing both a qualitative and quantitative evaluation of a   provider's qualifications submitted in response to a request for   qualifications;                 (4)     review an investment grade audit report and   supporting documentation completed by the provider and any   subsequent change order, contract addendum, or other amendment to   the proposed energy savings performance contract;                 (5)   prepare written opinions in accordance with Section   302.104 and submit written opinions to the State Energy   Conservation Office if specified under Section 302.105 for the   office to archive;                 (6)     perform the measurement and verification review of   the meter guarantee under Sections 302.052 and 302.053;                 (7)     monitor the performance of the provider's or   independent third party's measurement and verification services   required under Section 302.301;                 (8)     review the provider's or independent third party's   measurement and verification reports under Section 302.301; and                 (9)     review the provider's annual reconciliation   statement under Section 302.302.           (b)     The third-party engineer must be a professional   engineer licensed under Chapter 1001, Occupations Code, and must:                 (1)     have a minimum of three years of specialized   experience with energy savings performance contracts;                 (2)     have demonstrated technical competence in   relation to, and working knowledge of, the procurement process of   energy savings performance contracts;                 (3)  not be an officer or employee of:                       (A)     a provider for the energy savings performance   contract; or                       (B)     a wholly owned subsidiary, majority-owned   subsidiary, parent company, or affiliate of the provider for the   contract; and                 (4)     not be otherwise associated with the energy   savings performance contract.           (c)  A local government:                 (1)     if the third-party engineer is not a full-time   employee of the local government, shall procure the third-party   engineer's services in accordance with the procedures prescribed   for procuring the professional services of an engineer under   Section 2254.004, Government Code; and                 (2)     shall pay a third-party engineer described by   Subdivision (1) a pre-negotiated fee based on the work completed if   the local government does not enter into an energy savings   performance contract that was reviewed by the third-party engineer   under Section 302.104.           (d)     A provider selected to perform an investment grade audit   and propose an energy savings performance contract is prohibited   from suggesting, recommending, or arranging a third-party   engineer.           (e)     Before the local government selects or designates a   third-party engineer, the third-party engineer shall certify in   writing to the local government that the engineer meets the   qualifications required under Subsection (b) and that there is no   conflict of interest with regard to the local government and the   proposals the third-party engineer is to evaluate that result from   the request for qualifications.             (f)     A third-party engineer who reviews an energy savings   performance contract shall maintain the confidentiality of any   proprietary information the third-party engineer acquires while   reviewing the contract.           (g)     A local government may require a provider to include in   the calculation of the cost of a proposal for an energy savings   performance contract any fees payable by the local government for   use of a third-party engineer who is not a full-time employee of the   local government.   A fee charged by a third-party engineer   described by this subsection may not exceed 2.5 percent of the total   value of the energy savings performance contract at the time that a   contract is executed by that provider.           (h)     The written report under Subsection (a)(3) must include   a recommendation for selecting a provider, but the local government   is not obligated to follow the recommendation.          SECTION 5.  Chapter 302, Local Government Code, is amended   by adding Subchapter B, and a heading is added to that subchapter to   read as follows:   SUBCHAPTER B. ENERGY SAVINGS PERFORMANCE CONTRACT          SECTION 6.  Sections 302.002 and 302.006, Local Government   Code, are transferred to Subchapter B, Chapter 302, Local   Government Code, as added by this Act, redesignated as Sections   302.051 and 302.052, Local Government Code, respectively, and   amended to read as follows:          Sec.  302.051   [ 302.002 ].  ENERGY SAVINGS PERFORMANCE   CONTRACTS.  (a)  The governing body of a local government may enter   into an energy savings performance contract in accordance with this   chapter if:                 (1)     the contract includes the provisions required   under this section; and                 (2)     the local government receives approval for the   contract from the State Energy Conservation Office under Section   302.105 .          (b)  Each energy or water conservation or usage measure must   comply with current local, state, and federal construction,   plumbing, and environmental codes and   regulations.  Notwithstanding Section 302.001, an energy savings   performance contract may not include improvements or equipment that   allow or cause water from any condensing, cooling, or industrial   process or any system of nonpotable usage over which public water   supply system officials do not have sanitary control to be returned   to the potable water supply.           (b-1)     An energy savings performance contract must contain   provisions requiring the provider of the energy or water   conservation or usage measures to provide a written guarantee.           (c)     An energy savings performance contract must contain a   provision requiring the provider to provide to the local government   an annual reconciliation statement of the written guarantee as   required by Section 302.302.           (d)     The written guarantee must require the provider to pay   the local government for any shortfall amounts based on the results   of the measurement and verification review required under Section   302.301.   If the energy savings, increase in billable revenues, or   both, resulting from an energy savings performance contract fall   short of the energy savings and increase in billable revenues   projected under the contract and all required shortfall payments to   the local government have not been made, the local government may   terminate the contract without incurring any additional obligation   to the provider.           (e)     An energy savings performance contract and any other   contract entered into by the local government with a provider under   this chapter must contain a prohibition against contingent fees as   follows: "The provider warrants that he or she has not employed or   retained any company or person, other than a bon [Text truncated for display. 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