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REFERENCE TITLE: energy savings performance contracting |
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State of Arizona House of Representatives Forty-ninth Legislature First Regular Session 2009
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HB 2423 |
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Introduced by Representative Reagan
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AN ACT
amending title 34, chapter 4, Arizona Revised Statutes, by adding article 2; relating to energy savings performance contracting.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 34, chapter 4, Arizona Revised Statutes, is amended by adding article 2, to read:
ARTICLE 2. ENERGY SAVINGS PERFORMANCE CONTRACTING
34-441. Definitions
In this article, unless the context otherwise requires:
1. "Alternate energy equipment" means equipment for the production or conversion of energy from alternate sources as its primary fuel source, such as solar, biomass, wind, geothermal, hydroelectricity under thirty megawatts, remote natural gas of less than one billion cubic feet estimated reserves per mile from an existing gas gathering line, natural gas containing eight hundred fifty or fewer British thermal units per standard cubic foot or any other source of energy, the efficient use of which will reduce the use of fossil or nuclear fuels.
2. "Conservation measures" means equipment, maintenance, load management techniques and equipment or other measures to reduce energy use or make for a more efficient use of energy.
3. "Conservation services" means the electrical, thermal, or other energy savings resulting from conservation measures, which shall be treated as a supply of such energy.
4. "Energy conservation facility" means alternate energy equipment, cogeneration equipment or conservation measures located in a public building or on land owned by a public agency.
5. "Energy service contract" means a contract entered into by a public agency with any person pursuant to which the person provides electrical or thermal energy or conservation services to a public agency from an energy conservation facility.
6. "Facility financing contract" means a contract entered into by a public agency with any person pursuant to which the person provides financing for an energy conservation facility in exchange for repayment of the financing and all costs and expenses related to the financing by the public agency.
7. "Facility ground lease":
(a) Means a lease of all, or any portion of, land or a public building owned by, or under lease to, a public agency to a person in conjunction with an energy service contract or a facility financing contract.
(b) May also include:
(i) In addition to the land on which energy conservation facilities will be located, easements, rights-of-way, licenses and rights of access for the construction, use or ownership by the person of the facility and all related utility lines not owned or controlled by the interconnecting utility and offsite improvements related to the utility lines.
(ii) The addition or improvement of utility lines and equipment owned by the interconnecting utility that are necessary to permit interconnection between that utility and an energy conservation facility.
8. "Person" means any individual, company, corporation, partnership, limited liability company, public agency, association, proprietorship, trust, joint venture or other entity or group of entities.
9. "Public agency" means this state, a county, city, town, special district, community college district, school district, joint power authority or other entity designated or created by a political subdivision relating to energy development projects and any other political subdivision or public corporation in this state.
10. "Public building" includes any structure, building, facility or work that a public agency is authorized to construct or use, automobile parking lots, landscaping and other facilities, including furnishings and equipment, incidental to the use of any structure, building, facility or work and the site and any easements or rights-of-way appurtenant to or necessary for its full use.
34-442. Application
To implement a policy for facilities of local governments, a public agency may develop energy conservation and alternate energy supply sources at the facilities of public agencies for the purposes of section 15‑213.01 or 34‑455 pursuant to this article.
34-443. Energy service contract; findings
A. Notwithstanding any other law, a public agency may enter into an energy service contract and any necessarily related facility ground lease on terms that its governing body determines are in the best interest of the public agency if:
1. The determination is made at a regularly scheduled public hearing.
2. The governing board finds:
(a) That the anticipated cost to the public agency for thermal or electrical energy or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the public agency of thermal, electrical or other energy that would have been consumed by the public agency in the absence of those purchases.
(b) That the difference, if any, between the fair rental value for the real property subject to the facility ground lease and the agreed rent is anticipated to be offset by below-market energy purchases or other benefits provided under the energy service contract.
b. State agency heads and governing bodies may make the findings required by subsection A without holding a public hearing.
34-444. Facility financing contract
A. Notwithstanding any other law, a public agency may enter into a facility financing contract and a facility ground lease on terms that its governing body determines are in the best interest of the public agency if:
1. The determination is made at a regularly scheduled public hearing and proper public notice is given in advance.
2. The governing body finds that monies for the repayment of the financing of the cost of design, construction and operation of the energy conservation facility, as required by the contract, are projected to be available from revenues resulting from the sale of electricity or thermal energy from the facility or from funding that otherwise would have been used for the purchase of electrical, thermal or other energy required by the public agency in the absence of the energy conservation facility.
B. State agency heads may make the findings required by subsection A without holding a public hearing.
C. A facility financing contract may provide for the person with whom the public agency contracts to provide any combination of feasibility studies for, and design and construction of, all or part of the energy conservation facility in addition to the financing and other related services and may provide for an installment sale purchase, another form of purchase or amortized lease of the energy conservation facility by the public agency.
34-445. Findings; proposals
A. A public agency may base the findings required on projections for electrical and thermal energy rates from the following sources:
1. The public utility that provides thermal or electrical energy to the public agency.
2. The corporation commission.
3. The department of commerce energy office.
B. Before awarding or entering into an agreement or lease, a public agency shall request proposals from qualified persons. After evaluating the proposals, the public agency shall award the contract on the basis of the experience of the contractor, the type of technology employed by the contractor, the cost to the public agency and any other relevant considerations. The public agency may use a pool of qualified energy service companies for this purpose.
34-446. Limitations; construction of article
A. This article does not limit the authority of any public agency to construct energy conservation projects or to enter into other leases or contracts relating to the financing construction, operation or use of alternate energy type facilities in any manner authorized under existing statutes.
B. This article shall be construed to provide the greatest possible flexibility to public agencies in structuring agreements entered into pursuant to this article so that economic benefits may be maximized and financing and other costs associated with the design and construction of alternate energy projects may be minimized. Public agencies and the entities with whom they contract under this article shall have great latitude in characterizing components of energy conservation facilities as personal or real property and in granting security interests in leasehold interests and components of the alternate energy facilities to project lenders.