Arizona Revised Statutes
Title 15 - Education
§ 15-213.01 - Procurement practices; guaranteed energy cost savings contracts; definitions

15-213.01. Procurement practices; guaranteed energy cost savings contracts; definitions
A. Notwithstanding section 15-213, subsection A, a school district may contract for the procurement of a guaranteed energy cost savings contract with a qualified provider through a competitive sealed proposal process as provided by the procurement practices adopted by the state board of education.
B. A school district may enter into a guaranteed energy cost savings contract with a qualified provider if it determines that the energy savings project pays for itself within the expected life, according to the manufacturer's equipment standards, of the energy cost savings measures implemented, 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 savings contract, and these cost savings may be used to pay for the contract and project implementation.
C. The school district shall use objective criteria in 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. The school district shall set forth each criterion with its respective numerical weighting in the request for proposal.
D. In selecting a contractor to perform any construction work related to performing the guaranteed energy cost savings contract, the qualified provider may develop and use a prequalification process for contractors. These prequalifications may 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.
E. A study shall be performed by the selected qualified provider in order to establish the exact scope of the guaranteed energy cost savings contract, the fixed cost savings guarantee amount and the methodology for determining actual savings. This 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 to the division of school facilities within the department of administration and the department of administration.
F. The guaranteed energy cost savings contract shall require that, in determining whether the projected energy savings calculations have been met, the energy savings shall be computed by comparing the energy baseline 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:
1. Changes in utility rates.
2. Changes in the number of days in the utility billing cycle.
3. Changes in the square footage of the facility.
4. Changes in the operational schedule of the facility.
5. Changes in facility temperature.
6. Significant changes in the weather.
7. Significant changes in the amount of equipment or lighting used in the facility.
8. Significant changes in the nature or intensity of energy use, such as the change of classroom space to laboratory space.
G. The information to develop the energy baseline shall be derived from historical energy costs or actual energy measurements 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 measures.
H. At the qualified provider's expense, the proposal shall include an independent third-party validation of cost savings calculations associated with each proposed energy cost savings measure by a licensed, registered professional engineer, with credentials from the national association of energy engineers, who has demonstrated experience in energy analysis. The school district must approve the selection of the credentialed engineer.
I. A school district, or two or more school districts, may enter into a financing agreement with a qualified provider or the financial institution, trustee or paying agent for the purchase and installation or implementation of energy cost savings measures. The guaranteed energy cost savings contract may provide for payments over a period of not more than the expected life, according to the manufacturer's equipment standards, of the energy cost savings measures implemented, the term of the financial agreement or twenty-five years, whichever is shortest. The contract shall provide that all payments, except obligations on termination of the contract before its expiration, shall be made pursuant to the terms of the financing agreement. If a school district purchases the energy cost savings measure, the qualified provider shall guarantee that the energy cost savings meet or exceed the school district's total cost of the energy savings project purchase.
J. The guaranteed energy cost savings contract shall include a written guarantee of the qualified provider that the energy savings will meet or exceed the costs of the energy cost savings measures over the expected life, according to the manufacturer's equipment standards, of the energy cost savings measures implemented, the term of the financial agreement or twenty-five years, whichever is shortest. The qualified provider shall:
1. For the term of the guaranteed energy cost savings contract, prepare a measurement and verification report on an annual basis in addition to an annual reconciliation of savings.
2. Reimburse the school district for any shortfall of guaranteed energy cost savings on an annual basis.
3. Use the international performance and measurement and verification protocol standards or the federal energy management program standards to validate the savings guarantee.
K. The school district may obtain any required financing as part of the original competitive sealed proposal process from the qualified provider or a third-party financing institution.
L. A qualified provider that is awarded the contract shall give a sufficient bond to the school district for its faithful performance of the equipment installment.
M. The qualified provider is required to make public the information in the subcontractor's bids only if the qualified provider is awarded the guaranteed energy cost savings contract by the school district.
N. For all projects carried out under this section, the district shall report the following information to the department of administration:
1. The name of the project.
2. The name of the qualified provider.
3. The total cost of the project.
4. The expected energy cost savings and relevant escalators.
5. The agreed-on baseline in the measurement and verification agreement in both kilowatt hours and dollars.
O. This section does not apply to the construction of new buildings.
P. A school district may use a simplified energy performance contract for projects that are less than $500, 000. Simplified energy performance contracts are not required to include an energy savings guarantee and shall comply with all requirements in this section except for the requirements that are specifically related to the energy savings guarantee and the measurement and verification of the guaranteed savings.
Q. A school district may elect to use a shorter capital cost repayment schedule than required pursuant to this section.
R. For the purposes of this section:
1. " Construction" means the process of building, altering, repairing, improving or demolishing any school district structure or building, or other public improvements of any kind to any school district real property. Construction does not include the routine operation, routine repair or routine maintenance of existing structures, buildings or real property.
2. " Energy baseline" means a calculation of the amount of energy used in an existing facility before the installation or implementation of the energy cost savings measures.
3. " Energy cost savings" means one or both of the following:
(a) An estimated reduction in net fuel costs, energy costs, water costs, stormwater fees or other utility costs, or related net operating costs, including costs for anticipated equipment replacement and repair, from or as compared to an established baseline of those costs.
(b) An estimated revenue increase associated with additional facility use or the use of improved meters or other measuring devices due to improvements included in the guaranteed energy cost savings contract.
4. " Energy cost savings measure" means a training program or facility alteration designed to reduce energy consumption and may include one or more of the following, and any related meters or other measuring devices:
(a) Insulating the building structure or systems in the building.
(b) Storm windows or doors, caulking or weather stripping, multiglazed windows 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.
(d) Heating, ventilating or air conditioning system modifications or replacements, including geothermal.
(e) Replacing or modifying 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 to increase air quality that conform to the applicable state or local building code requirements.
(g) Energy recovery systems.
(h) Installing a new or retrofitting an existing day lighting system.
(i) Procurement of low-cost utility supplies of all types, including electricity, natural gas, propane and water.
(j) Devices that reduce water consumption and water costs or that reduce sewer charges.
(k) Rainwater harvesting systems.
(l) Combined heat and power systems.
(m) Renewable and alternative energy projects and renewable energy power service agreements.
(n) Self-generation systems.
(o) Any additional building systems and infrastructure that produce energy, or that provide utility cost savings not specifically mentioned in this paragraph, if the improvements meet the life-cycle cost requirement and enhance building system performance or occupant comfort and safety, excluding those systems that fall under section 15-213.02.
(p) Geothermal.
5. " Guaranteed energy cost savings contract" means a contract for implementing one or more energy cost savings measures.
6. " Life-cycle cost" means the sum of present values of investment costs, capital costs, installation costs, energy costs, operating costs, maintenance costs and disposal costs and utility rebates over the life of the project, product or measure as provided by federal life-cycle cost rules, regulations and criteria contained in the United States department of energy federal energy management program " guidance on life-cycle cost analysis" required by executive order 13423, January 2007.
7. " Qualified provider" means a person or a business 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 capabilities to design and operate energy cost savings measures and projects and that has the financial ability to satisfy guarantees for energy cost savings.

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