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STATE OF OKLAHOMA
2nd Session of the 58th Legislature (2022)
COMMITTEE SUBSTITUTE
FOR
HOUSE BILL NO. 3691 By: McDugle
COMMITTEE SUBSTITUTE
An Act relating to energy efficiency; amending 61
O.S. 2021, Section 212, which rel ates to performance-
based efficiency contracts; modifying definition;
amending 70 O.S. 2021, Section 5 -131.2, which relates
to energy conservation measures; modifying
definition; and providing an effective date.
BE IT ENACTED BY THE PEOPLE OF T HE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 61 O.S. 2021, Section 212, is
amended to read as follows:
Section 212. A. For purposes of this section:
1. "Performance-based efficiency contract " means a contract for
the design, development, financing, installation, construction and
service of any improvement, repair, alteration or betterment of any
public building or facility; or any equipment, fixture or furnishing
to be added to or used in any such building or facility; or any
maintenance or operational strategy that is designed and implemented
that will reduce utility consumption or lower operating costs, and
may include, but is not limited to, one or more of the following:
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a. utility services,
b. heating, ventilating or air condi tioning system
modifications or replacements and automated control
systems,
c. replacement or modifications of lighting fixtures,
d. indoor air quality improvements to increase air
quality that conform to the applicabl e state or local
building code require ments when done in conjunction
with other cost-saving measures,
e. any additional building infrastructure improvement,
cost saving, life safety or any other improvement that
provides long-term operating cost reductions and is in
compliance with state and l ocal codes, or
f. any facility operation and support programs that
reduce operating cost , or
g. alternative energy production infrastructure ; and
2. "Qualified provider" means a person or business experienced
or trained in the design, analysis, constructi on and/or installation
of energy conservation and facility management measures. A
qualified provider must employ a professional engineer registered in
the State of Oklahoma.
B. In addition to any other legally permis sible alternatives of
entering into contracts, the Office of Management and Enterprise
Services Construction and Properties Di vision may enter into
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performance-based efficiency contracts on behalf of all state
agencies with a qualified provider pursuant to the provisions of
this section.
A qualified provider to whom the contract is awarded sh all be
required to provide to the Divi sion a sufficient bond for its
faithful performance of the contract. In addition, the Division may
require performance bonds cove ring the annual amount of guaranteed
savings over the contract term. The Office of Mana gement and
Enterprise Services may ent er into an installment contract, lease
purchase agreement or other contractual obligation for the purpose
of financing performance -based efficiency projects for a term not to
exceed the greater of twenty (20) years or the useful life of the
project.
The qualified provider must guarantee the contract ’s cost
savings each year during the term of the agreement. In calculating
cost savings, the public entity may consider cap ital cost avoidance
and include additional revenue that is directly attributed to the
performance-based efficiency contract. The savings must be
sufficient to offset the annual costs of the contract. The contract
shall provide for reimbursement to the st ate agency undertaking the
project annually for an y shortfall of guaranteed savings. Sa vings
must be measured, verified and documented each year of the term and
may be utilized to meet the annual debt service.
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The contracts authorized by this section shal l include
procedures for modifying the contract sh ould the Division determine
it necessary.
This section shall constitute the sole authority necessary to
enter into performance -based efficiency contracts, without regar d to
compliance with other laws which may specify additional procedural
requirements for execution of contracts.
SECTION 2. AMENDATORY 70 O.S. 2021, Section 5 -131.2, is
amended to read as follows:
Section 5-131.2 A. As used in this section, "energy
conservation measures" means one or more of the following items:
1. Insulation of the building structure or systems within the
building;
2. Storm windows or doors, caulk ing or weather-stripping,
multiglazed windows or doors, heat -absorbing or heat-reflective,
glazed, and coated window or door systems, additional glazin g,
reductions in glass area, or other window and door system
modifications that reduce energy consumption ;
3. Automatic or computerized energy control systems;
4. Heating, ventilating or air conditioning system
modifications or replacements;
5. Replacement or modification of lighting fixtures to increase
the energy efficiency of the lighting system, but not for the sole
purpose of increasing the overall illuminat ion of a facility, unless
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an increase in illumination is necessary to conform to the
applicable state or local building codes for the lighting system
after the proposed modifications are made;
6. Indoor air quality improvements;
7. Energy recovery syste ms;
8. Energy awareness education programs; and
9. Water-metering devices that increase effi ciency or accuracy
of water measurement and reduce energy consumption ; and
10. Alternative energy production infrastructure .
B. The board of education of any school district 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
school facilities.
C. 1. The board of education shall require the provider of th e
energy conservation measures to file with the bo ard of education a
performance bond that is in an amount the board finds reasonable and
necessary to protect the interests of the board and that covers t he
value of the guaranteed savings on the contract an d 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:
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a. a performance bond which covers guaranteed savings for
a shorter term. At the completion of the bond term, a
new bond may be executed which covers guaranteed
savings for an additiona l period of years. This
process may be continued in l ike manner for the
duration of the lease -purchase agreement as specified
by subsection D of this section, or
b. a performance bond which covers guaranteed savings for
a shorter term. At the completio n of the bond term,
if the bond cannot be renewed as pro vided in
subparagraph a of this paragraph and if t here has been
a guaranteed savings shortfall during the last twelve
(12) months, the board of education may assume a
continued annual shortfall of the same amount and
request repayment from the contractor o f the net
present value of the shortfall through t he 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.
D. 1. The board of education may enter in to 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 the board of education finds that the amount the
school district would spend on the energy conservation measures,
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excluding any initial parti al payment, will not exceed the total
savings over the repayment period of the energy conservation
contract from the date of installation.
2. The term of the energy conservation contract and the lease-
purchase agreement shall include the installation peri od and the
lease repayment period.
3. If the term of an energy conservation contract exceeds one
(1) year, the contractual obligation of the schoo l district,
excluding any initial partial payment, in any y ear during the term
of the energy conservation con tract may not exceed the total savings
including, but not limited to, electrical, gas, or other utility
cost savings and savings from lowered maint enance, as determined by
the board of education. Savings s hall be guaranteed by the entity
providing the energy conservation measures.
4. Energy conservation contracts shall not permit the carry -
forward of savings above the guaranteed amount from one ye ar to a
future year shortfall.
5. Maintenance for energy co nservation measures may be a part
of the energy conservation contract.
6. The board of education shall consider all costs of the
energy conservation measures, including costs of design,
engineering, installation, maintenance, m aintenance tools and
equipment, spare parts, repairs, and debt service.
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E. In addition to any other provisions, the energy conservation
contract shall:
1. Provide that all savings should be tracked and audited by
the contractor with an annual report prov ided to the board of
education along with a payment by the provider for reimbu rsement of
savings not realized;
2. Be for a term of years that is not less than the term of
years of any associated lease -purchase agreement;
3. Provide that the board of educ ation may terminate the
agreement for nonperformance by the contractor;
4. Contain a nonappropriation clause; and
5. Contain a baseline calculation and an energy savings
calculation. The calculations shall be perf ormed in accordance with
the procedures used by the International Pr otocol for Measurement
and Verification Procedures (IPMVP) or succeeding standard of the
United States Department of Energy.
F. 1. An energy conservation contract, with respect to
existing buildings or facilities, may be funde d through a lease-
purchase agreement that meets federal tax requirements for t ax-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 avera ge
equipment life of any equ ipment to be installed under the energy
conservation contract.
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3. Lease-purchase agreements for energy conservation measures
shall be considered separate from the energy conservation co ntract
and shall contain a nonappropriatio n clause.
G. 1. Prior to entering into an energy conservation contract,
the board of education shall solicit a request for qualification
from one or more energy service company providers. Requests for
qualification must solicit quotations and must speci fy the relative
importance of guaranteed savings, price, financial performance and
stability, quality, technical ability, experience and other
evaluation factors.
2. In order to determine the energy savings measur es to be
considered by proposers, the boar d of education may hire an
independent energy consultant.
3. Fees assessed by the consultant will be paid from proceeds
of any financing associated with the energy conservation contract.
H. Proposals shall be ope ned in a manner that avoids disclosure
of the contents to competing of ferors and keeps the proposals
confidential during negotiations.
I. The board of education and the offeror selected through the
request for qualification procedures shall enter into a me morandum
of understanding which shall req uire the provider to perform
preliminary analysis regarding the physical featu res and operating
history of the facilities under consideration. There shall be no
financial obligation to the school district for this analysis.
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J. After completion of the pre liminary analysis, the energ y
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 b asis for
operating the existing building o r facilities and the detaile d
information necessary to make a financial decisi on 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 school di strict decides not to enter into a long-
term performance-based efficiency cont ract with the provider, the
school district must pay the sum stipulated in the performance audit
contract.
K. Trade secrets and proprie tary information clearly identified
in the proposals shall not be open for public inspection.
SECTION 3. This act shall become effective November 1, 2022.
58-2-10888 LRB 03/02/22