Bill Text: NJ A3605 | 2010-2011 | Regular Session | Introduced
Bill Title: Authorizes various public entities to utilize competitive contracting procedures for certain energy savings improvement projects.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2010-12-13 - Reported out of Assembly Committee, 2nd Reading [A3605 Detail]
Download: New_Jersey-2010-A3605-Introduced.html
Sponsored by:
Assemblywoman SHEILA Y. OLIVER
District 34 (Essex and Passaic)
SYNOPSIS
Authorizes various public entities to utilize competitive contracting procedures for certain energy savings improvement projects.
CURRENT VERSION OF TEXT
As introduced.
An Act authorizing public entities to utilize competitive contracting for energy savings improvements and amending various parts of the statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 1 of P.L.2009, c.4 (C.18A:18A-4.6) is amended to read as follows:
1. a. A board of education, as defined in N.J.S.18A:18A-2, may implement an energy savings improvement program in the manner provided by this section whenever it determines that the savings generated from reduced energy use from the program will be sufficient to cover the cost of the program's energy conservation measures as set forth in an energy savings plan. Under such a program, a board of education may enter into an energy savings services contract with an energy services company to implement the program or the board may authorize separate contracts to implement the program. The provisions of N.J.S.18A:18A-1 et seq. shall apply to any contracts awarded pursuant to this section to the extent that the provisions of such law are not inconsistent with any provision of this section.
b. (1) To be eligible to enter into an energy savings services contract, an energy services company shall be a commercial entity that is qualified to provide energy savings services in accordance with the provisions of this section. A board of education may determine to enter into an energy savings services contract either through public advertising for bids and the receipt of bids therefor or through competitive contracting in lieu of public bidding in the manner provided by sections 45 through 49 of P.L.1999, c.440 (C.18A:18A-4.1 et seq.).
(2) (a) Public works activities performed under an energy savings improvement program shall be subject to all requirements regarding public bidding, bid security, performance guarantees, insurance and other public contracting requirements that are applicable to public works contracts, to the extent not inconsistent with this section. A general contractor, energy services company serving as general contractor, or any subcontractor hired for the furnishing of plumbing and gas fitting and all kindred work, and of steam and hot water heating and ventilating apparatus, steam power plants and kindred work, and electrical work, structural steel and ornamental iron work, shall be classified by the Division of Property Management and Construction in the Department of the Treasury in order to perform public works activities under an energy savings improvement program.
(b) Individuals or organizations performing energy audits, acting as commissioning agents, or conducting verification of energy savings plans, implementation of energy conservation measures, or verifying guarantees shall be prequalified by the Division of Property Management and Construction in the Department of the Treasury to perform their work under an energy savings improvement program.
(3) An energy services company may be designated as the general contractor for improvements to be made pursuant to an energy savings plan, provided that the hiring of subcontractors that are required to be classified pursuant to subparagraph (a) of paragraph (2) of this subsection shall be performed pursuant to the public bidding requirements of the board of education or through competitive contracting, as defined in this section, in lieu of public bidding. A contract with an energy savings company shall include, but not be limited to: preparation of an energy savings plan; the responsibilities of the parties for project schedules, installations, performance and quality, payment of subcontractors, project completion, commissioning, savings implementation; a requirement that the savings to be achieved by energy conservation measures be verified upon commissioning of the improvements; allocation of State and federal rebates and tax credits; and any other provisions deemed necessary by the parties.
(4) Except as provided in paragraph (5) of this subsection, a subsidiary or wholly-owned or partially-owned affiliate of the energy services company shall not be an eligible contractor or subcontractor under an energy savings services contract.
(5) When the energy services company is the manufacturer of direct digital control systems and contracts with the board of education to provide a guaranteed energy savings option pursuant to subsection f. of this section, the specification of such direct digital control systems may be treated as proprietary [goods and if so treated, the bid specification shall set forth an allowance price for its supply by the energy services company which shall be used by all bidders in the public bidding process]. Direct digital controls shall be open protocol format and shall meet the interoperability guidelines established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers.
c. An energy savings improvement program may be financed through a lease-purchase agreement or through the issuance of energy savings obligations pursuant to this subsection.
(1) An energy savings improvement program may be financed through a lease-purchase agreement between a board of education and an energy services company or other public or private entity. Under a lease-purchase agreement, ownership of the energy savings equipment or improved facilities shall pass to the board of education when all lease payments have been made. Notwithstanding the provisions of section 46 of P.L.1999, c.440 (C.18A:18A-4.2) or any other law to the contrary, the duration of such a lease-purchase agreement shall not exceed 15 years, except that the duration of a lease purchase agreement for a combined heat and power or cogeneration project shall not exceed 20 years.
(2) Any lease-purchase agreement entered into pursuant to this subsection may contain: a clause making it subject to the availability and appropriation annually of sufficient funds as may be required to meet the extended obligation; and a non-substitution clause maintaining that if the agreement is terminated for non-appropriation, the board of education may not replace the leased equipment or facilities with equipment or facilities that perform the same or similar functions.
(3) A board of education may arrange for incurring energy savings obligations to finance an energy savings improvement program. Energy savings obligations may be funded through appropriations for utility services in the annual budget of the board, or may be funded through appropriation to the debt service fund, and may be issued as refunding bonds pursuant to P.L.1969, c.130 (C.18A:24-61.1 et seq.), including the issuance of bond anticipation notes as may be necessary, provided that all such bonds and notes mature within the periods authorized for such energy savings obligations. Energy savings obligations may be issued either through the board of education or another public agency authorized to undertake financing on behalf of the board.
(4) Lease-purchase agreements and energy savings obligations shall not be used to finance maintenance, guarantees, or verification of guarantees of energy conservation measures. Lease-purchase agreements and energy savings obligations may be used to finance the cost of an energy audit or the cost of verification of energy savings as part of adopting an energy savings plan. Notwithstanding any law to the contrary, lease-purchase agreements and energy savings certificates shall [not] be excepted from any budget or tax levy limitation otherwise provided by law. Maturity schedules of lease-purchase agreements or energy savings obligations must not exceed the estimated useful life of the [individual] energy conservation measures.
d. (1) The energy audit component of an energy savings improvement program [shall] may be conducted either by the board of education or by a qualified third party retained by the board for that purpose. It [shall not] may be conducted by an energy services company subsequently hired to develop an energy savings improvement program, subject to third party verification of an investment grade audit. The energy audit shall identify the current energy use of any or all facilities and energy conservation measures that can be implemented in which the energy savings and energy efficiency could be realized and maximized.
(2) To implement an energy savings improvement program, a board of education shall develop an energy savings plan that consists of one or more energy conservation measures. The plan shall:
(a) contain the results of an energy audit;
(b) describe the energy conservation measures that will comprise the program;
(c) estimate greenhouse gas reductions resulting from those energy savings;
(d) [identify] provide all design and compliance issues that require the professional services of an architect or engineer [and identify who will provide these services];
(e) [include an assessment of risks involved in the successful implementation of the plan;] (Deleted by amendment, P.L. , c. ).
(f) identify the eligibility for, and costs and revenues associated with the PJM Independent System Operator for demand response and curtailable service activities;
(g) include schedules showing calculations of all costs of implementing the proposed energy conservation measures and the projected energy savings;
(h) identify maintenance requirements necessary to ensure continued energy savings[, and describe how they will be fulfilled]; and
(i) if developed by an energy services company, a description of, and cost estimates of an energy savings guarantee.
All professionals providing engineering services under the plan shall have errors and omissions insurance.
(3) Prior to the adoption of the plan by the governing body, the board of education shall contract with a qualified third party to verify the projected energy savings to be realized from the proposed program have been calculated as required by subsection e. of this section.
(4) Upon adoption, the plan shall be submitted to the Board of Public Utilities, which shall post it on the Internet on a public webpage maintained for such purpose. If the board of education maintains its own website, it shall also post the plan on that site. The Board of Public Utilities may require periodic reporting concerning the implementation of the plan.
(5) Verification by a qualified third party shall be required when energy conservation measures are placed in service or commissioned, to ensure the savings projected in the energy savings plan shall be achieved.
(6) Energy-related capital improvements that do not reduce energy usage may be included in an energy savings improvement program [but the cost of such improvements shall not be financed as a lease-purchase or through energy savings obligations authorized by subsection c. of this section]. Nothing herein is intended to prevent financing of such capital improvements through otherwise authorized means.
(7) A qualified third party when required by this subsection may include an employee of the board of education who is properly trained and qualified to perform such work.
e. (1) The calculation of energy savings for the purposes of determining that the energy savings resulting from the program will be sufficient to cover the cost of the program's energy conservation measures, as provided in subsection a. of this section, shall involve determination of the dollar amount saved through implementation of an energy savings improvement program using the guidelines of the International Performance Measurement and Verification Protocol or other protocols approved by the Board of Public Utilities and standards adopted by the Board of Public Utilities pursuant to this section. The calculation shall include all applicable State and federal rebates and tax credits, but shall not include the cost of an energy audit and the cost of verifying energy savings. The calculation shall state which party has made application for rebates and credits and how these applications translate into energy savings.
(2) For the purposes of this section, the Board of Public Utilities shall adopt standards and uniform values for interest rates and escalation of prices for labor, electricity, oil, and gas, as well as standards for presenting these costs in a life cycle and net present value format, standards for the presentation of obligations for carbon reductions, and other standards that the board may determine necessary.
f. (1) When an energy services company is awarded an energy savings services contract, it shall offer the board of education the option to purchase, for an additional amount, an energy savings guarantee. The guarantee, if accepted by a separate vote of the board of education, shall insure that the energy savings resulting from the energy savings improvement program, determined periodically over the duration of the guarantee, will be sufficient to defray all payments required to be made pursuant to the lease-purchase agreement or energy savings obligation, and if the savings are not sufficient, the energy services company will reimburse the board for any additional amounts. Annual costs of a guarantee shall not be financed or included as costs in an energy savings plan but shall be fully disclosed in an energy savings plan.
(2) When a guaranteed energy savings option is purchased, the contract shall require a qualified third party to verify the energy savings at intervals established by the parties.
g. As used in this section:
"competitive contracting" means the method of contracting for specialized goods and services in which formal proposals are solicited from vendors through public advertising, all formal proposals are evaluated by the board of education or general contractor, and the board of education or general contractor awards a contract to a vendor or vendors from among the formal proposals received;
"direct digital control systems" means the devices and computerized control equipment that contain software and computer interfaces that perform the logic that control a building's heating, ventilating, and air conditioning system. Direct digital controls shall be open protocol format and shall meet the interoperability guidelines established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers;
"energy conservation measure" means an improvement that results in reduced energy use, including, but not limited to, installation of energy efficient equipment; demand response equipment; combined heat and power systems; facilities for the production of renewable energy; water conservation measures, fixtures or facilities; building envelope improvements that are part of an energy savings improvement program; and related control systems for each of the foregoing;
"energy related capital improvement" means a capital improvement that uses energy but does not result in a reduction of energy use;
"energy [saving] savings obligation" means a bond, note or other agreement evidencing the obligation to repay borrowed funds incurred in order to finance energy [saving] savings improvements;
"energy savings" means a measured reduction in fuel, energy, operating or maintenance costs resulting from the implementation of one or more energy conservation measures services when compared with an established baseline of previous fuel, energy, operating or maintenance costs, including, but not limited to, future capital replacement expenditures avoided as a result of equipment installed or services performed as part of an energy savings plan;
"energy savings improvement program" means an initiative of a board of education to implement energy conservation measures in existing facilities, provided that the value of the energy savings resulting from the program will be sufficient to cover the cost of the program's energy conservation measures;
"energy savings plan" means the document that describes the actions to be taken to implement the energy savings improvement program;
"energy savings services contract" means a contract with an energy savings company to develop an energy savings plan, prepare bid specifications, manage the performance, provision, construction, and installation of energy conservation measures by subcontractors, to offer a guarantee of energy savings derived from the implementation of an energy savings plan, and may include a provision to manage the bidding process;
"energy services company" means a commercial entity that is qualified to develop and implement an energy savings plan in accordance with the provisions of this section;
"public works activities" means any work subject to the provisions of P.L.1963, c.150 (C.34:11-56.25 et seq.); and
"water conservation measure" means an alteration to a facility or equipment that reduces water consumption, maximizes the efficiency of water use, or reduces water loss.
h. (1) The Director of the Division of Local Government Services in the Department of Community Affairs, the State Treasurer, and the Board of Public Utilities may take such action as is deemed necessary and consistent with the intent of this section to implement its provisions.
(2) The Director of the Division of Local Government Services in the Department of Community Affairs, the State Treasurer and the Board of Public Utilities may adopt implementation guidelines or directives, and adopt such administrative rules, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary for the implementation of those agencies' respective responsibilities under this section, except that notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the Director of the Division of Local Government Services in the Department of Community Affairs, the State Treasurer, and the Board of Public Utilities may adopt, immediately upon filing with the Office of Administrative Law, such rules and regulations as deemed necessary to implement the provisions of this act which shall be effective for a period not to exceed 12 months and shall thereafter be amended, adopted or re-adopted in accordance with the provisions of P.L.1968, c.410 (C.52:14B-1 et seq.).
(cf: P.L.2009, c.4, s.1)
2. Section 45 of P.L.1999, c.440 (C.18A:18A-4.1) is amended to read as follows:
45. Notwithstanding the provisions of any law, rule or regulation to the contrary, competitive contracting may be used by boards of education in lieu of public bidding for procurement of specialized goods and services the price of which exceeds the bid threshold, for the following purposes:
a. The purchase or licensing of proprietary computer software designed for board of education purposes, which may include hardware intended for use with the proprietary software. This subsection shall not be utilized for the purpose of acquiring general purpose computer hardware or software;
b. The hiring of a for-profit entity or a not-for-profit entity incorporated under Title 15A of the New Jersey Statutes for the purpose of:
(1) the operation, management or administration of recreation or social service facilities or programs; or
(2) the operation, management or administration of data processing services;
c. Services performed by an organization engaged in providing energy conservation education and training services to train employees of a board of education to reduce consumption of energy;
d. Telecommunications transmission or switching services that are not part of a tariff or schedule of charges filed with the Board of Public Utilities;
e. The purchase of specialized machinery or equipment of a technical nature, or servicing thereof, which will not reasonably permit the drawing of specifications;
f. Food services provided by food service management companies when not part of programs administered by the New Jersey Department of Agriculture, Bureau of Child Nutrition Programs;
g. Driver education courses provided by licensed driver education schools;
h. At the option of the board of education, any good or service that is exempt from bidding pursuant to N.J.S.18A:18A-5;
i. Laboratory testing services;
j. Concessions;
k. The operation, management or administration of other services, with the approval of the Division of Local Government Services in the Department of Community Affairs[.]; and
l. Energy savings improvement programs.
Any purpose included herein shall not be considered by a board of education as an extraordinary unspecifiable service pursuant to paragraph (2) of subsection a. of N.J.S.18A:18A-5.
(cf: P.L.2009, c.4, s.2)
3. Section 4 of P.L.2009, c.4 (C.18A:65A-1) is amended to read as follows:
4. a. The board of trustees of a public institution of higher education may implement an energy savings improvement program in the manner provided by this section whenever it determines that the savings generated from reduced energy use from the program will be sufficient to cover the cost of the program's energy conservation measures as set forth in an energy savings plan. Under such a program, a board of trustees may enter into an energy savings services contract with an energy services company to implement the program or the board may authorize separate contracts to implement the program. The provisions of: N.J.S.18A:64-1 et seq., in the case of any State college; P.L.1995, c.400 (C.18A:64E-12 et seq.), in the case of the New Jersey Institute of Technology; N.J.S.18A:65-1 et seq., in the case of Rutgers, the State University; P.L.1970, c.102 (C.18A:64G-1 et al.), in the case of the University of Medicine and Dentistry of New Jersey; and N.J.S.18A:64A-1 et seq., in the case of the county colleges; shall apply to any contracts awarded pursuant to this section to the extent that the provisions of such law are not inconsistent with any provision of this section.
In the case of Rutgers, the State University, references in this section to the board of trustees shall mean the Rutgers board of governors.
b. (1) To be eligible to enter into an energy savings services contract, an energy services company shall be a commercial entity that is qualified to provide energy savings services in accordance with the provisions of this section. A public institution of higher education may enter into an energy savings services contract through public advertising for bids and the receipt of bids therefor or through competitive contracting, as defined in this section, in lieu of public bidding.
(2) (a) Public works activities performed under an energy savings improvement program shall be subject to all requirements regarding public bidding, bid security, performance guarantees, insurance and other public contracting requirements that are applicable to public works contracts, to the extent not inconsistent with this section. A general contractor, energy services company serving as general contractor, or any subcontractor hired for the furnishing of plumbing and gas fitting and all kindred work, and of steam and hot water heating and ventilating apparatus, steam power plants and kindred work, and electrical work, structural steel and ornamental iron work, shall be classified by the Division of Property Management and Construction in the Department of the Treasury in order to perform public works activities under an energy savings improvement program.
(b) Individuals or organizations performing energy audits, acting as commissioning agents, or conducting verification of energy savings plans, implementation of energy conservation measures, or verifying guarantees shall be prequalified by the Division of Property Management and Construction in the Department of the Treasury to perform their work under an energy savings improvement program.
(c) Where there is a need for compatibility of a direct digital control system with previously installed control systems and equipment, the bid specifications may include a requirement for proprietary goods, and if so included, the bid specification shall set forth an allowance price for its supply which shall be used by all bidders in the public bidding process.
(3) An energy services company may be designated as the general contractor for improvements to be made pursuant to an energy savings plan, provided that the hiring of subcontractors that are required to be classified pursuant to subparagraph (a) of paragraph (2) of this subsection shall be performed pursuant to the public bidding requirements of the board of trustees or through competitive contracting, as defined in this section, in lieu of public bidding. A contract with an energy savings company shall include, but not be limited to: preparation of an energy savings plan, the responsibilities of the parties for project schedules, installations, performance and quality, payment of subcontractors, project completion, commissioning, savings implementation; a requirement that the savings to be achieved by energy conservation measures be verified upon commissioning of the improvements; allocation of State and federal rebates and tax credits; and any other provisions deemed necessary by the parties.
(4) Except as provided in paragraph (5) of this subsection, a subsidiary or wholly-owned or partially-owned affiliate of the energy services company shall not be an eligible contractor or subcontractor under an energy savings services contract.
(5) When the energy services company is the manufacturer of direct digital control systems and contracts with the board of trustees to provide a guaranteed energy savings option pursuant to subsection f. of this section, the specification of such direct digital control systems may be treated as proprietary [goods and if so treated, the bid specification shall set forth an allowance price for its supply by the energy services company which shall be used by all bidders in the public bidding process]. Direct digital controls shall be open protocol format and shall meet the interoperability guidelines established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers.
c. An energy savings improvement program may be financed through a lease-purchase agreement or through the issuance of energy savings obligations pursuant to this subsection.
(1) An energy savings improvement program may be financed through a lease-purchase agreement between a board of trustees and an energy services company or other public or private entity. Under a lease-purchase agreement, ownership of the energy savings equipment or improved facilities shall pass to the board of trustees when all lease payments have been made. Notwithstanding the provisions of any other law to the contrary, the duration of such a lease-purchase agreement shall not exceed 15 years, except that the duration of a lease purchase agreement for a combined heat and power or cogeneration project shall not exceed 20 years.
(2) Any lease-purchase or other agreement entered into in connection with an energy savings improvement program may be a general obligation of the public institution of higher education pursuant to this subsection, and may contain: a clause making it subject to the availability and appropriation annually of sufficient funds as may be required to meet the extended obligation; and a non-substitution clause maintaining that if the agreement is terminated for non-appropriation, the board of trustees may not replace the leased equipment or facilities with equipment or facilities that perform the same or similar functions.
(3) A board of trustees may arrange for incurring energy savings obligations to finance an energy savings improvement program and may enter into any agreement with the New Jersey Educational Facilities Authority or other persons in connection with the issuance by the authority of its obligations on behalf of the public institution of higher education in order to finance the institution's energy savings improvement program. Energy savings obligations may be funded through appropriations for utility services in the annual budget of the board, or incurred as a general obligation of the public institution of higher education in connection with the issuance by the New Jersey Educational Facilities Authority of bonds or notes pursuant to N.J.S.18A:72A-2 et seq., or, in the case of a county college, by a sponsoring county as a refunding bond pursuant to N.J.S.40A:2-52 et seq., including the issuance of bond anticipation notes as may be necessary, provided that all such bonds and notes mature within the periods authorized for such energy savings obligations.
(4) Lease-purchase agreements and energy savings obligations shall not be used to finance maintenance, guarantees, or verification of guarantees of energy conservation measures. Lease-purchase agreements and energy savings obligations may be used to finance the cost of an energy audit or the cost of verification of energy savings as part of adopting an energy savings plan. Maturity schedules of lease-purchase agreements or energy savings obligations must not exceed the estimated useful life of the [individual] energy conservation measures.
d. (1) The energy audit component of an energy savings improvement program [shall] may be conducted either by the board of trustees or by a qualified third party retained by the board for that purpose. It [shall not] may be conducted by an energy services company subsequently hired to develop an energy savings improvement program, subject to third party verification of an investment grade audit. The energy audit shall identify the current energy use of any or all facilities and energy conservation measures that can be implemented in which the energy savings and energy efficiency could be realized and maximized.
(2) To implement an energy savings improvement program, a board of trustees shall develop an energy savings plan that consists of one or more energy conservation measures. The plan shall:
(a) contain the results of an energy audit;
(b) describe the energy conservation measures that will comprise the program;
(c) estimate greenhouse gas reductions resulting from those energy savings;
(d) [identify] provide all design and compliance issues that require the professional services of an architect or engineer [and identify who will provide these services];
(e) [include an assessment of risks involved in the successful implementation of the plan;] (Deleted by amendment, P.L , c. ).
(f) identify the eligibility for, and costs and revenues associated with the PJM Independent System Operator for demand response and curtailable service activities;
(g) include schedules showing calculations of all costs of implementing the proposed energy conservation measures and the projected energy savings;
(h) identify maintenance requirements necessary to ensure continued energy savings[, and describe how they will be fulfilled]; and
(i) if developed by an energy services company, a description of, and cost estimates of an energy savings guarantee.
All professionals providing engineering services under the plan shall have errors and omissions insurance.
(3) Prior to the adoption of the plan, the board of trustees shall contract with a qualified third party to verify the projected energy savings to be realized from the proposed program have been calculated as required by subsection e. of this section.
(4) Upon adoption, the plan shall be submitted to the Board of Public Utilities, which shall post it on the Internet on a public webpage maintained for such purpose. If the board of trustees maintains its own website, it shall also post the plan on that site. The Board of Public Utilities may require periodic reporting concerning the implementation of the plan.
(5) Verification by a qualified third party shall be required when energy conservation measures are placed in service or commissioned, to ensure the savings projected in the energy savings plan shall be achieved.
(6) Energy-related capital improvements that do not reduce energy usage may be included in an energy savings improvement program [but the cost of such improvements shall not be financed as a lease-purchase or through energy savings obligations authorized by subsection c. of this section]. Nothing herein is intended to prevent the financing of such capital improvements through otherwise authorized means.
(7) A qualified third party when required by this subsection may include an employee of the public institution of higher education who is properly trained and qualified to perform such work.
e. (1) The calculation of energy savings for the purposes of determining that the energy savings resulting from the program will be sufficient to cover the cost of the program's energy conservation measures, as provided in subsection a. of this section, shall involve determination of the dollar amount saved through implementation of an energy savings improvement program using the guidelines of the International Performance Measurement and Verification Protocol or other protocols approved by the Board of Public Utilities and standards adopted by the Board of Public Utilities pursuant to this section. The calculation shall include all applicable State and federal rebates and tax credits, but shall not include the cost of an energy audit and the cost of verifying energy savings. The calculation shall state which party has made application for rebates and credits and how these applications translate into energy savings.
(2) For the purposes of this section, the Board of Public Utilities shall adopt standards and uniform values for interest rates and escalation of prices for labor, electricity, oil, and gas, as well as standards for presenting these costs in a life cycle and net present value format, standards for the presentation of obligations for carbon reductions, and other standards that the board may determine necessary.
f. (1) When an energy services company is awarded an energy savings services contract, it shall offer the board of trustees the option to purchase, for an additional amount, an energy savings guarantee. The guarantee, if accepted by a separate vote of the board of trustees, shall insure that the energy savings resulting from the energy savings improvement program, determined periodically over the duration of the guarantee, will be sufficient to defray all payments required to be made pursuant to the lease-purchase agreement or energy savings obligation, and if the savings are not sufficient, the energy services company will reimburse the board of trustees for any additional amounts. Annual costs of a guarantee shall not be financed or included as costs in an energy savings plan but shall be fully disclosed in an energy savings plan.
(2) When a guaranteed energy savings option is purchased, the contract shall require a qualified third party to verify the energy savings at intervals established by the parties.
g. As used in this section:
"competitive contracting" means the method of contracting for specialized goods and services in which formal proposals are solicited from vendors through public advertising, all formal proposals are evaluated by the board of trustees of a public institution of higher education or general contractor, and the board of trustees of a public institution of higher education or general contractor awards a contract to a vendor or vendors from among the formal proposals received;
"direct digital control systems" means the devices and computerized control equipment that contain software and computer interfaces that perform the logic that control a building's heating, ventilating, and air conditioning system. Direct digital controls shall be open protocol format and shall meet the interoperability guidelines established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers;
"educational facility" means a structure suitable for use as a dormitory, dining hall, student union, administrative building, academic building, library, laboratory, research facility, classroom, athletic facility, health care facility, teaching hospital, and parking, maintenance, storage or utility facility or energy conservation measures and other structures or facilities related thereto or required or useful for the instruction of students or the conducting of research or the operation of an institution for higher education, and public libraries, and the necessary and usual attendant and related facilities and equipment, but shall not include any facility used or to be used for sectarian instruction or as a place for religious worship;
"energy conservation measure" means an improvement that results in reduced energy use, including, but not limited to, installation of energy efficient equipment; demand response equipment; combined heat and power systems; facilities for the production of renewable energy; water conservation measures, fixtures or facilities; building envelope improvements that are part of an energy savings improvement program; and related control systems for each of the foregoing;
"energy related capital improvement" means a capital improvement that uses energy but does not result in a reduction of energy use;
"energy [saving] savings obligation" means a bond, note or other agreement evidencing the obligation to repay borrowed funds incurred in order to finance energy [saving] savings improvements;
"energy savings" means a measured reduction in fuel, energy, operating or maintenance costs resulting from the implementation of one or more energy conservation measures services when compared with an established baseline of previous fuel, energy, operating or maintenance costs, including, but not limited to, future capital replacement expenditures avoided as a result of equipment installed or services performed as part of an energy savings plan;
"energy savings improvement program" means an initiative of a public institution of higher education to implement energy conservation measures in existing facilities, provided that the value of the energy savings resulting from the program will be sufficient to cover the cost of the program's energy conservation measures;
"energy savings plan" means the document that describes the actions to be taken to implement the energy savings improvement program;
"energy savings services contract" means a contract with an energy savings company to develop an energy savings plan, prepare bid specifications, manage the performance, provision, construction, and installation of energy conservation measures by subcontractors, to offer a guarantee of energy savings derived from the implementation of an energy savings plan, and may include a provision to manage the bidding process;
"energy services company" means a commercial entity that is qualified to develop and implement an energy savings plan in accordance with the provisions of this section;
"public works activities" means any work subject to the provisions of P.L.1963, c.150 (C.34:11-56.25 et seq.); and
"water conservation measure" means an alteration to a facility or equipment that reduces water consumption, maximizes the efficiency of water use, or reduces water loss.
h. (1) The State Treasurer and the Board of Public Utilities may take such action as is deemed necessary and consistent with the intent of this section to implement its provisions.
(2) The State Treasurer and the Board of Public Utilities may adopt implementation guidelines or directives, and adopt such administrative rules, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary for the implementation of those agencies' respective responsibilities under this section, except that notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the State Treasurer and the Board of Public Utilities may adopt, immediately upon filing with the Office of Administrative Law, such rules and regulations as deemed necessary to implement the provisions of this act which shall be effective for a period not to exceed 12 months and shall thereafter be amended, adopted or re-adopted in accordance with the provisions of P.L.1968, c.410 (C.52:14B-1 et seq.).
(cf: P.L.2009, c.4, s.4)
4. Section 6 of P.L.2009, c.4 (C.40A:11-4.6) is amended to read as follows:
6. a. A contracting unit, as defined in P.L.1971, c.198 (C.40A:11-1 et seq.), may implement an energy savings improvement program in the manner provided by this section whenever it determines that the savings generated from reduced energy use from the program will be sufficient to cover the cost of the program's energy conservation measures as set forth in an energy savings plan. Under such a program, a contracting unit may enter into an energy savings services contract with an energy services company to implement the program or the contracting unit may authorize separate contracts to implement the program. The provisions of P.L.1971, c.198 (C.40A:11-1 et seq.) shall apply to any contracts awarded pursuant to this section to the extent that the provisions of such law are not inconsistent with any provision of this section.
b. (1) To be eligible to enter into an energy savings services contract, an energy services company shall be a commercial entity that is qualified to provide energy savings services in accordance with the provisions of this section. A contracting unit may determine to enter into an energy savings services contract either through public advertising for bids and the receipt of bids therefor or through competitive contracting in lieu of public bidding in the manner provided by sections 1 through 5 of P.L.1999, c.440 (C.40A:11-4.1 et seq.).
(2) (a) Public works activities performed under an energy savings improvement program shall be subject to all requirements regarding public bidding, bid security, performance guarantees, insurance and other public contracting requirements that are applicable to public works contracts, to the extent not inconsistent with this section. A general contractor, energy services company serving as general contractor, or any subcontractor hired for the furnishing of plumbing and gas fitting and all kindred work, and of steam and hot water heating and ventilating apparatus, steam power plants and kindred work, and electrical work, structural steel and ornamental iron work, shall be classified by the Division of Property Management and Construction in the Department of the Treasury in order to perform public works activities under an energy savings improvement program.
(b) Individuals or organizations performing energy audits, acting as commissioning agents, or conducting verification of energy savings plans, implementation of energy conservation measures, or verifying guarantees shall be prequalified by the Division of Property Management and Construction in the Department of the Treasury to perform their work under an energy savings improvement program.
(3) An energy services company may be designated as the general contractor for improvements to be made pursuant to an energy savings plan, provided that the hiring of subcontractors that are required to be classified pursuant to subparagraph (a) of paragraph (2) of this subsection shall be performed pursuant to the public bidding requirements of the contracting unit or through competitive contracting, as defined in this section, in lieu of public bidding. A contract with an energy savings company shall include, but not be limited to: preparation of an energy savings plan; the responsibilities of the parties for project schedules, installations, performance and quality, payment of subcontractors, project completion, commissioning, savings implementation; a requirement that the savings to be achieved by energy conservation measures be verified upon commissioning of the improvements; allocation of State and federal rebates and tax credits; and any other provisions deemed necessary by the parties.
(4) Except as provided in paragraph (5) of this subsection, a subsidiary or wholly-owned or partially-owned affiliate of the energy services company shall not be an eligible contractor or subcontractor under an energy savings services contract.
(5) When the energy services company is the manufacturer of direct digital control systems and contracts with the contracting unit to provide a guaranteed energy savings option pursuant to subsection f. of this section, the specification of such direct digital control systems may be treated as proprietary [goods and if so treated, the bid specification shall set forth an allowance price for its supply by the energy services company which shall be used by all bidders in the public bidding process]. Direct digital controls shall be open protocol format and shall meet the interoperability guidelines established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers.
c. An energy savings improvement program may be financed through a lease-purchase agreement or through the issuance of energy savings obligations pursuant to this subsection.
(1) An energy savings improvement program may be financed through a lease-purchase agreement between a contracting unit and an energy services company or other public or private entity. Under a lease-purchase agreement, ownership of the energy savings equipment or improved facilities shall pass to the contracting unit when all lease payments have been made. Notwithstanding the provisions of any other law to the contrary, the duration of such a lease-purchase agreement shall not exceed 15 years, except that the duration of a lease purchase agreement for a combined heat and power or cogeneration project shall not exceed 20 years.
(2) Any lease-purchase agreement entered into pursuant to this subsection, may contain: a clause making it subject to the availability and appropriation annually of sufficient funds as may be required to meet the extended obligation; and a non-substitution clause maintaining that if the agreement is terminated for non-appropriation, the contracting unit may not replace the leased equipment or facilities with equipment or facilities that perform the same or similar functions.
(3) A contracting unit may arrange for incurring energy savings obligations to finance an energy savings improvement program. Energy savings obligations may be funded through appropriations for utility services in the annual budget of the contracting unit and may be issued as refunding bonds pursuant to N.J.S.40A:2-52 et seq., including the issuance of bond anticipation notes as may be necessary, provided that all such bonds and notes mature within the periods authorized for such energy savings obligations. Energy savings obligations may be issued either through the contracting unit or another public agency authorized to undertake financing on behalf of the unit.
(4) Lease-purchase agreements and energy savings obligations shall not be used to finance maintenance, guarantees, or verification of guarantees of energy conservation measures. Lease-purchase agreements and energy savings obligations may be used to finance the cost of an energy audit or the cost of verification of energy savings as part of adopting an energy savings plan. Notwithstanding any law to the contrary, lease-purchase agreements and energy savings certificates shall [not] be excepted from any budget or tax levy limitation otherwise provided by law. Maturity schedules of lease-purchase agreements or energy savings obligations must not exceed the estimated useful life of the [individual] energy conservation measures.
d. (1) The energy audit component of an energy savings improvement program [shall] may be conducted either by the contracting unit or by a qualified independent third party retained by the governing body for that purpose. It [shall not] may be conducted by an energy services company subsequently hired to develop an energy savings improvement program subject to third party verification of an investment grade audit. The energy audit shall identify the current energy use of any or all facilities and energy conservation measures that can be implemented in which the energy savings and energy efficiency could be realized and maximized.
(2) To implement an energy savings improvement program, a contracting unit shall develop a plan that consists of one or more energy conservation measures. The plan shall:
(a) contain the results of an energy audit;
(b) describe the energy conservation measures that will comprise the program;
(c) estimate greenhouse gas reductions resulting from those energy savings;
(d) [identify] provide all design and compliance issues that require the professional services of an architect or engineer [and identify who will provide these services];
(e) [include an assessment of risks involved in the successful implementation of the plan;] (Deleted by amendment, P.L. , c. ).
(f) identify the eligibility for, and costs and revenues associated with the PJM Independent System Operator for demand response and curtailable service activities;
(g) include schedules showing calculations of all costs of implementing the proposed energy conservation measures and the projected energy savings;
(h) identify maintenance requirements necessary to ensure continued energy savings[, and describe how they will be fulfilled]; and
(i) if developed by an energy services company, a description of, and cost estimates of an energy savings guarantee.
All professionals providing engineering services under the plan shall have errors and omissions insurance.
(3) Prior to the adoption of the plan, the contracting unit shall contract with a qualified third party to verify the projected energy savings to be realized from the proposed program have been calculated as required by subsection e. of this section.
(4) Upon adoption, the plan shall be submitted to the Board of Public Utilities, which shall post it on the Internet on a public webpage maintained for such purpose. If the contracting unit maintains its own website, it shall also post the plan on that site. The board may require periodic reporting concerning the implementation of the plan.
(5) Verification by a qualified third party shall be required when energy conservation measures are placed in service or commissioned, to ensure the savings projected in the energy savings plan shall be achieved.
(6) Energy-related capital improvements that do not reduce energy usage may be included in an energy savings improvement program [but the cost of such improvements shall not be financed as a lease-purchase or through energy savings obligations authorized by subsection c. of this section]. Nothing herein is intended to prevent financing of such capital improvements through otherwise authorized means.
(7) A qualified third party when required by this subsection may include an employee of the contracting unit who is properly trained and qualified to perform such work.
e. (1) The calculation of energy savings for the purposes of determining that the energy savings resulting from the program will be sufficient to cover the cost of the program's energy conservation measures, as provided in subsection a. of this section, shall involve determination of the dollar amount saved through implementation of an energy savings improvement program using the guidelines of the International Performance Measurement and Verification Protocol or other protocols approved by the Board of Public Utilities and standards adopted by the Board of Public Utilities pursuant to this section. The calculation shall include all applicable State and federal rebates and tax credits, but shall not include the cost of an energy audit and the cost of verifying energy savings. The calculation shall state which party has made application for rebates and credits and how these applications translate into energy savings.
(2) For the purposes of this section, the Board of Public Utilities shall adopt standards and uniform values for interest rates and escalation of prices for labor, electricity, oil, and gas, as well as standards for presenting these costs in a life cycle and net present value format, standards for the presentation of obligations for carbon reductions, and other standards that the board may determine necessary.
f. (1) When an energy services company is awarded an energy savings services contract, it shall offer the contracting unit the option to purchase, for an additional amount, an energy savings guarantee. The guarantee, if accepted by a separate vote of the governing body of the contracting unit, shall insure that the energy savings resulting from the energy savings improvement program, determined periodically over the duration of the guarantee, will be sufficient to defray all payments required to be made pursuant to the lease-purchase agreement or energy savings obligation, and if the savings are not sufficient, the energy services company will reimburse the contracting unit for any additional amounts. Annual costs of a guarantee shall not be financed or included as costs in an energy savings plan but shall be fully disclosed in an energy savings plan.
(2) When a guaranteed energy savings option is purchased, the contract shall require a qualified third party to verify the energy savings at intervals established by the parties.
g. As used in this section:
"competitive contracting" means the method of contracting for specialized goods and services in which formal proposals are solicited from vendors through public advertising, all formal proposals are evaluated by the contracting unit or general contractor, and the contracting unit or general contractor awards a contract to a vendor or vendors from among the formal proposals received;
"direct digital control systems" means the devices and computerized control equipment that contain software and computer interfaces that perform the logic that control a building's heating, ventilating, and air conditioning system. Direct digital controls shall be open protocol format and shall meet the interoperability guidelines established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers;
"energy conservation measure" means an improvement that results in reduced energy use, including, but not limited to, installation of energy efficient equipment; demand response equipment; combined heat and power systems; facilities for the production of renewable energy; water conservation measures, fixtures or facilities; building envelope improvements that are part of an energy savings improvement program; and related control systems for each of the foregoing;
"energy related capital improvement" means a capital improvement that uses energy but does not result in a reduction of energy use;
"energy [saving] savings obligation" means a bond, note or other agreement evidencing the obligation to repay borrowed funds incurred in order to finance energy [saving] savings improvements;
"energy savings" means a measured reduction in fuel, energy, operating or maintenance costs resulting from the implementation of one or more energy conservation measures services when compared with an established baseline of previous fuel, energy, operating or maintenance costs, including, but not limited to, future capital replacement expenditures avoided as a result of equipment installed or services performed as part of an energy savings plan;
"energy savings improvement program" means an initiative of a contracting unit to implement energy conservation measures in existing facilities, provided that the value of the energy savings resulting from the program will be sufficient to cover the cost of the program's energy conservation measures;
"energy savings plan" means the document that describes the actions to be taken to implement the energy savings improvement program;
"energy savings services contract" means a contract with an energy savings company to develop an energy savings plan, prepare bid specifications, manage the performance, provision, construction, and installation of energy conservation measures by subcontractors, to offer a guarantee of energy savings derived from the implementation of an energy savings plan, and may include a provision to manage the bidding process;
"energy services company" means a commercial entity that is qualified to develop and implement an energy savings plan in accordance with the provisions of this section;
"public works activities" means any work subject to the provisions of P.L.1963, c.150 (C.34:11-56.25 et seq.); and
"water conservation measure" means an alteration to a facility or equipment that reduces water consumption, maximizes the efficiency of water use, or reduces water loss.
h. (1) The Director of the Division of Local Government Services in the Department of Community Affairs, the State Treasurer, and the Board of Public Utilities may take such action as is deemed necessary and consistent with the intent of this section to implement its provisions.
(2) The Director of the Division of Local Government Services in the Department of Community Affairs, the State Treasurer, and the Board of Public Utilities may adopt implementation guidelines or directives, and adopt such administrative rules, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary for the implementation of those agencies' respective responsibilities under this section, except that notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the Director of the Division of Local Government Services in the Department of Community Affairs, the State Treasurer, and the Board of Public Utilities may adopt, immediately upon filing with the Office of Administrative Law, such rules and regulations as deemed necessary to implement the provisions of this act which shall be effective for a period not to exceed 12 months and shall thereafter be amended, adopted or re-adopted in accordance with the provisions of P.L.1968, c.410 (C.52:14B-1 et seq.).
(cf: P.L.2009, c.4, s.6)
5. Section 1 of P.L.1999, c.440 (C.40A:11-4.1) is amended to read as follows:
1. Notwithstanding the provisions of any law, rule or regulation to the contrary, competitive contracting may be used by local contracting units in lieu of public bidding for procurement of specialized goods and services the price of which exceeds the bid threshold, for the following purposes:
a. The purchase or licensing of proprietary computer software designed for contracting unit purposes, which may include hardware intended for use with the proprietary software. This subsection shall not be utilized for the purpose of acquiring general purpose computer hardware or software;
b. The hiring of a for-profit entity or a not-for-profit entity incorporated under Title 15A of the New Jersey Statutes for the purpose of:
(1) the operation and management of a wastewater treatment system or a water supply or distribution facility of the type described in subsection (37) of section 15 of P.L.1971, c.198 (C.40A:11-15), provided that competitive contracting shall not be used as a means of awarding contracts pursuant to P.L.1985, c.37 (C.58:26-1 et al.) and P.L.1985, c.72 (C.58:27-1 et al.);
(2) the operation, management or administration of recreation or social service facilities or programs, which shall not include the administration of benefits under the Work First New Jersey program established pursuant to P.L.1997, c.38 (C.44:10-55 et seq.), or under General Assistance; or
(3) the operation, management or administration of data processing services;
c. (Deleted by amendment, P.L.2009, c.4).
d. Homemaker--home health services;
e. Laboratory testing services;
f. Emergency medical services;
g. Contracted food services;
h. Performance of patient care services by contracted medical staff at county hospitals, correctional facilities and long-term care facilities;
i. At the option of the governing body of the contracting unit, any good or service that is exempt from bidding pursuant to section 5 of P.L.1971, c.198 (C.40A:11-5);
j. Concessions;
k. The operation, management or administration of other services, with the approval of the Director of the Division of Local Government Services[.]; and
l. Energy savings improvement programs.
Any purpose included herein
shall not be considered by a contracting unit as an extraordinary unspecifiable
service pursuant
to paragraph (a)(ii) of subsection (1) of section 5 of P.L.1971, c.198
(C.40A:11-5).
(cf: P.L.2009, c.4, s.7)
6. Section 9 of P.L.2009, c.4 (C.52:34-25) is amended to read as follows:
9. a. A State contracting agency, as defined in this section, may implement an energy savings improvement program in the manner provided by this section whenever it determines that the savings generated from reduced energy use from the program will be sufficient to cover the cost of the program's energy conservation measures as set forth in an energy savings plan. Under such a program, a contracting agency may enter into an energy savings services contract with an energy services company to implement the program or the contracting agency may authorize separate contracts to implement the program. The provisions of Title 52 of the Revised Statutes shall apply to any contracts awarded pursuant to this section to the extent that the provisions of such law are not inconsistent with any provision of this section.
b. (1) To be eligible to enter into an energy savings services contract, an energy services company shall be a commercial entity that is qualified to provide energy savings services in accordance with the provisions of this section. A State contracting agency may determine to enter into an energy savings services contract through public advertising for bids and the receipt of bids therefor or through competitive contracting, as defined in this section, in lieu of public bidding.
(2) (a) Public works activities performed under an energy savings improvement program shall be subject to all requirements regarding public bidding, bid security, performance guarantees, insurance and other public contracting requirements that are applicable to public works contracts, to the extent not inconsistent with this section. A general contractor, energy services company serving as general contractor, or any subcontractor hired for the furnishing of plumbing and gas fitting and all kindred work, and of steam and hot water heating and ventilating apparatus, steam power plants and kindred work, and electrical work, structural steel and ornamental iron work, shall be classified by the Division of Property Management and Construction in the Department of the Treasury in order to perform public works activities under an energy savings improvement program.
(b) Individuals or organizations performing energy audits, acting as commissioning agents, or conducting verification of energy savings plans, implementation of energy conservation measures, or verifying guarantees shall be prequalified by the Division of Property Management and Construction in the Department of the Treasury to perform their work under an energy savings improvement program.
(3) An energy services company may be designated as the general contractor for improvements to be made pursuant to an energy savings plan, provided that the hiring of subcontractors that are required to be classified pursuant to subparagraph (a) of paragraph (2) of this subsection shall be performed pursuant to the public bidding requirements of the State contracting agency or through competitive contracting, as defined in this section, in lieu of public bidding. A contract with an energy savings company shall include, but not be limited to: preparation of an energy savings plan, the responsibilities of the parties for project schedules, installations, performance and quality, payment of subcontractors, project completion, commissioning, savings implementation; a requirement that the savings to be achieved by energy conservation measures be verified upon commissioning of the improvements; allocation of State and federal rebates and tax credits; and any other provisions deemed necessary by the parties.
(4) Except as provided in paragraph (5) of this subsection, a subsidiary or wholly-owned or partially-owned affiliate of the energy services company shall not be an eligible contractor or subcontractor under an energy savings services contract.
(5) When the energy services company is the manufacturer of direct digital control systems and contracts with the contracting agency to provide a guaranteed energy savings option pursuant to subsection f. of this section, the specification of such direct digital control systems may be treated as proprietary [goods and if so treated, the bid specification shall set forth an allowance price for its supply by the energy services company which shall be used by all bidders in the public bidding process]. Direct digital controls shall be open protocol format and shall meet the interoperability guidelines established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers.
c. In addition to existing authorization of a State agency to enter into lease-purchase agreements or to issue obligations to finance the costs of an energy savings improvement program, a contracting agency is hereby authorized to finance the costs of an energy savings improvement program by entering into a lease purchase agreement. Any financing mechanism shall be administered in a manner consistent with this subsection insofar as it does not conflict with the provisions of other law that applies to the contracting agency.
(1) An energy savings improvement program may be financed through a lease-purchase agreement between a State contracting agency and an energy services company or other public or private entity. Under a lease-purchase agreement, ownership of the energy savings equipment or improved facilities shall pass to the contracting agency or the client agency responsible for the facility when all lease payments have been made. Notwithstanding the provisions of any other law to the contrary, the duration of such a lease-purchase agreement shall not exceed 15 years, except that the duration of a lease purchase agreement for a combined heat and power or cogeneration project shall not exceed 20 years.
(2) Lease-purchase agreements and energy savings obligations shall not be used to finance maintenance, guarantees, or verification of guarantees of energy conservation measures. Lease-purchase agreements may be used to finance the cost of an energy audit or the cost of verification of energy savings as part of adopting an energy savings plan. Maturity schedules of lease-purchase agreements must not exceed the estimated useful life of the [individual] energy conservation measures.
d. (1) The energy audit component of an energy savings improvement program [shall] may be conducted either by the contracting agency or by a qualified independent third party retained by the contracting agency for that purpose. It [shall not] may be conducted by an energy services company subsequently hired to develop an energy savings improvement program subject to third party verification of an investment grade audit. The energy audit shall identify the current energy use of any or all facilities and energy conservation measures that can be implemented in which the energy savings and energy efficiency could be realized and maximized.
(2) To implement an energy savings improvement program, a contracting agency shall develop an energy savings plan that consists of one or more energy conservation measures. The plan shall:
(a) contain the results of an energy audit;
(b) describe the energy conservation measures that will comprise the program;
(c) estimate greenhouse gas reductions resulting from those energy savings;
(d) [identify] provide all design and compliance issues that require the professional services of an architect or engineer [and identify who will provide these services];
(e) [include an assessment of risks involved in the successful implementation of the plan;] (Deleted by amendment, P.L. , c. ).
(f) identify the eligibility for, and costs and revenues associated with the PJM Independent System Operator for demand response and curtailable service activities;
(g) include schedules showing calculations of all costs of implementing the proposed energy conservation measures and the projected energy savings;
(h) identify maintenance requirements necessary to ensure continued energy savings[, and describe how they will be fulfilled]; and
(i) if developed by an energy services company, a description of, and cost estimates of an energy savings guarantee.
All professionals providing engineering services under the plan shall have errors and omissions insurance.
(3) Prior to the adoption of the plan, the contracting agency shall contract with a qualified third party to verify the projected energy savings to be realized from the proposed program have been calculated as required by subsection e. of this section.
(4) Upon adoption, the plan shall be submitted to the Board of Public Utilities, which shall post it on the Internet on a public webpage maintained for such purpose. If the contracting agency maintains its own website, it shall also post the plan on that site. The Board of Public Utilities may require periodic reporting concerning the implementation of the plan.
(5) Verification by a qualified third party shall be required when energy conservation measures are placed in service or commissioned, to ensure the savings projected in the energy savings plan shall be achieved.
(6) Energy-related capital improvements that do not reduce energy usage may be included in an energy savings improvement program [but the cost of such improvements shall not be financed as a lease-purchase or through energy savings obligations authorized by subsection c. of this section]. Nothing herein is intended to prevent financing of such capital improvements through otherwise authorized means.
(7) A qualified third party when required by this subsection may include an employee of the State contracting agency who is properly trained and qualified to perform such work.
e. (1) The calculation of energy savings for the purposes of determining that the energy savings resulting from the program will be sufficient to cover the cost of the program's energy conservation measures, as provided in subsection a. of this section, shall involve determination of the dollar amount saved through implementation of an energy savings improvement program using the guidelines of the International Performance Measurement and Verification Protocol or other protocols approved by the Board of Public Utilities and standards adopted by the Board of Public Utilities pursuant to this section. The calculation shall include all applicable State and federal rebates and tax credits, but shall not include the cost of an energy audit and the cost of verifying energy savings. The calculation shall state which party has made application for rebates and credits and how these applications translate into energy savings.
(2) For the purposes of this section, the Board of Public Utilities shall adopt standards and uniform values for interest rates and escalation of prices for labor, electricity, oil, and gas, as well as standards for presenting these costs in a life cycle and net present value format, standards for the presentation of obligations for carbon reductions, and other standards that the board may determine necessary.
f. (1) When an energy services company is awarded an energy savings services contract, it shall offer the contracting agency the option to purchase, for an additional amount, an energy savings guarantee. The guarantee, if accepted by the contracting agency, shall insure that the energy savings resulting from the energy savings improvement program, determined periodically over the duration of the guarantee, will be sufficient to defray all payments required to be made pursuant to the lease-purchase agreement or energy savings obligation, and if the savings are not sufficient, the energy services company will reimburse the contracting agency for any additional amounts. Annual costs of a guarantee shall not be financed or included as costs in an energy savings plan but shall be fully disclosed in an energy savings plan.
(2) When a guaranteed energy savings option is purchased, the contract shall require a qualified third party to verify the energy savings at intervals established by the parties.
g. As used in this section:
"competitive contracting" means the method of contracting for specialized goods and services in which formal proposals are solicited from vendors through public advertising, all formal proposals are evaluated by the State contracting agency or general contractor, and the State contracting agency or general contractor awards a contract to a vendor or vendors from among the formal proposals received;
"direct digital control systems" means the devices and computerized control equipment that contain software and computer interfaces that perform the logic that control a building's heating, ventilating, and air conditioning system. Direct digital controls shall be open protocol format and shall meet the interoperability guidelines established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers;
"energy conservation measure" means an improvement that results in reduced energy use, including, but not limited to, installation of energy efficient equipment; demand response equipment; combined heat and power systems; facilities for the production of renewable energy; water conservation measures, fixtures or facilities; building envelope improvements that are part of an energy savings improvement program; and related control systems for each of the foregoing;
"energy related capital improvement" means a capital improvement that uses energy but does not result in a reduction of energy use;
"energy savings" means a measured reduction in fuel, energy, operating or maintenance costs resulting from the implementation of one or more energy conservation measures services when compared with an established baseline of previous fuel, energy, operating or maintenance costs, including, but not limited to, future capital replacement expenditures avoided as a result of equipment installed or services performed as part of an energy savings plan;
"energy savings improvement program" means an initiative of a State contracting agency to implement energy conservation measures in existing facilities, provided that the value of the energy savings resulting from the program will be sufficient to cover the cost of the program's energy conservation measures;
"energy savings plan" means the document that describes the actions to be taken to implement the energy savings improvement program;
"energy savings services contract" means a contract with an energy savings company to develop an energy savings plan, prepare bid specifications, manage the performance, provision, construction, and installation of energy conservation measures by subcontractors, to offer a guarantee of energy savings derived from the implementation of an energy savings plan, and may include a provision to manage the bidding process;
"energy services company" means a commercial entity that is qualified to develop and implement an energy savings plan in accordance with the provisions of this section;
"public works activities" means any work subject to the provisions of P.L.1963, c.150 (C.34:11-56.25 et seq.);
"State contracting agency" or "contracting agency" means any of the principal departments in the Executive Branch of State Government, and any division, board, bureau, office, commission or other instrumentality created by a principal department; and
"water conservation measure" means an alteration to a facility or equipment that reduces water consumption, maximizes the efficiency of water use, or reduces water loss.
h. (1) The State Treasurer and the Board of Public Utilities may take such action as is deemed necessary and consistent with the intent of this section to implement its provisions.
(2) The State Treasurer and the Board of Public Utilities may adopt implementation guidelines or directives, and adopt such administrative rules, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary for the implementation of those agencies' respective responsibilities under this section, except that notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the State Treasurer, and the Board of Public Utilities may adopt, immediately upon filing with the Office of Administrative Law, such rules and regulations as deemed necessary to implement the provisions of this act which shall be effective for a period not to exceed 12 months and shall thereafter be amended, adopted or re-adopted in accordance with the provisions of P.L.1968, c.410 (C.52:14B-1 et seq.).
(cf: P.L.2009, c.4, s.9)
7. Section 10 of P.L.2009, c.4 (C.52:35A-1) is amended to read as follows:
10. a. A public agency, as defined in this section, may implement an energy savings improvement program in the manner provided by this section whenever it determines that the savings generated from reduced energy use from the program will be sufficient to cover the cost of the program's energy conservation measures as set forth in an energy savings plan. Under such a program, a public agency may enter into an energy savings services contract with an energy services company to implement the program or the public agency may authorize separate contracts to implement the program. The provisions of any other law applicable to a public agency shall apply to any contracts awarded pursuant to this section to the extent that the provisions of such law are not inconsistent with any provision of this section.
b. (1) To be eligible to enter into an energy savings services contract, an energy services company shall be a commercial entity that is qualified to provide public agencies with energy savings services in accordance with the provisions of this section. A public agency may determine to enter into an energy savings services contract which shall be awarded through a procedure that results in the award of a contract to a vendor determined by the public agency to be the most advantageous, price and other factors considered.
(2) (a) Public works activities performed under an energy savings improvement program shall be subject to all requirements regarding public bidding, bid security, performance guarantees, insurance and other public contracting requirements that are applicable to public works contracts, to the extent not inconsistent with this section. A general contractor, energy services company serving as general contractor, or any subcontractor hired for the furnishing of plumbing and gas fitting and all kindred work, and of steam and hot water heating and ventilating apparatus, steam power plants and kindred work, and electrical work, structural steel and ornamental iron work shall be classified by the Division of Property Management and Construction in the Department of the Treasury in order to perform public works activities under an energy savings improvement program.
(b) Individuals or organizations performing energy audits, acting as commissioning agents, or conducting verification of energy savings plans, implementation of energy conservation measures, or verifying guarantees shall be prequalified by the Division of Property Management and Construction in the Department of the Treasury to perform their work under an energy savings improvement program.
(3) An energy services company may be designated as the general contractor for improvements to be made pursuant to an energy savings plan, provided that the hiring of subcontractors that are required to be classified pursuant to subparagraph (a) of paragraph (2) of this subsection shall be performed pursuant to the public bidding requirements of the public agency or through competitive contracting, as defined in this section, in lieu of public bidding. A contract with an energy savings company shall include, but not be limited to: preparation of an energy savings plan; the responsibilities of the parties for project schedules, installations, performance and quality, payment of subcontractors, project completion, commissioning, savings implementation; a requirement that the savings to be achieved by energy conservation measures be verified upon commissioning of the improvements; allocation of State and federal rebates and tax credits; and any other provisions deemed necessary by the parties.
(4) Except as provided in paragraph (5) of this subsection, a subsidiary or wholly-owned or partially-owned affiliate of the energy services company shall not be an eligible contractor or subcontractor under an energy savings services contract.
(5) When the energy services company is the manufacturer of direct digital control systems and contracts with the public agency to provide a guaranteed energy savings option pursuant to subsection f. of this section, the specification of such direct digital control systems may be treated as proprietary [goods and if so treated, the bid specification shall set forth an allowance price for its supply by the energy services company which shall be used by all bidders in the public bidding process]. Direct digital controls shall be open protocol format and shall meet the interoperability guidelines established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers.
c. In addition to existing authorization of a public agency to enter into lease-purchase agreements or to issue obligations to finance the costs of an energy savings improvement program, a public agency is hereby authorized to finance the costs of an energy savings improvement program by entering into a lease purchase agreement or by issuing energy savings obligations pursuant to this subsection. Any financing mechanism shall be administered in a manner consistent with this subsection insofar as it does not conflict with the provisions of other law that applies to the public agency.
(1) An energy savings improvement program may be financed through a lease-purchase agreement between a public agency and an energy services company or other public or private entity. Under a lease-purchase agreement, ownership of the energy savings equipment or improved facilities shall pass to the public agency when all lease payments have been made. Notwithstanding the provisions of any other law to the contrary, the duration of such a lease-purchase agreement shall not exceed 15 years, except that the duration of a lease purchase agreement for a combined heat and power or cogeneration project shall not exceed 20 years.
(2) A public agency may arrange for incurring energy savings obligations to finance an energy savings improvement program. Energy savings obligations may be funded through appropriations for utility services in the annual budget of the public agency and may be issued as refunding bonds, including the issuance of bond anticipation notes as may be necessary, provided that all such bonds and notes mature within the periods authorized for such energy savings obligations. Energy savings obligations may be issued either through the public agency or another public agency authorized to undertake financing on behalf of the public agency.
(3) Lease-purchase agreements and energy savings obligations shall not be used to finance maintenance, guarantees, or verification of guarantees of energy conservation measures. Lease-purchase agreements and energy savings obligations may be used to finance the cost of an energy audit or the cost of verification of energy savings as part of adopting an energy savings plan. Notwithstanding any law to the contrary, lease-purchase agreements and energy savings certificates shall not be excepted from any budget or tax levy limitation otherwise provided by law. Maturity schedules of lease-purchase agreements or energy savings obligations must not exceed the estimated useful life of the [individual] energy conservation measures.
d. (1) The energy audit component of an energy savings improvement program [shall] may be conducted either by the public agency or by a qualified independent third party retained by the board for that purpose. It [shall not] may be conducted by an energy services company subsequently hired to develop an energy savings improvement program subject to third party verification of an investment grade audit. The energy audit shall identify the current energy use of any or all facilities and energy conservation measures that can be implemented in which the energy savings and energy efficiency could be realized and maximized.
(2) To implement a program, a public agency shall develop an energy savings plan that consists of one or more energy conservation measures. The plan shall:
(a) contain the results of an energy audit;
(b) describe the energy conservation measures that will comprise the program;
(c) estimate greenhouse gas reductions resulting from those energy savings;
(d) [identify] provide all design and compliance issues that require the professional services of an architect or engineer [and identify who will provide these services];
(e) [include an assessment of risks involved in the successful implementation of the plan;] (Deleted by amendment, P.L. , c. ).
(f) identify the eligibility for, and costs and revenues associated with the PJM Independent System Operator for demand response and curtailable service activities;
(g) include schedules showing calculations of all costs of implementing the proposed energy conservation measures and the projected energy savings;
(h) identify maintenance requirements necessary to ensure continued energy savings[, and describe how they will be fulfilled]; and
(i) if developed by an energy services company, a description of, and cost estimates of an energy savings guarantee.
All professionals providing engineering services under the plan shall have errors and omissions insurance.
(3) Prior to the adoption of the plan, the public agency shall contract with a qualified third party to verify the projected energy savings to be realized from the proposed program have been calculated as required by subsection e. of this section.
(4) Upon adoption, the plan shall be submitted to the Board of Public Utilities, which shall post it on the Internet on a public webpage maintained for such purpose. If the public agency maintains its own website, it shall also post the plan on that site. The board may require periodic reporting concerning the implementation of the plan.
(5) Verification by a qualified third party shall be required when energy conservation measures are placed in service or commissioned, to ensure the savings projected in the energy savings plan shall be achieved.
(6) Energy-related capital improvements that do not reduce energy usage may be included in an energy savings improvement [program but the cost of such improvements shall not be financed as a lease-purchase or through energy savings obligations authorized by subsection c. of this section]. Nothing herein is intended to prevent financing of such capital improvements through otherwise authorized means.
(7) A qualified third party when required by this subsection may include an employee of the public agency who is properly trained and qualified to perform such work.
e. (1) The calculation of energy savings for the purposes of determining that the energy savings resulting from the program will be sufficient to cover the cost of the program's energy conservation measures, as provided in subsection a. of this section, shall involve determination of the dollar amount saved through implementation of an energy savings improvement program using the guidelines of the International Performance Measurement and Verification Protocol or other protocols approved by the Board of Public Utilities and standards adopted by the Board of Public Utilities pursuant to this section. The calculation shall include all applicable State and federal rebates and tax credits, but shall not include the cost of an energy audit and the cost of verifying energy savings. The calculation shall state which party has made application for rebates and credits and how these applications translate into energy savings.
(2) For the purposes of this section, the Board of Public Utilities shall adopt standards and uniform values for interest rates and escalation of prices for labor, electricity, oil, and gas, as well as standards for presenting these costs in a life cycle and net present value format, standards for the presentation of obligations for carbon reductions, and other standards that the board may determine necessary.
f. (1) When an energy services company is awarded an energy savings services contract, it shall offer the public agency the option to purchase, for an additional amount, an energy savings guarantee. The guarantee, if accepted by a separate vote of the governing body of the public agency, shall insure that the energy savings of the public agency resulting from the energy savings improvement program, determined periodically over the duration of the guarantee, will be sufficient to defray all payments required to be made pursuant to the lease-purchase agreement or energy savings obligation, and if the savings are not sufficient, the energy services company will reimburse the public agency for any additional amounts. Annual costs of a guarantee shall not be financed or included as costs in an energy savings plan but shall be fully disclosed in an energy savings plan.
(2) When a guaranteed energy savings option is purchased, the contract shall require a qualified third party to verify the energy savings at intervals established by the parties.
(3) When a guaranteed energy savings option is not purchased, the energy savings services contract shall not include maintenance services provided by the energy services company.
g. As used in this section:
"competitive contracting" means the method of contracting for specialized goods and services in which formal proposals are solicited from vendors through public advertising, all formal proposals are evaluated by the public agency or general contractor, and the public agency or general contractor awards a contract to a vendor or vendors from among the formal proposals received;
"direct digital control systems" means the devices and computerized control equipment that contain software and computer interfaces that perform the logic that control a building's heating, ventilating, and air conditioning system. Direct digital controls shall be open protocol format and shall meet the interoperability guidelines established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers;
"energy conservation measure" means an improvement that results in reduced energy use, including, but not limited to, installation of energy efficient equipment; demand response equipment; combined heat and power systems; facilities for the production of renewable energy; water conservation measures, fixtures or facilities; building envelope improvements that are part of an energy savings improvement program; and related control systems for each of the foregoing;
"energy related capital improvement" means a capital improvement that uses energy but does not result in a reduction of energy use;
"energy [saving] savings obligation" means a bond, note or other agreement evidencing the obligation to repay borrowed funds incurred in order to finance energy [saving] savings improvements;
"energy savings" means a measured reduction in fuel, energy, operating or maintenance costs resulting from the implementation of one or more energy conservation measures services when compared with an established baseline of previous fuel, energy, operating or maintenance costs, including, but not limited to, future capital replacement expenditures avoided as a result of equipment installed or services performed as part of an energy savings plan;
"energy savings improvement program" means an initiative of a public agency to implement energy conservation measures in existing facilities, provided that the value of the energy savings resulting from the program will be sufficient to cover the cost of the program's energy conservation measures;
"energy savings plan" means the document that describes the actions to be taken to implement the energy savings improvement program;
"energy savings services contract" means a contract with an energy savings company to develop an energy savings plan, prepare bid specifications, manage the performance, provision, construction, and installation of energy conservation measures by subcontractors, to offer a guarantee of energy savings derived from the implementation of an energy savings plan, and may include a provision to manage the bidding process;
"energy services company" means a commercial entity that is qualified to develop and implement an energy savings plan in accordance with the provisions of this section;
"public agency" means any government entity that is authorized to expend public funds and enter into contracts which is not otherwise authorized to implement an energy savings improvement program pursuant to section 1, 4, 6, or 9 of P.L.2009, c.4 (C.18A:18A-4.6, C.18A:65A-1, C.40A:11-4.6, or C.52:34-25).
"public works activities" means any work subject to the provisions of P.L.1963, c.150 (C.34:11-56.25 et seq.); and
"water conservation measure" means an alteration to a facility or equipment that reduces water consumption, maximizes the efficiency of water use, or reduces water loss.
h. (1) The State Treasurer and the Board of Public Utilities may take such action as is deemed necessary and consistent with the intent of this section to implement its provisions.
(2) The State Treasurer and the Board of Public Utilities may adopt implementation guidelines or directives, and adopt such administrative rules, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary for the implementation of those agencies' respective responsibilities under this section, except that notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the Director of the Division of Local Government Services in the Department of Community Affairs, the State Treasurer, and the Board of Public Utilities may adopt, immediately upon filing with the Office of Administrative Law, such rules and regulations as deemed necessary to implement the provisions of this act which shall be effective for a period not to exceed 12 months and shall thereafter be amended, adopted or re-adopted in accordance with the provisions of P.L.1968, c.410 (C.52:14B-1 et seq.).
(cf: P.L.2009, c.4, s.10)
8. This act shall take effect on the 60th day after the date of enactment, except that public entities may take such anticipatory administrative action in advance thereof as may be necessary for the implementation of this act.
STATEMENT
This bill amends various laws authorizing boards of education, public institutions of higher education, local contracting units, public agencies, State contracting agencies, and other public entities to designate energy services companies as general contractors for improvements to be made pursuant to an energy savings plan. Currently, these laws require the hiring of subcontractors for such improvements to be done in accordance with public bidding requirements; the bill authorizes subcontractors to be hired through a process of competitive contracting in lieu of public bidding.
The bill defines "competitive contracting" to mean the method of contracting for specialized goods and services in which formal proposals are solicited from vendors through public advertising, all formal proposals are evaluated by the public entity or general contractor, and the public entity or general contractor awards a contract to a vendor or vendors from among the formal proposals received.
The bill also deletes certain requirements from these laws including a bid specification allowance price from an energy supply company and an assessment of risks involved in the successful implementation of an energy savings plan. The bill permits rather than mandates the energy audit component of an energy savings improvement program to be conducted by either the public entity or a qualified third party retained by the public entity, and it removes the restriction on allowing an energy services company to conduct the audit provided that an investment grade audit is conducted pursuant to a third party verification procedure.
