11-34.3 - Energy Performance-Based Contract Procedures; required contract provisions.
§ 11-34.3. Energy Performance-Based Contract Procedures; required contractprovisions.
A. Any contracting entity may enter into an energy performance-based contractwith an energy performance contractor to significantly reduce energy costs toa level established by the public body or operating costs of a facilitythrough one or more energy conservation or operational efficiency measures.
B. The energy performance contractor shall be selected through competitivesealed bidding or competitive negotiation as defined in § 2.2-4301. Theevaluation of the request for proposal shall analyze the estimates of allcosts of installation, maintenance, repairs, debt service, post installationproject monitoring and reporting.
C. Before entering into a contract for energy conservation measures andfacility technology infrastructure upgrades and modernization measures, thecontracting entity shall require the performance contractor to provide apayment and performance bond relating to the installation of energyconservation measures and facility technology infrastructure upgrades andmodernization measures in the amount the contracting entity finds reasonableand necessary to protect its interests.
D. Prior to the design and installation of the energy conservation measure,the contracting entity shall obtain from the energy performance contractor areport disclosing all costs associated with the energy conservation measureand providing an estimate of the amount of the energy cost savings. Afterreviewing the report, the contracting entity may enter into an energyperformance-based contract if it finds (i) the amount the entity would spendon the energy conservation measures and facility and technologyinfrastructure upgrades and modernization measures recommended in the reportwill not exceed the amount to be saved in energy and operation costs morethan 20 years from the date of installation, based on life-cycle costingcalculations, if the recommendations in the report were followed and (ii) theenergy performance contractor provides a written guarantee that the energyand operating cost savings will meet or exceed the costs of the system. Thecontract may provide for payments over a period of time not to exceed 20years.
E. The term of any energy performance-based contract shall expire at the endof each fiscal year but may be renewed annually up to 20 years, subject tothe contracting entity making sufficient annual appropriations based uponcontinued realized cost savings. Such contracts shall stipulate that theagreement does not constitute a debt, liability, or obligation of thecontracting entity, or a pledge of the faith and credit of the contractingentity. Such contract may also provide capital contributions for the purchaseand installation of energy conservation and facility and technologyinfrastructure upgrades and modernization measures that cannot be totallyfunded by the energy and operational savings.
F. An energy performance-based contract shall include the followingprovisions:
1. A guarantee by the energy performance contractor that annual energy andoperational cost savings will meet or exceed the amortized cost of energyconservation measures. The guaranteed energy savings contract shall include awritten guarantee of the qualified provider that either the energy oroperational cost savings, or both, will meet or exceed within 20 years thecosts of the energy and operational savings measures. The qualified providershall reimburse the contracting entity for any shortfall of guaranteed energysavings projected in the contract.
2. A requirement that the energy performance contractor to whom the contractis awarded provide a 100 percent performance guarantee bond to thecontracting entity for the installation and faithful performance of theinstalled energy savings measures as outlined in the contract document.
3. A requirement that the energy performance contractor provide to thecontracting entity an annual reconciliation of the guaranteed energy costsavings. The energy performance contractor shall be liable for any annualsavings shortfall that may occur.
G. The Department of Mines, Minerals and Energy (the Department) shall make areasonable effort, as long as workload permits, to:
1. Provide general advice, upon request, to local governments that wish toconsider pursuit of an energy performance-based contract pursuant to thissection;
2. Annually compile a list of performance-based contracts entered into bylocal governments of which the Department may become aware.
(2001, c. 219; 2004, c. 197; 2009, c. 399.)