MISSISSIPPI LEGISLATURE

1998 Regular Session

To: Environment Prot, Cons and Water Res

By: Senator(s) Dearing

AN ACT TO AMEND SECTION 31-7-14, MISSISSIPPI CODE OF 1972, TO REVISE CERTAIN REQUIREMENTS FOR PUBLIC CONTRACTS FOR ENERGY EFFICIENCY SERVICES; TO INCLUDE PRIVATE NONPROFIT HOSPITALS IN THE ENERGY EFFICIENCY LEASE PROGRAM; TO AMEND SECTION 31-7-14.1, MISSISSIPPI CODE OF 1972, TO REQUIRE THE DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT TO UNDERTAKE ENERGY EFFICIENCY PROJECTS, AND TO DELETE THE REQUIREMENT THAT CERTAIN NET REVENUES BE CREDITED TO A SPECIAL ENERGY FUND; TO AMEND SECTIONS 57-39-101 THROUGH 57-39-115, MISSISSIPPI CODE OF 1972, THE "ENERGY MANAGEMENT LAW OF 1981," TO REVISE ENERGY MANAGEMENT GOALS, TO DELETE REFERENCES TO VEHICLES, AND TO CONFORM TO REORGANIZATION NOMENCLATURE; TO REPEAL SECTION 2, CHAPTER 584, LAWS OF 1982, WHICH LIMITS THE NUMBER OF AGENCIES CONDUCTING AN ENERGY SAVINGS PROGRAM; AND FOR RELATED PURPOSES. 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 31-7-14, Mississippi Code of 1972, is amended as follows:

31-7-14. (1) (a) For purposes of this section, "entity" means the board of trustees of any public school district, junior college, institution of higher learning, publicly-owned hospital, * * * state agency or * * * governing authority as defined in this chapter. An entity may contract for energy efficiency equipment, services relating to the installation, operation and maintenance of equipment or improvements reasonably required to existing equipment and existing improvements on a lease, energy services contract or lease-purchase basis in accordance with this section. For the purposes of this section, energy efficiency equipment, services relating to the installation, operation and maintenance of equipment and improvements reasonably required to existing equipment and existing improvements shall be defined to include, but not limited to, heating, ventilation and air conditioning systems, lighting, windows, insulation and energy management controls. Energy efficient projects are defined as modifications to new or existing facilities that optimize utility cost of energy consuming components in public property.

(b) An entity may enter into a lease, energy services contract or lease-purchase contracts for energy efficiency equipment, services relating to the installation, operation and maintenance of equipment or improvements reasonably required to existing equipment and existing improvements and shall contract in accordance with the following provisions:

(i) An entity shall publicly issue requests for proposals, advertised in the same manner as provided in Section 31-7-13 for seeking competitive sealed bids, concerning the provision of energy efficiency services relating to the installation, operation and maintenance of equipment, improvements reasonably required to existing equipment and existing improvements or the design, installation, ownership, operation and maintenance of energy efficiency equipment. Those requests for proposals shall contain terms and conditions relating to submission of proposals, evaluation and selection of proposals, financial terms, legal responsibilities, and any other matters as the entity determines to be appropriate for inclusion.

(ii) Upon receiving responses to the request for proposals, the entity may select the most qualified proposal or proposals on the basis of experience and qualifications of the proposers, the technical approach, the financial arrangements, the overall benefits to the entity and any other relevant factors determined to be appropriate.

(iii) An entity shall negotiate and enter into contracts with the person, persons, firm or firms submitting the proposal selected as the most qualified under this section.

(iv) All * * * contracts must contain the following annual allocation dependency clause: The continuation of this contract is contingent upon the appropriation of funds to fulfill the requirements of the contract by the Legislature or other budgeting authority. If the Legislature or other budgeting authority fails to appropriate sufficient monies to provide for the continuation of the contract, the contract shall terminate on the last day of the fiscal year for which appropriations were made. The termination shall be without penalty or expense to the entity of any kind whatsoever, except as to the portions of payments for which funds were appropriated.

(v) The annual rate of interest paid under any lease-purchase agreement authorized by this section shall not exceed the maximum interest rate to maturity on general obligation indebtedness permitted under Section 75-17-101.

(vi) The maximum lease-purchase term for any equipment acquired under this section shall not exceed the useful life of that equipment as determined according to the upper limit of the asset depreciation range (ADR) guidelines for the Class Life Asset Depreciation Range System established by the Internal Revenue Service under the United States Internal Revenue Code and the regulations thereunder as in effect on December 31, 1980, or comparable depreciation guidelines with respect to any equipment not covered by ADR guidelines.

(vii) * * * This subsection shall, with respect to the procurement of energy efficiency services and/or equipment, supersede * * * any contradictory or conflicting provisions of Chapter 7, Title 31, Mississippi Code of 1972, and other laws with respect to awarding public contracts.

(c) An energy services contract for the purposes of this section means those contracts where at least a portion of the cost of the energy efficiency contract is estimated to be paid for by savings in operating costs of the energy efficient equipment; however, payments for the contract are not contingent upon the actual savings realized from the equipment.

(2) (a) The Division of Energy of the Department of Economic and Community Development, referred to in this section as the "division," may * * * contract with a party selected under the provisions of this subsection to provide financing to public school districts, junior college districts, institutions of higher learning, publicly-owned hospitals, private "nonprofit" hospitals, state agencies, and governing authorities to purchase energy efficiency equipment, services relating to the installation, operation and maintenance of equipment or improvements reasonably required to existing equipment and existing improvements or an energy saving performance contract, energy services contract, or lease-purchase basis. Any energy efficiency lease financing contract entered into by the division before May 15, 1992, shall be valid and binding when the contract was entered into under this subsection.

(b) The entities and private "nonprofit" hospitals that decide to contract for energy efficiency equipment, services relating to the installation, operation and maintenance of equipment or improvements reasonably required to existing equipment and existing improvements on a lease, energy services contract or lease-purchase basis, may request financial assistance from the division * * *.

(c) The provisions of any energy efficiency lease-purchase agreements authorized under * * * this subsection shall comply with the requirements of subparagraphs (1)(b)(iv) and (v) of this section. The term of any energy services performance contract, energy services contract, lease or lease-purchase agreement for energy efficiency services and/or equipment entered into under this section shall not exceed fifteen (15) years. * * *

(d) Any board of trustees, state agency or governing authority having approval of the Department of Economic and Community Development may borrow money in anticipation of entering into a lease-purchase agreement pursuant to subsection (2)(b) of this section. Any borrowing may be upon terms and conditions as may be agreed upon by the borrowing entity and the party advancing interim funds; however, the principal on any such borrowing shall be repaid within a period of time not to exceed one hundred eighty (180) days. In borrowing money under the provision of this subparagraph * * *, it is not * * * necessary to publish notice of intention to do so or to secure the consent of the qualified electors, either by election or otherwise. Any borrowing may be negotiated between the parties and is not required to be publicly bid, may be evidenced by negotiable notes or lease and shall not be considered when computing any limitation of indebtedness of the borrowing entity established by law. The principal, interest and costs of incurring any borrowing shall not exceed the principal amount of the final contract or agreement approved by the Department of Economic and Community Development, and accepted by the borrowing entity, under subsection (2)(b) of this section.

(e) * * * This subsection shall, with respect to the procurement of energy efficiency services and/or equipment, supersede the provisions of any contradictory or conflicting provisions of Chapter 7, Title 31, Mississippi Code of 1972, and other laws with respect to awarding public contracts.

(3) All lease-purchase agreements authorized by this section and the income from those agreements shall be exempt from all taxation within the State of Mississippi, except gift, transfer and inheritance taxes.

(4) (a) If an entity decides to contract for energy efficiency, equipment, services relating to the installation, operation or maintenance of equipment or improvements reasonably required to existing equipment and existing improvements on a shared savings basis or performance basis, the entity must notify the division * * * in writing. The final contract must be approved by the division.

(b) The terms of any shared savings or performance contract for efficiency services and/or equipment entered into under this section may not exceed fifteen (15) years.

 * * * The terms of any shared savings or performance contract entered into under this section must contain a guarantee of savings clause from the company providing energy efficiency, equipment, services relating to the installation, operation and maintenance of equipment or improvements reasonably required to existing equipment and existing improvements.

(c) An energy performance contract for the purposes of this section is an agreement to provide energy services which include, but are not limited to, the design, installation, financing and maintenance or management of the energy systems or equipment in order to improve its energy efficiency. The energy savings are guaranteed by the performance contractor and can be used to repay the cost of the project.

(d) A shared savings contract for the purposes of this section is an agreement where the contractor and the entity each receive a pre-agreed percentage or dollar value of the energy cost savings over the life of the contract.

(5) By September 1 of each year, each entity that receives financial assistance through the energy efficiency lease program shall annually report to the * * * division * * * its energy usage by meter in dollars and consumption by fuel type for the previous fiscal year.

SECTION 2. Section 31-7-14.1, Mississippi Code of 1972, is amended as follows:

31-7-14.1. (1) Any agency as defined in this chapter that receives state budgetary consideration and has submitted a detailed energy management plan to the Energy * * * Division of the Department of Economic and Community Development, referred to in this section as "division," as required under Section 57-39-111 shall undertake energy efficiency projects for the purpose of producing energy and/or dollar savings whereby a portion of the savings may be retained by the participating agency. The * * * plan shall describe specific measures to be implemented to reduce the agency's energy consumption by energy unit measure or energy cost. The division * * * shall provide assistance in preparing the detailed energy management plan according to prescribed guidelines and reporting procedures. The * * * plan shall specify a project description of the energy efficiency measures to be undertaken, including, but not limited to, type of measure, cost, estimated savings in dollars and energy units, project and measure location, and terms and conditions of project financing.

(2) (a) Utilizing data submitted under * * * Sections 57-39-107 and 57-39-109, the * * * division shall develop and approve energy consumption baselines before project implementation, if feasible, and measure energy consumption after project implementation considering adjustments for any agency growth or reduction and seasonal variances, and calculate total energy savings. The * * * division shall derive a baseline use allocation to be utilized and submitted in each participating agency's annual budget. * * *

(b) For purposes of this section, "net savings" and "net revenues" * * * mean any funds remaining after payment of project capital costs, including debt service, and other payments and reserves as required by a bond resolution, loan agreement or other financing agreement and payment of project operating and maintenance expenses. * * *

(3) Net savings and net revenues generated from projects * * * shall be apportioned as follows:

(a) Any agency initiating energy savings through the implementation of an energy efficiency project may retain one-half (1/2) of all such net savings which may be used for any nonrecurring capital projects; and

(b) The remaining net savings and net revenues from conservation projects shall be remitted to * * * the State General Fund. Any funds remitted to the State General Fund shall not be transferred to the Education Enhancement Fund under Section 27-103-203.

The Energy Division shall verify the net savings and net revenues on an annual basis.

(4) The use by an agency of net savings and net revenues from energy efficiency projects shall be in addition to, and shall not supplant or replace, funding from traditional sources for their normal operations and maintenance or capital budgets. It is the intent of this subsection to ensure that the agencies receive the full benefit intended by this section, and that the effect will not be diminished by budget adjustments inconsistent with this intent.

SECTION 3. Section 57-39-101, Mississippi Code of 1972, is amended as follows:

57-39-101. Sections 57-39-101 through 57-39-117 may be cited as the "Mississippi Energy Management Law * * *."

SECTION 4. Section 57-39-103, Mississippi Code of 1972, is amended as follows:

57-39-103. The purpose of Sections 57-39-103 through 57-39-115 is to provide for development and implementation of a state energy management plan for all state-owned or state-leased buildings and facilities * * * which will minimize energy consumption and insure that buildings and facilities * * * are operated with maximum efficiency of energy use.

SECTION 5. Section 57-39-105, Mississippi Code of 1972, is amended as follows:

57-39-105. The Energy Division of the Department of Economic and Community Development, * * * referred to in Sections 57-39-103 through 57-39-117 as the "division," shall * * * coordinate the development and implementation of a general energy management plan. The general energy management plan shall include, but not be limited to, the following elements:

(a) Data gathering requirements;

(b) Buildings and facilities energy audit procedures;

(c) Uniform data analysis procedures;

(d) Employee energy education program procedures;

(e) Energy consumption reduction techniques;

(f) Training program for agency and institution * * * personnel and energy coordinators;

(g) Guidelines for buildings and facilities managers;

(h) Building retrofit revolving loan fund policies and procedures;

(i) Program monitoring and evaluation procedures.

The general energy management plan shall also include a description of actions to reduce consumption of electricity and nonrenewable energy sources used for * * * heating, cooling, ventilation, lighting and water heating * * *. The Board of Trustees of State Institutions of Higher Learning, the Department of Education and the Department of Finance and Administration shall assist in the preparation of the general energy management plan. The Department of Finance and Administration, Bureau of Buildings Division, shall notify the Energy Division of all renovations and repairs of buildings and facilities and the planning and design of new buildings and facilities to ensure that energy efficient equipment is utilized.

SECTION 6. Section 57-39-107, Mississippi Code of 1972, is amended as follows:

57-39-107. The Department of Finance and Administration shall submit data regarding energy consumption to the division, in a form and manner prescribed by the division, for all agencies renting office space from the Department of Finance and Administration. Any state agency that leases or approves leases of a building or facility, or a portion thereof, shall arrange for the energy consumption costs to be separated from other costs specified in any lease agreements entered or renewed after June 30, 1999. All other state agencies * * * shall submit data regarding energy consumption to the division in the form and manner prescribed by the division. * * *

SECTION 7. Section 57-39-109, Mississippi Code of 1972, is amended as follows:

57-39-109. Any * * * agency or institution designated by the division and funded in whole or in part by public funds shall appoint a coordinator from existing staff who shall advise the agency head or institution head on energy-related matters. The coordinator shall confer and cooperate with the board in developing, implementing and evaluating an energy management plan for the agency or institution. Any public school district may * * * appoint a coordinator from its existing staff.

SECTION 8. Section 57-39-111, Mississippi Code of 1972, is amended as follows:

57-39-111. (1) A state agency shall annually submit a detailed energy management plan to the division in the form as prescribed by the division. The detailed energy management plan shall describe specific measures to be taken to reduce the agency's energy consumption by energy unit measure in Fiscal Year 2001 by a minimum of fifteen percent (15%) as compared with its energy consumption in Fiscal Year 1998. The * * * plan shall also describe specific measures to be taken to reduce the agency's energy consumption by energy unit measure in Fiscal Year 2002 by a minimum of ten percent (10%) as compared with its energy consumption in Fiscal Year 2001 and * * * to maintain or reduce that level of energy consumption with adjustments for agency growth or reduction and seasonal variances. If the detailed energy management plan meets the criteria developed by the division, the division shall approve the plan. If the detailed energy management plan fails to meet the criteria, the division shall disapprove the detailed energy management plan and notify the submitting agency in writing including the reasons for disapproval.

(2) Before September 1 of each year, the division shall notify the Legislative Budget Office in writing of those agencies failing to have an approved detailed energy management plan. The Legislative Budget Office shall not consider the budget of any state agency that does not have an approved, detailed energy management plan filed with the division.

SECTION 9. Section 57-39-112, Mississippi Code of 1972, is amended as follows:

57-39-112. The division shall cooperate with all public school districts of the state which request its assistance and cooperation in developing a detailed energy management plan for that public school district. The purposes of the plan shall be to assist the public school district in reaching a goal of reducing * * * consumption of energy in its buildings and facilities * * * by energy unit measure in Fiscal Year 2003 * * * by a minimum of fifteen percent (15%) as compared with Fiscal Year 2001 * * * and to maintain or reduce that * * * level of energy consumption * * *, subject to any allowances for building and facilities modernization, remodeling or upgrading for educational purposes, and for increased or decreased enrollment. * * *

SECTION 10. Section 57-39-113, Mississippi Code of 1972, is amended as follows:

57-39-113. The division may allow smaller percentage reduction goals than those specified in Section 57-39-111 to a state agency or institution that has undertaken an energy management program and obtained significant results before the effective date of Senate Bill No. 3113, 1998 Regular Session.

SECTION 11. Section 57-39-115, Mississippi Code of 1972, is amended as follows:

57-39-115. Before September 1 of each year, the division shall report findings on results of energy reduction programs mandated by Sections 57-39-101 through 57-39-115. Findings shall include details as to individual state agency and institution * * * accomplishment and shall report compliance failures by * * * agencies and institutions * * * and any noteworthy or exceptional reductions.

SECTION 12. Section 2, Chapter 584, Laws of 1992, which limits the number of agencies conducting an energy savings program, is repealed.

SECTION 13. This act shall take effect and be in force from and after July 1, 1998.