§36-41  Energy retrofit and performancecontracting for public facilities.  (a)  All agencies shall evaluate andidentify for implementation energy efficiency retrofitting through performancecontracting.  Agencies that perform energy efficiency retrofitting may continueto receive budget appropriations for energy expenditures at an amount thatshall not fall below the pre-retrofitting energy budget but shall rise inproportion to any increase in the agency's overall budget for the duration ofthe performance contract or project payment term.

(b)  Any agency may enter into a multi-yearenergy performance contract for the purpose of undertaking or implementingenergy conservation or alternate energy measures in a facility or facilities. An energy performance contract may include but shall not be limited tofinancing options such as leasing, lease-purchase, financing agreements,third-party joint ventures, guaranteed-savings plans, or energy servicecontracts, or any combination thereof; provided that in due course the agencymay receive title to the energy system being financed.  Except as otherwiseprovided by law, the agency that is responsible for a particular facility shallreview and approve energy performance contract arrangements for the facility.

(c)  Notwithstanding any law to the contraryrelating to the award of public contracts, any agency desiring to enter into anenergy performance contract shall do so in accordance with the followingprovisions:

(1)  The agency shall issue a public request forproposals, advertised in the same manner as provided in chapter 103D,concerning the provision of energy efficiency services or the design,installation, operation, and maintenance of energy equipment or both.  Therequest for proposals shall contain terms and conditions relating to submissionof proposals, evaluation and selection of proposals, financial terms, legalresponsibilities, and other matters as may be required by law and as the agencydetermines appropriate;

(2)  Upon receiving responses to the request forproposals, the agency may select the most qualified proposal or proposals onthe basis of the experience and qualifications of the proposers, the technicalapproach, the financial arrangements, the overall benefits to the agency, andother factors determined by the agency to be relevant and appropriate;

(3)  The agency thereafter may negotiate and enterinto an energy performance contract with the person or company whose proposalis selected as the most qualified based on the criteria established by theagency;

(4)  The term of any energy performance contractentered into pursuant to this section shall not exceed twenty years;

(5)  Any contract entered into shall contain thefollowing annual allocation dependency clause:

"The continuation of this contract iscontingent upon the appropriation of funds to fulfill the requirements of thecontract by the applicable funding authority.  If that authority fails toappropriate sufficient funds to provide for the continuation of the contract,the contract shall terminate on the last day of the fiscal year for whichallocations were made";

(6)  Any energy performance contract may provide thatthe agency shall ultimately receive title to the energy system being financedunder the contract;

(7)  Any energy performance contract shall providethat total payments shall not exceed total savings; and

(8)  For any guaranteed-savings plan:

(A)  The payment obligation for each year ofthe contract, including the year of installation, shall be guaranteed by theprivate sector person or company to be less than the annual energy cost savingsattributable under the contract to the energy equipment and services.  Suchguarantee, at the option of the agency, shall be a bond or insurance policy, orsome other guarantee determined sufficient by the agency to provide a level ofassurance similar to the level provided by a bond or insurance policy; and

(B)  In the event that the actual annualverified savings are less than the annual amount guaranteed by the energyservice company, the energy service company, within thirty days of beinginvoiced, shall pay the agency, or cause the agency to be paid, the differencebetween the guaranteed amount and the actual verified amount.

(d)  For purposes of this section:

"Agency" means any executivedepartment, independent commission, board, bureau, office, or otherestablishment of the State or any county government, the judiciary, theUniversity of Hawaii, or any quasi-public institution that is supported inwhole or in part by state or county funds.

"Energy performance contract" meansan agreement for the provision of energy services and equipment, including butnot limited to building or facility energy conservation enhancing retrofits,water saving technology retrofits, and alternate energy technologies, in whicha private sector person or company agrees to finance, design, construct,install, maintain, operate, or manage energy systems or equipment to improvethe energy efficiency of, or produce energy in connection with, a facility inexchange for a portion of the cost savings, lease payments, or specifiedrevenues, and the level of payments is made contingent upon the verified energysavings, energy production, avoided maintenance, avoided energy equipmentreplacement, or any combination of the foregoing bases.  Energy conservationretrofits also include energy saved off-site by water or other utilityconservation enhancing retrofits.

"Facility" means a building orbuildings or similar structure, including the site owned or leased by, orotherwise under the jurisdiction of, the agency.

"Financing agreement" shall have thesame meaning as in section 37D-2.

"Guaranteed-savings plan" means anagreement under which a private sector person or company undertakes to design,install, operate, and maintain improvements to an agency's facility orfacilities and the agency agrees to pay a contractually specified amount ofverified energy cost savings.

"Verified" means the technique usedin the determination of baseline energy use, post-installation energy use, andenergy and cost savings by the following measurement and verificationtechniques:  engineering calculations, metering and monitoring, utility meterbilling analysis, computer simulations, mathematical models, and agreed-uponstipulations by the customer and the energy service company. [L 1986, c 72, §1;am L 1989, c 275, §1; am L Sp 1993, c 8, §54; am L 1997, c 192, §1; am L 2000,c 158, §1; am L 2004, c 98, §1]