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



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



(c)  Notwithstanding any law to the contrary
relating to the award of public contracts, any agency desiring to enter into an
energy performance contract shall do so in accordance with the following
provisions:



(1)  The agency shall issue a public request for
proposals, 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.  The
request for proposals shall contain terms and conditions relating to submission
of proposals, evaluation and selection of proposals, financial terms, legal
responsibilities, and other matters as may be required by law and as the agency
determines appropriate;



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



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



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



(5)  Any contract entered into shall 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 applicable funding authority.  If that authority fails to
appropriate sufficient funds to provide for the continuation of the contract,
the contract shall terminate on the last day of the fiscal year for which
allocations were made";



(6)  Any energy performance contract may provide that
the agency shall ultimately receive title to the energy system being financed
under the contract;



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



(8)  For any guaranteed-savings plan:



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



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



(d)  For purposes of this section:



"Agency" means any executive
department, independent commission, board, bureau, office, or other
establishment of the State or any county government, the judiciary, the
University of Hawaii, or any quasi-public institution that is supported in
whole or in part by state or county funds.



"Energy performance contract" means
an agreement for the provision of energy services and equipment, including but
not limited to building or facility energy conservation enhancing retrofits,
water saving technology retrofits, and alternate energy technologies, in which
a private sector person or company agrees to finance, design, construct,
install, maintain, operate, or manage energy systems or equipment to improve
the energy efficiency of, or produce energy in connection with, a facility in
exchange for a portion of the cost savings, lease payments, or specified
revenues, and the level of payments is made contingent upon the verified energy
savings, energy production, avoided maintenance, avoided energy equipment
replacement, or any combination of the foregoing bases.  Energy conservation
retrofits also include energy saved off-site by water or other utility
conservation enhancing retrofits.



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



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



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



"Verified" means the technique used
in the determination of baseline energy use, post-installation energy use, and
energy and cost savings by the following measurement and verification
techniques:  engineering calculations, metering and monitoring, utility meter
billing analysis, computer simulations, mathematical models, and agreed-upon
stipulations 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]