1.1                          A bill for an act 
  1.2             relating to state government; authorizing capital cost 
  1.3             avoidance for guaranteed savings contracts; proposing 
  1.4             coding for new law in Minnesota Statutes, chapter 16C. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  [16C.144] [GUARANTEED SAVINGS CONTRACTS.] 
  1.7      Subdivision 1.  [DEFINITIONS.] (a) The following 
  1.8   definitions apply to this section. 
  1.9      (b) "Utility" means electricity, natural gas, or other 
  1.10  energy resource, water, and wastewater. 
  1.11     (c) "Utility cost savings" means the difference between the 
  1.12  utility costs under the precontract conditions and the utility 
  1.13  costs after the changes have been made under the contract.  The 
  1.14  savings must be calculated in comparison to an established 
  1.15  baseline of utility costs. 
  1.16     (d) "Established baseline" means the precontract utilities, 
  1.17  operations, and maintenance costs. 
  1.18     (e) "Utility cost-savings measure" means a measure that 
  1.19  produces utility cost savings and/or operation and maintenance 
  1.20  cost savings. 
  1.21     (f) "Operation and maintenance cost savings" means a 
  1.22  measurable decrease in operation and maintenance costs that are 
  1.23  a direct result of the implementation of one or more utility 
  1.24  cost-savings measures, but do not include savings from in-house 
  1.25  staff labor.  The savings must be calculated in comparison to an 
  2.1   established baseline of operation and maintenance costs. 
  2.2      (g) "Guaranteed savings contract" means a contract for the 
  2.3   evaluation, recommendation, and installation of one or more 
  2.4   utility cost-savings measures.  The contract must provide that 
  2.5   all payments are to be made over time, but not to exceed 15 
  2.6   years from the date of final installation, and the savings are 
  2.7   guaranteed to the extent necessary to make payments for the 
  2.8   utility cost-savings measures. 
  2.9      (h) "Baseline adjustments" means adjusting the established 
  2.10  baselines in paragraphs (c) and (e) for changes in the following 
  2.11  variables: 
  2.12     (1) utility rates; 
  2.13     (2) number of days in the utility billing cycle; 
  2.14     (3) square footage of the facility; 
  2.15     (4) operational schedule of the facility; 
  2.16     (5) facility temperature set points; 
  2.17     (6) weather; 
  2.18     (7) amount of equipment or lighting utilized in the 
  2.19  facility; and 
  2.20     (8) indoor air quality. 
  2.21     (i) "Lease purchase contract" means a contract obligating 
  2.22  the state to make regular lease payments to satisfy the lease 
  2.23  costs of the utility cost-savings measures until the final 
  2.24  payment, after which the utility cost-savings measures become 
  2.25  the sole property of the state of Minnesota. 
  2.26     (j) "Qualified provider" means a person or business 
  2.27  experienced in the design, implementation, and installation of 
  2.28  utility cost-savings measures. 
  2.29     (k) "Engineering report" means a report prepared by a 
  2.30  professional engineer licensed by the state of Minnesota 
  2.31  summarizing estimates of all costs of installations, 
  2.32  modifications, or remodeling, including costs of design, 
  2.33  engineering, installation, maintenance, repairs, and estimates 
  2.34  of the amounts by which utility and operation and maintenance 
  2.35  costs will be reduced. 
  2.36     (l) "Capital cost avoidance" means money expended by a 
  3.1   state agency to pay for utility cost-savings measures with a 
  3.2   guaranteed savings contract so long as the measures that are 
  3.3   being implemented to achieve the cost savings are a significant 
  3.4   portion of an overall project. 
  3.5      (m) "Guaranteed savings contracting guidelines" means 
  3.6   policies, procedures, and requirements of guaranteed savings 
  3.7   contracts established by the department of administration under 
  3.8   this section. 
  3.9      Subd. 2.  [GUARANTEED SAVINGS CONTRACT.] The commissioner 
  3.10  may enter into a guaranteed savings contract with a qualified 
  3.11  provider if: 
  3.12     (1) the qualified provider is selected through a 
  3.13  competitive process in accordance with the guaranteed savings 
  3.14  contracting guidelines within the department of administration; 
  3.15     (2) the qualified provider agrees to submit an engineering 
  3.16  report prior to the execution of the guaranteed savings 
  3.17  contract; 
  3.18     (3) the commissioner finds that the amount that would be 
  3.19  spent on the utility cost-savings measures recommended in the 
  3.20  engineering report is not likely to exceed the amount to be 
  3.21  saved in utility operation and maintenance costs over 15 years 
  3.22  from the date of implementation of utility cost-savings 
  3.23  measures; 
  3.24     (4) the qualified provider provides a written guarantee 
  3.25  that the utility and operation and maintenance cost savings will 
  3.26  meet or exceed the costs of the guaranteed savings contract.  
  3.27  The qualified provider shall reimburse the state for any 
  3.28  shortfall of guaranteed utility cost savings; and 
  3.29     (5) the qualified provider gives a sufficient bond in 
  3.30  accordance with section 574.26 to the commissioner for the 
  3.31  faithful implementation and installation of the utility 
  3.32  cost-savings measures. 
  3.33     Subd. 3.  [LEASE PURCHASE CONTRACT.] The commissioner may 
  3.34  enter into a lease purchase agreement with any party for the 
  3.35  implementation of utility cost-savings measures in accordance 
  3.36  with an engineering report.  The implementation costs of the 
  4.1   utility cost-savings measures recommended in the engineering 
  4.2   report shall not exceed the amount to be saved in utility and 
  4.3   operation and maintenance costs over the term of the lease 
  4.4   purchase agreement.  The term of the lease purchase agreement 
  4.5   shall not exceed 15 years.  The lease is assignable in 
  4.6   accordance with terms approved by the commissioner of finance. 
  4.7      Subd. 4.  [USE OF CAPITAL COST AVOIDANCE.] The affected 
  4.8   state agency may contribute funds for capital cost avoidance for 
  4.9   guaranteed savings contracts.  Use of capital cost avoidance is 
  4.10  subject to the guaranteed savings contracting guidelines within 
  4.11  the department of administration. 
  4.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  4.13  following final enactment.