16C.144 GUARANTEED ENERGY SAVINGS PROGRAM.
Subdivision 1. Definitions.
The following definitions apply to this section.
(a) "Utility" means electricity, natural gas, or other energy resource, water, and wastewater.
(b) "Utility cost savings" means the difference between the utility costs after installation of
the utility cost-savings measures pursuant to the guaranteed energy savings agreement and the
baseline utility costs after baseline adjustments have been made.
(c) "Baseline" means the preagreement utilities, operations, and maintenance costs.
(d) "Utility cost-savings measure" means a measure that produces utility cost savings or
operation and maintenance cost savings.
(e) "Operation and maintenance cost savings" means a measurable difference between
operation and maintenance costs after the installation of the utility cost-savings measures pursuant
to the guaranteed energy savings agreement and the baseline operation and maintenance costs
after inflation adjustments have been made. Operation and maintenance costs savings shall not
include savings from in-house staff labor.
(f) "Guaranteed energy-savings agreement" means an agreement for the installation of one or
more utility cost-savings measures that includes the qualified provider's guarantee as required
under subdivision 2.
(g) "Baseline adjustments" means adjusting the utility cost-savings baselines annually for
changes in the following variables:
(1) utility rates;
(2) number of days in the utility billing cycle;
(3) square footage of the facility;
(4) operational schedule of the facility;
(5) facility temperature set points;
(6) weather; and
(7) amount of equipment or lighting utilized in the facility.
(h) "Inflation adjustment" means adjusting the operation and maintenance cost-savings
baseline annually for inflation.
(i) "Lease purchase agreement" means an agreement obligating the state to make regular
lease payments to satisfy the lease costs of the utility cost-savings measures until the final
payment, after which time the utility cost-savings measures become the sole property of the
state of Minnesota.
(j) "Qualified provider" means a person or business experienced in the design,
implementation, and installation of utility cost-savings measures.
(k) "Engineering report" means a report prepared by a professional engineer licensed
by the state of Minnesota summarizing estimates of all costs of installations, modifications,
or remodeling, including costs of design, engineering, installation, maintenance, repairs, and
estimates of the amounts by which utility and operation and maintenance costs will be reduced.
(l) "Capital cost avoidance" means money expended by a state agency to pay for utility
cost-savings measures with a guaranteed savings agreement so long as the measures that are being
implemented to achieve the utility, operation, and maintenance cost savings are a significant
portion of an overall project as determined by the commissioner.
(m) "Guaranteed energy-savings program guidelines" means policies, procedures, and
requirements of guaranteed savings agreements established by the Department of Administration.
Subd. 2. Guaranteed energy-savings agreement.
The commissioner may enter into a
guaranteed energy-savings agreement with a qualified provider if:
(1) the qualified provider is selected through a competitive process in accordance with the
guaranteed energy-savings program guidelines within the Department of Administration;
(2) the qualified provider agrees to submit an engineering report prior to the execution of
the guaranteed energy-savings agreement. The cost of the engineering report may be considered
as part of the implementation costs if the commissioner enters into a guaranteed energy-savings
agreement with the provider;
(3) the term of the guaranteed energy-savings agreement shall not exceed 15 years from
the date of final installation;
(4) the commissioner finds that the amount it would spend on the utility cost-savings
measures recommended in the engineering report will not exceed the amount to be saved in
utility operation and maintenance costs over 15 years from the date of implementation of utility
(5) the qualified provider provides a written guarantee that the annual utility, operation, and
maintenance cost savings during the term of the guaranteed energy-savings agreement will meet
or exceed the annual payments due under a lease purchase agreement. The qualified provider
shall reimburse the state for any shortfall of guaranteed utility, operation, and maintenance cost
(6) the qualified provider gives a sufficient bond in accordance with section
commissioner for the faithful implementation and installation of the utility cost-savings measures.
Subd. 3. Lease purchase agreement.
The commissioner may enter into a lease purchase
agreement with any party for the implementation of utility cost-savings measures in accordance
with the guaranteed energy-savings agreement. The implementation costs of the utility
cost-savings measures recommended in the engineering report shall not exceed the amount to
be saved in utility and operation and maintenance costs over the term of the lease purchase
agreement. The term of the lease purchase agreement shall not exceed 15 years from the date of
final installation. The lease is assignable in accordance with terms approved by the commissioner
Subd. 4. Use of capital cost avoidance.
The affected state agency may contribute funds for
capital cost avoidance for guaranteed energy-savings agreements. Use of capital cost avoidance
is subject to the guaranteed energy-savings program guidelines within the Department of
Subd. 5. Report.
By January 15, 2007, the commissioner of administration shall submit to
the commissioner of finance and the chairs of the senate and house of representatives capital
investment committees a list of projects in the agency that have been funded using guaranteed
energy savings, as outlined in this section, during the preceding biennium. For each guaranteed
energy-savings agreement entered into, the commissioner of administration shall contract
with an independent third party to evaluate the cost-effectiveness of each utility cost-savings
measure implemented to ensure that such measures were the least-cost measures available. For
the purposes of this section, "independent third party" means an entity not affiliated with the
qualified provider, that is not involved in creating or providing conservation project services to
that provider, and that has expertise (or access to expertise) in energy savings practices.
Subd. 6.[Repealed by amendment, 2005 c 156 art 2 s 24
History: 1Sp2003 c 8 art 1 s 9; 2005 c 156 art 2 s 24