READ FIRST TIME 02/1/07.   

     AN ACT Relating to conservation measures in performance-based contracting; and amending RCW 39.35A.010, 39.35A.020, 39.35A.030, and 39.35C.010.

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

Sec. 1   RCW 39.35A.010 and 1985 c 169 s 1 are each amended to read as follows:
     The legislature finds that:
     (1) Conserving energy and water in publicly owned buildings will have a beneficial effect on our overall supply of energy and water;
     (2) Conserving energy and water in publicly owned buildings can result in cost savings for taxpayers; and
     (3) Performance-based energy contracts are a means by which municipalities can achieve energy and water conservation without capital outlay.
     Therefore, the legislature declares that it is the policy that a municipality may, after a competitive selection process, negotiate a performance-based energy contract with a firm that offers the best proposal.

Sec. 2   RCW 39.35A.020 and 2001 c 214 s 18 are each amended to read as follows:
     Unless the context clearly indicates otherwise, the definitions in this section shall apply throughout this chapter.
     (1) "Energy equipment and services" means energy management systems and any equipment, materials, or supplies that are expected, upon installation, to reduce the energy use or energy cost of an existing building or facility, and the services associated with the equipment, materials, or supplies, including but not limited to design, engineering, financing, installation, project management, guarantees, operations, and maintenance. Reduction in energy use or energy cost may also include reductions in the use or cost of water, wastewater, or solid waste.
     (2) "Energy management system" has the definition provided in RCW 39.35.030.
     (3) "Municipality" has the definition provided in RCW 39.04.010.
     (4) "Performance-based contract" means one or more contracts for water conservation services, solid waste reduction services, or energy equipment and services between a municipality and any other persons or entities, if the payment obligation for each year under the contract, including the year of installation, is either: (a) Set as a percentage of the annual energy cost savings, water cost savings, or solid waste cost savings attributable under the contract ((to the energy equipment and services)); or (b) guaranteed by the other persons or entities to be less than the annual energy cost savings, water cost savings, or solid waste cost savings attributable under the contract ((to the energy equipment and services)). Such guarantee shall be, at the option of the municipality, a bond or insurance policy, or some other guarantee determined sufficient by the municipality to provide a level of assurance similar to the level provided by a bond or insurance policy.
     (5) "Water conservation" means reductions in the use of water or wastewater.

Sec. 3   RCW 39.35A.030 and 1985 c 169 s 3 are each amended to read as follows:
     (1) Each municipality shall publish in advance its requirements to procure water conservation services, solid waste reduction services, or energy equipment and services under a performance-based contract. The announcement shall state concisely the scope and nature of the equipment and services for which a performance-based contract is required, and shall encourage firms to submit proposals to meet these requirements.
     (2) The municipality may negotiate a fair and reasonable performance-based contract with the firm that is identified, based on the criteria that is established by the municipality, to be the firm that submits the best proposal.
     (3) If the municipality is unable to negotiate a satisfactory contract with the firm that submits the best proposal, negotiations with that firm shall be formally terminated and the municipality may select another firm in accordance with this section and continue negotiation until a performance-based contract is reached or the selection process is terminated.

Sec. 4   RCW 39.35C.010 and 2001 c 214 s 20 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1) "Cogeneration" means the sequential generation of two or more forms of energy from a common fuel or energy source. If these forms are electricity and thermal energy, then the operating and efficiency standards established by 18 C.F.R. Sec. 292.205 and the definitions established by 18 C.F.R. Sec. 292.202 (c) through (m) apply.
     (2) "Conservation" means reduced energy consumption or energy cost, or increased efficiency in the use of energy, and activities, measures, or equipment designed to achieve such results, but does not include thermal or electric energy production from cogeneration. "Conservation" also means reductions in the use or cost of water, wastewater, or solid waste.
     (3) "Cost-effective" means that the present value to a state agency or school district of the energy reasonably expected to be saved or produced by a facility, activity, measure, or piece of equipment over its useful life, including any compensation received from a utility or the Bonneville power administration, is greater than the net present value of the costs of implementing, maintaining, and operating such facility, activity, measure, or piece of equipment over its useful life, when discounted at the cost of public borrowing.
     (4) "Energy" means energy as defined in RCW 43.21F.025(1).
     (5) "Energy audit" has the definition provided in RCW 43.19.670, and may include a determination of the water or solid waste consumption characteristics of a facility.
     (6) "Energy efficiency project" means a conservation or cogeneration project.
     (7) "Energy efficiency services" means assistance furnished by the department to state agencies and school districts in identifying, evaluating, and implementing energy efficiency projects.
     (8) "Department" means the state department of general administration.
     (9) "Performance-based contracting" means contracts for which payment is conditional on achieving contractually specified energy savings.
     (10) "Public agency" means every state office, officer, board, commission, committee, bureau, department, and all political subdivisions of the state.
     (11) "Public facility" means a building or structure, or a group of buildings or structures at a single site, owned by a state agency or school district.
     (12) "State agency" means every state office or department, whether elective or appointive, state institutions of higher education, and all boards, commissions, or divisions of state government, however designated.
     (13) "State facility" means a building or structure, or a group of buildings or structures at a single site, owned by a state agency.
     (14) "Utility" means privately or publicly owned electric and gas utilities, electric cooperatives and mutuals, whether located within or without Washington state.
     (15) "Local utility" means the utility or utilities in whose service territory a public facility is located.