S-2389.2

SECOND SUBSTITUTE SENATE BILL 5308

BySenate Ways & Means (originally sponsored by Senators Short and Liias)

AN ACT Relating to performance-based contracting services by energy service contractors; amending RCW 39.35A.020 and 39.35A.050; adding new sections to chapter 39.35A RCW; and creating new sections.

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

Sec. 1. RCW 39.35A.020 and 2007 c 39 s 2 are each amended to read as follows:

((Unless the context clearly indicates otherwise,))The definitions in this section ((shall)) apply throughout this chapter unless the context clearly requires otherwise.

(1) "Department" means the department of enterprise services.

(2) "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)))(3) "Energy management system" has the definition provided in RCW 39.35.030.

(((3)))(4) "Municipality" has the definition provided in RCW 39.04.010.

(((4)))(5) "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; 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. 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)))(6) "Water conservation" means reductions in the use of water or wastewater.

Sec. 2. RCW 39.35A.050 and 2015 c 225 s 46 are each amended to read as follows:

The ((state)) department ((of enterprise services)) shall maintain a registry of energy service contractors and provide assistance to municipalities in identifying available performance-based contracting services. The department shall periodically review the registry of energy service contractors and, if necessary, revise the registry by adding or removing contractors based on qualifications identified by the department, such as contractors' performance history, comments from municipalities about services provided by contractors, and other similar factors. The department must incorporate the cost of this activity in its project management fee.

NEW SECTION.  Sec. 3. A new section is added to chapter 39.35A RCW to read as follows:

(1) All technical submissions required for construction and provided by the department or an energy service contractor under a performance-based contract must be prepared by the services of a professional engineer registered under chapter 18.43 RCW.

(2) This section only applies to performance-based contracting services that have been procured by a municipality with the assistance or involvement of the department.

NEW SECTION.  Sec. 4. A new section is added to chapter 39.35A RCW to read as follows:

(1)(a) Before a performance-based contract is executed, the department shall meet and confer with the parties to the contract to review the energy equipment and services proposed to be provided under the contract. The department must incorporate the cost of this activity in its project management fee.

(b) The purpose of the meeting required under this section is to ensure that the energy equipment and services are appropriate to meet the specific needs of the municipality.

(2) The department and the energy service contractor must be prepared to offer information and answer questions about the capabilities of the energy equipment and services, expected outcomes for the municipality, and whether other energy equipment and services may be better suited to the municipality's purposes.

(3) Any proposed revisions to the performance-based contract that are a result of the meeting among the department, energy service contractor, and municipality must be recorded and agreed upon by all parties before the energy equipment and services may be provided.

(4) This section only applies to performance-based contracting services that have been procured by a municipality with the assistance or involvement of the department.

NEW SECTION.  Sec. 5. A new section is added to chapter 39.35A RCW to read as follows:

(1) The department shall ensure that the performance-based contract provides for independent evaluation or review of the operability of the energy equipment and services. The independent evaluation or review required under this section must be conducted by a third-party contractor who is qualified and familiar with energy savings performance contracts but is not currently an eligible vendor in Washington state. The independent evaluation or review must include confirmation that the energy equipment and services are properly installed and capable of performing correctly and that the municipality's personnel have been appropriately trained in use and maintenance.

(2) Where ongoing monitoring is required under a performance-based contract, the energy service contractor shall provide an annual report to the municipality and the department summarizing the results of monitoring.

(3) This section only applies to performance-based contracting services that have been procured by a municipality with the assistance or involvement of the department.

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