Code of Virginia

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Code of Virginia
Title 45.2. Mines, Minerals, and Energy
Chapter 17. Other Sources of Energy Generally; Energy Policy

Article 2. Energy and Operational Efficiency Performance-Based Contracting Act.

§ 45.2-1702. (Effective October 1, 2021) Definitions.

As used in this article:

"Contracting entity" means any public body as defined in § 2.2-4301.

"Energy conservation measures" means the use of methods and techniques, the application of knowledge, or the installation of devices, including an alteration or betterment of an existing facility, that reduces energy consumption or operating costs and includes:

1. Insulation of the facility structure and systems within the facility.

2. Installation of storm windows and doors, caulking or weatherstripping, multiglazed windows and doors, heat-absorbing or heat-reflective glazed and coated window and door systems, or additional glazing; reductions in glass area; or the completion of other window and door system modifications that reduce energy consumption.

3. Installation of automatic energy control systems, including related software, or required network communication wiring, computer devices, wiring, and support services, or the design and implementation of major building technology infrastructure with operational improvements.

4. Modification or replacement of heating, ventilating, or air-conditioning systems.

5. Replacement or modification of lighting fixtures to increase the energy efficiency of the lighting system. Such replacement or modification shall, at a minimum, conform to the applicable provisions of the Uniform Statewide Building Code (§ 36-97 et seq.).

6. Installation of energy recovery systems.

7. Installation of cogeneration systems that produce, in addition to electricity, steam or another form of energy, such as heat, for use primarily within a facility or complex of facilities.

8. Installation of energy conservation measures that provide long-term operating cost reductions and significantly reduce the BTUs consumed.

9. Installation of building technology infrastructure measures that provide long-term operating cost reductions and reduce related operational costs.

10. Installation of an energy system, such as solar, biomass, or wind.

11. Installation of devices that reduce water consumption or sewer charges.

"Energy cost savings" means a measured reduction in fuel, energy, or operation and maintenance costs created from the implementation of one or more energy conservation measures when compared with an established baseline for previous fuel, energy, or operation and maintenance costs. When calculating "energy cost savings" attributable to the services performed or equipment installed pursuant to a performance-based efficiency contract, maintenance savings shall be included.

"Energy performance-based contract" means a contract for the evaluation, recommendation, and implementation of energy conservation measures that includes, at a minimum:

1. The design and installation of equipment to implement one or more such measures and, if applicable, the operation and maintenance of such measures.

2. The amount of any actual annual savings. Such amount shall meet or exceed the total annual contract payments made by the contracting entity for such contract.

3. The financing charges to be incurred by the contracting entity for such contract.

"Maintenance savings" means the operating expenses eliminated and future capital replacement expenditures avoided as a result of new equipment installed or services performed by the performance contractor.

"Performance guarantee bond" means the performance bond provided by the energy performance contractor for each year of the energy program in an amount equal to, but no greater than, the guaranteed measured and verifiable annual savings set forth in the program.

2001, c. 219, § 11-34.2; 2021, Sp. Sess. I, c. 387.

§ 45.2-1703. (Effective October 1, 2021) Energy performance-based contract procedures; required contract provisions.

A. Any contracting entity may enter into an energy performance-based contract with an energy performance contractor to significantly reduce (i) energy costs to a level established by the public body or (ii) operating costs of a facility through one or more energy conservation or operational efficiency measures. For the purposes of this article, energy conservation or operational efficiency measures shall not include roof replacement projects.

B. The energy performance contractor shall be selected through competitive sealed bidding or competitive negotiation as set forth in § 2.2-4302.1 or 2.2-4302.2. The evaluation of the request for proposals shall analyze the estimates of all costs of installation, maintenance, repairs, debt service, post-installation project monitoring, and reporting. Notwithstanding any other provision of law, any contracting entity may purchase energy conservation or operational efficiency measures under an energy performance-based contract entered into by another contracting entity pursuant to this article even if it did not participate in the request for proposals if the request for proposals specified that the procurement was being conducted on behalf of other contracting entities.

C. Before entering into a contract for energy conservation measures, the contracting entity shall require the performance contractor to provide a payment and performance bond relating to the installation of energy conservation measures in an amount the contracting entity finds reasonable and necessary to protect its interests.

D. Prior to the design and installation of any energy conservation measures, the contracting entity shall obtain from the energy performance contractor a report disclosing all costs associated with such energy conservation measures and providing an estimate of the amount of the energy cost savings. After reviewing the report, the contracting entity may enter into an energy performance-based contract if it finds (i) the amount the entity would spend on the energy conservation measures recommended in the report will not exceed the amount to be saved in energy and operation costs more than 20 years from the date of installation, based on life-cycle costing calculations, if the recommendations in the report were followed and (ii) the energy performance contractor provides a written guarantee that the energy and operating cost savings will meet or exceed the costs of the system. The contract may provide for payments over a period not to exceed 20 years.

E. The term of any energy performance-based contract shall expire at the end of each fiscal year but may be renewed annually for up to 20 years, subject to the contracting entity making sufficient annual appropriations based upon continued realized cost savings. Such contract shall stipulate that the agreement does not constitute a debt, liability, or obligation of the contracting entity, or a pledge of the faith and credit of the contracting entity. Such contract may also provide capital contributions for the purchase and installation of energy conservation measures that cannot be totally funded by the energy and operational savings.

F. An energy performance-based contract shall include the following provisions:

1. A guarantee by the energy performance contractor that annual energy and operational cost savings will meet or exceed the amortized cost of energy conservation measures. The guaranteed energy savings contract shall include a written guarantee of the qualified provider that either the energy savings or operational cost savings, or both, will meet or exceed within 20 years the costs of the energy and operational savings measures. The qualified provider shall reimburse the contracting entity for any shortfall of guaranteed energy savings projected in the contract.

2. A requirement that the energy performance contractor to whom the contract is awarded provide a 100 percent performance guarantee bond to the contracting entity for the installation and faithful performance of the installed energy savings measures as outlined in the contract document.

3. A requirement that the energy performance contractor provide to the contracting entity an annual reconciliation of the guaranteed energy cost savings. The energy performance contractor shall be liable for any annual savings shortfall that may occur.

G. The Department shall make a reasonable effort, as long as workload permits, to:

1. Provide general advice, upon request, to local governments considering pursuit of an energy performance-based contract pursuant to this article; and

2. Annually compile a list of performance-based contracts entered into by local governments of which the Department becomes aware.

2001, c. 219, § 11-34.3; 2004, c. 197; 2009, c. 399; 2013, c. 583; 2017, c. 259; 2021, Sp. Sess. I, c. 387.

§ 45.2-1704. (Effective October 1, 2021) Application of article.

The provisions of this article shall not apply to any new construction project undertaken by a public body.

2001, c. 219, § 11-34.4; 2021, Sp. Sess. I, c. 387.