Section 1. Amend Chapter 69, Title 29 of the Delaware Code, by re-designating Subchapter V thereof as “Subchapter VI”.

Section 2. Amend Chapter 69, Title 29 of the Delaware Code, by inserting therein a new Subchapter V as follows:

“Subchapter V. The Energy Performance Contracting Act.

§ 6970. Short title; Declaration of Policy.

(a) This subchapter shall be known and may be cited as the Energy Performance Contracting Act.

(b) The General Assembly finds that investment in energy conservation measures in agency facilities can reduce the amount of energy consumed and produce immediate and long-term savings. It is the policy of this State to encourage agencies to invest in energy conservation measures that reduce energy consumption, produce a cost savings for the agency, and improve the quality of indoor air in public facilities and to operate, maintain, and when economically feasible, build or renovate existing agency facilities in such a manner as to minimize energy consumption and maximize energy savings. It is further the policy of this state to encourage agencies to reinvest any energy savings resulting from energy conservation measures in additional energy conservation efforts.

§ 6971. Definitions.

As used in this subchapter:

(1) “Agency” means any state agency, authority, or any political subdivision of state or local government, including, but not limited to, county, city, township, village or municipal government, local school districts, and institutions of higher education, any state-supported institution, or a joint action agency composed of political subdivisions.

(2) “Energy conservation measure” means a training program, facility alteration, facility improvement, or equipment purchase to be added or used in any facility that is designed to reduce energy or operating costs and includes, but is not limited to:

a. Insulation of the facility structure and systems within the facility;

b. Storm windows and doors, caulking and weather-stripping, multi-glazed windows and doors, heat-absorbing, or heat-reflective, glazed and coated window and door systems, additional glazing, reductions in glass area, and other window and door system modifications that reduce energy consumption;

c. Automatic energy control systems;

d. Heating, ventilating, or air-conditioning system modifications or replacements;

e. Replacement or modifications of lighting fixtures to increase the energy efficiency of the lighting system;

f. Day-lighting systems;

g. Energy recovery systems;

h. Cogeneration systems that produce steam or forms of energy such as heat, as well as electricity, for use primarily within a facility or complex of facilities;

i. Renewable energy systems, such as solar, biomass or wind systems;

j. Devices that reduce water consumption or sewer charges;

k. Storage systems, such as fuel cells and thermal storage;

l. Generating technologies, such as micro turbines; and

m. Any other repair, replacement or upgrade of existing equipment that produces energy and operational cost savings, improves safety, significantly reduces energy consumption or increases the operating efficiency of the facilities and which must conform to the applicable state or local building code.

(3) “Energy and operational cost savings” means a measured reduction in the cost of fuel, energy consumption, and stipulated operation and maintenance created from the implementation of one or more energy conservation measures when compared with an established baseline for the previous cost of fuel, energy consumption, and stipulated operation and maintenance.

(4) “Guaranteed energy performance contract” means a contract between the agency and a qualified provider for the evaluation, recommendation, and implementation of energy conservation measures, which, at minimum, shall include:

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

b. That the amount of guaranteed actual savings must meet or exceed the total annual contract payments made by the contracting agency for the guaranteed performance contract and that the contracting agency shall not be required to pay the qualified provider more than the savings that accrue during any defined period in the contract; and

c. The finance charges incurred by the agency over the life of the contract.

(5) “Qualified provider” means a person or business with a record of established projects that is experienced in the analysis, design, implementation, or installation of energy conservation measures through guaranteed energy performance contracts.

§ 6972. Authorization

(a) An agency may enter into an energy performance contract with a qualified provider to reduce energy or operational costs of an agency facility through one or more energy conservation measures. Cost savings work shall comply with state or local building codes.

(b) An agency may enter into a performance contract structured as an installment payment contract or lease-purchase agreement for the purchase and installation of cost-saving measures. Financing, including tax exempt financing, implemented through an entity other than the qualified provider is authorized.

(c) The agency may enter into an energy performance contract with a qualified provider if the agency finds that the amount the agency would spend on the energy conservation measures will not exceed the amount to be saved in both energy and operational costs for up to 20 years from the date of installation.

(d) The qualified provider shall be selected pursuant to § 6924 of this title.

(e) The selected qualified provider shall prepare a financial grade energy audit which, upon acceptance, shall be part of the final performance contract which shall be executed with the agency. Notwithstanding the foregoing, if after preparation of the financial grade energy audit the governmental unit decides not to execute a performance contract, then the costs incurred in preparing such financial grade energy audit shall be paid to the qualified provider by the agency, otherwise the costs of the financial grade energy audit shall be deemed part of the costs of the performance contract.

(f) Simultaneous with the execution of a contract for energy conservation measures, the agency shall require the qualified provider to provide a payment and performance bond relating to the installation of energy conservation measures in the amount equal to 100% of the value of the performance contract.

(g) Where appropriate, agencies shall determine cost-effectiveness based on the life-cycle costs of combinations of conservation measures, particularly to encourage bundling of energy efficiency projects with onsite generation and renewable energy projects.

§ 6973. Allocation of Obligations, Use of Moneys & Payment Schedule

(a) Each governmental unit shall allocate sufficient moneys for each fiscal year to make payment of any amounts payable by the governmental unit under performance contracts during that fiscal year.

(b) The agency engaging in the performance contract shall retain the savings realized by entering into the performance contract. In no event shall the agency utilize such savings to supplant otherwise appropriated funds for the agency.

(c) A governmental unit may use funds designated for operating, energy, or capital expenditures for any performance contract, including, without limitation, for purchases on an installment payment or lease purchase basis.

(d) Grants, subsidies, or other payments from the State to an agency shall not be reduced as a result of energy savings obtained as a result of a performance contract during the life of the contract.

(e) A performance contract, and payments provided there under, may extend beyond the fiscal year in which the performance contract became effective, subject to appropriation of moneys, if required by law, for costs incurred in future fiscal years. The performance contract may extend for a term not to exceed 20 years.

§ 6974. Monitoring and Reporting

(a) During the term of each performance contract, the qualified provider shall monitor the reductions in energy consumption and cost-savings attributable to the cost-savings measures installed through the performance contract, and shall, no less than annually, prepare and provide a report to the governmental unit documenting the performance of the cost-savings measures to the governmental unit.

(b) The agency and qualified provider may agree to base the measurement and verification of the performance contract on the practices outlined by the International Performance Measurement and Verification Protocol when appropriate.

§ 6975. Adherence to State Procurement Laws.

(a) The qualified provider shall, in the execution of a performance contract, adhere to the requirements of 29 Del. C. § 6961 or § 6962.

(b) Before an agency enters into a performance contract, the performance contract shall be approved by the Secretary.”