LPDD Model Law: Legislation Enabling Guaranteed Conservation Performance Contracting for Public Entities

Employing energy-efficiency retrofits can improve the energy-efficiency of existing buildings by approximately 30-50%. One model for financing and installing such retrofits is the guaranteed energy savings agreement (also sometimes called an energy performance contract). Pursuant to such contracts, energy service companies (ESCOs) install retrofits to buildings and contractually guarantee energy, water, and sometimes other environmental savings over time, and the savings often exceed the cost of the upgrades.

While private entities already may have the financial and social incentives to upgrade existing buildings with energy-efficient retrofits, government entities face a procurement challenge. Because public owners must finance retrofits on the front end, they cannot take advantage of the performance contracting model unless enabling procurement legislation is in place.

The model legislation set forth below makes a variety of suggested improvements as compared to existing legislation.  The proposed model state law authorizes public entities to enter into Guaranteed Conservation Performance Contracts which address a broad range of energy, water, and environmental improvements.  The model legislation was prepared based on various existing procurement laws from several states.  It will be a good starting point for states that wish to implement new, update, or broaden existing laws.