HB0196

HOUSE BILL 196

53rd legislature - STATE OF NEW MEXICO - second session, 2018

INTRODUCED BY

Bill McCamley

AN ACT

RELATING TO ENERGY CONSERVATION; AMENDING THE ENERGY EFFICIENCY AND RENEWABLE ENERGY BONDING ACT; ADDING DEFINITIONS; UPDATING REQUIREMENTS FOR BUILDING ASSESSMENTS AND CERTAIN AGREEMENTS; PROVIDING FOR DISTRIBUTIONS TO AND ADMINISTRATION OF A FUND FOR DEBT SERVICE PAYMENTS; REQUIRING ADJUSTMENTS TO STATE EQUALIZATION GUARANTEE DISTRIBUTIONS OR OPERATING BUDGETS FOR CERTAIN AMOUNTS CERTIFIED PURSUANT TO THE ACT; CHANGING CRITERIA FOR THE ISSUANCE OF ENERGY EFFICIENCY BONDS; REQUIRING CERTIFICATIONS AND VERIFICATIONS REGARDING COMPLIANCE WITH CERTAIN PROVISIONS OF THE ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 6-21D-2 NMSA 1978 (being Laws 2005, Chapter 176, Section 2) is amended to read:

"6-21D-2. DEFINITIONS.--As used in the Energy Efficiency and Renewable Energy Bonding Act:

A. "audit" means an investment grade audit that:

(1) is conducted pursuant to American society of heating, refrigerating and air-conditioning engineers standards and department guidelines; and

(2) includes a comprehensive evaluation, identification and analysis of potential energy efficiency measures and savings for the building;

[A.] B. "authority" means the New Mexico finance authority;

[B.] C. "bonds" means energy efficiency bonds;

D. "building" means a building under the ownership or jurisdiction of an eligible entity;

E. "construction oversight" includes the review and management of the performance and completion of the installation of energy efficiency measures identified in a certified energy assessment or audit;

F. "construction oversight authority" means the public school facilities authority for a school district; the facilities management division of the general services department for a building under the ownership or jurisdiction of the general services department; and the higher education department for a public post-secondary educational institution;

[C.] G. "department" means the energy, minerals and natural resources department;

H. "eligible entity" means a public post-secondary educational institution, a school district or a state agency;

I. "energy assessment" means:

(1) an evaluation of a facility's utility usage data; mechanical and electrical deficiencies; and ability to generate energy;

(2) the overall performance of the facility before or after energy efficiency measures have been completed; and

(3) a comprehensive analysis of energy savings;

[D.] J. "energy efficiency measure" means a modification or improvement to a building or complex of buildings that is designed to reduce energy consumption or operating costs or that provides a renewable energy source and may include:

(1) insulation of the building structure or systems within the building;

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

(3) automated or computerized energy control systems;

(4) heating, ventilating or air conditioning system modifications or replacements;

(5) replacement or modification of lighting fixtures to increase the energy efficiency of the lighting system;

(6) energy recovery systems;

(7) on-site photovoltaics, solar heating and cooling systems or other renewable energy systems; or

(8) cogeneration or combined heat and power systems that produce steam, chilled water or forms of energy such as heat, as well as electricity, for use primarily within a building or complex of buildings;

[E.] K. "fund" means the energy efficiency and renewable energy bonding fund;

L. "oversight entity" means the higher education department for a public post-secondary educational institution; the public education department for a school district; and the department of finance and administration for a state agency;

M. "power purchase agreement" means a financial agreement under which a qualified provider arranges for the design, permitting, financing and installation of an energy system for purchase by an eligible entity;

N. "public post-secondary educational institution" means an educational institution designated in Article 12, Section 11 of the constitution of New Mexico or organized pursuant to the provisions of Chapter 21, Article 13, 14 or 16 NMSA 1978;

O. "qualified provider" means a company that is qualified and certified as qualified by the department; and

[F.] P. "school district" means a political subdivision of the state established for the administration of public schools, segregated geographically for taxation and bonding purposes and governed by the Public School Code

[G. "school district building" means a building, the title to which is held by a school district; and

H. "state building" means a building, the title to which is held by the state or an agency of the state]."

SECTION 2. Section 6-21D-3 NMSA 1978 (being Laws 2005, Chapter 176, Section 3, as amended) is amended to read:

"6-21D-3. BUILDING ASSESSMENTS FOR ENERGY EFFICIENCY MEASURES.--

A. [Upon the request of a state agency or a school district] The department may perform or contract for the performance of an energy [efficiency] assessment [of a state or school district] or audit of a building [to]. The energy assessment or audit shall:

(1) identify the energy efficiency measures that can be installed and operated at a total price that is less than the energy cost savings [realized. In addition, the assessment shall]; and

(2) include a schedule for funding and installing the energy efficiency measures that will realize significant energy cost savings in the shortest time frame. [The department shall develop the assessment of:

(1) state buildings, in conjunction with the facilities management division of the general services department, the staff architect of the division, the capitol buildings planning commission and other state agencies with control and management over buildings; and

(2) school district buildings, in conjunction with the public education department, the public school capital outlay council and the public school facilities authority.

B. State agencies and school districts shall cooperate with the department in the assessment performed pursuant to Subsection A of this section.]

B. An eligible entity shall cooperate with the department in its certification of an energy assessment or audit that the department determines to have been completed by a qualified provider and to have provided reasonable and accurate estimates. The department shall provide the certification that includes energy cost savings projections to the eligible entity and the construction oversight entity."

SECTION 3. Section 6-21D-4 NMSA 1978 (being Laws 2005, Chapter 176, Section 4, as amended) is amended to read:

"6-21D-4. CONTRACTS FOR THE INSTALLATION, MAINTENANCE AND SAVINGS MONITORING OF ENERGY EFFICIENCY MEASURES.--

A. Pursuant to [an] a certified energy [efficiency] assessment or audit performed [under] pursuant to Section 6-21D-3 NMSA 1978, [and with] the provisions of the Procurement Code and the guidelines and approval of the department, [a state agency or school district] an eligible entity may [install] perform or enter into contracts for the installation, maintenance and savings monitoring of energy efficiency measures [on] for the building identified in the energy assessment [An installation contract shall be entered into pursuant to the Procurement Code, except that the contract may be entered into for a term of up to ten years. The installation or contracts shall address provisions concerning payment schedules, monitoring, inspecting, measuring and warranties as are necessary to ensure that the energy efficiency measures will be installed and the energy cost savings realized in the manner most beneficial to the state; provided that bonds shall not be issued pursuant to the Energy Efficiency and Renewable Energy Bonding Act without a finding by the department that the energy cost savings realized from the energy efficiency measures will be greater than the debt service due on the bonds issued to finance the energy efficiency measures] or audit.

B. A qualified provider shall:

(1) maintain a direct relationship with an eligible entity throughout the term of the authority loan agreement; and

(2) verify and report to the eligible entity about:

(a) the completion of the installation;

(b) each instance of maintenance; and

C. The eligible entity and construction oversight authority shall report to the department on the verifications and reports received from the qualified provider pursuant to the provisions of Subsection B of this section."

SECTION 4. Section 6-21D-5 NMSA 1978 (being Laws 2005, Chapter 176, Section 5) is amended to read:

"6-21D-5. ENERGY EFFICIENCY AND RENEWABLE ENERGY BONDING FUND--[PLEDGE OF MONEY IN THE FUND] AUTHORITY ADMINISTRATION OF A FUND FOR DEBT SERVICE.--

A. The "energy efficiency and renewable energy bonding fund" is created as a special fund within the authority. The fund shall be administered by the authority as a special account. The fund shall consist of gross receipts tax revenues distributed to the fund [by law] pursuant to Section 7-1-6.53 NMSA 1978, money transferred to the fund pursuant to the provisions of the Energy Efficiency and Renewable Energy Bonding Act and other transfers and appropriations made to the fund. Earnings of the fund shall be credited to the fund. Any unexpended or unencumbered balance in the [energy efficiency and renewable energy bonding] fund shall revert to the general fund at the end of a fiscal year.

B. Money in the fund shall be pledged irrevocably by the authority for the payment of principal and interest on all bonds issued pursuant to the Energy Efficiency and Renewable Energy Bonding Act. Money in the fund is appropriated to the authority for the purpose of paying debt service, including redemption premiums, on the bonds and the expenses incurred in the issuance, payment and administration of the bonds.

C. On the [last day of January and July of each year] date of bond issuance, the authority shall [estimate] provide to the secretary of taxation and revenue a certification of the amount needed to make debt service payments on the bonds issued pursuant to the Energy Efficiency and Renewable Energy Bonding Act plus the amount that may be needed for any required reserves, administrative expenses or [the] other obligations [coming due during the next twelve months from the fund] until final maturity or defeasance of the bonds. The taxation and revenue department shall use the certification from the authority to make distributions pursuant to the provisions of Section 7-1-6.53 NMSA 1978. Amounts that revert to the general fund from the [energy efficiency and renewable energy bonding] fund may be appropriated by the legislature to the department for the purposes of carrying out the provisions of the Energy Efficiency and Renewable Energy Bonding Act. The authority shall provide a new certification to the secretary of taxation and revenue upon any change in amount from the amount originally certified on the date of bond issuance.

D. Upon payment or defeasance of all principal, interest and other expenses or obligations related to the bonds, the authority shall [certify to the public education department, the department] provide a certification to the secretary of finance and administration, [and] the secretary of taxation and revenue, the applicable oversight entity and the secretary of general services for state agency buildings that all obligations for the bonds issued pursuant to the Energy Efficiency and Renewable Energy Bonding Act have been discharged and shall direct that distributions cease to the fund pursuant to that act and the Tax Administration Act.

E. The bonds issued pursuant to the Energy Efficiency and Renewable Energy Bonding Act shall be payable solely from the fund or such other special funds as may be provided by law and do not create an obligation or indebtedness of the state within the meaning of any constitutional provision. A breach of any contractual obligation incurred pursuant to that act shall not impose a pecuniary liability or a charge upon the general credit or taxing power of the state, and the bonds are not general obligations for which the state's full faith and credit is pledged.

F. The state does hereby pledge that the fund shall be used only for the purposes specified in this section and pledged first to pay the debt service on the bonds issued pursuant to the Energy Efficiency and Renewable Energy Bonding Act. The state further pledges that any law authorizing the distribution of taxes or other revenues to the fund or authorizing expenditures from the fund shall not be amended or repealed or otherwise modified so as to impair the bonds to which the fund is dedicated as provided in this section."

SECTION 5. Section 6-21D-6 NMSA 1978 (being Laws 2005, Chapter 176, Section 6) is amended to read:

"6-21D-6. CALCULATION OF COST SAVINGS [TRANSFERS TO ENERGY EFFICIENCY AND RENEWABLE ENERGY BONDING FUND] AND COSTS--DEDUCTIONS FROM OPERATING BUDGETS.--

A. Upon the installation of energy efficiency measures in a [state building or school district] building, the department shall calculate the estimated energy cost savings [in the form of lower utility payments by the school district or the state] that will be annually realized as a result of the installation of the energy efficiency measures. The department shall certify the estimate to the [department] secretary of finance and administration, the eligible entity, the applicable oversight entity and the [general services department or other] state agency [with] that has ownership of or jurisdiction [in the case of state buildings, and to the department of finance and administration, the public education department and the school district, in the case of school district buildings] over a state agency building.

B. [In the case of a school district building] When calculating an eligible entity's operating budget or the state equalization guarantee distribution for a school district pursuant to Section 22-8-25 NMSA 1978, the [public education department] oversight entity shall deduct ninety percent of the amount certified [for the school district] in the energy assessment or audit by the department.

[C. Reduction of a school district's state equalization guarantee distribution shall cease when the school district's cumulative reductions equal its proportional share of the cumulative debt service payments necessary to service the bonds issued pursuant to the Energy Efficiency and Renewable Energy Bonding Act.

D. Prior to June 30 of each year, the total amount deducted for all school districts pursuant to Subsection B of this section shall be transferred to the fund.

E.] In the case of a [state] building under the ownership or jurisdiction of a state agency, the department of finance and administration shall deduct [from the operating budget of the agency responsible for paying the utilities of the state building] ninety percent of the amount certified [for the agency] in the energy assessment or audit by the department

[F. Deduction] from the operating budget of the agency responsible for paying the utilities of the state building. [shall cease when the agency's cumulative deductions equal its proportional share of the cumulative debt service payments necessary to service the bonds issued pursuant to the Energy Efficiency and Renewable Energy Bonding Act.

G.] C. Deductions made pursuant to Subsection B of this section shall cease upon payment or defeasance of all principal, interest and other expenses or obligations related to bonds issued to finance energy efficiency measures in an eligible entity's building.

D. Prior to June 30 of each year, each oversight entity shall revert to the general fund the total amount deducted for all [agencies and all state buildings] eligible entities pursuant to Subsection [D] B of this section [shall be transferred from the appropriate funds to the energy efficiency and renewable energy bonding fund]."

SECTION 6. Section 6-21D-6.1 NMSA 1978 (being Laws 2007, Chapter 171, Section 6) is amended to read:

"6-21D-6.1. ENERGY EFFICIENCY ASSESSMENT REVOLVING

FUND.--The "energy efficiency assessment revolving fund" is created in the state treasury. The fund shall consist of appropriations, gifts, grants, donations and bequests made to the fund and reimbursements of costs incurred by the department in performing energy [efficiency] assessments or audits pursuant to the Energy Efficiency and Renewable Energy Bonding Act. Income from the fund shall be credited to the fund, and money in the fund shall not revert or be transferred to any other fund at the end of a fiscal year. Money in the fund is appropriated to the department for the purposes of performing energy [efficiency] assessments or audits. Expenditures from the fund shall be made on warrant of the secretary of finance and administration pursuant to vouchers signed by the secretary of energy, minerals and natural resources."

SECTION 7. Section 6-21D-7 NMSA 1978 (being Laws 2005, Chapter 176, Section 7, as amended) is amended to read:

"6-21D-7. ENERGY EFFICIENCY BONDS AUTHORIZED-- CONDITIONS--PROCEDURE.--

A. The authority is authorized to issue and sell from time to time revenue bonds, known as "energy efficiency bonds", in an amount outstanding at any one time not to exceed twenty million dollars ($20,000,000), payable solely from the fund administered by the authority pursuant to Section 6-21D-5 NMSA 1978, in compliance with the Energy Efficiency and Renewable Energy Bonding Act and the New Mexico Finance Authority Act for the purpose of installing energy efficiency measures when the department has certified the need for the bonds and the conditions of Subsection C of this section have been satisfied.

B. The net proceeds from the bonds are appropriated to the authority for the purpose of making distributions to one or more [state agencies or school districts] eligible entities that, pursuant to an energy [efficiency] assessment or audit certified by the department, have committed to install energy efficiency measures or entered into contracts for the installation of the energy efficiency measures. Upon receipt of a distribution, the [state agency or school district shall deposit into the energy efficiency assessment revolving fund the cost incurred by the department to make the energy efficiency assessment on the building and shall use the remainder] eligible entity shall use the net proceeds of the bonds for the installation of energy efficiency measures, maintenance and savings monitoring pursuant to the Energy Efficiency and Renewable Energy Bonding Act, costs incurred by the eligible entity for the energy assessment or audit and bond issuance; provided that, after the installation of the energy efficiency measures, any unexpended balance of the bond proceeds shall revert to the [energy efficiency and renewable energy bonding] fund administered by the authority under Section 6-21D-5 NMSA 1978.

C. Bonds shall not be issued pursuant to this section unless:

(1) [a state agency or school district] an eligible entity has committed to [install or has entered into one or more contracts] enter into a contract or power purchase agreement for the installation, maintenance and savings monitoring of energy efficiency measures pursuant to Section 6-21D-4 NMSA 1978 [for the installation of energy efficiency measures] and the department has certified that the resulting estimated energy cost savings will be realized within a reasonable time;

(2) considering the timeliness and amount of energy cost savings estimated to be realized from the energy efficiency measures, the department has certified the [approximate date when the energy cost savings are most likely to equal or exceed the debt service due on the bonds to be issued to fund] energy cost savings estimated from the energy efficiency measures over the life of the energy efficiency measures;

(3) the life of energy efficiency measures meets or exceeds the life of the bonds allocable to those energy efficiency measures as determined by the department and the authority; and

(4) based on the department's certification, the debt service on the bonds has been structured by the authority [to preclude the annual debt service payments due until the date] such that the total cost savings [equal] meet or exceed the debt service payments and other associated costs over the term of the bonds.

D. Each series of bonds shall be issued pursuant to the provisions of the New Mexico Finance Authority Act, except as otherwise provided in the Energy Efficiency and Renewable Energy Bonding Act."

SECTION 8. Section 6-21D-10 NMSA 1978 (being Laws 2005, Chapter 176, Section 10, as amended) is amended to read:

"6-21D-10. ANNUAL REPORT REQUIRED.--No later than December 1 of each year, the department shall report to the legislature, [and to] the governor and the authority on its activities during the previous fiscal year in administering the provisions of the Energy Efficiency and Renewable Energy Bonding Act. The report shall include:

[A. details concerning all payments made for the installation of energy efficiency measures;

B. details concerning all expenditures made in administering the provisions of the Energy Efficiency and Renewable Energy Bonding Act;

C.] A. a list of all buildings on which an energy [efficiency] assessment or audit has been performed and the buildings in which energy efficiency measures were installed;

[D.] B. details showing how the energy cost savings were calculated;

[E.] C. an analysis of whether the program has been cost-effective;

[F.] D. a summary of activities being conducted during the present fiscal year; and

[G.] E. any additional information that will assist the legislature and the governor in evaluating the program."

SECTION 9. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2018.

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