TITLE 34.PUBLIC FINANCE

Part 1. COMPTROLLER OF PUBLIC ACCOUNTS

Chapter 19. STATE ENERGY CONSERVATION OFFICE

Subchapter A. GENERAL PROVISIONS

34 TAC §19.1, §19.2

The Comptroller of Public Accounts proposes new §19.1 and §19.2, concerning the purpose of the State Energy Conservation Office (SECO) and the SECO business office location and mailing address. These new sections are proposed under Texas Administrative Code, Title 34, Part 1, new Chapter 19: State Energy Conservation Office: Subchapter A: General Provisions, and relate to the functions and responsibilities of SECO, pursuant to House Bill 2914, House Bill 2278, and House Bill 3286, 77th Legislature, 2001.

House Bill 2914, transfers to the comptroller all the functions and activities of the General Services Commission that relate to energy conservation under Government Code, Chapter 447 or Chapter 2305. Government Code, §447.001, establishes the State Energy Conservation Office in the comptroller's office; Government Code, §447.002, directs the state energy conservation office to make rules relating to the adoption and implementation of energy conservation programs applicable to state buildings and facilities; and Government Code, §2305.011, authorizes the comptroller to adopt rules as necessary to administer the programs prescribed by Government Code, Chapter 2305, relating to restitution for oil overcharges. These provisions of House Bill 2914 were effective immediately.

House Bill 2278, September 1, 2001, amends Government Code, Chapter 447 and Chapter 2305, relating to the consolidation and functions of the Energy Management Center and the State Energy Conservation Office and to the transfer of the powers and duties of the center and the office to the comptroller's office.

House Bill 3286, effective September 1, 2001, amends Government Code, Chapter 447, to include water conservation along with energy conservation among the duties of the State Energy Conservation Office relating to state buildings and facilities.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the rules will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. LeBas also has determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rule will be minimizing or helping to control utility costs incurred by state agencies and institutions of higher education, reducing energy and water consumption, and facilitating long range utility management planning by state agencies and institutions of higher education, leading to more fiscally responsible government. There is no significant anticipated economic cost to individuals who are required to comply with the proposed rules. There are no significant anticipated fiscal implications for small businesses.

Comments on the proposal may be submitted to Dub Taylor, Manager, State Energy Conservation Office, Comptroller of Public Accounts, P.O. Box 13528, Austin, Texas 78711- 3528.

These new sections are proposed under Government Code, §447.002 and §2305.011, which authorize the comptroller and the State Energy Conservation Office to adopt rules relating to energy and water conservation for state buildings and facilities and to the LoanSTAR Revolving Loan Program.

The new sections implement Government Code, §§447.001, 447.002, and 2305.032.

§19.1.Purpose of the State Energy Conservation Office.

The State Energy Conservation Office (SECO) is the designated successor to the Energy Management Center that was originally established in 1987 in the governor's office and reestablished in 1995 in the General Services Commission. SECO is now under the direction and control of the comptroller. Pursuant to Government Code, Chapter 447, SECO was created to develop and provide energy and water conservation information for the state and to implement energy and water conservation programs that apply to state buildings and facilities. Pursuant to Government Code, Chapter 2305, SECO was created to manage the programs that relate to the Oil Overcharge Restitutionary Act.

§19.2.State Energy Conservation Office Business Location and Mailing Address.

The business office of the State Energy Conservation Office (SECO) is located at Lyndon Baines Johnson (LBJ) State Office Building, 111 E. 17th Street, Suite 1114, Austin, Texas 78774. The mailing address for SECO is: State Energy Conservation Office, Comptroller of Public Accounts, P.O. Box 13528, Austin, Texas 78711-3528.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 4, 2002.

TRD-200200688

Martin Cherry

Deputy General Counsel for Taxation

Comptroller of Public Accounts

Earliest possible date of adoption: March 17, 2002

For further information, please call: (512) 463-3699


Subchapter B. STATE FACILITY ENERGY AND WATER MANAGEMENT

34 TAC §§19.11 - 19.19

The Comptroller of Public Accounts proposes new §§19.11-19.19, concerning state facility energy and water management. These new sections are proposed under Texas Administrative Code, Title 34, Part 1, new Chapter 19: State Energy Conservation Office, Subchapter B: State Facility Energy and Water Management, and relate to the functions and responsibilities of SECO, pursuant to House Bill 2914, House Bill 2278, and House Bill 3286, 77th Legislature, 2001.

House Bill 2914, transfers to the comptroller all the functions and activities of the General Services Commission that relate to energy conservation under Government Code, Chapter 447 or Chapter 2305. Government Code, §447.001, establishes the State Energy Conservation Office in the comptroller's office; Government Code, §447.002, directs the State Energy Conservation Office to develop rules relating to the adoption and implementation of energy conservation programs applicable to state buildings and facilities; and Government Code, §2305.011, authorizes the comptroller to adopt rules as necessary to administer the programs prescribed by Government Code, Chapter 2305, relating to restitution for oil overcharges. These provisions of House Bill 2914 were effective immediately.

House Bill 2278, September 1, 2001, amends Government Code, Chapter 447 and Chapter 2305, relating to the consolidation and functions of the Energy Management Center and the State Energy Conservation Office and to the transfer of the powers and duties of the center and the office to the comptroller's office.

House Bill 3286, effective September 1, 2001, amends Government Code, Chapter 447, to include water conservation along with energy conservation among the duties of the State Energy Conservation Office relating to state buildings and facilities.

Section 19.11 states the purpose of the rules related to state facility energy and water management; §19.12 provides that the rules apply generally to state agencies and institutions of higher education that occupy state-owned buildings or that otherwise incur utility costs; §19.13 provides definitions of terms used in 34 TAC, Chapter 19, Subchapter B; §19.14 proposes the requirements for utility management planning for state agencies and institutions of higher education; §19.15 addresses implementation of the Resource Efficiency Plan recommendations; §19.16 outlines the proposed requirements for the Long Range Utility Services Plan; §19.17 requires each state agency and institution of higher education to review and audit utility billings and contracts to detect billing errors; §19.18 specifies the requirements for semiannual reporting; §19.19 outlines the process for obtaining an extension of time to file plans and reports.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the rules will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. LeBas also has determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rule will be minimizing or helping to control utility costs incurred by state agencies and institutions of higher education, reducing energy and water consumption, and facilitating long range utility management planning by state agencies and institutions of higher education, leading to more fiscally responsible government. There is no significant anticipated economic cost to individuals who are required to comply with the proposed rules. There are no significant anticipated fiscal implications for small businesses.

Comments on the proposal may be submitted to Dub Taylor, Manager, State Energy Conservation Office, Comptroller of Public Accounts, P.O. Box 13528, Austin, Texas 78711- 3528.

These new sections are proposed under Government Code, §447.002 and §2305.011, which authorize the comptroller and the State Energy Conservation Office to adopt rules relating to energy and water conservation for state buildings and facilities and to the LoanSTAR Revolving Loan Program.

The new sections implement Government Code, §§447.001, 447.002, and 2305.032.

§19.11.Purpose of Rules.

The purpose of the rules that pertain to state facility energy and water management is to achieve measurable cost effective utility and related operational efficiency improvements, and to reduce unnecessary consumption of natural resources by state agencies and institutions of higher education.

§19.12.Application.

(a) Unless specified otherwise, these rules apply generally to state agencies and institutions of higher education that occupy state-owned buildings or that otherwise incur utility costs.

(b) Responsibilities of state agencies. All state agencies that occupy state-owned buildings are required to submit a Resource Efficiency Plan to the State Energy Conservation Office (SECO).

(1) State agencies responsible for provision of utilities. A state agency that is responsible for the supply of utilities that are used in buildings or facilities of other state agencies shall have the primary responsibility for development and implementation of the Resource Efficiency Plan, with the assistance of the using agency.

(2) Using agencies. Any state agency that occupies space in a state-owned building to which a managing state agency provides the utility service shall submit to SECO a Resource Efficiency Plan, which addresses applicable provisions, and shall assist the managing agency in the preparation and implementation of the managing agency's Resource Efficiency Plan. The using agency shall coordinate its Resource Efficiency Plan with the managing agency.

(3) Leased space. A state agency that occupies a building that the state does not own shall submit to SECO a Resource Efficiency Plan, which addresses applicable provisions, and shall cooperate with SECO in addressing the utility management of that leased space. This cooperation shall include taking actions to affect energy and water use and employee behavior to the extent that such actions can result in savings in utility related lease costs. A state agency that occupies non-state owned buildings shall prepare and submit the Utility Awareness Plan that is described in §19.14(c)(5) of this title (relating to Utility Management Planning) and update the plan as required.

(c) Responsibilities of institutions of higher education.

(1) State funded facilities. An institution of higher education that occupies a state-owned building shall submit a Resource Efficiency Plan to SECO for its state funded facilities.

(2) Non-state funded (auxiliary) facilities. An institution of higher education may ask SECO for technical guidance to assist any of the institution's auxiliary enterprises in utility management to the extent that the assistance may result in a public benefit.

(3) Leased space. An institution of higher education that occupies a building that the state does not own shall cooperate with SECO in addressing the utility management of the leased space. This cooperation shall include taking actions to affect energy and water use and user behavior to the extent that such actions can result in savings in utility related lease costs. An institution of higher education that occupies non-state owned buildings shall prepare and submit the Utility Awareness Plan that is described in §19.14(c)(5) of this title (relating to Utility Management Planning) and update the plan as required.

§19.13.Definitions.

The following words and terms, when used in this chapter shall have the following meanings, unless the context clearly indicates otherwise.

(1) Available funding--Any funds that are appropriated for utility efficiency improvements or related capital upgrades, repairs, maintenance, and operations of utility systems; funds that would ordinarily be allocated to pay for utility expenses; and funding from a financing method that is prescribed by Government Code, §2166.406.

(2) Comprehensive project--All utility related facility and operational improvements which, when considered together, can cost effectively be implemented at one time.

(3) Cost effective measure--Efficiency measures that individually or as a group create measurable and verifiable utility cost savings that are at least as great as their cost within their useful life, not to exceed 15 years.

(4) Five-year Energy Management Plan--A comprehensive plan that consists of a Resource Efficiency Plan and a Long Range Utility Services Plan.

(5) Institution of higher education--Has the meaning that is assigned by Education Code, §61.003.

(6) Managing state agency--A state agency that is responsible for the supply of utilities used in buildings or facilities of other state agencies.

(7) Resource efficiency measure--Any cost effective measure that is designed to reduce utility consumption and related operating costs of governmental facilities.

(8) Resource Efficiency Plan--A comprehensive biennial plan that a state agency or institution of higher education prepares and that identifies potential cost effective measures for minimizing utility consumption and costs in all agency facilities and buildings, along with implementation schedules and methods of financing the measures as outlined in this chapter.

(9) State agency--Any department, commission, board, office, or other agency in the executive, judicial, or legislative branch of state government that exists under the constitution or a statute of this state and that has authority that is not limited to a geographical portion of the state.

(10) Using agency--An instrumentality of the state that occupies and uses a state-owned building or facility that another state agency manages.

(11) Utility--Electricity, gas, thermal, or other energy resource, water, and wastewater.

(12) Utility Assessment Report--An assessment of utility and utility related operational efficiency that is prepared by, or under the supervision of, a person who is registered as a professional engineer under the Texas Engineering Practice Act, and which identifies each of the cost effective utility and utility related operational efficiency measures or practices that apply to the buildings or facilities of a state agency or institution of higher education as required by this chapter.

§19.14.Utility Management Planning.

(a) Plan requirement. The head of a state agency or an institution of higher education as outlined in §19.12 of this title (relating to Application) shall submit to the State Energy Conservation Office (SECO) a Resource Efficiency Plan for approval.

(b) Submission date. The Resource Efficiency Plan shall be submitted by October 31 of each even numbered year beginning October 31, 2002.

(c) Contents of plan. The Resource Efficiency Plan shall include, at a minimum, the following:

(1) a summary of the overall strategy and goals for addressing utility use at state-owned buildings or facilities;

(2) a UtilityAssessment Report (UAR) for a representative number of the state-owned buildings or facilities that the state agency or institution of higher education occupies, and a projected schedule that outlines the plans for completion of a UAR for all the remaining state-owned buildings or facilities that the agency or institution occupies. The UAR should detail recommendations for cost effective resource efficiency measures that could be implemented to reduce utility consumption and/or utility costs;

(3) an Implementation Schedule that describes how the agency or institution plans to achieve the agency established goals and implement the recommended cost effective resource efficiency measures that are identified in the UAR, and a strategy for monitoring the status of implementation of the Resource Efficiency Plan;

(4) a Finance Strategy that describes how the agency or institution plans to obtain funding for the recommended cost effective efficiency measures;

(5) a Utility Awareness Plan through which the agency or institution will educate its personnel on utility conservation methods and practices;

(6) an Asset Management Inventory that describes the agency's or institution's buildings or facilities, in a format that SECO prescribes;

(7) a two-year history of utility use and expenditures for the buildings and facilities that are identified in the Asset Management Inventory, in a format that SECO prescribes, including, without limitation, the rates for utilities that are charged to, and the amount of utilities that are used by, the agency or institution.

(8) a Savings Monitoring and Evaluation Plan that describes the plans for monitoring and evaluating utility efficiency savings as a result of implementation of the recommendations in the UAR;

(9) a Project Implementation Update that outlines the progress over the previous two years in implementation of the recommendations that are contained in the previous Resource Efficiency Plan, including a summary of the results of the projects in terms of utility efficiency and cost savings;

(10) the name and address of the designated official at the agency or institution who is responsible for implementation of the recommendations in the Resource Efficiency Plan, and the name and address of an agency or institution contact person for the Resource Efficiency Plan;

(11) any Resource Efficiency Plans that using agencies have prepared.

(d) The plan for a using agency or for an agency that leases space shall include only those provisions of subsection (c) of this section that apply to the occupying agency's situation.

§19.15.Implementation of Resource Efficiency Plan Recommendations.

A state agency shall implement the cost effective utility conservation measures in accordance with the timelines and recommendations that are contained in the agency's Resource Efficiency Plan, if the measures meet the eligibility requirements of Government Code, §2166.406, and to the extent of available funding. To the extent feasible, utility and utility related operational improvements that are made to each building or facility shall be implemented through comprehensive projects in order to optimize the scope of each project. Through implementation of the Resource Efficiency Plan recommendations, state agencies shall adopt qualified cost effective efficiency measures for all state-owned facilities by September 1, 2006.

§19.16.Long Range Utility Services Plan.

A state agency or institution of higher education that purchases utilities shall prepare and submit to the State Energy Conservation Office (SECO) a long range plan for the delivery of reliable, cost-effective utility services for the agency or institution. This plan may be submitted in conjunction with, or as part of, the Resource Efficiency Plan. The agency or institution shall update the Long Range Utility Services Plan at least every five years to support five-year construction and major renovation planning.

§19.17.Utility Bill Review.

Each state agency or institution of higher education shall review and audit utility billings and contracts to detect billing errors.

§19.18.Semiannual Reporting.

Each state agency that has prepared a Resource Efficiency Plan under this chapter shall semiannually provide to the State Energy Conservation Office (SECO) a status report, in a form that SECO prescribes, that discusses the progress that the agency has made in the implementation of its Resource Efficiency Plan and in the reduction of utility costs through adherence to the Resource Efficiency Plan. SECO shall prescribe the form and content of the report, and will report the information to the Legislative Budget Board.

§19.19.Extension of Time.

A state agency or institution of higher education may apply to the State Energy Conservation Office (SECO) for an extension of time to submit any plan or report submission that is required under this chapter. The request should be submitted in writing to SECO prior to the deadline for submission of the plan or report. The request should outline the reasons that support the grant of the extension. SECO may grant the request for good cause shown. This agency hereby certifies that these proposals have been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on February 4, 2002. MARTIN E. CHERRY Deputy General Counsel for Taxation Comptroller of Public Accounts

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 4, 2002.

TRD-200200689

Martin Cherry

Deputy General Counsel for Taxation

Comptroller of Public Accounts

Earliest possible date of adoption: March 17, 2002

For further information, please call: (512) 463-3699


Subchapter C. ENERGY CONSERVATION DESIGN STANDARDS

34 TAC §§19.31 - 19.34

The Comptroller of Public Accounts proposes new §§19.31-19.34, concerning energy and water conservation design standards for state buildings and facilities. These new sections are proposed under Texas Administrative Code, Title 34, Part 1, new Chapter 19: State Energy Conservation Office, Subchapter C: Energy Conservation Design Standards, and relate to the functions and responsibilities of the State Energy Conservation Office (SECO), pursuant to House Bill 2914, House Bill 2278, and House Bill 3286, 77th Legislature, 2001.

House Bill 2914, transfers to the comptroller all the functions and activities of the General Services Commission that relate to energy conservation under Government Code, Chapter 447 or Chapter 2305. Government Code, §447.001, establishes the state energy conservation office in the comptroller's office; Government Code, §447.002, directs the state energy conservation office to make rules relating to the adoption and implementation of energy conservation programs applicable to state buildings and facilities; and Government Code, §2305.011, authorizes the comptroller to adopt rules as necessary to administer the programs prescribed by Government Code, Chapter 2305, relating to restitution for oil overcharges. These provisions of House Bill 2914 were effective immediately.

House Bill 2278, September 1, 2001, amends Government Code, Chapter 447 and Chapter 2305, relating to the consolidation and functions of the Energy Management Center and the State Energy Conservation Office and to the transfer of the powers and duties of the center and the office to the comptroller's office.

House Bill 3286, effective September 1, 2001, amends Government Code, Chapter 447, to include water conservation along with energy conservation among the duties of the State Energy Conservation Office relating to state buildings and facilities.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the rules will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. LeBas also has determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rule will be minimizing or helping to control utility costs incurred by state agencies and institutions of higher education, reducing energy and water consumption, and facilitating long range utility management planning by state agencies and institutions of higher education, leading to more fiscally responsible government. There is no significant anticipated economic cost to individuals who are required to comply with the proposed rules. There are no significant anticipated fiscal implications for small businesses.

Comments on the proposal may be submitted to Dub Taylor, Manager, State Energy Conservation Office, Comptroller of Public Accounts, P.O. Box 13528, Austin, Texas 78711- 3528.

These new sections are proposed under Government Code, §447.002 and §2305.011, which authorize the comptroller and the State Energy Conservation Office to adopt rules relating to energy and water conservation for state buildings and facilities and to the LoanSTAR Revolving Loan Program.

The new sections implement Government Code, §§447.001, 447.002, and 2305.032.

§19.31.Requirement to Use Design Standards.

Pursuant to Government Code, §447.004, state agencies and institutions of higher education shall use the energy and water conservation design standards that the State Energy Conservation Office (SECO) has adopted under this chapter, when constructing new state buildings or conducting major renovations of existing state buildings.

§19.32.Energy and Water Conservation Design Standards.

(a) The State Energy Conservation Office (SECO) adopts by reference the following standards for new construction or major renovation projects:

(1) the energy conservation design standard of the American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) / Illuminating Engineering Society of North America (IESNA), Energy Standard for Buildings Except Low-Rise Residential Buildings, ASHRAE/IESNA Standard 90.1-1999, or the most current adopted version;

(2) for public low rise residential buildings, the energy conservation design standard of the International Energy Code Council as published in the International Energy Conservation Code for 2000, or the most current adopted version.

(b) SECO shall adopt guidelines for the design of water conservation measures for new state buildings and major renovation projects. All water conservation measures must comply with current local, state, and federal construction, plumbing, and environmental codes and regulations.

(c) Copies of the standards are on file with SECO, 111 E. 17th Street, LBJ State Office Building, Suite 1114, Austin, Texas 78774, and may be viewed during normal office hours.

§19.33.Major Renovation Projects.

For the purposes of 34 TAC, Chapter 19, Subchapter C, a major renovation project is a building renovation or improvement that affects the energy or water use of the facility.

§19.34.Submission of Certification and Compliance Documentation.

Before beginning construction of a new state building or a major renovation project, a state agency or an institution of higher education shall submit to the State Energy Conservation Office (SECO) a copy of the certification by the design architect or engineer that verifies to the agency or institution that the construction or renovation complies with the standards that are established under this chapter, including engineering documentation.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 4, 2002.

TRD-200200690

Martin Cherry

Deputy General Counsel for Taxation

Comptroller of Public Accounts

Earliest possible date of adoption: March 17, 2002

For further information, please call: (512) 463-3699


Subchapter D. LOAN PROGRAM FOR ENERGY RETROFITS

19 TAC §§19.41 - 19.45

The Comptroller of Public Accounts proposes new §§19.41-19.45, concerning the state loan program for energy retrofits. These new sections are proposed under Administrative Code, Title 34, Part 1, new Chapter 19: State Energy Conservation Office, Subchapter D: Loan Program for Energy Retrofits, and relate to the functions and responsibilities of the State Energy Conservation Office (SECO), pursuant to House Bill 2914, House Bill 2278, and House Bill 3286, 77th Legislature, 2001.

House Bill 2914, transfers to the comptroller all the functions and activities of the General Services Commission that relate to energy conservation under Government Code, Chapter 447 or Chapter 2305. Government Code, §447.001, establishes the state energy conservation office in the comptroller's office; Government Code, §447.002, directs the state energy conservation office to make rules relating to the adoption and implementation of energy conservation programs applicable to state buildings and facilities; and Government Code, §2305.011, authorizes the comptroller to adopt rules as necessary to administer the programs prescribed by Government Code, Chapter 2305, relating to restitution for oil overcharges. These provisions of House Bill 2914 were effective immediately.

House Bill 2278, September 1, 2001, amends Government Code, Chapter 447 and Chapter 2305, relating to the consolidation and functions of the Energy Management Center and the State Energy Conservation Office and to the transfer of the powers and duties of the center and the office to the comptroller's office.

House Bill 3286, effective September 1, 2001, amends Government Code, Chapter 447, to include water conservation along with energy conservation among the duties of the State Energy Conservation Office relating to state buildings and facilities.

New §19.41 relates that under Government Code, §2305.032, SECO administers a revolving loan program, called the Texas LoanSTAR (Saving Taxes and Resources) Program for Public Sector Institutions, which provides loans to eligible applicants for energy conservation measures. The current rule for the LoanSTAR program (1 TAC §5.401) will be proposed for repeal after new LoanSTAR rules are adopted pursuant to this rulemaking. New §19.42 contains definitions applicable to the LoanSTAR energy retrofit program; §19.43 outlines the eligibility criteria for projects proposed by loan candidates; §19.44 outlines the application process, application period, and the basis for loan application evaluation; §19.45 describes project funding and repayment requirements, loan payout, loan recipient responsibilities, and title to equipment.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the rules will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. LeBas also has determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rule will be minimizing or helping to control utility costs incurred by state agencies and institutions of higher education, reducing energy and water consumption, and facilitating long range utility management planning by state agencies and institutions of higher education, leading to more fiscally responsible government. There are no significant anticipated fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed rules.

Comments on the proposal may be submitted to Dub Taylor, Manager, State Energy Conservation Office, Comptroller of Public Accounts, P.O. Box 13528, Austin, Texas 78711- 3528.

These new sections are proposed under Government Code, §447.002 and §2305.011, which authorize the comptroller and the State Energy Conservation Office to adopt rules relating to energy and water conservation for state buildings and facilities and to the LoanSTAR Revolving Loan Program.

The new sections implement Government Code, §§447.001, 447.002, and 2305.032.

§19.41.Description of Program.

Under Government Code, §2305.032, the State Energy Conservation Office (SECO) administers a revolving loan program that provides loans to eligible applicants for energy conservation measures. The loan program is called the Texas LoanSTAR (Saving Taxes and Resources) Program for Public Sector Institutions.

§19.42.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Building--A structure that consumes energy.

(2) Energy conservation measure (ECM)--A commercially available energy efficient device, technique, or technology that is designed to reduce energy consumption, peak demand, and/or utility costs at an existing facility that a public sector institution owns, or to achieve similar savings from enhancements that exceed all applicable energy-related regulatory requirements in a proposed facility to be owned by such institution.

(3) Energy conservation measure (ECM) project--The identification, design, installation, monitoring, and evaluation of one or more energy efficient measures that are designed to reduce energy consumption, peak demand, and/or utility cost.

(4) Estimated simple payback--The total estimated energy conservation measure costs (including audit, metering, installation, equipment, and engineering design) divided by the annual estimated utility cost savings.

(5) Facility--Any major energy using group of buildings in geographic proximity to each other and/or a major energy using system that one or more public sector institutions own and occupy or operate.

(6) Interest fee--The interest charge that covers the costs of administering the LoanSTAR Program.

(7) Loan agreement--The written agreement between an applicant and the State Energy Conservation Office (SECO) that details all terms and requirements under which the loan is issued, including the intended use of the loan proceeds.

(8) LoanSTAR Program--The state Revolving Loan Program that SECO administers, and which funds energy conservation measures. The program is comprised of five elements: energy audits, efficiency retrofits or enhancements, a revolving loan financing mechanism, program monitoring, and evaluation.

(9) Project cost--All costs that SECO determines to be directly related to the identification, design, implementation, metering, and monitoring of an energy conservation measure.

(10) Public sector institution--Any state department, commission, board, office, institution, facility, or other agency; a public junior college or community college; an institution of higher education as defined in Education Code, §61.003; units of local government including a county, city, town, a public or non-profit hospital or health care facility; a public school; or a political subdivision of the state.

(11) SECO--The Comptroller of Public Accounts State Energy Conservation Office or legally designated successor.

§19.43.Eligibility.

(a) Projects that loan candidates propose must fulfill the following program and eligibility requirements.

(1) Experimental or research-related technologies are not eligible for funding. Retrofit measures that result from renewable energy resources shall not be considered experimental or research related if the measure is commercially available or has a demonstrated track record of its cost- effectiveness.

(2) Eligible measures shall have a demonstrated track record of cost-effectiveness.

(3) Eligible measures shall be commercially available.

(4) Each energy conservation measure must be unique in its application, location, building characteristics, and/or target audience.

(5) Eligible energy conservation measure projects include:

(A) indoor and outdoor lighting projects;

(B) heating, ventilation, and air conditioning equipment (HVAC);

(C) electrical distribution equipment;

(D) building shell improvements;

(E) energy management systems;

(F) energy recovery systems, including systems that generate electricity on-site;

(G) alternate/renewable energy systems;

(H) load management devices;

(I) water systems and waste water systems energy conservation measures;

(J) other cost-effective energy efficiency enhancements, demand, or rate-based measures that the LoanSTAR Program has approved; and

(K) incremental cost on higher energy efficient equipment for new construction.

(b) All eligible measures must be recommended in an energy assessment report that a licensed professional engineer prepares in a format that follows the LoanSTAR Program guidelines, unless SECO specifically waives this requirement.

§19.44.Application and Selection.

(a) Application Period. The State Energy Conservation Office (SECO) will accept and process applications from public sector institutions that seek loan funds for energy conservation measures on a "first come, first serve" basis.

(b) Application Process.

(1) Each applicant shall submit to SECO a copy of its energy assessment report with a completed loan application that is directed to the attention of the LoanSTAR Program.

(2) The LoanSTAR Program will evaluate loan applications on the basis of the following criteria:

(A) estimated simple payback period;

(B) ability to repay the loan through energy demand savings;

(C) engineering assessment of the viability of the technology;

(D) likelihood of effective project monitoring; and

(E) ability to meet all state and federal program eligibility requirements.

(3) SECO will approve loans based on the LoanSTAR Program staff recommendations and engineering evaluations of estimated paybacks and reliability.

(4) A public sector institution that receives a loan from SECO will receive a loan agreement that identifies the existing or proposed buildings to be modified, approved measures, rate of interest, loan amount, and loan terms and conditions.

(5) Institutions that are denied funding shall receive written notification that states the reasons for denial and possible actions for qualifying the non-selected projects.

§19.45.Project Funding and Repayment.

(a) The LoanSTAR Program will determine the term of the loan based upon anticipated energy and demand savings and time that are needed to install the energy conservation measure(s) (ECMs).

(b) An interest fee that covers the cost of administration and operation of the program will be charged at a rate that the State Energy Conservation Office (SECO) will determine. All interest fees will be computed on an annual percentage rate basis.

(c) Loan payout and repayment.

(1) Loan proceeds may be used to pay for the entire cost of the retrofit project, including the cost of the energy assessment report, engineering design, construction, equipment acquisition and installation, maintenance, and metering and monitoring.

(2) Loan funds shall be disbursed to the borrower upon receipt of supporting documentation that SECO requires.

(3) A state agency may use general revenue funds that are appropriated for utilities to make loan payments as stipulated in Government Code, Chapter 2305.

(4) Loan repayment schedules shall be determined on the basis of expected payback and project installation time.

(5) Frequency of payments shall be no greater than quarterly.

(6) No loans will be forgiven.

(d) Loan recipient responsibilities (project monitoring).

(1) Loan recipients shall provide the LoanSTAR Program with the access and information that is necessary to monitor the performance of the retrofits, as stated in the loan agreement.

(2) Loan recipients shall be responsible for submission of all reports that the LoanSTAR Program requests as outlined in the loan agreement.

(3) Compliance with applicable local, state, and federal procurement guidelines and procedures is the responsibility of the loan recipient.

(e) Title to equipment.

(1) Title to all equipment that is acquired under this program will vest in the borrower, in accordance with applicable state statutes.

(2) Disposition and inventory of any equipment shall be done in accordance with state statutes and regulations.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 4, 2002.

TRD-200200691

Martin Cherry

Deputy General Counsel for Taxation

Comptroller of Public Accounts

Earliest possible date of adoption: March 17, 2002

For further information, please call: (512) 463-3699