House Passes Expanded Guaranteed Energy, Water Savings Contract Bill

The House this week passed legislation--House Bill 1489-- to make it easier for government entities to make energy conservation improvements to their facilities, according to the bill's sponsor Rep. Frank Dermody (D-Allegheny).

"Sustainability of the environment and preserving our natural resources is a key objective in today's world, so anything we can do toward that end is worth pursuing. The least of that is encouraging and supporting energy conservation," said Rep. Dermody, chairman of the House Urban Affairs Committee.

"This bill would make it easier for all eligible entities to conserve energy by broadening what is considered an energy conservation measure under the law and expanding the maximum length of the contract energy conservation improvements."

Under the law, a guaranteed energy savings contract is a contract that has no up-front cost and guarantees that the savings from the contracted project will pay for the project during the life of the agreement. Governmental entities, such as the Commonwealth, counties, municipalities, school districts, or state-aided institutions may enter into one of these contracts with an energy services company to make energy conservation improvements to their facilities.

The bill would increase the contract length from 15 years to 20 years, mirroring federal law, to allow for lengthier payback periods, and expand the list of energy conservation measures permitted to include technology upgrades to existing conservations; water and sewer conservation measures; upgrades that improve the accuracy of billable revenue-generating systems; and automated systems that reduce personnel or operating costs.

"Public housing authorities that operate housing complexes are one such group that uses these guaranteed energy savings contracts," Rep. Dermody said. "The energy costs savings that these authorities realize can be put to use for additional improvements and property management, but current state restrictions on these contracts impede the ability to maximize federal funding. This should be resolved statutorily, considering the millions in additional federal funding Pennsylvania public housing authorities are receiving from the federal stimulus package."