Ariz. Rev. Stat. § 34-455 – Performance contracting; definitions

A. The department of administration shall develop and implement a program to enter into performance contracts solely for the purpose of achieving energy savings as measured in dollars and benefits ancillary to that purpose. Each contract may be for a period of not more than the expected life of the energy savings measures implemented or twenty-five years, whichever is shorter. The contract shall provide that the energy and operational savings generated cover all costs, after accounting for any financial incentives or assistance provided by utilities, associated with implementation of energy conservation measures to include audits, design equipment, purchase and installation, metering, interest on monies borrowed and training, and the contract shall include contractor profit. The contractor shall recover an amount not to exceed the summation of these costs and the agreed upon profit. Energy dollar savings realized as a result of a performance contract under this section shall be shared at a negotiated rate between the state and the contractor, until such time as the contractor has recovered the amount specified in the contract, at which time all savings shall accrue to the state. Interest rates charged on each contract shall be mutually agreed upon by the department of administration and the contractor. Contracts shall contain contingency provisions agreed upon by the department and the contractor for cases where measured energy dollar savings do not meet predicted energy dollar savings.
B. For the purposes of this section:
1. 1. "Combined heat and power" means any system that simultaneously or sequentially generates both electric or mechanical energy and useful thermal energy using the same unit of fuel.
2. 2. "Energy dollar savings" means a reduction in the cost of energy, from a base energy cost established through a methodology set forth in the contract, utilized in an existing or new state owned or leased building as a result of either:
  1. (a) The lease or purchase of operating equipment by the state or contractor, improvements made, altered operation and maintenance, technical services provided or renewable energy sources utilized.
  2. (b) The increased efficient use of existing energy sources by cogeneration or combined heat and power.