(a) The following procedures consistent with Energy Law, section 9-103(8), and Education Law, sections 305(27) and 3602(6)(i)(5)(i)(b) and (c) shall apply to energy performance contracts entered into by a school district or a board of cooperative educational services (BOCES) on or after July 1, 1998, provided that this section shall not apply to energy performance contracts for which a request for proposals was entered into prior to July 1, 1998.

1. (1) Energy performance contract shall mean an agreement for the provision of energy services, including but not limited to electricity, heating, ventilation, cooling, steam or hot water, in which a person agrees to install, maintain or manage energy systems or equipment to improve the energy efficiency of, or produce energy in connection with, a building or facility in exchange for a portion of the energy savings or revenues.
2. (2) Simple payback period shall mean a measure of the length of time required for the cumulative cost savings, net of cumulative future costs, from an investment in an energy conservation project to pay back the investment cost, without taking into account the time value of money, or the differential energy price escalation rate, or the State building aid payable for the project.
3. (3) Energy savings shall mean the positive difference between the energy and associated cost before the retrofit and its estimated cost after the retrofit of a proposed alternative building system, taking into account all types of energy effected.
4. (4) Cost savings shall mean the positive difference between the operation and maintenance cost before the retrofit and its established operation and maintenance cost after the retrofit.
5. (5) Co-generation shall mean the simultaneous production of electricity and thermal energy. Typical systems utilize natural gas engines to turn electric generators thereby producing electricity, which reduces utility costs. Waste heat captured from the natural gas combustion process can be used to produce domestic hot water, provide space heat in winter or air conditioning in summer when used in conjunction with absorption chillers.

(b) Definitions.

For the purposes of this section:

(c) The appropriate type of projects that qualify to be completed under an energy performance contract may include, but are not limited to:

1. (1) replacement of lighting fixtures;
2. (2) installation of energy efficient boiler/furnace, heating, ventilating, air conditioning (HVAC) equipment;
3. (3) installation of vestibules;
4. (4) installation of automatic setback thermostat;
5. (5) energy management system;
6. (6) upgrade domestic hot water system;
7. (7) roof insulation;
8. (8) installation of energy efficient window/doors;
9. (9) co-generation; or
10. (10) the installation, maintenance or management of other energy systems or equipment to improve the energy efficiency of, or produce energy in connection with, a building or facility.

(d) Every energy performance contract entered into by a school district or BOCES to which this section applies and every amendment to an energy performance contract entered into on or after July 1, 1998 by a board of education or a BOCES shall be subject to approval by the Commissioner of Education and shall contain a provision that such contract shall not be executory until approval of the commissioner is obtained. In order to obtain approval by the Commissioner of Education to enter into an energy performance contract, the school district or BOCES shall:

1. (1) demonstrate that the project complies with all applicable provisions of section 155.2 of this Part;
2. (2) describe the scope and nature of the work to be performed;
3. (3) demonstrate that the types of projects included in the energy performance contract are appropriate in accordance with subdivision (c) of this section;

4. (4) provide a detailed breakdown of the energy performance savings to be derived each year and for the duration of the energy performance contract in the project summary form, which shall include:

   1. (i) a description of each energy conservation measure included in the energy performance contract;
   2. (ii) the cost of each energy conservation measure;
   3. (iii) the project energy savings and cost savings;
   4. (iv) the useful life of each energy conservation measure; and
   5. (v) the simple payback period;
5. (5) state any maintenance and monitoring charges that are part of the energy performance contract in a clear and conspicuous manner separately in the contract;
6. (6) provide the interest rate applicable to the energy performance contract and length of borrowing. The interest rate will be compared to the U.S. Treasury rate for like terms as published in the Wall Street Journal and must be comparable;

7. (7) provide the following certifications:

   1. (i) the sole trustee, the president of the board of trustees or board of education, or the president of the BOCES shall certify that in lieu of competitive bidding, the energy performance contract was procured pursuant to a request for proposal (RFP) process in accordance with the school district's or BOCES' procurement policies and procedures adopted pursuant to applicable provisions of General Municipal Law, section 104-b;
   2. (ii) the energy performance contractor shall certify that such energy performance contractor has guaranteed recovery of contract costs from energy savings realized by the school district during the term of the energy performance contract, which shall not exceed 18 years, or the useful life of the equipment being installed, whichever is less. This certification shall be based on an analysis of energy costs and savings, which shall not include any cost savings attributable to State building aid. If a simple payback calculation is used to demonstrate compliance with the 18 year payback limitation, it shall be calculated by dividing the initial contract cost by the first year cost savings. If another analysis is used to support the certification, it should be submitted with the certification;
   3. (iii) the energy performance contractor shall certify that measurement and verification techniques for determining cost savings will be performed in accordance with the North American Energy Measurement and Verification Protocol, March 1996 (U.S. Department of Energy, Washington, DC 20585: available at the Office of Facilities Planning, Room 1060, State Education Building Annex, Albany, NY 12234);
   4. (iv) the energy performance contractor shall certify that any State building aid attributable to such project has been excluded in determining the cost savings and payback period under the energy performance contract; and
   5. (v) the architect and/or engineer of record shall certify that he or she is free from financial interest in the energy performance contractor which conflicts with the proper completion of the audit and any design work associated with the energy performance contract and that full disclosure has been made to the school district and/or BOCES detailing all financial compensation received from the energy performance contractor.

(e) The administrative and technical review by the State Education Department shall include:

1. (1) review of project scope and its appropriateness to be done under an energy performance contract and its eligibility for building aid;
2. (2) review of the project's compliance with applicable provisions of section 155.2 of this Part;
3. (3) review of detailed breakdown of the energy savings to ensure compliance with Education Law, section 3602(6)(i)(5)(i);
4. (4) review of certifications by the president of the board of education, energy performance contractor and architect/engineer as specified in regulations;
5. (5) review of interest rate and comparison to the U.S. Treasury rate for like terms; and
6. (6) review of technical specifications for compliance with the Uniform Fire Prevention and Building Code, State Education Department standards and other applicable standards.