Judges: CHARLES C. FOTI, JR., Attorney General.
Filed Date: 8/5/2005
Status: Precedential
Modified Date: 7/5/2016
Dear Mr. Monica:
You have requested the opinion of this office on whether a proposed Parish project that would replace all existing Parish owned water meters would qualify as "Performance-based energy efficiency contract" pursuant to La. R.S.
R.S.
"a contract for energy efficiency services and equipment in which the payment obligation for each year of the contract is either: (a) Set as a percentage of the annual energy cost savings attributable to the services or equipment under the contract, or (b) Guaranteed by the person under contract to be less than the annual energy cost savings attributable to the services or equipment under the contract."
R.S.
A. Any political subdivision may enter into a performance-based energy efficiency contract for services and equipment. Such a contract shall be considered a contract for services and shall be exempt from the provisions of R.S.
38:2212 but shall be subject to the provisions of this Chapter.B. For the purposes of this Chapter, a performance-based energy efficiency contract shall be defined as a contract for energy efficiency services and equipment in which the payment obligation for each year of the contract is either:
(1) Set as a percentage of the annual energy cost savings attributable to the services or equipment under the contract; or (2) Guaranteed by the person under contract to be less than the annual energy cost savings attributable to the services or equipment under the contract.
The provisions of R.S.
R.S.
Taken together, these provisions require that maintenance savings and energy savings be factored into the contract in calculating the fee due pursuant to R.S.
The proposed contract involves the replacement of all existing Parish owned water meters with new meters that contain leak detection equipment and automatic reading technology. The current maintenance schedule indicates that the Parish replaces approximately 150 meters per year. The proposed contract will require a 10 year guarantee or warranty on each new meter that will eliminate or significantly reduce short term future capital replacement costs and eliminate some operating expenses.
It does not appear that the proposed contract will result in any direct reduction in energy consumption. Such a reduction is a necessary requirement to qualify for a performance-based energy efficiency contract pursuant to R.S.
While the leak detection equipment will result in an increase in billable usage of water such an increase will not used to calculate the required guaranteed energy cost savings. Installing a more efficient system that tracks water usage does not reduce energy consumption. While the proposed contract will include a guarantee of savings the guarantee is related to an increase in billable water usage and a savings in maintenance costs rather than savings due to the direct reduction of energy consumption. As stated above maintenance saving alone cannot qualify a project for a performance-based energy efficiency contract. The proposed contract will not result in any direct reductions in energy consumption as required by the statute to qualify the project from a performance-based energy efficiency contract.
Given this result, it is the opinion of this office that the proposed contract will not result in the direct reduction of energy consumption as required by R.S.
I trust that this answers your inquiry. Please let me know if we may be of further assistance in this matter.
Yours very truly,
CHARLES C. FOTI, JR. Attorney General
BY: RICHARD L. McGIMSEY Assistant Attorney General