S.B. No. 1050 amends the Local Government Code to establish comprehensive guidelines for energy savings performance contracts for local governments in Texas. The bill introduces new definitions for key terms and mandates the selection of a third-party engineer to oversee the procurement process and ensure compliance with energy savings guarantees. It requires that contracts include written guarantees from providers, annual reconciliation statements, and prohibits contingent fees. The responsibilities of the third-party engineer are outlined, including evaluating provider qualifications and conducting measurement and verification reviews. Local governments may charge a fee for the use of a third-party engineer, capped at 2.5% of the contract's total value, and are protected from financial shortfalls related to energy savings guarantees.

Additionally, the bill establishes new provisions for conducting investment grade audits, detailing the scope of work required and ensuring transparency in the auditing process. It requires local governments to submit proposed contracts to the State Energy Conservation Office for approval, including the final audit report and measurement and verification plan. The bill also prohibits the use of purchasing cooperatives for certain services exceeding $50,000 and mandates that providers file a payment and performance bond before entering into contracts. To enhance accountability, the bill introduces compliance programs to deter fraud, outlines enforcement mechanisms for violations, and establishes criminal offenses related to contingent fee solicitation, classifying them as felonies of the second degree. The definition of "contraband" is also amended to include proceeds from offenses related to energy savings performance contracts.

Statutes affected:
Introduced: Local Government Code 302.001, Education Code 44.901 (Education Code 44, Local Government Code 302)