New Jersey § 18a:65a-1

§ 18a:65a-1.

a. (1) The board of trustees of a public institution of higher education may implement

an energy savings improvement program in the manner provided by this section whenever

it determines that the savings generated from reduced energy use from the program

will be sufficient to cover the cost of the program's energy conservation measures

as set forth in an energy savings plan. Under such a program, a board of trustees may enter into an energy savings services

contract with an energy services company to implement the program or the board may

authorize separate contracts to implement the program. The provisions of: N.J.S.18A:64-1 et seq. , in the case of any State college; P.L.1995, c. 400 ( C.18A:64E-12 et seq. ), in the case of the New Jersey Institute of Technology; N.J.S.18A:65-1 et seq. , in the case of Rutgers, the State University; P.L.2012, c. 45 ( C.18A:64M-1 et al.), in the case of Rowan University; P.L.2017, c. 178 ( C.18A:64N-1 et al.), in the case of Montclair State University; P.L.2021, c. 282 ( C.18A:64O-1 et al.), in the case of Kean University; and N.J.S.18A:64A-1 et seq. , in the case of the county colleges; shall apply to any contracts awarded pursuant

to this section to the extent that the provisions of such law are not inconsistent

with any provision of this section. In the case of Rutgers, the State University, references in this section to the board

of trustees shall mean the Rutgers board of governors. (2) An educational facility alteration required to properly implement other energy

efficiency or energy conservation measures, or both, may be included as part of an

energy savings services contract, in which case, notwithstanding any other provision

of law, rule, regulation, or order to the contrary, the facility alteration may be

undertaken or supervised by the energy services company performing the energy savings

services contract if: (a) the total cost of the improvement does not exceed 15 percent of the total cost

of the work to be performed under the energy savings services contract; and (b)(i) the improvement is necessary to conform to a law, rule, or regulation, or order,

or (ii) an analysis within an approved proposal, or the board of trustees, at the

time of the award of the proposal, demonstrates that there is an economic advantage

to the board of trustees implementing the improvement as part of the energy savings

services contract, and the savings rationale for the improvement is documented and

supported by reasonable justification. b. (1) To be eligible to enter into an energy savings services contract, an energy

services company shall be a commercial entity that is qualified to provide energy

savings services in accordance with the provisions of this section. A public institution of higher education may enter into an energy savings services

contract through public advertising for bids and the receipt of bids therefor. (2)(a) Public works activities performed under an energy savings improvement program

shall be subject to all requirements regarding public bidding, bid security, performance

guarantees, insurance and other public contracting requirements that are applicable

to public works contracts, to the extent not inconsistent with this section. A general contractor, energy services company serving as general contractor, or

any subcontractor hired for the furnishing of plumbing and gas fitting and all kindred

work, and of steam and hot water heating and ventilating apparatus, steam power plants

and kindred work, and electrical work, structural steel and ornamental iron work,

shall be classified by the Division of Property Management and Construction in the

Department of the Treasury in order to perform public works activities under an energy

savings improvement program. (b) Individuals or organizations performing energy audits, acting as commissioning

agents, or conducting verification of energy savings plans, implementation of energy

conservation measures, or verifying guarantees shall be prequalified by the Division

of Property Management and Construction in the Department of the Treasury to perform

their work under an energy savings improvement program. (c) Where there is a need for compatibility of a direct digital control system with

previously installed control systems and equipment, the bid specifications may include

a requirement for proprietary goods, and if so included, the bid specification shall

set forth an allowance price for its supply which shall be used by all bidders in

the public bidding process. (3)(a) An energy services company may be designated as the general contractor for

improvements to be made pursuant to an energy savings plan, provided that the hiring

of subcontractors that are required to be classified pursuant to subparagraph (a)

of paragraph (2) of this subsection shall be performed in accordance with the procedures

and requirements set forth pursuant to the public bidding requirements of the board

of trustees. A contract with an energy savings company shall include, but not be limited to:

preparation of an energy savings plan; the responsibilities of the parties for project

schedules, installations, performance and quality, payment of subcontractors, project

completion, commissioning, savings implementation; a requirement that the savings

to be achieved by energy conservation measures be verified upon commissioning of the

improvements; allocation of State and federal rebates and tax credits; and any other

provisions deemed necessary by the parties. (b) All workers performing public works activities for subcontractors awarded contracts

by an energy services company pursuant to this section shall be paid prevailing wages

in accordance with the “New Jersey Prevailing Wage Act,” P.L.1963, c. 150 ( C.34:11-56.25 et seq. ). All subcontractors shall comply with the provisions of “The Public Works Contractor

Registration Act,” P.L.1999, c. 238 ( C.34:11-56.48 et seq. ). Only firms appropriately classified as contractors by the Division of Property Management

and Construction shall be eligible to be awarded a contract as a subcontractor of

an energy services company under this section for performing public works activities

pursuant to regulations adopted by the Division of Property Management and Construction. (c) In order to expedite communications with an energy services company and facilitate

the implementation of an energy savings improvement program, a board of trustees may

designate or appoint an employee of the public institution of higher education with

decision-making authority to coordinate with the energy services company and to address

issues associated with the implementation of an energy savings improvement program

as they arise, provided that any decision requiring a change order shall be made only

upon the approval of the board of trustees of the public institution of higher education. (4) A subsidiary or wholly-owned or partially-owned affiliate of the energy services

company shall not be an eligible contractor or subcontractor under an energy savings

services contract. c. An energy savings improvement program may be financed through a lease-purchase

agreement or through the issuance of energy savings obligations pursuant to this subsection. (1) An energy savings improvement program may be financed through a lease-purchase

agreement between a board of trustees and an energy services company or other public

or private entity. Under a lease-purchase agreement, ownership of the energy savings equipment or improved

facilities shall pass to the board of trustees when all lease payments have been made. Notwithstanding the provisions of any other law to the contrary, the duration of

such a lease-purchase agreement shall not exceed 15 years, except that the duration

of a lease purchase agreement for a combined heat and power or cogeneration project

shall not exceed 20 years. For the purposes of this paragraph, the duration of the repayment term of a lease-purchase

agreement shall commence on the date upon which construction and installation of the

energy savings equipment, “ combined heat and power facility ” or “ cogeneration facility ,” as those terms are defined pursuant to section 3 of P.L.1999, c. 23 ( C.48:3-51 ), or other energy conservation measures undertaken pursuant to the energy savings

plan, have been completed. (2) Any lease-purchase or other agreement entered into in connection with an energy

savings improvement program may be a general obligation of the public institution

of higher education pursuant to this subsection, and may contain: a clause making

it subject to the availability and appropriation annually of sufficient funds as may

be required to meet the extended obligation; and a non-substitution clause maintaining

that if the agreement is terminated for non-appropriation, the board of trustees may

not replace the leased equipment or facilities with equipment or facilities that perform

the same or similar functions. (3) A board of trustees may arrange for incurring energy savings obligations to finance

an energy savings improvement program and may enter into any agreement with the New

Jersey Educational Facilities Authority or other persons in connection with the issuance

by the authority of its obligations on behalf of the public institution of higher

education in order to finance the institution's energy savings improvement program. Energy savings obligations may be funded through appropriations for utility services

in the annual budget of the board, or incurred as a general obligation of the public

institution of higher education in connection with the issuance by the New Jersey

Educational Facilities Authority of bonds or notes pursuant to N.J.S.18A:72A-2 et seq. , or, in the case of a county college, by a sponsoring county as a refunding bond

pursuant to N.J.S.40A:2-52 et seq. , including the issuance of bond anticipation notes as may be necessary, provided

that all such bonds and notes mature within the periods authorized for such energy

savings obligations. (4) Lease-purchase agreements and energy savings obligations shall not be used to

finance maintenance, guarantees, or verification of guarantees of energy conservation

measures. Lease-purchase agreements and energy savings obligations may be used to finance

the cost of an energy audit or the cost of verification of energy savings as part

of adopting an energy savings plan. Maturity schedules of lease-purchase agreements or energy savings obligations shall

not exceed the estimated average useful life of the energy conservation measures. d. (1) The energy audit component of an energy savings improvement program shall be

conducted either by the board of trustees or by a qualified third party retained by

the board for that purpose. It shall not be conducted by an energy services company subsequently hired to develop

an energy savings improvement program. The energy audit shall identify the current energy use of any or all facilities

and energy conservation measures that can be implemented in which the energy savings

and energy efficiency could be realized and maximized. (2) To implement an energy savings improvement program, a board of trustees shall

develop an energy savings plan that consists of one or more energy conservation measures. The plan shall: (a) contain the results of an energy audit; (b) describe the energy conservation measures that will comprise the program; (c) estimate greenhouse gas reductions resulting from those energy savings; (d) identify all design and compliance issues that require the professional services

of an architect or engineer and identify who will provide these services; (e) include an assessment of risks involved in the successful implementation of the

plan; (f) identify the eligibility for, and costs and revenues associated with the PJM Independent

System Operator for demand response and curtailable service activities; (g) include schedules showing calculations of all costs of implementing the proposed

energy conservation measures and the projected energy savings; (h) identify maintenance requirements necessary to ensure continued energy savings,

and describe how they will be fulfilled; and (i) if developed by an energy services company, a description of, and cost estimates

of an energy savings guarantee. All professionals providing engineering services under the plan shall have errors

and omissions insurance. (3) Prior to the adoption of the plan, the board of trustees shall contract with a

qualified third party to verify the projected energy savings to be realized from the

proposed program have been calculated as required by subsection e. of this section. (4) Upon adoption, the plan shall be submitted to the Board of Public Utilities, which

shall post it on the Internet on a public webpage maintained for such purpose. If the board of trustees maintains its own website, it shall also post the plan

on that site. The Board of Public Utilities may require periodic reporting concerning the implementation

of the plan. (5) Verification by a qualified third party shall be required when energy conservation

measures are placed in service or commissioned, to ensure the savings projected in

the energy savings plan shall be achieved. (6) Energy-related capital improvements that do not reduce energy usage may be included

in an energy savings improvement program but the cost of such improvements shall not

be financed as a lease-purchase or through energy savings obligations authorized by

subsection c. of this section. Nothing herein is intended to prevent the financing of such capital improvements

through otherwise authorized means. (7) A qualified third party when required by this subsection may include an employee

of the public institution of higher education who is properly trained and qualified

to perform such work. e. (1)(a) The calculation of energy savings for the purposes of determining that the

energy savings resulting from the program will be sufficient to cover the cost of

the program's energy conservation measures, as provided in subsection a. of this section,

shall involve determination of the dollar amount saved through implementation of an

energy savings improvement program using the guidelines of the International Performance

Measurement and Verification Protocol or other protocols approved by the Board of

Public Utilities and standards adopted by the Board of Public Utilities pursuant to

this section. The calculation shall include all applicable State and federal rebates and tax credits,

but shall not include the cost of an energy audit and the cost of verifying energy

savings. The calculation shall state which party has made application for rebates and credits

and how these applications translate into energy savings. (b) During the procurement phase of an energy savings improvement program, an energy

services company's proposal submitted in response to a request for proposal shall

not include a savings calculation that assumes, includes, or references capital cost

avoidance savings, the current or projected value of a “solar renewable energy certificate,”

as defined pursuant to section 3 of P.L.1999, c. 23 ( C.48:3-51 ), or other environmental or similar attributes or benefits of whatever nature that

derive from the generation of renewable energy, and any costs or discounts associated

with maintenance services, an energy savings guarantee, or third party verification

of energy conservation measures and energy savings. The calculation of energy savings shall utilize and specifically reference as a

benchmark the actual demand and energy components of the public utility tariff rate

applicable to the board of trustees then in effect, and not a blended rate that aggregates,

combines, or restates in any manner the distinct demand and energy components of the

public utility tariff rate into a single combined or restated tariff rate. If an energy services company submits a proposal to a board of trustees that does

not calculate projected energy savings in the manner required by this subsection,

such proposal shall be rejected by the board of trustees. (2) For the purposes of this section, the Board of Public Utilities shall adopt standards

and uniform values for interest rates and escalation of labor, electricity, oil, and

gas, as well as standards for presenting these costs in a life cycle and net present

value format, standards for the presentation of obligations for carbon reductions,

and other standards that the board may determine necessary. f. (1) When an energy services company is awarded an energy savings services contract,

it shall offer the board of trustees the option to purchase, for an additional amount,

an energy savings guarantee. The guarantee, if accepted by a separate vote of the board of trustees, shall insure

that the energy savings resulting from the energy savings improvement program, determined

periodically over the duration of the guarantee, will be sufficient to defray all

payments required to be made pursuant to the lease-purchase agreement or energy savings

obligation, and if the savings are not sufficient, the energy services company will

reimburse the board of trustees for any additional amounts. Annual costs of a guarantee shall not be financed or included as costs in an energy

savings plan but shall be fully disclosed in an energy savings plan. (2) When a guaranteed energy savings option is purchased, the contract shall require

a qualified third party to verify the energy savings at intervals established by the

parties. (3) When an energy services company is awarded an energy savings services contract

to provide or perform goods or services for the purpose of enabling a board of trustees

to conserve energy through energy efficiency equipment, including a “combined heat

and power facility” as that term is defined pursuant to section 3 of P.L.1999, c. 23 ( C.48:3-51 ), on a self-funded basis, such contract shall extend for a term of up to 15 years

for energy efficiency projects, and for up to 20 years for a combined heat and power

facility after construction completion. If a board of trustees shall elect to contract with an energy services company for

an energy savings guarantee in connection with a contract awarded pursuant to this

section, such guarantee may extend for a term of up to 15 years for energy efficiency

projects, or up to 20 years for a combined heat and power facility after construction

completion. g. As used in this section: “ direct digital control systems ” means the devices and computerized control equipment that contain software and computer

interfaces that perform the logic that control a building's heating, ventilating,

and air conditioning system. Direct digital controls shall be open protocol format and shall meet the interoperability

guidelines established by the American Society of Heating, Refrigerating and Air-Conditioning

Engineers; “ educational facility ” means a structure suitable for use as a dormitory, dining hall, student union, administrative

building, academic building, library, laboratory, research facility, classroom, athletic

facility, health care facility, teaching hospital, and parking, maintenance, storage

or utility facility or energy conservation measures and other structures or facilities

related thereto or required or useful for the instruction of students or the conducting

of research or the operation of an institution for higher education, and public libraries,

and the necessary and usual attendant and related facilities and equipment, but shall

not include any facility used or to be used for sectarian instruction or as a place

for religious worship; “ energy conservation measure ” means an improvement that results in reduced energy use, including, but not limited

to, installation of energy efficient equipment; demand response equipment; combined

heat and power systems; facilities for the production of renewable energy; water

conservation measures, fixtures or facilities; building envelope improvements that

are part of an energy savings improvement program; and related control systems for

each of the foregoing; “ energy related capital improvement ” means a capital improvement that uses energy but does not result in a reduction

of energy use; “ energy saving obligation ” means a bond, note or other agreement evidencing the obligation to repay borrowed

funds incurred in order to finance energy saving improvements; “ energy savings ” means a measured reduction in fuel, energy, operating or maintenance costs resulting

from the implementation of one or more energy conservation measures services when

compared with an established baseline of previous fuel, energy, operating or maintenance

costs, including, but not limited to, future capital replacement expenditures avoided

as a result of equipment installed or services performed as part of an energy savings

plan; “ energy savings improvement program ” means an initiative of a public institution of higher education to implement energy

conservation measures in existing facilities, provided that the value of the energy

savings resulting from the program will be sufficient to cover the cost of the program's

energy conservation measures; “ energy savings plan ” means the document that describes the actions to be taken to implement the energy

savings improvement program; “ energy savings services contract ” means a contract with an energy savings company to develop an energy savings plan,

prepare bid specifications, manage the performance, provision, construction, and installation

of energy conservation measures by subcontractors, to offer a guarantee of energy

savings derived from the implementation of an energy savings plan, and may include

a provision to manage the bidding process; “ energy services company ” means a commercial entity that is qualified to develop and implement an energy savings

plan in accordance with the provisions of this section; “ public works activities ” means any work subject to the provisions of P.L.1963, c. 150 ( C.34:11-56.25 et seq. ); and “ water conservation measure ” means an alteration to a facility or equipment that reduces water consumption, maximizes

the efficiency of water use, or reduces water loss. h. (1) The State Treasurer and the Board of Public Utilities may take such action

as is deemed necessary and consistent with the intent of this section to implement

its provisions. (2) The State Treasurer and the Board of Public Utilities may adopt implementation

guidelines or directives, and adopt such administrative rules, pursuant to the “Administrative

Procedure Act,” P.L.1968, c. 410 ( C.52:14B-1 et seq. ), as are necessary for the implementation of those agencies' respective responsibilities

under this section, except that notwithstanding any provision of P.L.1968, c. 410

( C.52:14B-1 et seq. ) to the contrary, the State Treasurer and the Board of Public Utilities may adopt,

immediately upon filing with the Office of Administrative Law, such rules and regulations

as deemed necessary to implement the provisions of this act which shall be effective

for a period not to exceed 12 months and shall thereafter be amended, adopted or re-adopted

in accordance with the provisions of P.L.1968, c. 410 ( C.52:14B-1 et seq. ).