Community college performance contracts; exclude certain from 20-year payback provision.

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To: Public Utilities
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Representative Mims

HOUSE BILL NO. 1582

AN ACT TO AMEND SECTION 31-7-14, MISSISSIPPI CODE OF 1972, TO 1
EXCLUDE CERTAIN PERFORMANCE CONTRACTS FROM THE 20-YEAR PAYBACK 2
REQUIREMENT FOR COMMUNITY AND JUNIOR COLLEGES; TO PROVIDE A 3
REPEALER ON THE AMENDMENT; AND FOR RELATED PURPOSES. 4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 5
SECTION 1. Section 31-7-14, Mississippi Code of 1972, is 6
amended as follows: 7
31-7-14. (1) (a) For purposes of this section, the 8
following words and phrases shall have the meaning ascribed 9
herein, unless the context clearly indicates otherwise: 10
(i) "Division" means the Energy Division of the 11
Mississippi Development Authority. 12
(ii) "Energy services" or "energy efficient 13
services" means energy efficiency equipment, services relating to 14
the installation, operation and maintenance of equipment and 15
improvements reasonably required to existing or new equipment and 16
existing or new improvements and facilities including, but not 17
limited to, heating, ventilation and air conditioning systems, 18
lighting, windows, insulation and energy management controls, life 19
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safety measures that provide long term operating cost reductions, 20
building operation programs that reduce operating costs, 21
alternative fuel motor vehicles including vehicles that have been 22
converted to such and ancillary equipment related to or associated 23
with the fueling of alternative fuel motor vehicles, or other 24
energy conservation related improvements, including improvements 25
or equipment related to renewable energy, water and other natural 26
resources conservation, including accuracy and measurement of 27
water distribution and/or consumption, and other equipment, 28
services and improvements providing verifiable cost savings. 29
(iii) "Energy services provider" means a person or 30
business with a successful record of documented energy savings 31
projects that is experienced in the design, implementation and 32
installation of energy conservation measures; has the technical 33
capabilities to verify that such measures generate energy and 34
operational cost savings or enhanced revenues; has the ability to 35
guarantee the savings; has the ability to secure or arrange the 36
financing necessary to support the implementation of the energy 37
conservation measures; and is approved by the division. 38
Approval by the division of an energy services provider shall 39
be granted in a prequalification process. 40
Such energy services providers may petition the division to 41
review their qualifications and deem them to be qualified for 42
inclusion on a prequalification list if they meet the 43
qualifications set forth by the division. 44
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Any energy services project that has been competitively bid 45
and awarded prior to any change in law shall be allowed to 46
continue under the laws current at the time the project was 47
awarded. 48
The division shall ensure that small businesses are not 49
disadvantaged in the determination of a qualified energy services 50
provider. 51
(iv) "Entity" means the board of trustees of any 52
public school district, junior college, institution of higher 53
learning, publicly owned hospital, state agency or governmental 54
authority under this chapter. 55
(v) "Energy services contract" means an agreement 56
to provide energy services which include, but are not limited to, 57
the design, installation, financing and maintenance or management 58
of the energy systems or equipment in order to improve its energy 59
efficiency. Payments for the contract are not contingent upon the 60
actual savings realized from the equipment. 61
(vi) "Energy performance contract" means an 62
agreement to provide energy services which includes, but is not 63
limited to, the design, installation, financing and maintenance or 64
management of the energy systems or equipment in order to improve 65
its energy efficiency. 66
(vii) "Shared savings contract" means an agreement 67
where the contractor and the entity each receive a preagreed 68
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percentage or dollar value of the energy cost savings over the 69
life of the contract. 70
(viii) "Reduce operating costs" means elimination 71
of future expenses or avoidance of future replacement expenditures 72
as a result of new equipment installed or services performed. 73
Material savings, labor savings, cancelled maintenance contracts, 74
et cetera, shall be considered as being viable to reduce operating 75
costs. Reduce operating costs may be included in the performance 76
contract or energy services agreement solely at the discretion of 77
the entity. A contract that otherwise satisfies the requirements 78
of this section shall satisfy the requirements allowing use of an 79
energy performance, energy services or shared savings contract 80
even if the sole expense being eliminated is maintenance expense. 81
(ix) "Capital cost avoidance" means planned 82
capital improvement expenditures that will be avoided through 83
implementation of the energy services project. Capital cost 84
avoidance may be included in an energy services contract or an 85
energy performance contract solely at the discretion of the 86
entity. Capital cost avoidance may be claimed as an annual 87
avoidance or as a one time avoidance in a specific year of the 88
contract term, depending upon the nature of the avoided capital 89
cost. 90
(x) "Alternative fuel motor vehicle" means a motor 91
vehicle propelled by alternative fuel either as a dedicated 92
alternative fuel vehicle, as a bi fuel vehicle using alternative 93
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fuel as one of its fuels, or as a dual fuel vehicle using 94
alternative fuel as one of its fuels. 95
(xi) "Energy conservation measure" means the 96
individual items or components of a large energy services or 97
energy efficient services program. 98
(xii) "Simple payback period" means the amount of 99
time for the recuperation of the initial investment. The simple 100
payback period is calculated by dividing the initial investment by 101
the annual savings. The simple payback period for any contract 102
shall not exceed twenty (20) years. The simple payback period of 103
an individual energy conservation measure shall not be considered 104
in any evaluation provided the simple payback period for the 105
contract does not exceed twenty (20) years. 106
(b) An entity may, using any sources of funding 107
available to the entity, enter into an energy services contract, 108
energy performance contract, shared savings contract, any of which 109
may contain a lease, or lease purchase contract for energy 110
efficiency equipment, services relating to the installation, 111
operation and maintenance of equipment or improvements reasonably 112
required to existing or new equipment and existing or new 113
improvements and facilities and shall contract in accordance with 114
the following provisions: 115
(i) The division may assemble a list of 116
prequalified energy services providers. The division shall use 117
objective criteria in the selection process. The criteria for 118
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evaluation shall include, but shall not be limited to, the 119
following factors: to assess the capability of the qualified 120
energy services provider in the area of design engineering, 121
installation, maintenance and repairs associated with energy 122
services or guaranteed energy performance contracts; 123
qualifications including engineering depth and experience, post 124
installation project monitoring, data collection, and verification 125
of and reporting of savings; overall project experience and 126
qualifications; management capability; ability to access long term 127
sources of project financing; financial health and stability, 128
litigation history with customers and other factors determined by 129
the division to be relevant and appropriate and related to the 130
ability to perform the project. The division shall either accept 131
or reject an application for prequalification from an energy 132
services provider within sixty (60) days after receipt. If the 133
division fails to act within sixty (60) days from the date of 134
receiving an application, then the application shall automatically 135
be accepted and the energy services provider shall be added to the 136
prequalified list. 137
(ii) An entity shall publicly issue requests for 138
proposals, advertised in the same manner as provided in Section 31 139
7 13 for seeking competitive sealed bids, concerning the provision 140
of energy efficiency services relating to the installation, 141
operation and maintenance of equipment, improvements reasonably 142
required to existing or new equipment and existing or new 143
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improvements and facilities or the design, installation, 144
ownership, operation and maintenance of energy efficiency 145
equipment. Those requests for proposals shall contain terms and 146
conditions relating to submission of proposals, evaluation and 147
selection of proposals, financial terms, legal responsibilities, 148
and any other matters as the entity determines to be appropriate 149
for inclusion. 150
(iii) Upon receiving responses to the request for 151
proposals, the entity may select the most qualified proposal or 152
proposals on the basis of experience and qualifications of the 153
proposers, the technical approach, the financial arrangements, the 154
overall benefits to the entity and any other relevant factors 155
determined to be appropriate. 156
(iv) An entity shall negotiate and enter into 157
contracts with the person, persons, firm or firms submitting the 158
proposal selected as the most qualified under this section. 159
(v) The annual rate of interest paid under any 160
lease purchase agreement authorized by this section shall not 161
exceed the maximum interest rate to maturity on general obligation 162
indebtedness permitted under Section 75 17 101. 163
(vi) The maximum lease purchase term for any 164
equipment acquired under this section shall not exceed the lesser 165
of twenty (20) years or the average useful life of the energy 166
conservation measures from the date the energy conservation 167
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measures have been completed and accepted by the governmental 168
unit. 169
(vii) This subsection shall, with respect to the 170
procurement of energy efficiency services and/or equipment, 171
supersede any contradictory or conflicting provisions of Chapter 172
7, Title 31, Mississippi Code of 1972, and other laws with respect 173
to awarding public contracts. 174
(2) (a) The division may contract with a party selected 175
under this subsection to provide financing to entities and private 176
"nonprofit" hospitals, to purchase energy efficiency equipment, 177
services relating to the installation, operation and maintenance 178
of equipment or improvements reasonably required to existing or 179
new equipment and existing or new improvements and facilities or 180
an energy saving performance contract, energy services contract, 181
or lease purchase basis. Any energy efficiency lease financing 182
contract entered into by the division before May 15, 1992, shall 183
be valid and binding when the contract was entered into under this 184
subsection. 185
(b) The entities and private "nonprofit" hospitals that 186
decide to contract for energy efficiency equipment, services 187
relating to the installation, operation and maintenance of 188
equipment or improvements reasonably required to existing or new 189
equipment and existing or new improvements and facilities on a 190
lease, energy services contract or lease purchase basis, may 191
request financial assistance from the division. 192
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(c) The provisions of any energy efficiency lease 193
purchase agreements authorized under this subsection (2) shall 194
comply with the requirements of subsection (1)(b)(v) of this 195
section. The term of any lease or lease purchase agreement for 196
energy efficiency services and/or equipment entered into under 197
this section shall not exceed twenty (20) years, commencing on the 198
completion of the installation of equipment or improvements under 199
the contract. 200
(d) Any entity or private "nonprofit" hospital having 201
approval of the division may borrow money in anticipation of 202
entering into a lease purchase agreement pursuant to subsection 203
(2)(b) of this section. Any borrowing may be upon terms and 204
conditions as may be agreed upon by the borrowing entity and the 205
party advancing interim funds; however, the principal on any 206
borrowing shall be repaid within a period of time not to exceed 207
one hundred eighty (180) days. In borrowing money under this 208
paragraph (d), it is not necessary to publish notice of intention 209
to do so or to secure the consent of the qualified electors, 210
either by election or otherwise. Any borrowing may be negotiated 211
between the parties and is not required to be publicly bid, may be 212
evidenced by negotiable notes or lease and shall not be considered 213
when computing any limitation of indebtedness of the borrowing 214
entity established by law. The principal, interest and costs of 215
incurring any borrowing shall not exceed the principal amount of 216
the final contract or agreement approved by the division, and 217
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accepted by the borrowing entity, under subsection (2)(b) of this 218
section. 219
(e) This subsection (2) shall, with respect to the 220
procurement of energy efficiency services and/or equipment, 221
supersede the provisions of any contradictory or conflicting 222
provisions of Chapter 7, Title 31, Mississippi Code of 1972, and 223
other laws with respect to awarding public contracts. 224
(3) All lease purchase agreements authorized by this section 225
and the income from those agreements shall be exempt from all 226
taxation within the State of Mississippi, except gift, transfer 227
and inheritance taxes. 228
(4) (a) An entity may contract for energy efficiency 229
equipment services relating to the installation, operation or 230
maintenance of equipment or improvements reasonably required to 231
existing or new equipment and existing or new improvements and 232
facilities on a shared savings basis or performance basis. 233
(b) If an entity decides to enter into a contract for 234
energy efficiency equipment, services relating to the 235
installation, operation or maintenance of equipment or 236
improvements reasonably required to existing or new equipment and 237
existing or new improvements and facilities on a shared savings 238
basis or performance basis, the entity shall issue a request for 239
proposals or a request for qualifications, as determined necessary 240
by the division, in the same manner as prescribed under subsection 241
(1)(b) of this section. The entity shall notify the division in 242
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writing of its intention to issue a request for proposals or a 243
request for qualifications. 244
(c) The terms of any shared savings contract, energy 245
services contract, or energy performance contract entered into 246
under this section may not exceed twenty (20) years, commencing on 247
the completion of the installation of equipment or improvements 248
under the contract. 249
(d) The terms of any shared savings or energy 250
performance contract entered into under this section must contain 251
a guarantee of savings clause from the company providing energy 252
efficiency equipment services relating to the installation, 253
operation and maintenance of equipment or improvements reasonably 254
required to existing or new equipment and existing or new 255
improvements and facilities. 256
(5) (a) By March 1 and September 1 of each year, each 257
entity that enters into an energy performance contract or shared 258
savings contract shall report to the division its energy usage by 259
meter in dollars and consumption by fuel type for the previous six 260
month period determined by the division. 261
(b) The division shall remove qualified status of an 262
energy services provider that fails to meet the reporting 263
requirements of paragraph (a) of this subsection after two (2) 264
such violations. 265
(c) Any costs associated with the reporting made under 266
this subsection (5) shall be paid by the energy services provider. 267
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(6) The contract may be construed to provide flexibility to 268
public agencies in structuring agreements entered into hereunder 269
so that economic benefits may be maximized. 270
(7) (a) The requirement provided in this section that a 271
performance contract achieve a simple payback within twenty (20) 272
years shall not apply to facilities performance contracts executed 273
pursuant to this subsection (7). 274
Contract terms may extend for a period not to exceed the 275
useful life of the improvements or services provided, as 276
determined by the governing board. 277
(b) A facilities performance contract under this 278
subsection may include long term operation, maintenance, repair, 279
replacement, and management services, provided that such services 280
are directly related to achieving the guaranteed savings and 281
performance outcomes. 282
(c) Performance Guarantee and Measurement. Each 283
facilities performance contract shall include: 284
(i) A written guarantee of cost savings from the 285
provider; 286
(ii) An annual reconciliation of guaranteed 287
savings versus actual savings; and 288
(iii) Measurement and verification procedures 289
consistent with industry standards. 290
(d) Procurement. Contracts under this subsection may 291
be procured using a qualifications based or best-value selection 292
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ST: Community college performance contracts;
exclude certain from 20-year payback provision.
process as determined each community college and these contracts 293
shall not be subject to competitive bidding requirements 294
applicable to construction contracts. 295
(e) Reporting Requirements. Each participating 296
community college shall submit an annual report to the Mississippi 297
Community College Board and the Legislature detailing: 298
(i) Contract scope and term; 299
(ii) Guaranteed versus realized savings; 300
(iii) Capital expenditures avoided; and 301
(iv) Facility condition outcomes. 302
(f) The provisions of this subsection (7) shall repeal 303
on and after July 1, 2035. 304
( * * *8) This section shall stand repealed on July 1, * * * 305
2035. 306
SECTION 2. This act shall take effect and be in force from 307
and after July 1, 2026. 308