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HB 4268 Guaranteed Energy Savings Contract Advocacy Alert

  • 1.  HB 4268 Guaranteed Energy Savings Contract Advocacy Alert

    Posted 03-03-2022 10:30

    HB 4268 is a bill attempting to change and limit how districts contract with firms specializing in energy savings contracts.  We often refer to these firms as ESCOs.  For the past 7 years a bill of this nature has emerged, primarily supported by the American Institute of Architects (AIA).  In 2018 Illinois ASBO worked with AIA and the National Association of Energy Service Corporations (NAESCO) to develop a model RFP for securing an ESCO to engage in energy savings contracts.  While this model RFP was a negotiation, both Illinois ASBO, NAESCO and AIA agreed it represented best practices that a district could use when planning for these type of contracts.

    In regard to HB 4268, we have been adamant from the beginning that we do not think this legislation is needed but also that while architects and ESCOs are both members of Illinois ASBO, our primary focus is on protecting the ability for school districts to do performance contracting.  The sponsor and AIA lobbyists are very aware that the ESCOs have not been engaged and we have stressed that architects should not be pursuing legislation that impacts other entities that in many cases are competitors. 

    IASBO and IASB were able to negotiate an amendment (HAM #2) to HB 4268 that protects school districts from having unreasonable bureaucracy and limitations, and also retains the 20-year window for most guaranteed energy savings contracts with reasonable periodic updates regarding guaranteed savings.  We also put up the model RFP that was negotiated several years ago as an option for school districts to avoid new burdensome bureaucracy.  

    After we were able to change the bill to reflect most of what we wanted for school districts, we indicated that the sponsor should now focus on ESCOs and get clarity there.  In effect, that doesn't change our original position that there is no need for this bill, but it does mean that we are neutral to further negotiations and that those should be between the sponsor and ESCOs.  Although there are additional problems with language in the bill, we ascertain that the remaining primary issue is around the elimination of "operational savings."  This would still have a negative impact on a district's ability to utilize performance contracting.  We had hoped the sponsor and some ESCOs could meet to discuss the intricacies of the bill, but there has been little effort in that direction.  Absent outreach from the sponsor or the AIA lobbyists to work with ESCOs to discuss their concerns, we are recommending that districts reach out to their ESCO partners to review how HB 4268 might impact their future projects.

    Then please let your legislators know how it might impact your district or would have impacted it in the past had "operational savings" not been allowed as a part of those contracts.  This is especially important as we enter the final month of this session and legislation begins to move quickly.

    Michael Jacoby Ed.D., SFO, CAE
    Executive Director/CEO
    Illinois Association of School Business Officials (Illinois ASBO)