Bill
SB 1047
The bill standardizes and strengthens governance of government energy-saving contracts, boosting transparency, verification, and financial safeguards for NC government projects.
Purpose and overarching aim
- The bill, known as the Regulatory Reform Act of 2026, seeks to provide broader regulatory relief and streamline procurement related to guaranteed energy savings contracts (GESCs) for governmental units in North Carolina.
- It principally reformulates, codifies, and expands the existing framework for energy performance contracting to govern how governments solicit, select, finance, and oversee energy conservation measures in public facilities and utilities.
Key provisions and changes
1) Creation and codification of Guaranteed Energy Savings Contracts (GESCs)
- New Part 3 is added to Article 3B, Chapter 143, establishing a comprehensive framework titled “Guaranteed Energy Savings Contracts.”
- The recodified sections rename and relocate several preexisting provisions into the new Part 3 (e.g., 143-64.18A through 143-64.18K and related sections).
2) Solicitation, selection, and evaluation process (Section 143-64.18A)
- Governmental units must issue a Request for Qualifications (RFQ) before entering a GESC.
- RFQ content requirements include: unit name/address, project description, evaluation criteria and weights, deadline, and right to reject any responses.
- Selection criteria for providers include: competence, past performance, technical feasibility, lifecycle cost analysis, an independent engineering verification for measurement and verification (M&V) protocol, total project cost with financing comparisons, and, for state units, an impartial third-party M&V review.
3) Shortlisting, ranking, and pre-award transparency
- Units develop a shortlist and may proceed with a sole responsive provider if competition is unlikely.
- A qualified reviewer assists in ranking; negotiations occur with the highest-ranked provider, with fallback to other providers if necessary.
- Before award, a Pre-Award Report must be publicly available detailing installation/maintenance costs, debt service, and projected savings, plus lifecycle cost analysis.
4) Investment Grade Audit (IGA) and compliance
- Providers must conduct an IGA and lifecycle cost analysis for each measure; state units have tighter variance thresholds (10% for both savings and total cost), while local units have a 15% threshold.
- If audit results fall outside thresholds, termination without additional obligation is allowed; within threshold, the provider may be reimbursed for audit costs, and results become governmental property.
5) Performance monitoring and M&V standards
- Annual reconciliation statements compare guaranteed vs. actual savings using standard M&V methods (IPMVP, DOE M&V Guidelines, or ASHRAE Guideline 14-2002) or an approved alternative.
- Surpluses/shortfalls are settled on a 12-month guarantee year; surpluses cannot be carried forward to offset future shortfalls.
6) Financial safeguards and funding disclosures
- A 100% performance bond (security) is required, ensuring faithful performance; bonds comply with State Treasurer directives.
- A non-refundable $1,000 administrative fee must be paid to the State Energy Office within 30 days of contract execution (not recoverable from the governmental unit or included in total contract cost).
7) Financing disclosures and federal funds
- The act creates a Financing Disclosure Rule. State entities must include financing cost estimates in procurement documents; local entities may obtain financing cost estimates from the Office of the State Treasurer or a qualified provider.
- A separate Federal Funds Certification Rule requires federal fund compliance verification for contracts paid with federal funds.
8) Effective date and rulemaking
- Effective July 1, 2026, with applicability to RFQs issued on or after that date.
- The Department of Administration must adopt temporary rules immediately and permanent rules subsequently, with special rulemaking provisions for financing disclosures and federal funds.
Affected parties
- State and local governmental units in North Carolina conducting energy conservation projects.
- Qualified providers of energy savings measures and related engineering firms.
- The Office of the State Treasurer and the State Energy Office as oversight and provider of certain disclosures and certifications.
- The Department of Administration as the implementing agency for rules.
Overall impact
- The bill standardizes and strengthens governance around energy-saving projects in government buildings, enhances procurement transparency, tightens cost/savings verification, increases financial safeguards, and clarifies the use of federal funds in these contracts.
Compiled from official sources — confirm details with the bill’s official record.
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