Utah Department of Administrative Services Division of Administrative Rules

Utah Administrative Code

The Utah Administrative Code is the body of all effective administrative rules as compiled and organized by the Division of Administrative Rules (Subsection 63G-3-102(5); see also Sections 63G-3-701 and 702).

NOTE: For a list of rules that have been made effective since January 1, 2015, please see the codification segue page.

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R362. Governor, Energy Development (Office of).

Rule R362-3. Energy Efficiency Fund.

As in effect on January 1, 2015

Table of Contents

R362-3-1. Purpose.

This rule is for the purposes of

A. Conducting the responsibilities assigned to the Utah Governor's Energy Advisor (Advisor), the Utah Governor's Office of Energy Development (OED) and the State Energy Program (SEP) in managing the Energy Efficiency Fund and implementing the associated loan program established in Utah Code Section 53A-20c-102; and

B. Establishing requirements for eligibility for loans from the Energy Efficiency Fund, procedures for accepting, evaluating, and prioritizing applications for loans, and the terms and conditions for loans.

R362-3-2. Authority.

Pursuant to Utah Code Section 53A-20c-102, the OED Advisor shall make rules establishing criteria, procedures, priorities, and conditions for the award of loans from the Energy Efficiency Fund.

R362-3-3. Definitions.

A. "Advisor" means the Governor's Energy Advisor, who oversees the Utah Governor's Office of Energy Development.

B. "Energy" means, for the purposes of this rule, electricity, natural gas or other methane, fuel oil, coal, or propane that is used by a school district to operate a building's electrical devices, lighting, heating and cooling systems, and other equipment necessary for the building's operation.

C. "Energy cost payback" means the period of time, generally expressed in years, that is needed for the energy cost savings of an energy efficiency project to equal the cost of the energy efficiency project. It does not include the time-value of money and is sometimes referred to as simple payback.

D. "Energy cost savings" means the monetary value to a school district of the energy that is saved or is not consumed as a result of an energy efficiency project and is generally stated on an annual cost savings basis. This value is measured based upon the current cost per unit of the energy source or sources used by the building at which an energy efficiency project is to take place.

E. "Energy efficiency project" means

1. For existing buildings, a retrofit to improve energy efficiency; or

2. For new buildings, an enhancement to improve energy efficiency beyond the minimum required by the energy code.

3. It does not mean

a. The repair of existing buildings or equipment;

b. Projects that save money through the switching of fuels, energy sources, or vendors;

c. Projects or measures intended to save money by changing the time of day or year at which energy is consumed (i.e. thermal energy storage or other peak demand reduction systems); or

d. Upgrades to non-fixed appliances or equipment within a building such as computers, copiers, and other systems.

F. "Energy savings" means the combined value, in British thermal units (Btu's), of all energy sources saved or not consumed as a result of an energy efficiency project. For purposes of this rule, the following conversion factors are used in calculating the total energy savings:

1. Electricity - One kilowatt hour = 10,495 Btu's.

2. Natural gas or methane - One therm = 100,000 Btu's.

3. Natural gas or methane - One cubic foot = 1,030 Btu's.

4. Fuel oil - One gallon = 138,690 Btu's.

5. Coal - One pound = 11,580 Btu's.

6. Propane - One gallon = 91,333 Btu's.

G. "Fund" means the Energy Efficiency Fund established by Utah Code Section 53A-20c-102.

H. "Utah Energy Code" means the most-recent edition of the International Energy Conservation Code currently in effect within the State of Utah and as incorporated and amended by Utah Rule 156.56 (Utah Uniform Building Standard Act Rules).

I. "Quarter" means a three month period beginning with one of the following dates: January 1, April 1, July 1, and October 1.

J. "SEP" means the State Energy Program, a subdivision of the Utah Governor's Office of Energy Development, which is required by Utah Code 53A-20c-102 to serve as staff to the revolving loan program associated with the Energy Efficiency Fund.

K. "OED" means the Utah Governor's Office of Energy Development.

R362-3-4. Eligibility of Projects for Loans.

A. Eligibility for loans from the Fund is limited to school districts within the state of Utah.

B. Loans may be used only by school districts to fully or partially finance energy efficiency projects within buildings owned and operated by the school district.

C. For energy efficiency projects involving renovation, upgrade, or improvement of existing buildings, the following project measures are eligible for loan financing from the Fund:

1. Building exterior weatherization, air sealing, or thermal efficiency;

2. Increase or improvement in building insulation;

3. Door, window, or skylight upgrades;

4. Lighting technology upgrades, or reduction of the number of fixtures;

5. Heating, ventilation, and air conditioning (HVAC) replacements or upgrades;

6. Improvements to energy control systems;

7. Other energy efficiency projects that a school district can demonstrate will result in a significant reduction in the consumption of energy within a building.

D. An energy efficiency project can be eligible as part of a new building construction if the following conditions are met:

1. The building measure or system for which a loan is sought must surpass the minimum prescriptive requirements of the Utah Energy Code; and

2. The completed building must exceed the minimum energy performance standards of the Utah Energy Code for its building type by at least 10%.

E. There is no limit to the total number of loans a single school district may receive from the Fund, however, no school district may receive a loan that would cause the sum of its outstanding loan balances to exceed $500,000.

F. An energy efficiency project is eligible for a loan only if the total amount of funds awarded to the project are repaid in a term of more than two and less than twelve years.

R362-3-5. Eligible Costs.

A. This section defines the specific costs incurred by an energy efficiency project that are eligible for financing from the Fund.

B. The following direct costs of an energy efficiency project may be eligible for financing, subject to the remaining conditions of this section:

1. Building materials;

2. Doors, windows, and skylights;

3. Mechanical systems and components including HVAC and hot water;

4. Electrical systems and components including lighting and energy management systems.

5. Labor necessary for the construction or installation of the energy efficiency project;

6. Design and planning of the energy efficiency project;

7. Energy audits that identify measures that are included in the energy efficiency project;

8. Commissioning, inspections or certifications necessary for implementing the energy efficiency project.

C. The following costs are not eligible for financing from the Fund:

1. The costs of a construction or renovation project that are not directly related to energy efficiency measures;

2. Costs incurred for the acquisition of financing for the project;

3. Costs for equipment or systems that reduce energy costs without also resulting in reductions in the use of energy.

D. In cases for which the school district receives a financial incentive or rebate from a utility or other third party for undertaking some or all of the measures in an energy efficiency project, such incentives or rebates are to be deducted from the costs that are eligible for financing from the Fund. No loans made from the Fund may exceed the final cost incurred by the school district for the project after third party financing.

E. For an energy efficiency project undertaken as part of a new building construction, only the incremental cost of the project is eligible. For purposes of this section, incremental cost means the portion of the overall cost of a measure or system that exceeds the cost that would have been incurred by meeting the minimum prescriptive requirements of the Utah Energy Code.

F. For an energy efficiency project undertaken as part of the renovation of an existing building, building components or systems that are covered by the prescriptive requirements of the Utah Energy Code must exceed the minimum Utah Energy Code requirements in order for their costs to be eligible for a loan from the Fund.

R362-3-6. Loan Application Process.

A. The Advisor shall receive and evaluate applications for loans from the Fund on a rolling basis as complete proposals are developed in conjunction with SEP staff.

B. School districts interested in applying for a loan should first contact SEP. SEP staff will consult or meet with school district staff to make an initial assessment of the strength or weakness of a proposed project. SEP staff may also choose to conduct a site visit of the proposed project location prior to an application. SEP staff shall engage with school districts in a pre-application process evaluating potential project measures and preparing applications. Final applications shall be checked for completeness and eligibility by SEP staff prior to submission to the Advisor.

C. Applications for loans will be made using forms developed by SEP. Application forms shall require that the following information be provided by the school district:

1. Identification of school district personnel responsible for financial authority and project management;

2. Name and location of the building or buildings where the energy efficiency project will take place;

3. A description of the energy efficiency project to be undertaken, including existing conditions, specific measures to be undertaken, the cost or incremental cost of each measure, and the equipment or building materials to be installed;

4. Projected or estimated energy savings that result from each measure undertaken as part of the project;

5. Projected or estimated energy cost savings from each measure undertaken as part of the project;

6. Appendices providing supplemental information detailing the extent of school district commitment to the project (i.e. special needs, prior investments, existing audit/design documents) or descriptions of any additional community or environmental benefits that may result from the project.

D. The Advisor shall establish a Review Committee to provide in-depth evaluation of loan applications. The Committee must consist of at least the following:

1. The SEP Manager;

2. An SEP technical specialist chosen by the SEP Manager;

3. The OED Associate Director;

4. One member of the Governor's Energy Task Force selected by the Advisor for a two year renewable term;

5. A representative of the Utah Office of Education approved by the Advisor for a two year renewable term.

Other members may be designated at the discretion of the Advisor.

E. When SEP has deemed that an application is complete and that the proposed project complies with this rule, the application will be forwarded to the Review Committee for its evaluation.

F. The Review Committee will review and discuss the merits of each application in light of all materials submitted by the school district and technical analysis undertaken by SEP staff. After discussion of each application, Review Committee members will evaluate each according to the following criteria and scoring:

1. The feasibility and practicality of the project (maximum 30 points);

2. The projected energy cost payback period of the project (maximum 20 points);

3. The energy savings and energy cost savings attributable to the project (maximum 30 points);

4. Any supplemental information contained in the appendices or available to the Review Committee through the Utah State Office of Education (i.e. school district finances and enrollment) (maximum 20 points).

A separate score sheet will be completed by each Review Committee member for each application under consideration.

G. The Review Committee will compile the scores of each of its members for each application. Based upon the compiled scores of all members, the Committee will make recommendations to the Advisor for the funding of energy efficiency projects. For applications that receive an average score of less than 70 points, the Review Committee shall recommend that the Advisor not provide a loan from the Fund. Applications receiving an average score over 70 will normally be recommended for funding. However, if the current balance of the fund does not permit for the funding of all projects with an average score over 70, the Review Committee will recommend, beginning with the highest scoring application and working downward in score, those applications that may be funded given the current balance of the Fund.

H. The Review Committee provides advice and recommendations to the Advisor. It is not vested with the authority to make decisions regarding the public's business in connection with the Fund. The Advisor is the decision making authority with regard to the award of loans from the Fund.

I. Based upon the Review Committee's evaluations and recommendations, SEP will prepare a memorandum for the Advisor that will

1. Provide a brief description of each project reviewed by the Review Committee;

2. List estimates of energy savings, energy cost savings and simple paybacks.

3. Specify projects recommended for funding and those not recommended for funding;

4. Provide a brief explanation of the Review Committee's rationale for each application that is not recommended for funding.

J. The Advisor can approve or deny loans through electronic correspondence. if a majority of the quorum is in favor.

K. When considering Loan applications, the Advisor may modify the dollar amount or project scope for approved projects if the Advisor determines that individual measures included in a project do not meet the requirements of this rule, are not cost effective, or that funds could better be used for funding of other projects.

R362-3-7. Loan Terms.

A. The maximum amount that may be approved by the Advisor for any single energy efficiency project is $250,000. The minimum amount that may be approved is $5,000.

B. No school district may receive a loan that would cause the sum of its outstanding loan balances to exceed $500,000.

C. The final value of any loan may vary from the Advisor-approved amount according to the actual incursion of costs by the school district. In cases where costs have exceeded those presented in the initial application, a school district may request that the Advisor increase its loan award, subject to the limitations of subsections (A) and (B) above.

D. After approval of a loan application by the Advisor, a school district has one year in which to complete the energy efficiency project. If at the end of one year a school district is unable to meet this time limitation, it may request an extension from the Advisor of no more than six additional months.

E. Loan amounts from the Fund will be encumbered in an escrow account for periodic disbursement at the discretion of the school district-appointed project manager (designated in loan application form, see R362-3-6.C1), with invoices of the expenditures documented in each quarterly progress report, and the final 10% withheld pending a determination of substantial completion by SEP.

F. Once a project has been completed, the school district shall provide to SEP documentation of actual costs incurred, such as invoices from contractors, as well as information on any third party financial incentives received. SEP will use this information to determine the actual cost of the project measures approved by the Advisor.

G. The final loan amount will be equal to actual costs incurred for the project minus the value of any third party incentives received unless

1. This amount exceeds $250,000, in which case the amount of the loan will be set at $250,000; or

2. This amount exceeds the amount approved by the Advisor, in which case the loan amount will be set at the amount originally approved by the Advisor; or

3. This amount exceeds the amount approved by the Advisor and the Advisor increases the loan award at the request of the school district.

H. No interest will be charged to school districts receiving loans for energy efficiency projects from the Fund.

I. An administrative fee may be charged to loan recipients to defray the cost of servicing loan accounts.

J. Loan repayment periods will be set to any term desired by the applicant between two and twelve years. The loan repayment period for a specific energy efficiency project begins with the first day of the next quarter after all of the loan funds have been disbursed.

K. Loan repayments will be due at the beginning of each quarter.

L. Quarterly loan repayment amounts will be calculated as follows:

(Total loan amount + (annual administrative fee x loan repayment period) / loan repayment period) / 4.

M. School districts that are approved for a loan award will enter into a contract with SEP that specifies all terms applying to the loan, including the terms specified in this rule and standard contract terms for contracts and loans currently in effect for the State of Utah.

R362-3-8. Reporting and Site Visits.

A. In the period between Advisor approval and project completion, the school district shall complete and provide to SEP a report at the beginning of each quarter. The report shall include information on the school district's progress in completing the energy efficiency project, its most-current estimate for the time of project completion, what proportion of the loan award has been disbursed in the quarter and total to date, and any notable problems or changes in the project since Advisor approval such as construction delays or cost overruns.

B. If a school district fails to submit the quarterly reports described in subsection (A) above, the Advisor may freeze the remainder of the loan award escrow account.

C. After loan funds have been completely disbursed, the school district shall complete and provide to SEP annual reports due at the beginning of the calendar quarter in which the anniversary of the loan repayment period began. This report shall include the following:

1. A description of the performance of the building and of the performance of the measures included in the energy efficiency project;

2. A description of any notable problems that have occurred with the building or the project;

3. A description of any notable changes to the building or to its operations that would cause a significant change in its energy consumption;

4. Documentation of building energy consumption and cost in the prior year.

Annual reports shall be provided for either the first four years after project completion or for each year of the repayment period, whichever is longer.

D. If a school district fails to submit the annual reports described in subsection (C) above, the Advisor may bar the school district from eligibility for future loans from the Fund

E. Approximately one year after project completion, SEP staff will conduct a site visit to the location of the energy efficiency project to verify project completion and assess the success of the project. Additional site visits may also be conducted by SEP staff during the repayment period. Loan recipients will assist SEP with such site visits, including providing access to all components of the energy efficiency project.


energy, efficiency, schools, loans

Date of Enactment or Last Substantive Amendment

April 6, 2009

Notice of Continuation

August 30, 2012

Authorizing, Implemented, or Interpreted Law


Additional Information


For questions regarding the content or application of rules under Title R362, please contact the promulgating agency (Governor, Energy Development (Office of)). A list of agencies with links to their homepages is available at http://www.utah.gov/government/agencylist.html or from http://www.rules.utah.gov/contact/agencycontacts.htm.