R362.  Governor, Energy Development (Office of).
R362-3.  Energy Efficiency Fund.
R362-3-1.  Purpose.
	(1)  This rule is for the purposes of
	(a)  Implementing the responsibilities assigned to the Utah Governor's Energy Advisor (Advisor), and the Utah Office of Energy Development (Office) in managing the Energy Efficiency Fund as defined in Utah Code Section 11-45-102, and implementing the associated loan program established in Utah Code Section 11-45-201; 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.
	(1)  Pursuant to Utah Code Section 11-45-204, the Advisor shall make rules establishing criteria, procedures, priorities, and conditions for the award of loans from the Energy Efficiency Fund.

R362-3-3.  Definitions.
	(1)  "Advisor" means the Governor's Energy Advisor, who oversees the Utah Office of Energy Development.
	(2)  "Energy" means, for the purposes of this rule, electricity, natural gas or other methane, fuel oil, coal, or propane that is used by a political subdivision to operate a building's electrical devices, lighting, heating and cooling systems, and other equipment necessary for the building's operation.
	(3)  "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.
	(4)  "Energy cost savings" means the monetary value to a political subdivision 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.
	(5)  "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:
	(a)  Electricity - One kilowatt hour = 10,495 Btu's.
	(b)  Natural gas or methane - One therm = 100,000 Btu's.
	(c)  Natural gas or methane - One cubic foot = 1,030 Btu's.
	(d)  Fuel oil - One gallon = 138,690 Btu's.
	(e)  Coal - One pound = 11,580 Btu's.
	(f)  Propane - One gallon = 91,333 Btu's.
	(6)  "Quarter" means a three month period beginning with one of the following dates: January 1, April 1, July 1, and October 1.
	(7)  "Director" means Director of the Utah Office of Energy Development.
	(8)  "Associate Director" means Associate Director of the Utah Office of Energy Development.

R362-3-4.  Eligibility of Projects for Loans.
	(1)  Eligibility for loans from the Fund is limited to political subdivisions within the State of Utah.
	(2)  Loans may be used only by political subdivisions to fully or partially finance energy efficiency projects within buildings owned and operated by the political subdivision.
	(3)  For energy efficiency projects involving renovation, upgrade, or improvement of existing buildings, the following project measures are eligible for loan financing from the Fund:
	(a)  Building exterior weatherization, air sealing, or thermal efficiency;
	(b)  Increase or improvement in building insulation;
	(c)  Door, window, or skylight upgrades;
	(d)  Lighting technology upgrades, or reduction of the number of fixtures;
	(e)  Heating, ventilation, and air conditioning (HVAC) replacements or upgrades;
	(f)  Improvements to energy control systems;
	(g)  Renewable energy systems;
	(h)  Other energy efficiency projects that a political subdivision can demonstrate will result in a significant reduction in the consumption of energy within a building.
	(4)  The following project measures are not eligible for energy efficiency projects from the Fund involving renovation, upgrade, or improvement of existing buildings:
	(a)  The repair of existing buildings or equipment;
	(b)  Projects that save money through switching of fuels, energy sources, or vendors, except in the case of the installation of a renewable energy system or other fuel changes that result in energy savings;
	(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.
	(5)  An energy efficiency project can be eligible as part of a new building construction if the following conditions are met:
	(a)  The building measure or system for which a loan is sought must surpass the minimum prescriptive requirements of the Utah Energy Code; and
	(b)  The completed building must exceed the minimum energy performance standards of the Utah Energy Code for its building type by at least 10%.
	(6)  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 between two and twelve years.

R362-3-5.  Eligible Costs.
	(1)  This section defines the specific costs incurred by an energy efficiency project that are eligible for financing from the Fund.
	(2)  The following direct costs of an energy efficiency project may be eligible for financing, subject to the remaining conditions of this section:
	(a)  Building materials;
	(b)  Doors, windows, and skylights;
	(c)  Mechanical systems and components including HVAC and hot water;
	(d)  Electrical systems and components including lighting, renewable energy systems, and energy management systems.
	(e)  Labor necessary for the construction or installation of the energy efficiency project;
	(f)  Design and planning of the energy efficiency project;
	(g)  Energy audits that identify measures that are included in the energy efficiency project;
	(h)  Commissioning, inspections or certifications necessary for implementing the energy efficiency project.
	(3)  The following costs are not eligible for financing from the Fund:
	(a)  The costs of a construction or renovation project that are not directly related to energy efficiency measures;
	(b)  Costs incurred for the acquisition of financing for the project;
	(c)  Costs for equipment or systems that reduce energy costs without also resulting in reductions in the use of energy.
	(4)  In cases for which the political subdivision 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 political subdivision for the project after third party financing.
	(5)  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.
	(6)  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.
	(1)  The Office shall receive and evaluate applications for loans from the Fund during competitive bid cycles, based on Fund availability.
	(2)  Political subdivisions interested in applying for a loan should first contact the Office.  Office staff will consult or meet with political subdivision staff to make an initial assessment of the strength or weakness of a proposed project.  Office staff may also choose to conduct a site visit of the proposed project location prior to an application.  Office staff shall engage with political subdivisions in a pre-application process evaluating potential project measures and preparing applications.
	(3)  Applications for loans will be made using forms developed by the Office.  Application forms shall require that the following information be provided by the political subdivision:
	(a)  Identification of political subdivision personnel responsible for financial authority and project management;
	(b)  Name and location of the building or buildings where the energy efficiency project will take place;
	(c)  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;
	(d)  Projected or estimated energy savings that result from each measure undertaken as part of the project;
	(e)  Projected or estimated energy cost savings from each measure undertaken as part of the project;
	(f)  Appendices providing supplemental information detailing the extent of political subdivision 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.
	(4)  The Office and the Advisor or Director shall establish a Review Committee to provide in-depth evaluation of loan applications.  The Committee shall consist of at least the following:
	(a)  The State Energy Program Manager;
	(b)  An Office technical specialist;
	(c)  The Associate Director; and
	(d)  Other members as may be designated at the discretion of the Advisor or Director.
	(5)  When the Office 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.
	(6)  The Review Committee will review and discuss the merits of each application in light of all materials submitted by the political subdivision and technical analysis undertaken by Office staff.  After discussion of each application, Review Committee members will evaluate each according to the following criteria and scoring:
	(a)  The feasibility and practicality of the project (maximum 35 points);
	(b)  The projected energy cost payback period of the project (maximum 25 points);
	(c)  The energy savings and energy cost savings attributable to the project (maximum 40 points);
	A separate score sheet will be completed by each Review Committee member for each application under consideration.
	(7)  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 or Director for the funding of energy efficiency projects.
	(8)  The Review Committee provides advice and recommendations to the Advisor or Director.  It is not vested with the authority to make decisions regarding the public's business in connection with the Fund.  The Advisor or Director is the decision making authority with regard to the award of loans from the Fund.
	(9)  Based upon the Review Committee's evaluations and recommendations, the Office will prepare a memorandum for the Advisor or Director that will
	(a)  Provide a brief description of each project reviewed by the Review Committee;
	(b)  List estimates of energy savings, energy cost savings and simple paybacks.
	(c)  Specify projects recommended for funding and those not recommended for funding;
	(d)  Provide a brief explanation of the Review Committee's rationale for each application that is not recommended for funding.
	(10)  The Advisor or Director can approve or deny loans through electronic correspondence if a majority of the Review Committee is in favor.
	(11)  When considering loan applications, the Office upon consultation with the Advisor or Director may modify the dollar amount or project scope for approved projects if the Office 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.
	(1)  The maximum amount that may be approved by the Advisor or Director for any single energy efficiency project is $1,000,000.  The minimum amount that may be approved is $5,000.
	(2)  The final value of any loan may vary from the Advisor or Director-approved amount according to the actual incursion of costs by the political subdivision.  In cases where costs have exceeded those presented in the initial application, a political subdivision may request that the Advisor or Director increase its loan award, subject to the limitations of subsections (1) and (2) above.
	(3)  After approval of a loan application by the Advisor or Director, a political subdivision has one year in which to complete the energy efficiency project.  If at the end of one year a political subdivision is unable to meet this time limitation, it may request an extension from the Office of no more than six additional months.
	(4)  Loan amounts from the Fund will be reserved for periodic disbursement upon invoice approval at the discretion of the Office.  Expenditures will be documented in each quarterly progress report, and the final 10% withheld pending a determination of substantial completion by the Office.
	(5)  Once a project has been completed, the political subdivision shall provide the Office documentation of actual costs incurred, such as invoices from contractors, as well as information on any third party financial incentives received.  The Office will use this information to determine the actual cost of the project measures approved by the Advisor or Director.
	(6)  The final loan amount will be equal to actual costs incurred for the project minus the value of any third party incentives received unless
	(a)  This amount exceeds $1,000,000, in which case the amount of the loan will be set at $1,000,000; or
	(b)  This amount exceeds the amount approved by the Advisor or Director, in which case the loan amount will be set at the amount originally approved by the Advisor or Director; or
	(c)  This amount exceeds the amount approved by the Advisor or Director and the Advisor or Director increases the loan award at the request of the political subdivision.
	(7)  At the discretion of the Office, interest will be charged to political subdivisions receiving loans for energy efficiency projects from the Fund at or below market interest rates.
	(8)  An administrative fee may be charged to loan recipients to defray the cost of servicing loan accounts.
	(9)  Loan repayment periods will be set to any term desired by the applicant between two and twelve years at the discretion of the Office.  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.
	(10)  Loan repayments will be due at the beginning of each quarter.
	(11)  Quarterly loan repayment amounts will be calculated using a standard amortization schedule.
	(12)  Political subdivisions that are approved for a loan award will enter into a contract with the Office 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.
	(1)  In the period between approval and project completion, the political subdivision shall complete and provide to the Office a report at the beginning of each quarter.  The report shall include information on the political subdivision'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 or Director approval such as construction delays or cost overruns.
	(2)  If a political subdivision fails to submit the quarterly reports described in subsection (1) above, the Office upon consulting with the Advisor or Director may freeze the remainder of the loan award.
	(3)  After loan funds have been completely disbursed, the political subdivision shall complete and provide to the Office 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:
	(a)  A description of the performance of the building and of the performance of the measures included in the energy efficiency project;
	(b)  A description of any notable problems that have occurred with the building or the project;
	(c)  A description of any notable changes to the building or to its operations that would cause a significant change in its energy consumption;
	(d)  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.
	(4)  If a political subdivision fails to submit the annual reports described in subsection (3) above, the Office upon consulting with the Advisor or Director may bar the political subdivision from eligibility for future loans from the Fund.
	(5)  Approximately one year after project completion, Office 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 Office staff during the repayment period.  Loan recipients will assist the Office with such site visits, including providing access to all components of the energy efficiency project.

KEY:  energy, efficiency, municipalities, loans
Date of Enactment or Last Substantive Amendment:  January 7, 2015
Notice of Continuation:  December 18, 2017
Authorizing, and Implemented or Interpreted Law:  11-45-101