I wrote last year with enthusiasm about legislation authored by Washington State Representative Hans Dunshee that proposed $3 billion for energy retrofits for schools. That legislation inspired the term “Green Increment Financing,” which I used to describe a program that would use the state’s ability to borrow money to start energy efficiency retrofits for schools today, and use the savings from those efficiencies to pay back the lenders over time. That legislation didn’t survive last year’s legislative process, but Representative Dunshee is back with a different version of the legislation he is calling the “Jobs Act.” It is way too early in the process to know whether this bill will pass or how it will look after weeks of hearing and debate, but it is worth a summary.

Now this latest bill is not Green Increment Financing and it is a smaller dollar figure this year, creating about $850 million dollars in bonding authority for retrofitting schools in Washington. But this bill is founded on the basic principles of performance contracting, which I described in a post called “Energy Efficiencies that Pay for Themselves.”

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  • The new version of the bill would authorize the sale of bonds which would be paid back by the state out of the general fund, rather than paid back with local energy savings. Local school districts would apply for the funds generated by the sale of the bonds and would be awarded grants based on how much energy their proposed project would save. The bill stipulates that in each round of application review by the state’s Department of Commerce, proposals will be ranked based on how much the project will save the district, “the higher the energy savings, the higher the project ranking.”

    Additionally, proposals will be judged using the same energy savings performance standards used by the General Administration department cap for performance contracting. Performance contracting, which has been used for years in Oregon and Washington, requires that a project guarantee enough energy savings to achieve “simple payback,” which means saving enough money to cover the up front capital costs.

    The goal of this legislation—creating jobs by saving energy—is not just laudable but an especially urgent need at a time of chronic unemployment. And schools are being hard hit by budget cuts, so saving cash on energy means more resources for local school districts to do what they are constitutionally mandated to do: educate children. Dunshee’s legislation will likely evolve, but it is consistent with some of what we learned as we researched green collar jobs and how energy efficiencies can create many of those jobs. We’ll be tracking it closely over the coming months of Washington’s 2010 legislative session.