A3668

An Act authorizing municipal electric utilities to create the municipal shared services energy company to provide for shared facilities, powers and services, amending P.L.1971, c.198 and supplementing Title 40A of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) This act shall be known and may be cited as the "Municipal Shared Services Energy Company Law."

2. (New section) The Legislature finds and declares that:

a. Since 1888, municipalities in New Jersey have had the power to construct and maintain facilities for the generation of electricity;

b. Under such statutory authority, nine municipalities and one rural electric cooperative presently utilize such power to own and operate municipal electric utility systems for the benefit of their residents and businesses;

c. Since 1888, the generation and distribution of electricity has evolved from a local and statewide endeavor into a national marketplace and such evolution has resulted in a system where the size and sophistication of the market participants influence the ability to efficiently compete in the marketplace;

d. Paramount in the present marketplace is the ability to reserve sufficient electric capacity at reasonable prices to ensure safe, reliable and efficient electrical power to local businesses and residents, and such ability is contingent on the power to contract for the generation or delivery of a sufficient quantity of power and to act as a contracting partner in long term, short term, and spot market power supply contracts;

e. Given this evolution of the electric supply marketplace, the municipal electric utilities operating in New Jersey desire to act jointly to achieve greater efficiencies in the procurement and generation of electric power;

f. The operation of electric utility systems by municipalities and the improvement of these systems through joint action in the wholesale procurement of electricity and transmission services, and in the generation, transmission and distribution of electric power and energy, is in the public interest;

g. The establishment of the municipal shared services energy company by municipalities which own or operate electric utility systems will ensure the continued viability and stability of these systems, by enabling these municipalities to act jointly to develop coordinated bulk power and fuel supply programs, and to post collateral and act as a market participant in such programs, thereby providing the means to pursue efficiencies and savings for retail customers;

h. The Legislature has determined that it is therefore in the public interest to permit municipally owned or operated electric utility systems to act jointly through the voluntary creation of the municipal shared services energy company, and to empower the company to perform according to standard electric industry practices, in order to aid in promoting the stability and viability of such systems and to achieve the efficiencies and savings for the retail customers of these utility systems;

i. Thirty seven other states have enacted statutes to allow individual municipal electric utilities to act jointly to pursue such marketplace efficiencies, and the Legislature has resolved to follow the example developed by Delaware which enacted legislation in 1978 to establish the Delaware Municipal Electric Corporation pursuant to 22 Del. C. s.1301 et seq. and to authorize its local governments to act as efficient market participants in the national electricity marketplace; and

j. It is therefore declared to be the policy of this State to promote the welfare of its residents by authorizing municipalities that operate municipal electric utilities to jointly establish a body corporate and politic to be known as the “municipal shared services energy company” which shall exist and operate for the purposes set forth in this act. Such purposes are declared to be public purposes for which public money may be spent and private property may be acquired by the exercise of the power of eminent domain.

3. (New section) As used in P.L. , c. (C. ) (pending before the Legislature as this bill), unless a different meaning clearly appears from the context:

“Bonds” means any bonds, interim certificates, notes, debentures, or other obligations issued by the municipal shared services energy company pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill);

"Collateral" means cash, letters of credit, or other security of a party to a power supply contract acceptable to the counterparty, which shall be valued in accordance with the terms of the applicable power supply contract and which shall be otherwise consistent with electric industry standards in the marketplace, and which shall secure the obligations of the municipal shared services energy company and its counterparty under a power supply contract;

"Cost" means, in addition to the usual connotations thereof, the cost of acquisition or construction of all or any part of an electric supply project and of all or any property, rights, easements, privileges, agreements, and franchises deemed by the company to be necessary or useful and convenient therefor or in connection therewith, including interest or discount on bonds, cost of issuance of bonds, engineering and inspection costs and legal expenses, cost of financial, professional and other estimates and advice, organization, administrative, operating, and other expenses of the municipal shared services energy company prior to and during such acquisition or construction, and all such other expenses as may be necessary or incident to the financing, acquisition, construction, and completion of an electric supply project or part thereof, and the placing of such a project in operation, and also such provision or reserves for working capital, operating, maintenance or replacement expenses or for payment or security of principal of, or interest on, bonds during or after such acquisition or construction as the company may determine, and also reimbursements to the company or any county, municipality, or other person of any moneys theretofore expended for the purposes of the company or to any county or municipality of any moneys theretofore expended for or in connection with electric utility systems and facilities;

"Creation contract" means a contract executed by the member municipalities creating the municipal shared services energy company and defining the rights and responsibilities of the company and its members; as such creation contract may be amended as provided herein to, among other things, add one or more rural electric cooperatives as members;

"Electric supply project" or “project” means any plant, works, system, facilities, and real and personal property of any nature whatsoever, together with all parts thereof and appurtenances thereto, used or useful in the generation, production, transmission, distribution, purchase, sale, exchange, or interchange of electric power and energy, in whole or in part, for the benefit of the members including the utilization of renewable capacity and energy, or any interest therein or right to capacity thereof and the acquisition of fuel of any kind for any such purposes, including, but not limited to, the acquisition of fuel deposits and the acquisition or construction and operation of facilities for extracting fuel from natural deposits, for converting it for use in another form, for burning it in place, for transportation, storage and reprocessing or for any energy conservation measure which involves public education or the actual fitting and application of a device;

"Member municipality" means a municipality which joins with other members to create or join the municipal shared services energy company pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill);

"Member" means a member municipality or a rural electric cooperative which joins in the initial or amended creation contract of the municipal shared services energy company;

"Municipal shared services energy company” or “company” means the public corporation created under P.L. , c. (C. ) (pending before the Legislature as this bill) by contract between three or more municipalities that operate retail electric distribution systems;

"Municipality" means a municipal corporation and includes cities, towns, townships, villages and boroughs, and any municipality governed by a board of commissioners or an improvement commission;

"Person" means a natural person, a public agency, cooperative or private corporation, association, firm, statutory trust, partnership, or business trust of any nature whatsoever, organized and existing under the laws of any state;

"Power supply contract" means a contractual arrangement between the company and another person relating to the purchase or sale of electrical power and component goods or services related thereto;

"Public agency" means any municipality or other municipal corporation, political subdivision, government unit or public corporation created under the laws of this State or of another state or of the United States, and any state, and the United States, and any person, board or other body declared by the laws of any state or the United States to be a department, agency or instrumentality thereof; and

"Rural electric cooperative" means a non-profit utility that is exclusively owned and controlled by the customers it serves, and which is exempt from Board of Public Utilities jurisdiction pursuant to section 1 of P.L.1983, c.78 (C.48:2-13.1).

4. (New section) a. Any combination of three or more municipalities that operate retail electric distribution systems pursuant to R.S.40:62-12 et seq., may, by adoption of parallel ordinances approving a creation contract, establish a separate legal entity to be known as the "municipal shared services energy company" to be used by its members to effect joint development of electric energy resources or production, distribution, and transmission of electric power and energy, including the utilization of renewable capacity and energy, in whole or in part, for the benefit of its members. Notwithstanding any other law to the contrary, following approval of the Local Finance Board within the Division of Local Government Services in the Department of Community Affairs pursuant to subsection b. of this section, the final adoption by the municipalities of the parallel ordinances, and due execution by the municipalities, the creation contract shall have such term as is provided by the contract. The members that enter into the creation contract may thereafter amend the contract in the manner set forth by P.L. , c. (C. ) (pending before the Legislature as this bill).

b. Upon the introduction of the parallel ordinances by each municipality seeking to create the company, but before final adoption of the ordinances, copies of the ordinances, together with the proposed creation contract shall be submitted to the Local Finance Board for approval. The Local Finance Board shall not unreasonably withhold approval of the proposed creation contract, and if the Local Finance Board does not disapprove the contract within 60 days after receipt of the proposed creation contract, then the ordinances and proposed creation contract shall be deemed approved.

c. Upon receipt of the creation contract duly executed by the member municipalities, the Department of the Treasury shall record the creation contract and issue a certificate of incorporation stating the name of the company and the date and fact of incorporation. The issuance of the certificate shall be conclusive proof that the company legally exists and such company shall have the powers set forth in section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill).

d. Once the company has been legally established, it may add member municipalities as provided in paragraphs (1) and (2) of this subsection:

(1) A municipality requesting to become a member of the company and the staff and board of directors of the company shall negotiate an amended creation contract on terms and conditions acceptable to the parties. Once an amended creation contract has been agreed to, it shall be submitted for approval by the board of directors. Adoption of an amended creation contract shall require approval by a two-thirds majority vote of the full membership of the board.

(2) The municipality requesting to become a member of the company shall introduce an ordinance approving the amended creation contract as approved by the board of directors of the company. Upon the introduction of the ordinance, but before final adoption of such ordinance, copies of the ordinance, together with the proposed amended creation contract shall be submitted to the Local Finance Board within the Division of Local Government Services in the Department of Community Affairs, for approval. The Local Finance Board shall not unreasonably withhold approval, and if the Local Finance Board does not disapprove the proposed amended creation contract within 60 days after receipt of the proposed amended creation contract, then the ordinance and proposed amended creation contract shall be deemed approved.

e. Once the company has been legally established, it may add one or more rural electric cooperatives as a member as provided in paragraphs (1) and (2) of this subsection:

(1) A rural electric cooperative requesting to become a member of the company and the staff and board of directors of the company shall negotiate an amended creation contract on terms and conditions acceptable to the parties. Once an amended creation contract has been agreed to, it shall be submitted for approval by the board of directors. Adoption of an amended creation contract shall require approval by a two-thirds majority vote of the full membership of the board.

(2) The company shall present the proposed amended creation contract for approval to the Local Finance Board within the Division of Local Government Services in the Department of Community Affairs. The Local Finance Board shall not unreasonably withhold approval, and if the Local Finance Board does not disapprove the proposed amended creation contract within 60 days after receipt of the proposed amended creation contract, then the proposed amended creation contract shall be deemed approved.

5. (New section) Any creation contract establishing the municipal shared services energy company under P.L. , c. (C. ) (pending before the Legislature as this bill) shall specify:

a. The name and purpose of the company and the functions or services to be provided by the company. The name may refer to the company as an agency, company, group, system or other descriptive title;

b. The establishment and organization of a governing board of the company which shall be a board of directors in which all powers of the company are vested. The creation contract may provide for the creation by the board of an executive committee of the board to which the power and duties may be delegated as the board shall specify;

c. The number of directors, the manner of their appointment, the terms of office and compensation, if any, and the procedure for filling vacancies on the board. Each member municipality and cooperative shall have the power to appoint one member to the board of directors and shall be entitled to remove that member at will;

d. The manner of selection of the officers of the company and their duties;

e. The voting requirements for action by the board; but, unless specifically provided otherwise, a majority of directors shall constitute a quorum and a majority of the quorum shall be necessary for any action taken by the board;

f. The duties of the board, which shall include the obligation to comply or to cause compliance with P.L. , c. (C. ) (pending before the Legislature as this bill) and the laws of this State and, in addition, with each and every term, provision and covenant in the creation contract creating the company on its part to be kept or performed;

g. The manner in which additional municipalities and rural electric cooperatives may become parties to the creation contract by amendment;

h. The manner in which members may withdraw from participation in the contract, which shall include a defeasance of such member’s pro-rata share of any bonds issued by the company;

i. Provisions for the disposition, division or distribution of any property or assets of the company on dissolution;

j. The term of the creation contract, which may be a definite period or until rescinded or terminated, and the method, if any, by which the creation contract may be rescinded or terminated, but the creation contract may not be rescinded or terminated so long as the company has bonds outstanding, unless provision for full payment of such bonds, by escrow or otherwise, has been made pursuant to the terms of the bonds or the resolution, trust indenture or security instrument securing the bonds; and

k. The terms for payment to the company of funds for commodities to be procured and services to be rendered by the company, including authority to enter into purchase agreements between the members and the company for the purchase of electric power and energy whereby the member is obligated to make payments or provide collateral in amounts which shall be sufficient to enable the company to meet its expenses, interest and principal payments, whether at maturity or upon sinking fund redemption, for its bonds, reasonable reserves for debt service, operation and maintenance and renewals and replacements and the requirements of any rate covenant with respect to debt service coverage contained in any resolution, trust indenture or other security instrument. Such purchase agreements between the members and the company may contain such other terms and conditions as the company and the members may determine, including provisions whereby a member is obligated to pay for power irrespective of whether energy is produced or delivered to the member or whether any electric supply project contemplated by any such agreement is completed, operable or operating, and notwithstanding suspension, interruption, interference, reduction, or curtailment of the output of such electric supply project. The creation contract may further provide that, if one or more of the members defaults in the payment of its obligations under any such purchase agreement, the remaining members, which also have such agreements, shall be required to accept and pay for, and shall be entitled proportionately to use or otherwise dispose of, the power and energy to be purchased by the defaulting purchaser. For purposes of this section, the phrase “purchase of electric power and energy” includes any right to capacity or interest in any electric supply project.

6. (New section) No provision of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be construed to limit, inhibit or in any way restrict the right of any municipality to form, own, or operate an electric utility, either directly, or as a department of that municipality.

7. (New section) No officer or employee of the municipal shared services energy company shall have or acquire any interest, direct or indirect, in any contract or proposed contract or property related to the provision of wholesale electric power, transmission, generation, materials, services or supplies to be furnished to or used by the company or any of its members.

8. (New section) The municipal shared services energy company shall be a public body politic and corporate, established as an instrumentality exercising public and essential governmental functions to provide for the public health and welfare. The company shall have the duties, privileges, immunities, rights, liabilities, and disabilities of a public body politic and corporate but shall not have taxing power. The company shall be a “contracting unit” for purposes of the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et seq.), shall have perpetual succession, and shall have the following powers:

a. To adopt and have a common seal and to alter the same at pleasure;

b. To sue and be sued;

c. To acquire, own, rent, hold, lease, as lessor or lessee, use and sell or otherwise dispose of, mortgage, pledge, or grant a security in, any real or personal property, commodity or service or interest therein;

d. To hold or place collateral with a counterparty to a power supply contract and to account for, value, and use such collateral as provided in the power supply contract notwithstanding any other law or regulation to the contrary;

e. To plan, develop, acquire, construct, reconstruct, operate, manage, dispose of, participate in, maintain, repair, extend, or improve one or more electric supply projects within or outside the State and act as agent, or designate one or more other persons participating in an electric supply project to act as its agent, in connection with the planning, acquisition, construction, operation, maintenance, repair, extension, or improvement of such electric supply project for generation, production, transmission, and provision of electrical power and energy at wholesale, in whole or in part, for the benefit of the members;

f. To negotiate for, exploit, produce, acquire, buy, sell, distribute and process fuels necessary or appropriate to the production of electric power and energy, the development of coordinated bulk power and fuel supply programs, and the implementation of energy conservation measures as necessary or appropriate to meet energy needs of the members and clients of the company;

g. To enter into franchises, exchange, interchange, pooling, wheeling, transmission, construction, and other agreements with any person, firm, entity, or public agency, notwithstanding the provisions of P.L.1971, c.198 (C.40A:11-1 et seq.) or any other law, provided, however, that any contract to provide for construction of a facility as a result of such arrangement shall be subject to P.L.1971, c.198 (C.40A:11-1 et seq.);

h. To negotiate and enter into power supply contracts pursuant to section 19 of P.L. , c. (C. ) (pending before the Legislature as this bill) and to take such actions as are necessary to remain in compliance with the terms of such contracts;

i. In addition to power supply contracts, to make and execute such additional contracts and other instruments necessary or convenient to the exercise of its powers;

j. To employ agents and employees;

k. To contract with any person, entity or public agency within or outside the State of New Jersey for the construction of any electric supply project or for the purchase, sale or transmission of electric power and energy generated by any electric supply project, in whole or in part, for the benefit of its members, or for any interest or share therein, or any right to capacity thereof, on such terms and for such period of time as its board shall determine;

l. To purchase and sell, exchange or transmit electric power and energy at wholesale within and outside the State of New Jersey, consistent with federal law, in such amounts as it shall determine to be necessary or appropriate to make the most effective use of its powers and to meet its responsibilities and to enter into agreements with any person, entity, or public agency with respect to the purchase, sale, exchange, or transmission on such terms and for such period of time as its board shall determine;

m. To provide for and secure the payment of any bonds and the rights of the holders thereof, and to purchase, hold, and dispose of any bonds;

n. To accept gifts or grants of real or personal property, money, material, labor, or supplies for the purposes of the municipal shared services energy company, and to make and perform such agreements and contracts as may be necessary or convenient in connection with the procuring, acceptance, or disposition of the gifts or grants;

o. To acquire, by condemnation, any land or building which is necessary for an electric supply project, pursuant to the provisions of the "Eminent Domain Act of 1971," P.L.1971, c.361 (C.20:3-1 et seq.), and to enter on any lands, waters, or premises for the purpose of making surveys, borings, soundings and examinations for the purposes of the municipal shared services energy company;

p. To make and enforce by-laws or rules and regulations for the management and regulation of its business and affairs and for the use, maintenance, and operation of its properties and to amend the by-laws;

q. To do and perform any acts and things authorized by this act, through or by means of its own officers, agents, and employees, or by contract with any person;

r. To enter into any and all contracts, execute any and all instruments, and do and perform any and all things or acts necessary, convenient, or desirable for the purposes of the municipal shared services energy company, or to carry out any power expressly authorized under P.L. , c. (C. ) (pending before the Legislature as this bill);

s. To exercise such powers as are granted to municipalities under R.S.40:60-12 et seq.;

t. To join organizations, including private or trade organizations, which the board of directors has deemed to be beneficial to the accomplishment of the company’s purposes;

u. To enter into a power supply contract, lease, operation contract, or contract for management of electric generation, or for the purchase of fuel for electric generation for a term not to exceed 40 years, notwithstanding any durational limitation in section 15 of P.L.1971, c.198 (C.40A:11-15); and

v. Notwithstanding any other law to the contrary, to invest any funds held in reserve or sinking funds, or any funds not required for immediate disbursement, including the proceeds from the sale of any bonds, in such obligations, securities, and other investments as the company deems to be proper.

9. (New section) a. The municipal shared services energy company shall have the power to authorize or provide for the issuance of bonds pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) for the purpose of raising funds to pay the cost of any part of an electric supply project, to fulfill the terms of a power supply contract, including any provision for collateral or related performance security measures, and to fund or refund any bonds.

b. The municipal shared services energy company shall adopt a bond resolution which shall:

(1) describe in brief and general terms sufficient for reasonable identification the electric supply project or part thereof, to be constructed or acquired, or describe the bonds which are to be funded or refunded, if any;

(2) state the cost or estimated cost of the project, if any; and

(3) provide for the issuance of the bonds in accordance with sections 10 through 18 of P.L. , c. (C. ) (pending before the Legislature as this bill).

10. (New section) Upon adoption of a bond resolution, the municipal shared services energy company shall have power to incur indebtedness, borrow money and issue its bonds for the purpose of financing a project or of funding or refunding the bonds issued pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill). Such bonds shall be authorized by the bond resolution and may be issued in one or more series and shall bear such date or dates, mature at such time or times not exceeding 40 years from the date thereof, bear interest at a rate or rates within such maximum rate as permitted by law, be in such denomination or denominations, be in such form, either coupon or registered, carry such conversion or registration privileges, have such rank or priority, be executed in such manner, be payable from such sources in such medium of payment at such place or places within or without the State, and be subject to such terms of redemption, with or without a premium, as the bond resolution may provide.

11. (New section) Bonds of the municipal shared services energy company may be sold by the municipal shared services energy company at public or private sale, and at such price or prices as the municipal shared services energy company shall determine.

12. (New section) The municipal shared services energy company may cause a copy of any bond resolution adopted by it to be filed for public inspection in its office and in the office of the clerk of the governing body of each member municipality, and may thereupon cause to be published, in a newspaper published or circulating in each member's community, a notice stating the fact and date of this adoption and the places where the bond resolution has been filed for public inspection and also the date of the first publication of the notice and also that any action or proceeding of any kind or nature in any court questioning the validity or proper authorization of bonds provided for by the bond resolution, or the validity of any covenants, agreements or contract provided for by the bond resolution shall be commenced within 20 days after the first publication of the notice. If the notice shall at any time be published and if no action or proceeding questioning the validity of the establishment of the municipal shared services energy company or the validity or proper authorization of bonds provided for by the bond resolution referred to in the notice, or the validity of any covenants, agreements or contract provided for by the bond resolution shall be commenced or instituted within 20 days after the first publication of the notice, then all residents and taxpayers and owners of property in each of the member municipalities, and all other persons whatsoever, shall be forever barred and foreclosed from instituting or commencing any action or proceeding in any court, or from pleading any defense to any action or proceedings, questioning the validity of the establishment of the municipal shared services energy company, or the validity or proper authorization of the bonds, or the validity of the covenants, agreements or contracts, and the municipal shared services energy company shall be conclusively deemed to have been validly established and to be authorized to transact business and exercise powers under P.L. , c. (C. ) (pending before the Legislature as this bill), and the bonds, covenants, agreements and contracts shall be conclusively deemed to be valid and binding obligations in accordance with their terms and tenor.

13. (New section) Any provision of any law to the contrary notwithstanding, any bond or other obligation issued pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), shall be fully negotiable within the meaning and for all purposes of the negotiable instruments law of this State, and each holder or owner of such a bond or other obligation, or of any coupon appurtenant thereto, by accepting such bond or coupon shall be conclusively deemed to have agreed that such bond, obligation or coupon is and shall be fully negotiable within the meaning and for all purposes of the State’s negotiable instruments law under Title 12A of the New Jersey Statutes.

14. (New section) Neither the members nor any person executing bonds issued pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) shall be liable personally on the bonds by reason of the issuance thereof. Bonds or other obligations issued pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) shall not be in any way a debt or liability of the State, and bonds or other obligations issued by the municipal shared services energy company pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) shall not be in any way a debt or liability of the State or of any local unit or of any county or municipality, except for member municipalities guarantying such bonds in accordance with the provisions of section 18 of P.L. , c. (C. ) (pending before the Legislature as this bill), and shall not create or constitute any indebtedness, liability or obligation of the State or of any such local unit, county or municipality, either legal, moral, or otherwise, and nothing in P.L. , c. (C. ) (pending before the Legislature as this bill) contained shall be construed to authorize the municipal shared services energy company to incur any indebtedness on behalf of or in any way to obligate the State or any county or municipality.

15. (New section) Any bond resolution of the municipal shared services energy company providing for or authorizing the issuance of any bonds may contain provisions, and the municipal shared services energy company shall, in order to secure the payment of the bonds in addition to its other powers, have the power by the provisions in the bond resolution to covenant and agree with the several holders of the bonds as to:

a. The custody, security, use, expenditure, or application of the proceeds of the bonds;

b. The construction and completion, or replacement, of all or any part of an electric supply project of the municipal shared services energy company or its system;

c. The use, regulation, operation, maintenance, insurance, or disposition of all or any part of an electric supply project of the municipal shared services energy company, or its system, or restrictions on the exercise of the powers of the municipal shared services energy company to dispose of, limit, or regulate the use of all or any part of the electric supply project or system;

d. Payment of the principal of, or interest on, the bonds, or any other obligations, and the sources and methods thereof, the rank or priority of the bonds or obligations as to any lien or security, or the acceleration of the maturity of the bonds or obligations;

e. The use and disposition of any monies of the municipal shared energy company, including any of the company’s revenues, derived or to be derived from the operation of all or any part of one or more electric supply projects of the municipal shared services energy company or systems thereof, including any parts thereof that are thereafter constructed or acquired as any of the project’s parts, extensions, replacements, or improvements thereafter constructed or acquired;

f. Pledging, setting aside, depositing, or acting as trustee for all or any part of the system revenues or other monies of the municipal shared services energy company to secure the payment of the principal of, or interest on, the bonds or any other obligations, or the payment of expenses of operation or maintenance of one or more electric supply projects of the municipal shared services energy company or its system, and the powers and duties of any trustee with regard thereto;

g. The setting aside out of the system revenues or other monies of the municipal shared services energy company including its reserves and sinking funds, and the source, custody, security, regulation, application, and disposition thereof;

h. Determination or definition of the system revenues or of the expenses of operation and maintenance of the system or one or more of its electric supply projects;

i. The rents, rates, fees or other charges in connection with the use, products, or services of one or more electric supply projects of the municipal shared services energy company or its system, including any of the parts, extensions, replacements, or improvements of the project or its system thereafter constructed or acquired, and the fixing, establishment, collection and enforcement of the same, the amount of electric supply project revenues or system revenues to be produced thereby, and the disposition and application of the amounts charged or collected;

j. The assumption or payment or discharge of any indebtedness, liens, or other claims relating to the whole or any part of one or more electric supply projects of the municipal shared services energy company or of its system for any obligations having or which may have a lien on any part of the system of the municipal shared services energy company;

k. Limitations on the issuance of additional bonds or any other obligations or on the incurrence of indebtedness of the municipal shared services energy company;

1. Limitations on the powers of the municipal shared services energy company to construct, acquire or operate, or to permit the construction, acquisition or operation of any plants, structures, facilities or properties which may compete or tend to compete with one or more of the municipal shared services energy company's electric supply projects or any part of its system;

m. Vesting in a trustee or trustees within or without the State such property, rights, powers, and duties in trust as the municipal shared services energy company may determine, which may include any or all of the rights, powers, and duties of the trustee appointed by the holders of bonds, and limiting or abrogating the right of the holders to appoint a trustee or limiting the rights, duties, and powers of the trustee;

n. Payment of costs or expenses incident to the enforcement of the bonds or of the provisions of the bond resolutions or of any covenant or contract with the holders of the bonds;

o. The procedure, if any, by which the terms of any covenant or contract with, or duty to the holders of the bonds may be amended or abrogated, the amount of bonds that the holders of which must consent thereto, and the manner in which the consent may be given or evidenced; and

p. Any other matter or course of conduct which, by recital in the bond resolution, is declared to further secure the payment of the principal of, or interest on, the bonds.

The provisions of the bond resolution and the covenants and agreements relative thereto shall constitute valid and legally binding contracts between the municipal shared services energy company and the several holders of the bonds, regardless of the time of issuance of the bonds, and shall be enforceable by any holder or holders by appropriate suit, action or proceeding in any court of competent jurisdiction, or by proceeding in lieu of prerogative writ.

16. (New section) a. If the bond resolution of the municipal shared services energy company authorizing or providing for the issuance of a series of its bonds shall provide in substance that the holders of the bonds of such series shall be entitled to the benefits of this section, then, in the event that there shall be a default in the payment of principal of, or interest on, any bonds of such series after the same shall become due, whether at maturity or upon call for redemption, and such default shall continue for a period of 30 days, or in the event that the municipal shared services energy company shall fail or refuse to comply with the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) or shall fail or refuse to carry out and perform the terms of any contract with the holders of any such bonds, and such failure or refusal shall continue for a period of 30 days after written notice to the municipal shared services energy company of its existence and nature, the holders of 25 percent in aggregate principal amount of the bonds and such series then outstanding by instrument or instruments filed in the office of the Secretary of State and proved or acknowledged in the same manner as a deed to be recorded, may appoint a trustee to represent the holders of the bonds of such series for the purposes provided in this section.

b. Such trustee may and upon written request of the holders of 25 percent in aggregate principal amount of the bonds of such series then outstanding shall, in the trustee’s or its own name:

(1) by any action, writ, proceeding in lieu of prerogative writ, or other proceeding, enforce all rights of the holders of such bonds, including the right to require the municipal shared services energy company to charge and collect service charges adequate to carry out any contract as to, or pledge of, system revenues, and to require the municipal shared services energy company to carry out and perform the terms of any contract with the holders of such bonds or its duties under P.L. , c. (C. ) (pending before the Legislature as this bill);

(2) bring an action upon all or any part of such bonds or interest coupons or claims appurtenant thereto;

(3) by action, require the municipal shared services energy company to account as if it were the trustee of an express trust for the holders of such bonds;

(4) by action, enjoin any acts or things which may be unlawful or in violation of the rights of the holders of such bonds; and

(5) declare all such bonds due and payable, whether or not in advance of maturity, upon 30 days' prior notice in writing to the municipal shared services energy company and, if all defaults shall be made good, then with the consent of the holders of 25 percent of the principal amount of such bonds then outstanding, annul such declaration and its consequences.

c. The trustee shall, in addition to the powers set forth in subsections a. and b. of this section, have and possess all of the powers necessary or appropriate for the exercise of the functions specifically set forth herein or incident to the general representation of the holders of bonds of such series in the enforcement and protection of their rights.

d. In any action or proceeding by the trustee, the fees, counsel fees and expenses of the trustee and of the receiver, if any, appointed pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), shall constitute taxable costs and disbursements, and all costs and disbursements, allowed by the court, shall be a first charge upon any service charges and system revenues of the municipal shared services energy company pledged for the payment or security of bonds of such series.

17. (New section) If the bond resolution of the municipal shared services energy company authorizing or providing for the issuance of a series of its bonds shall provide in substance that the holders of the bonds of such series shall be entitled to the benefits of section 15 of P.L. , c. (C. ) (pending before the Legislature as this bill), and shall further provide in substance that any trustee appointed pursuant to that section or having the powers of such a trustee shall have the powers provided by this section, then such trustee, whether or not all of the bonds of such series shall have been declared due and payable, shall be entitled as of right to the appointment of a receiver of the utility system, and the receiver may enter upon and take possession of the utility system and, subject to any pledge or contract with the holders of such bonds, shall take possession of all moneys and other property derived from or applicable to the acquisition, construction, operation, maintenance, or reconstruction of the utility system, and proceed with such acquisition, construction, operation, maintenance, or reconstruction which the municipal shared services energy company is under any obligation to do, and operate, maintain and reconstruct the utility system and fix, charge, collect, enforce, and receive the service charges and all system revenues thereafter arising subject to any pledge thereof or contract with the holders of the bonds relating thereto and perform the public duties and carry out the contracts and obligations of the municipal shared services energy company in the same manner as the municipal shared services energy company itself might do and under the direction of the court.

18. (New section) For the purpose of aiding the municipal shared services energy company in the planning, undertaking, acquisition, construction, financing or operation of any electric supply project authorized pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), a member municipality may, by ordinance of its governing body, in the manner provided for adoption of a bond ordinance as provided in any local bond law and with or without consideration and upon such terms and conditions as may be agreed to by and between the member municipality and the company, unconditionally guarantee the punctual payment of the principal of, and interest on, all or a portion of any bonds of the company. Any guaranty of the bonds of the company made pursuant to this section shall be evidenced by endorsement thereof on the bonds, executed in the name of the member municipality and on its behalf by such officer thereof as may be designated in the ordinance authorizing such guaranty, and the municipality shall thereupon and thereafter be obligated to pay the principal of, and interest on, said bonds in the same manner and to the same extent as in the case of bonds issued by it. Any such guaranty of bonds of the company may be made, and any ordinance authorizing such guaranty may be adopted, notwithstanding any statutory debt or other limitations, including particularly any limitation or requirement under or pursuant to any local bond law, but the principal amount of the bonds so guaranteed, shall, after their issuance, be included in the gross debt of the member municipality for the purpose of determining the indebtedness of the municipality under or pursuant to any local bond law. The principal amount of the bonds so guaranteed and included in gross debt shall be deducted and is hereby declared to be and to constitute a deduction from the gross debt under and for all the purposes of any local bond law:

a. from and after the time of issuance of the bonds until the end of the fiscal year beginning next after the completion of acquisition or construction of the facility to be financed from the proceeds of the bonds; and

b. in any annual debt statement filed pursuant to any local bond law as of the end of the fiscal year or any subsequent fiscal year if the revenues or other receipts or moneys of the company in that year are sufficient to pay its expenses of operation and maintenance in the year and all amounts payable in the year on account of the principal of, and interest on, all the guaranteed bonds, and all bonds of the company issued under P.L. , c. (C. ) (pending before the Legislature as this bill).

19. (New section) a. The municipal shared services energy company may enter into power supply contracts with any person, entity, or public agency within or outside the State of New Jersey for the purchase or sale of electric power and energy, or for both the purchase and sale of electric power and energy. The power supply contracts shall be for a term not to exceed 40 years and shall provide for payment to or from the municipal shared services energy company of funds for commodities to be procured, and services to be rendered by or to the municipal shared services energy company. The municipal shared services energy company may enter into power supply contracts with these customers for the purchase or sale of electric power and energy, or for both the purchase and sale of electric power and energy, whereby the purchaser is obligated to make payments in amounts which shall be sufficient to enable the municipal shared services energy company to meet its expenses, interest and principal payments, whether at maturity or upon sinking fund redemption, for its bonds, reasonable reserves for debt service, operation and maintenance, renewals and replacements, and the requirements of any rate covenant with respect to debt service coverage contained in any resolution, trust indenture, or other security instrument. Power supply contracts may contain such other terms and conditions as the municipal shared services energy company and the purchasers may determine, including provisions whereby the purchaser is obligated to pay for power irrespective of whether energy is produced or delivered to the purchaser, or whether any electric supply project contemplated by the agreement is completed, operable, or operating, and notwithstanding suspension, interruption, interference, reduction, or curtailment of the output of the electric supply project. The power purchase agreement may provide that if one or more of the purchasers defaults in the payment of its obligations under the purchase agreement, the remaining purchasers which also have such agreements shall be required to accept and pay for the power and energy to be purchased by the defaulting purchaser, and shall be entitled proportionately to use or otherwise dispose of the power and energy to be purchased by the defaulting purchaser. For purposes of this section the phrase “purchase of electric power and energy” includes any right to capacity or interest in any electric supply project.

b. The obligations of a municipality that is eligible to be, but that is not, a member municipality under a power supply contract with the municipal shared services energy company, or arising out of the default by any other purchaser with respect to such an agreement, shall not be construed to constitute a debt of the municipality. To the extent provided in the purchase agreement, these obligations shall constitute special obligations of the municipality, payable solely from the revenues and other moneys derived by the municipality from its municipal electric utility and shall be treated as expenses of operating a municipal electric utility.

c. The contract may also provide for payments in the form of collateral, contributions to defray the cost of any purpose set forth in the contract and as advances for any such purpose subject to repayment by the municipal shared services energy company.

d. Such agreements may be for a term covering the life of an electric supply project, for the anticipated output period of the electric supply project, or for any other term not exceeding 40 years. If a power supply contract is entered into with a municipality other than a member municipality, the contracts shall be subject to the "Local Public Contracts Law," P.L.1971, c.198 (C. 40A:11-1 et seq.).

20. (New section) The Board of Public Utilities shall have no supervision or regulatory authority over the municipal shared services energy company formed pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), or over the budget, operations, rates, property, property rights, equipment, or facilities of the municipal shared services energy company formed pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).

21. (New section) All property of the municipal shared services energy company shall be exempt from levy and sale by virtue of an execution of a court of competent jurisdiction and no execution or other judicial process shall issue against the same nor shall any judgment against the municipal shared services energy company be a charge or lien upon its property, provided, however, that nothing in this section shall apply to or limit the rights of the holder of any bonds to pursue any remedy for the enforcement of any pledge or lien given by the municipal shared services energy company on its system, revenues, or other monies.

22. (New section) Notwithstanding any restriction contained in any other law, the State and all public officers, municipalities, counties, political subdivisions of public bodies, and agencies thereof, all banks, bankers, trust companies, savings banks and institutions, building and loan associations, savings and loan associations, investment companies, and other persons carrying on a banking business, all insurance companies, insurance associations, and other persons carrying on an insurance business, and all executors, administrators, guardians, trustees and other fiduciaries, may legally invest any sinking funds, monies, or other funds belonging to them or within their control, in any bonds of the municipal shared services energy company, and the bonds shall be authorized security for any and all public deposits.

23. (New section) Every electric supply project, facility, or item of utility plant owned by the municipal shared services energy company, including any pro rata share of any property owned by the municipal shared services energy company in conjunction with any other person or public agency and used in connection with the generation, transmission and production of electrical power and energy, and all other property of the municipal shared services energy company, is hereby declared to be public property and devoted to an essential public and governmental function and purpose and, the property, the municipal shared services energy company and its income shall be exempt from all taxes and special assessments of the State or any subdivision of the State. All bonds of the municipal shared services energy company are hereby declared to be issued by a political subdivision of the State and for an essential public and governmental purpose and to be a public instrumentality in the bonds, and the interest thereon and the income therefrom and all service charges, funds, revenues, and other monies pledged or available to pay or secure the payment of the bonds, or interest thereon, shall at all times be exempt from taxation except for transfer, inheritance and estate taxes, and taxes on transfers by or in contemplation of death.

24. (New section) The State of New Jersey does hereby pledge to and covenant and agree with the holders of any bonds issued pursuant to a bond resolution of the municipal shared services energy company, that the State will not limit or alter the rights hereby vested in the municipal shared services energy company to acquire, construct, operate, and participate in one or more electric supply projects and facilities for the generation, production, and transmission of electric power and energy at wholesale, to fix, establish, charge, and collect charges, fees, and payments, and to fulfill the terms of any agreement made with the holders of the bonds or other obligations, and will not in any way impair the rights or remedies of these holders, and will not modify in any way the exemptions from taxation provided for in P.L. , c. (C. ) (pending before the Legislature as this bill) until the bonds, together with interest thereon, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of these holders, are fully met and discharged.

25. (New section) All banks, bankers, trust companies, savings banks, investment companies, and other persons carrying on a banking business are hereby authorized to give to the municipal shared services energy company a good and sufficient undertaking with such sureties as shall be approved by the municipal shared services energy company to the effect that this bank or banking institution shall faithfully keep and pay over to the order of or upon the warrant of the municipal shared services energy company or its authorized agent, all such funds as may be deposited with it by the municipal shared services energy company and agreed interest thereon, at such times or upon such demands as may be agreed with the municipal shared services energy company or in lieu of these sureties, deposit with the municipal shared services energy company or its agent or any trustee therefor or for the holders of any bonds, as collateral, such securities as the municipal shared services energy company may approve. The deposits of the municipal shared services energy company may be evidenced or secured by a depository collateral agreement in such form and upon such terms and conditions as may be agreed upon by the municipal shared services energy company and the bank or banking institution.

26. (New section) The municipal shared services energy company shall cause an annual audit of its accounts to be made, and for this purpose shall employ a registered municipal accountant registered pursuant to the laws of the State of New Jersey or a certified public accountant licensed pursuant to the laws of the State of New Jersey. The audit shall be completed and filed with the municipal shared services energy company within four months after the close of its fiscal year and a certified duplicate thereof shall be filed with the Director of the Division of Local Government Services in the Department of Community Affairs within five days after the original report is filed with the municipal shared services energy company.

27. (New section) The municipal shared services energy company shall file a copy of each bond resolution adopted by it with the Director of the Division of Local Government Services in the Department of Community Affairs, together with a summary of the dates, amounts, maturities, and interest rates of all bonds issued pursuant thereto.

28. Section 5 of P.L.1971, c.198 (C.40A:11-5) is amended to read as follows:

5. Any contract the amount of which exceeds the bid threshold, may be negotiated and awarded by the governing body without public advertising for bids and bidding therefor and shall be awarded by resolution of the governing body if:

(1) The subject matter thereof consists of:

(a) (i) Professional services. The governing body shall in each instance state supporting reasons for its action in the resolution awarding each contract and shall forthwith cause to be printed once, in the official newspaper, a brief notice stating the nature, duration, service and amount of the contract, and that the resolution and contract are on file and available for public inspection in the office of the clerk of the county or municipality, or, in the case of a contracting unit created by more than one county or municipality, of the counties or municipalities creating such contracting unit; or (ii) Extraordinary unspecifiable services. The application of this exception shall be construed narrowly in favor of open competitive bidding, whenever possible, and the Division of Local Government Services is authorized to adopt and promulgate rules and regulations after consultation with the Commissioner of Education limiting the use of this exception in accordance with the intention herein expressed. The governing body shall in each instance state supporting reasons for its action in the resolution awarding each contract and shall forthwith cause to be printed, in the manner set forth in subsection (1) (a) (i) of this section, a brief notice of the award of such contract;

(b) The doing of any work by employees of the contracting unit;

(c) The printing of legal briefs, records and appendices to be used in any legal proceeding in which the contracting unit may be a party;

(d) The furnishing of a tax map or maps for the contracting unit;

(e) The purchase of perishable foods as a subsistence supply;

(f) The supplying of any product or the rendering of any service by a public utility, which is subject to the jurisdiction of the Board of Public Utilities or the Federal Energy Regulatory Commission or its successor, in accordance with tariffs and schedules of charges made, charged or exacted, filed with the board or commission;

(g) The acquisition, subject to prior approval of the Attorney General, of special equipment for confidential investigation;

(h) The printing of bonds and documents necessary to the issuance and sale thereof by a contracting unit;

(i) Equipment repair service if in the nature of an extraordinary unspecifiable service and necessary parts furnished in connection with such service, which exception shall be in accordance with the requirements for extraordinary unspecifiable services;

(j) The publishing of legal notices in newspapers as required by law;

(k) The acquisition of artifacts or other items of unique intrinsic, artistic or historical character;

(l) Those goods and services necessary or required to prepare and conduct an election;

(m) Insurance, including the purchase of insurance coverage and consultant services, which exception shall be in accordance with the requirements for extraordinary unspecifiable services;

(n) The doing of any work by handicapped persons employed by a sheltered workshop;

(o) The provision of any goods or services including those of a commercial nature, attendant upon the operation of a restaurant by any nonprofit, duly incorporated, historical society at or on any historical preservation site;

(p) (Deleted by amendment, P.L.1999, c.440.)

(q) Library and educational goods and services;

(r) (Deleted by amendment, P.L.2005, c.212).

(s) The marketing of recyclable materials recovered through a recycling program, or the marketing of any product intentionally produced or derived from solid waste received at a resource recovery facility or recovered through a resource recovery program, including, but not limited to, refuse-derived fuel, compost materials, methane gas, and other similar products;

(t) (Deleted by amendment, P.L.1999, c.440.)

(u) Contracting unit towing and storage contracts, provided that all such contracts shall be pursuant to reasonable non-exclusionary and non-discriminatory terms and conditions, which may include the provision of such services on a rotating basis, at the rates and charges set by the municipality pursuant to section 1 of P.L.1979, c.101 (C.40:48-2.49). All contracting unit towing and storage contracts for services to be provided at rates and charges other than those established pursuant to the terms of this paragraph shall only be awarded to the lowest responsible bidder in accordance with the provisions of the "Local Public Contracts Law" and without regard for the value of the contract therefor;

(v) The purchase of steam or electricity from, or the rendering of services directly related to the purchase of such steam or electricity from a qualifying small power production facility or a qualifying cogeneration facility as defined pursuant to 16 U.S.C.s.796;

(w) The purchase of electricity or administrative or dispatching services directly related to the transmission of such purchased electricity by a contracting unit engaged in the generation of electricity;

(x) The printing of municipal ordinances or other services necessarily incurred in connection with the revision and codification of municipal ordinances;

(y) An agreement for the purchase of an equitable interest in a water supply facility or for the provision of water supply services entered into pursuant to section 2 of P.L.1993, c.381 (C.58:28-2), or an agreement entered into pursuant to P.L.1989, c.109 (N.J.S.40A:31-1 et al.), so long as such agreement is entered into no later than six months after the effective date of P.L.1993, c.381;

(z) A contract for the provision of water supply services entered into pursuant to P.L.1995, c.101 (C.58:26-19 et al.);

(aa) The cooperative marketing of recyclable materials recovered through a recycling program;

(bb) A contract for the provision of wastewater treatment services entered into pursuant to P.L.1995, c.216 (C.58:27-19 et al.);

(cc) Expenses for travel and conferences;

(dd) The provision or performance of goods or services for the support or maintenance of proprietary computer hardware and software, except that this provision shall not be utilized to acquire or upgrade non-proprietary hardware or to acquire or update non-proprietary software;

(ee) The management or operation of an airport owned by the contracting unit pursuant to R.S.40:8-1 et seq.;

(ff) Purchases of goods and services at rates set by the Universal Service Fund administered by the Federal Communications Commission;

(gg) A contract for the provision of water supply services or wastewater treatment services entered into pursuant to section 2 of P.L.2002, c.47 (C.40A:11-5.1), or the designing, financing, construction, operation, or maintenance, or any combination thereof, of a water supply facility as defined in subsection (16) of section 15 of P.L.1971, c.198 (C.40A:11-15) or a wastewater treatment system as defined in subsection (19) of section 15 of P.L.1971, c.198 (C.40A:11-15), or any component part or parts thereof, including a water filtration system as defined in subsection (16) of section 15 of P.L.1971, c.198 (C.40A:11-15);

(hh) The purchase of electricity generated from a power production facility that is fueled by methane gas extracted from a landfill in the county of the contracting unit.

(2) It is to be made or entered into with the United States of America, the State of New Jersey, county or municipality or any board, body, officer, agency or authority thereof or any other state or subdivision thereof.

(3) Bids have been advertised pursuant to section 4 of P.L.1971, c.198 (C.40A:11-4) on two occasions and (a) no bids have been received on both occasions in response to the advertisement, or (b) the governing body has rejected such bids on two occasions because it has determined that they are not reasonable as to price, on the basis of cost estimates prepared for or by the contracting agent prior to the advertising therefor, or have not been independently arrived at in open competition, or (c) on one occasion no bids were received pursuant to (a) and on one occasion all bids were rejected pursuant to (b), in whatever sequence; any such contract may then be negotiated and may be awarded upon adoption of a resolution by a two-thirds affirmative vote of the authorized membership of the governing body authorizing such contract; provided, however, that:

(i) A reasonable effort is first made by the contracting agent to determine that the same or equivalent goods or services, at a cost which is lower than the negotiated price, are not available from an agency or authority of the United States, the State of New Jersey or of the county in which the contracting unit is located, or any municipality in close proximity to the contracting unit;

(ii) The terms, conditions, restrictions and specifications set forth in the negotiated contract are not substantially different from those which were the subject of competitive bidding pursuant to section 4 of P.L.1971, c.198 (C.40A:11-4); and

(iii) Any minor amendment or modification of any of the terms, conditions, restrictions and specifications, which were the subject of competitive bidding pursuant to section 4 of P.L.1971, c.198 (C.40A:11-4), shall be stated in the resolution awarding such contract; provided further, however, that if on the second occasion the bids received are rejected as unreasonable as to price, the contracting agent shall notify each responsible bidder submitting bids on the second occasion of its intention to negotiate, and afford each bidder a reasonable opportunity to negotiate, but the governing body shall not award such contract unless the negotiated price is lower than the lowest rejected bid price submitted on the second occasion by a responsible bidder, is the lowest negotiated price offered by any responsible vendor, and is a reasonable price for such goods or services.

Whenever a contracting unit shall determine that a bid was not arrived at independently in open competition pursuant to subsection (3) of this section it shall thereupon notify the county prosecutor of the county in which the contracting unit is located and the Attorney General of the facts upon which its determination is based, and when appropriate, it may institute appropriate proceedings in any State or federal court of competent jurisdiction for a violation of any State or federal antitrust law or laws relating to the unlawful restraint of trade.

(4) The contracting unit has solicited and received at least three quotations on materials, supplies or equipment for which a State contract has been issued pursuant to section 12 of P.L.1971, c.198 (C.40A:11-12), and the lowest responsible quotation is at least 10% less than the price the contracting unit would be charged for the identical materials, supplies or equipment, in the same quantities, under the State contract. Any such contract entered into pursuant to this subsection may be awarded only upon adoption of a resolution by the affirmative vote of two-thirds of the full membership of the governing body of the contracting unit at a meeting thereof authorizing such a contract. A copy of the purchase order relating to any such contract, the requisition for purchase order, if applicable, and documentation identifying the price of the materials, supplies or equipment under the State contract and the State contract number shall be filed with the director within five working days of the award of any such contract by the contracting unit. The director shall notify the contracting unit of receipt of the material and shall make the material available to the State Treasurer. The contracting unit shall make available to the director upon request any other documents relating to the solicitation and award of the contract, including, but not limited to, quotations, requests for quotations, and resolutions. The director periodically shall review material submitted by contracting units to determine the impact of such contracts on local contracting and shall consult with the State Treasurer on the impact of such contracts on the State procurement process. The director may, after consultation with the State Treasurer, adopt rules in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to limit the use of this subsection, after considering the impact of contracts awarded under this subsection on State and local contracting, or after considering the extent to which the award of contracts pursuant to this subsection is consistent with and in furtherance of the purposes of the public contracting laws.

(5) Notwithstanding any provision of law, rule or regulation to the contrary, the subject matter consists of the combined collection and marketing, or the cooperative combined collection and marketing of recycled material recovered through a recycling program, or any product intentionally produced or derived from solid waste received at a resource recovery facility or recovered through a resource recovery program including, but not limited to, refuse-derived fuel, compost materials, methane gas, and other similar products, provided that in lieu of engaging in such public advertising for bids and the bidding therefor, the contracting unit shall, prior to commencing the procurement process, submit for approval to the Director of the Division of Local Government Services, a written detailed description of the process to be followed in securing said services. Within 30 days after receipt of the written description the director shall, if the director finds that the process provides for fair competition and integrity in the negotiation process, approve, in writing, the description submitted by the contracting unit. If the director finds that the process does not provide for fair competition and integrity in the negotiation process, the director shall advise the contracting unit of the deficiencies that must be remedied. If the director fails to respond in writing to the contracting unit within 30 days, the procurement process as described shall be deemed approved. As used in this section, "collection" means the physical removal of recyclable materials from curbside or any other location selected by the contracting unit.

(6) Notwithstanding any provision of law, rule or regulation to the contrary, the contract is for the provision of electricity by a contracting unit engaged in the generation, transmission, or distribution of electricity for wholesale or retail sale, or for the provision of administrative or dispatching services related to the transmission of such electricity, provided that in lieu of engaging in public advertising for bids and the bidding therefor, the contracting unit shall, prior to commencing the procurement process, submit for approval to the Director of the Division of Local Government Services, a written detailed description of the process to be followed in securing such services. Such process shall be designed in a way that is appropriate to and commensurate with industry practices, and the integrity of the government contracting process. Within 30 days after receipt of the written description, the director shall, if the director finds that the process provides for fair competition and integrity in the negotiation process, approve, in writing, the description submitted by the contracting unit. If the director finds that the process does not provide for fair competition and integrity in the negotiation process, the director shall advise the contracting unit of the deficiencies that must be remedied. If the director fails to respond in writing to the contracting unit within 30 days, the procurement process, as submitted to the director pursuant to this section, shall be deemed approved.

(cf: P.L.2005, c.296, s.1)

29. Section 15 of P.L.1971, c.198 (C.40A:11-15) is amended to read as follows:

15. All contracts for the provision or performance of goods or services shall be awarded for a period not to exceed 24 consecutive months, except that contracts for professional services pursuant to subparagraph (i) of paragraph (a) of subsection (1) of section 5 of P.L.1971, c.198 (C.40A:11-5) shall be awarded for a period not to exceed 12 consecutive months. Contracts may be awarded for longer periods of time as follows:

(1) Supplying of:

(a) (Deleted by amendment, P.L.1996, c.113.)

(b) (Deleted by amendment, P.L.1996, c.113.)

(c) Thermal energy produced by a cogeneration facility, for use for heating or air conditioning or both, for any term not exceeding 40 years, when the contract is approved by the Board of Public Utilities. For the purposes of this paragraph, "cogeneration" means the simultaneous production in one facility of electric power and other forms of useful energy such as heating or process steam;

(2) (Deleted by amendment, P.L.1977, c.53.)

(3) The collection and disposal of municipal solid waste, the collection and disposition of recyclable material, or the disposal of sewage sludge, for any term not exceeding in the aggregate, five years;

(4) The collection and recycling of methane gas from a sanitary landfill facility, for any term not exceeding 25 years, when such contract is in conformance with a district solid waste management plan approved pursuant to P.L.1970, c.39 (C.13:1E-1 et seq.), and with the approval of the Division of Local Government Services in the Department of Community Affairs and the Department of Environmental Protection. The contracting unit shall award the contract to the highest responsible bidder, notwithstanding that the contract price may be in excess of the amount of any necessarily related administrative expenses; except that if the contract requires the contracting unit to expend funds only, the contracting unit shall award the contract to the lowest responsible bidder. The approval by the Division of Local Government Services of public bidding requirements shall not be required for those contracts exempted therefrom pursuant to section 5 of P.L.1971, c.198 (C.40A:11-5);

(5) Data processing service, for any term of not more than seven years;

(6) Insurance, including the purchase of insurance coverages, insurance consulting or administrative services, claims administration services and including participation in a joint self-insurance fund, risk management program or related services provided by a contracting unit insurance group, or participation in an insurance fund established by a local unit pursuant to N.J.S.40A:10-6, or a joint insurance fund established pursuant to P.L.1983, c.372 (C.40A:10-36 et seq.), for any term of not more than three years;

(7) Leasing or servicing of (a) automobiles, motor vehicles, machinery and equipment of every nature and kind, for a period not to exceed five years, or (b) machinery and equipment used in the generation of electricity by a contracting unit engaged in the generation of electricity, for a period not to exceed 20 years; provided, however, such contracts shall be awarded only subject to and in accordance with the rules and regulations promulgated by the Director of the Division of Local Government Services in the Department of Community Affairs;

(8) The supplying of any product or the rendering of any service by a company providing voice, data, transmission or switching services for a term not exceeding five years;

(9) Any single project for the construction, reconstruction or rehabilitation of any public building, structure or facility, or any public works project, including the retention of the services of any architect or engineer in connection therewith, for the length of time authorized and necessary for the completion of the actual construction;

(10) The providing of food services for any term not exceeding three years;

(11) On-site inspections and plan review services undertaken by private agencies pursuant to the "State Uniform Construction Code Act," P.L.1975, c.217 (C.52:27D-119 et seq.) for any term of not more than three years;

(12) (Deleted by amendment, P.L.2009, c.4).

(13) (Deleted by amendment, P.L.1999, c.440.)

(14) (Deleted by amendment, P.L.1999, c.440.)

(15) Leasing of motor vehicles, machinery and other equipment primarily used to fight fires, for a term not to exceed ten years, when the contract includes an option to purchase, subject to and in accordance with rules and regulations promulgated by the Director of the Division of Local Government Services in the Department of Community Affairs;

(16) The provision of water supply services or the designing, financing, construction, operation, or maintenance, or any combination thereof, of a water supply facility, or any component part or parts thereof, including a water filtration system, for a period not to exceed 40 years, when the contract for these services is approved by the Division of Local Government Services in the Department of Community Affairs, the Board of Public Utilities, and the Department of Environmental Protection pursuant to P.L.1985, c.37 (C.58:26-1 et al.), except that no such approvals shall be required for those contracts otherwise exempted pursuant to subsection (30), (31), (34), (35) or (43) of this section. For the purposes of this subsection, "water supply services" means any service provided by a water supply facility; "water filtration system" means any equipment, plants, structures, machinery, apparatus, or land, or any combination thereof, acquired, used, constructed, rehabilitated, or operated for the collection, impoundment, storage, improvement, filtration, or other treatment of drinking water for the purposes of purifying and enhancing water quality and insuring its portability prior to the distribution of the drinking water to the general public for human consumption, including plants and works, and other personal property and appurtenances necessary for their use or operation; and "water supply facility" means and refers to the real property and the plants, structures, interconnections between existing water supply facilities, machinery and equipment and other property, real, personal and mixed, acquired, constructed or operated, or to be acquired, constructed or operated, in whole or in part by or on behalf of a political subdivision of the State or any agency thereof, for the purpose of augmenting the natural water resources of the State and making available an increased supply of water for all uses, or of conserving existing water resources, and any and all appurtenances necessary, useful or convenient for the collecting, impounding, storing, improving, treating, filtering, conserving or transmitting of water and for the preservation and protection of these resources and facilities and providing for the conservation and development of future water supply resources;

(17) The provision of resource recovery services by a qualified vendor, the disposal of the solid waste delivered for disposal which cannot be processed by a resource recovery facility or the residual ash generated at a resource recovery facility, including hazardous waste and recovered metals and other materials for reuse, or the design, financing, construction, operation or maintenance of a resource recovery facility for a period not to exceed 40 years when the contract is approved by the Division of Local Government Services in the Department of Community Affairs, and the Department of Environmental Protection pursuant to P.L.1985, c.38 (C.13:1E-136 et al.); and when the resource recovery facility is in conformance with a district solid waste management plan approved pursuant to P.L.1970, c.39 (C.13:1E-1 et seq.). For the purposes of this subsection, "resource recovery facility" means a solid waste facility constructed and operated for the incineration of solid waste for energy production and the recovery of metals and other materials for reuse; or a mechanized composting facility, or any other facility constructed or operated for the collection, separation, recycling, and recovery of metals, glass, paper, and other materials for reuse or for energy production; and "residual ash" means the bottom ash, fly ash, or any combination thereof, resulting from the combustion of solid waste at a resource recovery facility;

(18) The sale of electricity or thermal energy, or both, produced by a resource recovery facility for a period not to exceed 40 years when the contract is approved by the Board of Public Utilities, and when the resource recovery facility is in conformance with a district solid waste management plan approved pursuant to P.L.1970, c.39 (C.13:1E-1 et seq.). For the purposes of this subsection, "resource recovery facility" means a solid waste facility constructed and operated for the incineration of solid waste for energy production and the recovery of metals and other materials for reuse; or a mechanized composting facility, or any other facility constructed or operated for the collection, separation, recycling, and recovery of metals, glass, paper, and other materials for reuse or for energy production;

(19) The provision of wastewater treatment services or the designing, financing, construction, operation, or maintenance, or any combination thereof, of a wastewater treatment system, or any component part or parts thereof, for a period not to exceed 40 years, when the contract for these services is approved by the Division of Local Government Services in the Department of Community Affairs and the Department of Environmental Protection pursuant to P.L.1985, c.72 (C.58:27-1 et al.), except that no such approvals shall be required for those contracts otherwise exempted pursuant to subsection (36) or (43) of this section. For the purposes of this subsection, "wastewater treatment services" means any services provided by a wastewater treatment system, and "wastewater treatment system" means equipment, plants, structures, machinery, apparatus, or land, or any combination thereof, acquired, used, constructed, or operated for the storage, collection, reduction, recycling, reclamation, disposal, separation, or other treatment of wastewater or sewage sludge, or for the final disposal of residues resulting from the treatment of wastewater, including, but not limited to, pumping and ventilating stations, facilities, plants and works, connections, outfall sewers, interceptors, trunk lines, and other personal property and appurtenances necessary for their operation;

(20) The supplying of goods or services for the purpose of lighting public streets, for a term not to exceed five years;

(21) The provision of emergency medical services for a term not to exceed five years;

(22) Towing and storage contracts, awarded pursuant to paragraph u. of subsection (1) of section 5 of P.L.1971, c.198 (C.40A:11-5) for any term not exceeding three years;

(23) Fuel for the purpose of generating electricity for a term not to exceed eight years;

(24) The purchase of electricity or administrative or dispatching services related to the transmission of such electricity, from a supplier of electricity subject to the jurisdiction of a federal regulatory agency, from a qualifying small power producing facility or qualifying cogeneration facility, as defined by 16 U.S.C.s.796, or from any supplier of electricity within any regional transmission organization or independent system operator or from such organization or operator or their successors, by a contracting unit engaged in the generation of electricity for retail sale, as of May 24, 1991, for a term not to exceed 40 years, or by a contracting unit engaged solely in the distribution of electricity for retail sale for a term not to exceed ten years, except that a contract with a contracting unit, engaged solely in the distribution of electricity for retail sale, in excess of ten years, shall require the written approval of the Director of the Division of Local Government Services. If the director fails to respond in writing to the contracting unit within 10 business days, the contract shall be deemed approved;

(25) Basic life support services, for a period not to exceed five years. For the purposes of this subsection, "basic life support" means a basic level of prehospital care, which includes but need not be limited to patient stabilization, airway clearance, cardiopulmonary resuscitation, hemorrhage control, initial wound care and fracture stabilization;

(26) (Deleted by amendment, P.L.1999, c.440.)

(27) The provision of transportation services to elderly, disabled or indigent persons for any term of not more than three years. For the purposes of this subsection, "elderly persons" means persons who are 60 years of age or older. "Disabled persons" means persons of any age who, by reason of illness, injury, age, congenital malfunction, or other permanent or temporary incapacity or disability, are unable, without special facilities or special planning or design to utilize mass transportation facilities and services as effectively as persons who are not so affected. "Indigent persons" means persons of any age whose income does not exceed 100 percent of the poverty level, adjusted for family size, established and adjusted under section 673(2) of subtitle B, the "Community Services Block Grant Act," Pub.L.97-35 (42 U.S.C.s.9902 (2));

(28) The supplying of liquid oxygen or other chemicals, for a term not to exceed five years, when the contract includes the installation of tanks or other storage facilities by the supplier, on or near the premises of the contracting unit;

(29) The performance of patient care services by contracted medical staff at county hospitals, correction facilities and long term care facilities, for any term of not more than three years;

(30) The acquisition of an equitable interest in a water supply facility pursuant to section 2 of P.L.1993, c.381 (C.58:28-2), or a contract entered into pursuant to the "County and Municipal Water Supply Act," N.J.S.40A:31-1 et seq., if the contract is entered into no later than January 7, 1995, for any term of not more than forty years;

(31) The provision of water supply services or the financing, construction, operation or maintenance or any combination thereof, of a water supply facility or any component part or parts thereof, by a partnership or copartnership established pursuant to a contract authorized under section 2 of P.L.1993, c.381 (C.58:28-2), for a period not to exceed 40 years;

(32) Laundry service and the rental, supply and cleaning of uniforms for any term of not more than three years;

(33) The supplying of any product or the rendering of any service, including consulting services, by a cemetery management company for the maintenance and preservation of a municipal cemetery operating pursuant to the "New Jersey Cemetery Act," N.J.S.8A:1-1 et seq., for a term not exceeding 15 years;

(34) A contract between a public entity and a private firm pursuant to P.L.1995, c.101 (C.58:26-19 et al.) for the provision of water supply services may be entered into for any term which, when all optional extension periods are added, may not exceed 40 years;

(35) A contract for the purchase of a supply of water from a public utility company subject to the jurisdiction of the Board of Public Utilities in accordance with tariffs and schedules of charges made, charged or exacted or contracts filed with the Board of Public Utilities, for any term of not more than 40 years;

(36) A contract between a public entity and a private firm or public authority pursuant to P.L.1995, c.216 (C.58:27-19 et al.) for the provision of wastewater treatment services may be entered into for any term of not more than 40 years, including all optional extension periods;

(37) The operation and management of a facility under a license issued or permit approved by the Department of Environmental Protection, including a wastewater treatment system or a water supply or distribution facility, as the case may be, for any term of not more than ten years. For the purposes of this subsection, "wastewater treatment system" refers to facilities operated or maintained for the storage, collection, reduction, disposal, or other treatment of wastewater or sewage sludge, remediation of groundwater contamination, stormwater runoff, or the final disposal of residues resulting from the treatment of wastewater; and "water supply or distribution facility" refers to facilities operated or maintained for augmenting the natural water resources of the State, increasing the supply of water, conserving existing water resources, or distributing water to users;

(38) Municipal solid waste collection from facilities owned by a contracting unit, for any term of not more than three years;

(39) Fuel for heating purposes, for any term of not more than three years;

(40) Fuel or oil for use in motor vehicles for any term of not more than three years;

(41) Plowing and removal of snow and ice for any term of not more than three years;

(42) Purchases made under a contract awarded by the Director of the Division of Purchase and Property in the Department of the Treasury for use by counties, municipalities or other contracting units pursuant to section 3 of P.L.1969, c.104 (C.52:25-16.1), for a term not to exceed the term of that contract;

(43) A contract between the governing body of a city of the first class and a duly incorporated nonprofit association for the provision of water supply services as defined in subsection (16) of this section, or wastewater treatment services as defined in subsection (19) of this section, may be entered into for a period not to exceed 40 years;

(44) The purchase of electricity generated through class I renewable energy or from a power production facility that is fueled by methane gas extracted from a landfill in the county of the contacting unit for any term not exceeding 25 years;

(45) The provision or performance of goods or services for the purpose of producing class I renewable energy or class II renewable energy, as those terms are defined in section 3 of P.L.1999, c.23 (C.48:3-51), at, or adjacent to, buildings owned by, or operations conducted by, the contracting unit, the entire price of which is to be established as a percentage of the resultant savings in energy costs, for a term not to exceed 15 years; provided, however, that such contracts shall be entered into only subject to and in accordance with guidelines promulgated by the Board of Public Utilities establishing a methodology for computing energy cost savings and energy generation costs[.]; and

(46) A power supply contract as that term is defined in section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) between a contracting unit and the municipal shared services energy company, established pursuant to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), for the lease, operation, or management of electric generation or the purchase of electricity, or the purchase of fuel for generating units for a term not to exceed 40 years.

Any contract for services other than professional services, the statutory length of which contract is for three years or less, may include provisions for no more than one two-year, or two one-year, extensions, subject to the following limitations: a. The contract shall be awarded by resolution of the governing body upon a finding by the governing body that the services are being performed in an effective and efficient manner; b. No such contract shall be extended so that it runs for more than a total of five consecutive years; c. Any price change included as part of an extension shall be based upon the price of the original contract as cumulatively adjusted pursuant to any previous adjustment or extension and shall not exceed the change in the index rate for the 12 months preceding the most recent quarterly calculation available at the time the contract is renewed; and d. The terms and conditions of the contract remain substantially the same.

All multiyear leases and contracts entered into pursuant to this section, including any two-year or one-year extensions, except contracts involving the supplying of electricity for the purpose of lighting public streets and contracts for thermal energy authorized pursuant to subsection (1) above, construction contracts authorized pursuant to subsection (9) above, contracts for the provision or performance of goods or services or the supplying of equipment to promote energy conservation through the production of class I renewable energy or class II renewable energy authorized pursuant to subsection (45) above, contracts for water supply services or for a water supply facility, or any component part or parts thereof authorized pursuant to subsection (16), (30), (31), (34), (35), (37) or (43) above, contracts for resource recovery services or a resource recovery facility authorized pursuant to subsection (17) above, contracts for the sale of energy produced by a resource recovery facility authorized pursuant to subsection (18) above, contracts for wastewater treatment services or for a wastewater treatment system or any component part or parts thereof authorized pursuant to subsection (19), (36), (37) or (43) above, and contracts for the purchase of electricity or administrative or dispatching services related to the transmission of such electricity authorized pursuant to subsection (24) above [and], contracts for the purchase of electricity generated from a power production facility that is fueled by methane gas authorized pursuant to subsection (44) above, and power supply contracts authorized pursuant to subsection (46) respectively, shall contain a clause making them subject to the availability and appropriation annually of sufficient funds as may be required to meet the extended obligation, or contain an annual cancellation clause.

The Division of Local Government Services in the Department of Community Affairs shall adopt and promulgate rules and regulations concerning the methods of accounting for all contracts that do not coincide with the fiscal year.

All contracts shall cease to have effect at the end of the contracted period and shall not be extended by any mechanism or provision, unless in conformance with the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et seq.), except that a contract may be extended by mutual agreement of the parties to the contract when a contracting unit has commenced rebidding prior to the time the contract expires or when the awarding of a contract is pending at the time the contract expires.

(cf: P.L.2009, c.4, s.8)

30. (New section) P.L. , c. (C. ) (pending before the Legislature as this bill) shall be construed liberally to effectuate the legislative intent and as complete and independent authority for the performance of each and every act and thing that is authorized by P.L. , c. (C. ) (pending before the Legislature as this bill). The powers granted under P.L. , c. (C. ) (pending before the Legislature as this bill) do not limit the powers of municipalities to enter into intergovernmental cooperation agreements or contracts, or to establish separate legal entities under municipal charters or any other applicable law or otherwise to carry out their powers under applicable statutory provisions, nor shall the powers granted under P.L. , c. (C. ) (pending before the Legislature as this bill) limit the powers reserved to municipalities by State law. By enacting P.L. , c. (C. ) (pending before the Legislature as this bill), the Legislature contemplates that activities by municipalities or municipal agencies pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) are not subject to the antitrust laws of the United States.

31. This act shall take effect immediately.

STATEMENT

This bill would authorize three or more municipalities that operate retail electric distribution systems to establish the municipal shared services energy company (the “company”). The bill authorizes the company to enter into contracts with municipal electric utilities, other public agencies, and private entities for the purchase and sale at wholesale of electricity inside and outside of New Jersey, consistent with federal law. Under current law, the joint operation of such facilities under such a joint meeting arrangement is not permitted under the “Uniform Shared Services and Consolidation Act,” P.L.2007, c.63 (C.40A:65-1 through C.40A:65-35).

The purpose of the company is to develop safe, reliable electric energy resources for the generation and transmission of electric power and energy, including the utilization of renewable capacity and energy, at wholesale for the benefit of the customers of municipally owned or operated electric utility systems in New Jersey.

The company would have the power to plan, finance, develop, acquire, construct, reconstruct, improve, own, operate, and participate in, as joint or sole owner, electric supply projects, and would be able to purchase, sell, lease, and make other arrangements, contractual and otherwise, of every kind and description, with respect to generation, transmission, pooling, and provision of electric power and energy at wholesale. The company would be able to develop generation projects using fuel sources generated by other public agencies such as garbage, trash and other waste materials, and using renewable resources such as solar energy, wind power, geothermal energy, as well as traditional fossil fuel resources.

The bill also provides for the company to have bonding powers, and other general powers related to that of an independent legal entity. The company would be considered a “contracting unit” with respect to the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et seq.). In addition, the length of contract and competitive bidding aspects of that law would apply in order to allow for longer terms and special procurement rules as determined by the Director of the Division of Local Government Services in the Department of Community Affairs.