Cal. Pub. Util. Code § 388

(a) Notwithstanding any other provision of law, a state agency may enter into an energy savings contract with a qualified energy service company for the purchase or exchange of thermal or electrical energy or water, or to acquire energy efficiency or water conservation services, or both energy efficiency and water conservation services for a term not exceeding 35 years, at rates and upon those terms approved by the agency.

(b) The Department of General Services or any other state or local agency intending to enter into an energy savings contract or a contract for an energy retrofit project may establish a pool of qualified energy service companies based on qualifications, experience, pricing, or other pertinent factors. Energy service contracts for individual projects undertaken by any state or local agency may be awarded through a competitive selection process to individuals or firms identified in the pool. The pool of qualified energy service companies and contractors shall be reestablished at least every two years or shall expire.

(c) For purposes of this section, the following definitions apply: (1) (A) “Energy retrofit project” means a project for which the state or local agency works with a qualified energy service company to identify, develop, design, and implement energy conservation measures in existing facilities to reduce energy or water use or make more efficient use of energy or water. (B) “Energy retrofit project” does not include the erection or installation of a power generation system, a power purchase agreement, or a project utilizing a site license or lease agreement. (2) “Energy savings” means a measured and verified reduction in fuel, energy, or water consumption when compared to an established baseline of consumption. (3) “Qualified energy service company” means a company with a demonstrated ability to provide or arrange for building or facility energy auditors, selection and design of appropriate energy savings measures, project financing, implementation of these measures, and maintenance and ongoing measurement of these measures as to ensure and verify energy savings.