LEGISLATION; ELECTRIC UTILITIES; ELECTRIC UTILITIES - RESTRUCTURING;

UTILITIES-ELECTRIC-RESTRUCTURING;

Connecticut laws/regulations;

You asked for a section-by-section summary of this year’s electric restructuring bill (sSB 773/sHB 6510).

SECTION 1

By law, electric suppliers must obtain part of their power from renewable resources under the renewable portfolio standard (RPS). They must obtain part of this power from Class I resources such as wind power and obtain additional power from these resources or Class II resources such as biomass. This section expands the definition of Class I resources to include new run-of-river hydropower resources and certain new technologies, and to expand the types of biomass resources that count as Class I. On the other hand, it narrows the types of hydropower and biomass resources that count as Class II.

SECTION 2

This section defines distributed generation, one of the new technologies included in Class I resources.

SECTION 3

This section requires electric utilities to provide a credit for power their residential customers generate using class I resources; suppliers are already subject to this “net metering” requirement. The section also exempts net metering customers who use generators with a capacity of up to ten kilowatts from two charges on their bills with regard to the power they generate themselves.

SECTION 4

Default/Transitional Standard Offer Service

This section eliminates a requirement that utilities provide default service starting in 2004 to customers who do not choose a supplier. Instead, it extends the current standard offer requirement (renamed transitional standard offer) with regard to these customers for two years, but increases the maximum rate that utilities can charge for it by 10%. The transitional standard offer rate is subject to the same adjustments as the current standard offer rate.

Standard/Last Resort Service

The section requires utilities, starting in 2006, to provide standard service to small and medium size customers and last resort service to large customers. Utilities must procure power for standard service in a way mitigates price volatility. The price of standard service can change no more often than once per quarter; the price of last resort service must change monthly.

The section requires the Department of Public Utility Control (DPUC) to retain a consultant to oversee the process by which utilities initially bid out the procurement of power for standard service. DPUC has 15 days after receiving the consultant’s recommendation to accept or require a rebid. If a generator affiliated with a utility wants to bid in subsequent rounds, it must pay for the consultant.

Alternative to Transitional Standard Offer/Standard Service

The section allows DPUC to require utilities to offer, through a third party, an alternative to transitional standard offer service and standard service. The alternative can exceed the RPS or promote energy conservation. The utility must choose the provider in a bidding process overseen by DPUC.

Procurement Fee

The section entitles utilities to their actual administrative costs in providing transitional standard offer service and standard service, plus 0. 05 cents per kilowatt-hour (kwh) fee; the average price of power for residential customers is currently 10 cents per kwh. The section also allows utilities to receive an additional fee if they are able to procure power at a rate below the market average. The utility receives half of the difference, up to 0. 2 cents per kwh. The fees do not count in DPUC’s determination of whether a utility’s rates are just and reasonable.

Renewable Resources

Finally, the section subjects utilities to the RPS and requires that they pay 5. 5 cents for each kwh of shortfall. The payments go into the state’s Clean Energy Fund to help develop Class I resources. Utilities cannot charge ratepayers for this payment if renewable resources are available for less than 5. 5 cents per kwh. If a utility pays more than 5. 5 cents per kwh, the excess is not recoverable from ratepayers.

Utilities also must enter into long-term contracts to meet part of their Class I requirements for 2006, 2007, and 2008. Funding for such contracts is recoverable from ratepayers. Funding for these contracts is recoverable from ratepayers if (1) the contracts run for at least 15 years and (2) the projects providing the power received funding from the Clean Energy Fund.

SECTION 5

This section requires DPUC, in consultation with the Office of Consumer Counsel (OCC), to establish a program to provide customers with information regarding suppliers. It also requires DPUC, in consultation with OCC, to restart the consumer education program established under the restructuring law.

SECTION 6

This section modifies the licensure requirements for suppliers. Among other things, it (1) makes meeting certain standards a condition of maintaining, rather than obtaining, a license, (2) makes it easier to become an aggregator (a middleman who groups customers together to

make them more attractive to suppliers), (3) requires suppliers who fail to meet the RPS standard to make the same payment as utilities, rather than subjecting them to civil or licensing penalties, and (4) requires municipalities to be licensed by DPUC if they distribute electricity (apparently even if they use municipal utility facilities).

SECTION 7

This section modifies the RPS by (1) decreasing the amount of renewable power suppliers must obtain, (2) modifying where the power can be generated, and (3) extending the RPS to utilities.

SECTION 8

By law, utility customers pay a systems benefits charge to cover various public policy costs, including costs associated with utility workers dislocated as a result of restructuring. This section expands the charge to cover (1) dislocated nuclear plant workers (who are no longer employed by utilities), (2) the cost of surviving spouse insurance benefits, and (3) certain consumer education costs.

SECTION 9

This section modifies the way that utility conservation programs are approved and the costs that can be recovered by the conservation charge of electric bills.

SECTIONS 10 AND 11

Section 10 allows Connecticut Innovations, Inc. (CII) to invest Clean Energy Fund money in hydrogen production and conversion technologies. Section 11 requires that the committee that advises CII on the fund provide a copy of its annual report to DPUC and OCC.

SECTIONS 12 AND 13

These sections gives customer additional ways to approve a utility’s release of information about him to a supplier.

SECTION 14

This section requires utilities to provide customers with information regarding the environmental characteristics of the plants they use to provide standard service. The information includes the air pollution emissions rates of these plants and the types of fuel used at these plants.

SECTION 15

This section requires DPUC to adopt regulations on abusive switching practices by suppliers.

SECTION 16

This section requires entities that provide alternatives to transitional standard offer service or standard service to comply with DPUC orders, and subjects them to civil penalties if they do not.

SECTION 17

This section allows DPUC, by a vote of four of its five commissioners, to develop a request for proposals (RFP) if it determines there is a need for new electric or gas facilities in the state. The section does not allow electric utilities to own or operate generating facilities, but does allow the costs of the new facilities to be recovered in rates.

SECTION 18

This section requires DPUC to adopt standards for connecting new generating sources to the transmission grid.

SECTION 19

This section requires DPUC to study the status of competition in the electric market and report its findings and recommendations to the Energy and Technology Committee by January 1, 2005.

SECTION 20

This section amends the preamble of the restructuring law to include a finding that it is in the state’s interest that electric utilities have enough funding to meet their obligations, including money for distribution system improvements and staff training.

SECTION 21

This section eliminates DPUC’s authority to delay implementation of RPS deadlines by up to two years.

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