PUBLIC UTILITIES; LEGISLATION; ELECTRIC UTILITIES - RESTRUCTURING;

UTILITIES-ELECTRIC-RESTRUCTURING;

You asked for a section-by-section summary of the electric restructuring bill (SB 733), as passed by the House and Senate.

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. It also defines “federally mandated congestion costs,” which are costs related to congestion on the transmission system in southern and southwestern Connecticut. Historically, these costs were shared by customers across New England, but since March 2003 they have borne solely by Connecticut ratepayers as a result of decision by the Federal Energy Regulatory Commission.

SECTION 3

This section requires 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 three years, but increases the cap on the rate that utilities can charge for it by approximately 10%. It exempts from the cap congestion costs attributable to the Federal Energy Regulatory Commission decision. The transitional standard offer rate is subject to the same adjustments and exemptions as the current standard offer rate.

The bill requires Connecticut Light and Power to file a four-year plan with the Department of Public Utility Control (DPUC) for the provision of transmission and distribution services, which must be adjudicated in a quasi-judicial proceeding called a rate case. The requirement does not apply to United Illuminating, which recently underwent a rate case. But, if United Illuminating seeks to amend its transmission and distribution rates before 2007, it also must file the four-year plan.

Transitional Service Adjustment

This section entitles utilities to their actual administrative costs for providing transitional standard offer service and standard service. It also entitles them to a fee of 0. 05 cents per kilowatt-hour for their provision of transitional standard offer service. In addition, the company can receive 0. 025 cents per kilowatt-hour if it is able to buy power at lower than market rates. (The average price of power for residential customers is currently approximately 10 cents per kilowatt-hour. ) The revenues do not count in DPUC's determination of whether a utility's rates are just and reasonable.

Standard/Last Resort Service

The section requires utilities, starting in 2007, 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. A customer that returns to last resort service after having chosen a supplier must agree to stay on this service for at least one year.

The section requires DPUC to retain a consultant to oversee the process by which utilities power for standard service. DPUC has 10 business days after receiving the consultant's recommendation to accept or require a re-bid.

Alternatives to Transitional Standard Offer/Standard Service

This section allows DPUC to require utilities to offer, through a competitive supplier, one or more alternatives to transitional standard offer service and standard service. The alternatives can exceed the RPS or promote energy conservation. DPUC must determine the terms and conditions of the alternatives. The utility must choose the provider in a bidding process overseen by DPUC.

Renewable Resources

Finally, the section subjects utilities to the RPS by contracting with an electric supplier. DPUC must annually determine whether the utilities have met the standard in the preceding year. A utility that fails to meet the standard must pay 5. 5 cents for each kilowatt-hour of shortfall in meeting the standard. The payments go into the state's Clean Energy Fund to help develop Class I resources. Utilities cannot charge ratepayers for this payment.

Utilities also must enter into long-term contracts by July 1, 2007 to meet a total of at least 100 megawatts of their Class I requirements. These contracts must be with projects that have been funded by the state’s Clean Energy Fund and can cost no more than 5. 5 cents per kilowatt-hour above the comparable wholesale cost of generation. The costs of these contracts are recoverable from ratepayer if (1) the contracts run for a period that allows for the financing of the projects, but not less than 10 years and (2) the projects providing the power go into operation after June 30, 2003.

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 submit a plan to the Energy and Technology Committee to restart the consumer education program established under the original 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), and (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.

SECTION 7

This section modifies the RPS by (1) decreasing the total 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) nuclear plant workers who were dislocated after the utilities sold off their plants in accordance with the original restructuring law, (2) the cost of surviving spouse insurance benefits, (3) certain consumer education costs, and (4) the costs of temporary generation facilities authorized under section 17 of the bill.

SECTION 9

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

SECTION 12

This section gives customer additional ways to approve a utility's release of information about him to a supplier.

SECTION 13

Under prior law, any customer could rescind a contract with a supplier for three days after the contract is signed. The bill limits this provision to customers having a maximum demand of 500 kilowatts or less, i. e. , residential and small business customers.

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 municipal electric utilities to establish rates for interconnecting new generating facilities within their service territories to their transmission and distribution systems.

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 temporary generation facilities in the state. In order to do this, DPUC must find that (1) there is not an adequate supply of reasonably priced electricity on the wholesale market, (2) building the facilities would reduce transmission-related costs, and (3) the savings would exceed the costs of the new facilities. The section does not allow electric companies to own or operate generating facilities, but does allow the costs of the new facilities to be recovered in the system benefits charge component of rates. This provision sunsets in 2007.

SECTION 18

This section explicitly bars electric companies from owning or operating generation facilities. (Existing law effectively required the companies to divest themselves of their generation assets. )

SECTION 19

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

SECTION 20

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, 2006.

SECTION 21

When DPUC implemented the original restructuring law, it established an “adder” on top of the wholesale cost of power in setting the rate for standard offer service. The adder is approximately 0. 5 cents per kilowatt-hour. DPUC allocated the revenue from the adder to accelerate the payment of the utilities’ stranded costs, e. g. , the difference between the book value of the utilities nuclear power plants and the amount of money for which they were able to sell them. The bill instead requires DPUC to use this revenue and the revenue from any future adder to offset the transitional service adjustment described in section 4 of the bill. If there is money left over, DPUC must use to mitigate any increase in the cost of transitional standard offer over current rates and then to accelerate payment of stranded costs.

SECTION 22

This section requires that electric bills contain a line specifying the costs attributable to the Federal Energy Regulatory Commission decision described in section 2.

SECTION 23

This section bars DPUC from granting a cable TV company franchise of more than five years if the company fails to maintain fair and reasonable rates or meet other conditions.

SECTION 27

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

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