File No. 192

Senate, March 29, 2007

The Committee on Energy and Technology reported through SEN. FONFARA, J. of the 1st Dist., Chairperson of the Committee on the part of the Senate, that the substitute bill ought to pass.

AN ACT CONCERNING ELECTRICITY PROCUREMENT AND ENERGY EFFICIENCY.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subsection (c) of section 16-244c of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(c) (1) On and after January 1, 2007, each electric distribution company shall provide electric generation services through standard service to any customer who (A) does not arrange for or is not receiving electric generation services from an electric supplier, and (B) does not use a demand meter or has a maximum demand of less than five hundred kilowatts.

(2) Not later than October 1, 2006, and periodically as required by subdivision (3) of this subsection, but not more often than every calendar quarter, the Department of Public Utility Control shall establish the standard service price for such customers pursuant to subdivision (3) of this subsection. Each electric distribution company shall recover the actual net costs of procuring and providing electric generation services pursuant to this subsection, provided such company mitigates the costs it incurs for the procurement of electric generation services for customers who are no longer receiving service pursuant to this subsection.

(3) [An] Until December 31, 2007, an electric distribution company providing electric generation services pursuant to this subsection shall mitigate the variation of the price of the service offered to its customers by procuring electric generation services contracts in the manner prescribed in a plan approved by the department. Such plan shall require the procurement of a portfolio of service contracts sufficient to meet the projected load of the electric distribution company. Such plan shall require that the portfolio of service contracts be procured in an overlapping pattern of fixed periods at such times and in such manner and duration as the department determines to be most likely to produce just, reasonable and reasonably stable retail rates while reflecting underlying wholesale market prices over time. The portfolio of contracts shall be assembled in such manner as to invite competition; guard against favoritism, improvidence, extravagance, fraud and corruption; and secure a reliable electricity supply while avoiding unusual, anomalous or excessive pricing. The portfolio of contracts procured under such plan shall be for terms of not less than six months, provided contracts for shorter periods may be procured under such conditions as the department shall prescribe to (A) ensure the lowest rates possible for end-use customers; (B) ensure reliable service under extraordinary circumstances; and (C) ensure the prudent management of the contract portfolio. An electric distribution company may receive a bid for an electric generation services contract from any of its generation entities or affiliates, provided such generation entity or affiliate submits its bid the business day preceding the first day on which an unaffiliated electric supplier may submit its bid and further provided the electric distribution company and the generation entity or affiliate are in compliance with the code of conduct established in section 16-244h.

(4) On and after January 1, 2008, an electric distribution company providing electric generation services pursuant to this subsection shall mitigate the variation of the price of the service offered to its customers by procuring electric generation services in the manner prescribed in a standard service procurement plan approved by the department. Such plan shall specify the method for purchasing power for standard service, and may require the electric distribution company to (A) procure load following, full requirements service contracts in a manner similar to that pursuant to subdivision (3) of this subsection; (B) procure individual electric supply components electricity directly from a supplier, or generator, including, but not limited to, base load, intermediate and peaking energy resource, capacity and other power supply services, using both requests for proposals and bilateral contracts outside the request for proposal process; and (C) procure physical and financial hedges to manage prices, including, but not limited to, tolling arrangements and financial transmission rights. Such plan shall describe how an electric distribution company shall, over time, transition to its new supply aggregation role as described in this section from the current method of procuring power supply pursuant to subdivision (3) of this subsection to a mix of the procurement options described in this section. Once its procurement plan has been approved by the department, an electric distribution company shall be allowed to manage the power supply portfolio on a real-time basis, thereby enabling it to optimize supply for the benefit of customers. The department shall set standard service rates annually by combining the costs of the arrangements undertaken under the procurement plan, provided such rates will be trued up to actual revenues and expenses twice per year, with any over or under recovery being included in either the current period or subsequent standard service rate, as determined by the department. An electric distribution company shall be entitled to collect the reasonable costs it incurs to provide such service.

[(4) The] (5) In approving the plans pursuant to subdivisions (3) and (4) of this subsection, the department, in consultation with the Office of Consumer Counsel, shall retain the services of a third-party entity with expertise in the area of energy procurement to oversee the initial development of the request for proposals and the procurement of contracts by an electric distribution company for the provision of electric generation services offered pursuant to this subsection. Costs associated with the retention of such third-party entity shall be included in the cost of electric generation services that is included in such price.

[(5) Each] (6) For resources acquired pursuant to a request for proposal process, each bidder for a standard service contract shall submit its bid to the electric distribution company and the third-party entity who shall jointly review the bids and submit an overview of all bids together with a joint recommendation to the department as to the preferred bidders. The department shall make available to the Office of Consumer Counsel and the Attorney General all bids it receives pursuant to this subsection, provided the Office of Consumer Counsel and the Attorney General shall not make the bids available to the public until the department does so. The department may, [within ten] not later than two business days [of] after submission of the overview, reject the recommendation regarding preferred bidders. In the event that the department rejects the preferred bids, the electric distribution company and the third-party entity shall rebid the service pursuant to this subdivision. For other resources acquired by an electric distribution company pursuant to subdivision (4) of this subsection, such company shall submit information on such acquisitions to the department as shall be specified in the procurement plan.

Sec. 2. (NEW) (Effective from passage) Not later than January 1, 2008, and annually thereafter, the electric distribution companies, in consultation with the regional independent system operator and the Energy Resources Procurement Board, shall develop and submit an integrated resource plan to the Department of Public Utility Control that analyzes, over the short term and long term, the state's electricity energy resources, and specifies actions for acquiring such resources into the future from the broadest possible range of options. The plan shall consider and enable the use of all forms of resources that would provide benefits to customers, including, but not limited to, energy efficiency, new and existing conventional and renewable generation, and distributed generation. The plan shall focus on obtaining resources on a cost-of-service basis.

Sec. 3. Subsection (j) of section 16-19b of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2007):

(j) [Any] In order to ensure that the interests of gas and electric distribution companies are aligned with customer interests in reducing energy costs by severing the link between sales levels and recovery of costs, any purchased gas adjustment clause or energy adjustment clause approved by the department may include a provision designed to allow the electric or gas company to charge or reimburse the customer for any under-recovery or over-recovery of overhead and fixed costs due solely to the deviation of actual retail sales of electricity or gas from projected retail sales of electricity or gas. The department shall include such provision in any energy adjustment clause approved for an electric company if it determines (1) that a significant cause of excess earnings by the electric company is an increase in actual retail sales of electricity over projected retail sales of electricity as determined at the time of the electric company's most recent rate amendment, and (2) that such provision is likely to benefit the customers of the electric company. The department shall include such provision in any purchased gas adjustment clause approved for a gas or electric distribution company or energy adjustment clause approved for an electric distribution company on or after the issuance of a final decision in a proceeding on amendments to rate schedules for such company, but not later than January 1, 2009. The department shall not consider the existence of such provision in determining the return on equity of such company.

Sec. 4. (NEW) (Effective July 1, 2007) (a) The Department of Public Utility Control shall, in coordination with the Energy Conservation Management Board, established pursuant to section 16-245m of the general statutes, as amended by this act, establish a state-wide energy efficiency and outreach marketing campaign to target the following sectors: (1) Commercial, including small businesses, (2) industrial, (3) governmental, (4) institutional, including schools, hospitals and nonprofits, (5) agricultural, and (6) residential.

(b) The goals of the campaign established pursuant to subsection (a) of this section shall include, but not be limited to, (1) educating residents on the benefits of energy efficiency, (2) motivating said residents to take action to achieve lasting energy savings, (3) educating and informing said residents about the real-time energy reports prepared pursuant to section 6 of this act and the real-time energy alert system prepared pursuant to section 7 of this act, and (4) supporting the energy efficiency programs already in existence.

(c) On or before October 1, 2007, the department shall develop a plan to meet the goals of said campaign pursuant to subsection (b) of this section and, on or before January 1, 2008, the department shall implement said plan. Said plan shall include a coordinated range of marketing activities and outreach strategies, including, but not limited to, television, radio and newspaper advertisements, printed educational materials, events, a comprehensive web site resource serving all sectors, a biweekly electronic newsletter, planning forums and meetings throughout the state, and partnerships with businesses, government entities and nonprofit organizations.

Sec. 5. Subsection (c) of section 16-245m of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2007):

(c) The Department of Public Utility Control shall appoint and convene an Energy Conservation Management Board which shall include representatives of: (1) An environmental group knowledgeable in energy conservation program collaboratives; (2) the Office of Consumer Counsel; (3) the Attorney General; (4) the Department of Environmental Protection; (5) the electric distribution companies in whose territories the activities take place for such programs; (6) a state-wide manufacturing association; (7) a chamber of commerce; (8) a state-wide business association; (9) a state-wide retail organization; (10) a representative of a municipal electric energy cooperative created pursuant to chapter 101a; (11) two representatives selected by the gas companies in this state; [and] (12) residential customers; (13) a representative of the educational sector; (14) a representative of state hospitals; (15) a representative of nonprofit organizations; (16) a representative of the transportation sector; and (17) a representative of the agricultural sector. Such members shall serve for a period of five years and may be reappointed. Representatives of the gas companies shall not vote on matters unrelated to gas conservation. Representatives of the electric distribution companies and the municipal electric energy cooperative shall not vote on matters unrelated to electricity conservation.

Sec. 6. (NEW) (Effective July 1, 2007) (a) As part of the energy efficiency and outreach marketing campaign established pursuant to section 4 of this act, the Department of Public Utility Control shall, in consultation with the Energy Conservation Management Board, established pursuant to section 16-245m of the general statutes, as amended by this act, develop a real-time energy report for use on television and other media as part of daily weather reports. The report shall (1) identify the state's current real-time energy demand, along with how the demand has changed over the course of the day, and in the case of television news broadcasts, the real-time change between the beginning and end of the broadcast; (2) emphasize the importance of reducing peak demand and provide estimates of the money leaving the state and country because of our dependence on fossil fuels; and (3) provide tips on conservation measures, promote community and business competition to reduce energy consumption and give visibility to communities and businesses that have implemented energy saving changes or that are using renewable resources.

(b) The department shall get the information needed to develop the real-time energy reports established pursuant to subsection (a) of this section from the regional independent system operator.

(c) The department shall adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to determine the parameters of developing the real-time energy report established pursuant to subsection (a) of this section.

Sec. 7. (NEW) (Effective July 1, 2007) (a) As part of the energy efficiency and outreach marketing campaign established pursuant to section 4 of this act, the Department of Public Utility Control shall, in consultation with the Energy Conservation Management Board, established pursuant to section 16-245m of the general statutes, as amended by this act, develop a real-time energy electronic mail and cellular phone alert system to notify the public of the need to reduce energy consumption during peak power periods.

(b) The Department of Public Utility Control shall adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to determine the parameters of the real-time energy electronic mail and cellular phone alert system established pursuant to subsection (a) of this section.

Sec. 8. (NEW) (Effective July 1, 2007) (a) On or before September 1, 2007, the Department of Education, in consultation with the Department of Public Utility Control, electric distribution companies and interested manufacturers of compact fluorescent light bulbs, shall (1) establish a week-long promotional event, to be known as "See the Light Week", in late September or early October each year, that will promote renewable energy and energy conservation, (2) encourage and solicit school districts, individual schools and other educational institutions under the jurisdiction of the Department of Education to participate in a state-wide compact fluorescent light bulbs fundraiser established pursuant to subsection (b) of this section, and (3) provide outreach, guidance and training to districts, parent and teacher organizations and schools concerning the value of renewable energy.

(b) (1) The Department of Public Utility Control shall, in consultation with the Department of Education and the Energy Conservation Management Board, established pursuant to section 16-245m of the general statutes, as amended by this act, develop and implement a state-wide fundraiser for all public schools, in which students would sell compact fluorescent light bulbs. The participating schools would earn a portion of each sale.

(2) The Department of Public Utility Control shall establish a sales target for the state-wide fundraiser developed pursuant to subdivision (1) of this subsection, as well as adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to determine the parameters of said fundraiser.

Sec. 9. (NEW) (Effective July 1, 2007) (a) On or before October 1, 2007, the Department of Public Utility Control shall establish a plan to implement a voluntary rate program that will add a fourth tier to the rates required pursuant to section 16-243n of the general statutes. Said program shall (1) establish the surcharge on peak rates, which shall apply to high-demand peak days, for customers choosing to participate, (2) encourage a shift of demand, and (3) include an educational component.

(b) The department shall establish parameters for the program established in subsection (a) of this section, including, but not limited to, facilitating the delivery of meters. The department shall implement said program on or before June 1, 2008.

Sec. 10. (NEW) (Effective July 1, 2007) (a) On and after October 1, 2007, the Department of Public Utility Control shall, in consultation with the Department of Environmental Protection and the Department of Public Works, establish a grant program for clean and distributive generation, generated from a Class I renewable energy source, projects for businesses and state buildings.

(b) The Department of Public Utility Control shall award grants under said program as follows: (1) Not more than twenty-five million dollars to fuel cell projects, and (2) not more than twenty-five million dollars for all other clean and distributive generation projects.

(c) The Department of Public Utility Control shall adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to set the parameters of said grant program.

Sec. 11. (Effective July 1, 2007) (a) For the purposes described in subsection (b) of this section, the State Bond Commission shall have the power, from time to time, to authorize the issuance of bonds of the state in one or more series and in principal amounts not exceeding in the aggregate fifty million dollars.

(b) The proceeds of the sale of said bonds, to the extent of the amount stated in subsection (a) of this section, shall be used by the Department of Public Utility Control for the purpose of the grant program established in section 10 of this act.

(c) All provisions of section 3-20 of the general statutes, or the exercise of any right or power granted thereby, which are not inconsistent with the provisions of this section are hereby adopted and shall apply to all bonds authorized by the State Bond Commission pursuant to this section, and temporary notes in anticipation of the money to be derived from the sale of any such bonds so authorized may be issued in accordance with said section 3-20 and from time to time renewed. Such bonds shall mature at such time or times not exceeding twenty years from their respective dates as may be provided in or pursuant to the resolution or resolutions of the State Bond Commission authorizing such bonds. None of said bonds shall be authorized except upon a finding by the State Bond Commission that there has been filed with it a request for such authorization which is signed by or on behalf of the Secretary of the Office of Policy and Management and states such terms and conditions as said commission, in its discretion, may require. Said bonds issued pursuant to this section shall be general obligations of the state and the full faith and credit of the state of Connecticut are pledged for the payment of the principal of and interest on said bonds as the same become due, and accordingly and as part of the contract of the state with the holders of said bonds, appropriation of all amounts necessary for punctual payment of such principal and interest is hereby made, and the State Treasurer shall pay such principal and interest as the same become due.

Sec. 12. (NEW) (Effective July 1, 2007) On and after July 1, 2007, and not later than July 1, 2017, the Secretary of the Office of Policy and Management shall provide a five-hundred-dollar rebate for the purchase and installation in residential structures of replacement natural gas, propane and oil furnaces and boilers that are not less than eighty-four per cent efficient. Such rebates shall not exceed five million dollars in aggregate per year. Persons may apply to the secretary, on a form prescribed by the secretary, to receive such rebate. The rebate shall be available for only a residential structure containing not more than four dwelling units. Eligibility for said rebate program shall coincide with the guidelines set forth in subsection (c) of section 12-704c of the general statutes. The costs of the rebates pursuant to this section shall be recovered through the systems benefit charge established pursuant to section 16-245l of the general statutes.

Sec. 13. (NEW) (Effective July 1, 2007) The Department of Environmental Protection, in consultation with the Department of Public Utility Control, shall have the authority to conduct an auction for carbon dioxide credits allocated under the Regional Greenhouse Gas Initiative. One hundred per cent of funds generated through any such auction shall be allocated to consumer benefit, including, but not limited to, energy efficiency programs.

Sec. 14. Section 16a-38k of the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2008):

(a) Notwithstanding any provision of the general statutes, any (1) new construction [of a state facility, except salt sheds, parking garages, maintenance facilities or school construction,] that is projected to cost not less than five million dollars, [or more,] of which two million dollars is state funding, and is approved and funded on or after January 1, [2007] 2008, and (2) renovation of a state facility that is projected to cost not less than two million dollars, that is financed with state funds and is approved and funded on or after January 1, 2008, shall comply with the regulations adopted pursuant to subsection (b) of this section. The Secretary of the Office of Policy and Management, in consultation with the Commissioner of Public Works, [and the Institute for Sustainable Energy,] shall exempt any facility from complying with said regulations if [said secretary] the Institute for Sustainable Energy finds, in a written analysis, that the cost of such compliance significantly outweighs the benefits.

(b) Not later than January 1, 2007, the Secretary of the Office of Policy and Management, in consultation with the Commissioner of Public Works, the Commissioner of Environmental Protection and the Commissioner of Public Safety, shall adopt regulations, in accordance with the provisions of chapter 54, to adopt building construction standards that are consistent with or exceed the silver building rating of the Leadership in Energy and Environmental Design's rating system for new commercial construction and major renovation projects, as established by the United States Green Building Council, or an equivalent standard, including, but not limited to, a two-globe rating in the Green Globes USA design program, and thereafter update such regulations as the secretary deems necessary.

Sec. 15. (NEW) (Effective January 1, 2008) Any municipality may, by vote of its legislative body or, in a municipality where the legislative body is a town meeting, by vote of the board of selectmen, provide a property tax exemption with respect to any motor vehicle exempt from sales and use taxes under subdivision (110) or (115) of section 12-412 of the general statutes, as amended by this act.

Sec. 16. Subdivision (110) of section 12-412 of the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2008, and applicable to sales occurring on or after said date):

(110) On and after July 1, 2000, and prior to July 1, [2002] 2010, the sale of any passenger car that has a United States Environmental Protection Agency estimated highway gasoline mileage rating of at least [fifty] forty miles per gallon.

Sec. 17. Subdivision (57) of section 12-81 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2007, and applicable to assessment years commencing on or after October 1, 2007):

(57) (a) [Subject to authorization of the exemption by ordinance in any municipality, any] Any Class I renewable energy source, as defined in section 16-1, or any hydropower facility described in subdivision (27) of said section 16-1, as amended by this act, installed for the generation of electricity for private residential use, provided such installation occurs on or after October 1, 1977, and further provided such installation is for a single family dwelling or multifamily dwelling consisting of two to four units, or any passive or active solar water or space heating system or geothermal energy resource;

(b) Any person claiming the exemption provided in this subdivision for any assessment year shall, on or before the first day of November in such assessment year, file with the assessor or board of assessors in the town in which such Class I renewable energy source, hydropower facility, or passive or active solar water or space heating system or geothermal energy resource is located, written application claiming such exemption. Failure to file such application in the manner and form as provided by such assessor or board within the time limit prescribed shall constitute a waiver of the right to such exemption for such assessment year. Such application shall not be required for any assessment year following that for which the initial application is filed, provided if such Class I renewable energy source, hydropower facility, or passive or active solar water or space heating system or geothermal energy resource is altered in a manner which would require a building permit, such alteration shall be deemed a waiver of the right to such exemption until a new application, applicable with respect to such altered source, is filed and the right to such exemption is established as required initially.

Sec. 18. Subdivision (63) of section 12-81 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2007, and applicable to assessment years commencing on or after October 1, 2007):

(63) (a) Subject to authorization of the exemption by ordinance in any municipality and to the provisions of subparagraph (b) of this subdivision, [any solar energy electricity generating system which is not eligible for exemption under subdivision (57) of this section,] any cogeneration system [, or both,] installed on or after July 1, 1981. [,and before October 1, 2006.] The ordinance shall establish the number of years that a system will be exempt from taxation, except that it may not provide for an exemption beyond the first fifteen assessment years following the installation of a system. The ordinance shall prohibit the exemption from applying to additions to resources recovery facilities operating on October 1, 1994, or to resources recovery facilities constructed on and after that date and may prohibit the exemption from applying to property acquired by eminent domain for the purpose of qualifying for the exemption;

(b) As used in this subdivision, [(A) "solar energy electricity generating system" means equipment which is designed, operated and installed as a system which utilizes solar energy as the energy source for at least seventy-five per cent of the electricity produced by the system and meets the standards established by regulation, in accordance with the provisions of chapter 54, by the Secretary of the Office of Policy and Management, and (B)] "cogeneration system" means equipment which is designed, operated and installed as a system which produces, in the same process, electricity and exhaust steam, waste steam, heat or other resultant thermal energy which is used for space or water heating or cooling, industrial, commercial, manufacturing or other useful purposes and which meets standards established by regulation, in accordance with the provisions of chapter 54, by the Secretary of the Office of Policy and Management;

(c) Any municipality which adopts an ordinance authorizing an exemption provided by this subdivision may enter into a written agreement with an applicant for the exemption, which may require the applicant to make payments to the municipality in lieu of taxes. The agreement may vary the amount of the payments in lieu of taxes in each assessment year of the agreement, provided the payment in any assessment year is not greater than the taxes which would otherwise be due in the absence of the exemption. Any agreement negotiated under this subdivision shall be submitted to the legislative body of the municipality for its approval or rejection;

(d) Any person claiming the exemption provided in this subdivision for any assessment year and whose application has been approved in accordance with subparagraph (c) of this subdivision shall, on or before the first day of November in such assessment year, file with the assessor or board of assessors in the town in which the system is located written application claiming the exemption. Failure to file the application in the manner and form as provided by such assessor or board within the time limit prescribed shall constitute a waiver of the right to the exemption for such assessment year. Such application shall not be required for any assessment year following that for which the initial application is filed, provided if such [solar energy electricity generating system or] cogeneration system is altered in a manner which would require a building permit, such alteration shall be deemed a waiver of the right to such exemption until a new application, applicable with respect to such altered system, is filed and the right to such exemption is established as required initially.

Sec. 19. Section 1 of public act 05-2 of the October 25 special session is repealed and the following is substituted in lieu thereof (Effective July 1, 2007):

Notwithstanding the provisions of sections 4-28b and 16a-41a of the general statutes, the Commissioner of Social Services shall [amend the adopted] adopt a low income home energy assistance program block grant allocation plan for the [purpose of modifying the 2005/2006] 2007/2008 Connecticut energy assistance program state plan in the following manner: (1) To increase the basic benefit provided to all eligible households, including eligible households whose heat is included in their rent, over the benefit provided for the 2005/2006 plan, prior to the amendment of said plan, by two hundred dollars, (2) to fund, for the fiscal year ending June 30, 2008, the contingency heating assistance program under the Connecticut energy assistance program to provide a three hundred dollar basic benefit to eligible households, as defined in the Connecticut energy assistance program state plan, whose gross annual income is not more than sixty per cent of the median state income by household size, and an additional two hundred dollar crisis assistance benefit for such households who have exhausted their basic benefit and are unable to secure primary heat, causing a life threatening situation, (3) to increase the number of households weatherized pursuant to the Connecticut energy assistance program, and (4) to increase the number of households receiving home heating equipment tune-ups and home energy efficiency measures pursuant to the home energy assistance and reimbursements for tune-ups on heating equipment grant program as administered pursuant to subsection (c) of section 2 of [this act] public act 05-2 of the October 25 special session, as amended by section 1 of public act 05-4 of the October 25 special session.

Sec. 20. Subsection (a) of section 16a-41h of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) (1) Each electric [and] distribution company, gas company [, as defined in section 16-1, having at least seventy-five thousand customers] and municipal utility furnishing electric or gas service, shall include in its monthly bills a request to each customer to add a [one-dollar] donation in an amount designated by the customer to the bill payment. Such company shall provide to all of its customers the opportunity to donate one dollar, two dollars, three dollars or another amount on each bill provided to a customer either through the mail or electronically. Such designation shall be made available and included where customers are either electronically billed or bill payment is handled electronically. The opportunity to donate one dollar, two dollars, three dollars or another amount shall be included on the bill in such a way that facilitates such donations.

(2) Operation Fuel, Incorporated, shall provide fundraising inserts and remittance envelopes to retail dealers of fuel oil that volunteer to include the inserts and envelopes in their customers' bills for one or more billing cycles each year. Such retail dealers of fuel oil shall inform Operation Fuel, Incorporated, as to the number of inserts and envelopes needed to conduct such a mailing.

(3) Each electric, gas or fuel oil company shall transmit all such donations received each month and match dollars to Operation Fuel, Inc., a state-wide nonprofit organization designed to respond to people within the state who are in financial crisis and need emergency energy assistance. [Donations] Operation Fuel, Inc. shall [be distributed] distribute donations and match dollars to nonprofit social services agencies and private fuel banks in accordance with guidelines established by the board of directors of Operation Fuel, Inc., provided such funds shall be distributed on a priority basis to low-income elderly and working poor households [which] that are not eligible for public assistance or state-administered general assistance but are faced with a financial crisis and are unable to make timely payments on winter fuel, electricity or gas bills. Such companies shall coordinate their promotions of this program, holding promotions during the same month and using similar formats.

Sec. 21. Section 10a-180 of the general statutes is amended by adding subsection (w) as follows (Effective October 1, 2007):

(NEW) (w) To make grants or provide other forms of financial assistance to any institution of higher education, to any health care institution, to any nursing home, to any child care or child development facility and to any qualified nonprofit organization in such amounts, for energy efficient construction or renovation projects or renewable energy construction or renovation projects subject to such eligibility and other requirements the board of directors establishes pursuant to written procedures adopted by the board pursuant to subsection (h) of section 10a-179.

Sec. 22. Section 5 of public act 05-2 of the October 25 special session is repealed and the following is substituted in lieu thereof (Effective from passage):

Notwithstanding the provisions of section 16a-40b of the general statutes, as amended by section 5 of public act 05-191, for the fiscal year ending June 30, [2006] 2008, the range of rates of interest payable on all loans pursuant to subsection (b) of said section 16a-40b for purchases set forth in subsection (a) of said section 16a-40b, except for goods or services relating to [aluminum or vinyl siding,] replacement central air conditioning, [replacement roofs,] heat pumps or solar systems and passive solar additions, shall be not less than zero per cent for any applicant in the lowest income class and not more than three per cent for any applicant for whom the adjusted gross income of the household member or members who contribute to the support of the household was at least one hundred fifteen per cent of the median area income by household size.

Sec. 23. Section 29-256a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2007):

[The] (a) On and after January 1, 2008, the State Building Inspector and the Codes and Standards Committee shall revise the State Building Code to require that buildings and building elements, including residential, be designed to provide optimum cost-effective energy efficiency over the useful life of the building. Such revision shall meet the American Society of Heating, Refrigerating and Air Conditioning Engineers Standard 90.1 for new construction.

(b) Notwithstanding subsection (a) of this section, the State Building Inspector and the Codes and Standards Committee shall revise the State Building Code to require that any (1) building, except a residential building with no more than four units, constructed after January 1, 2009, that is projected to cost not less than five million dollars, and (2) renovation to any building, except a residential building with no more than four units, started after January 1, 2010, that is projected to cost not less than two million dollars shall be built or renovated using building construction standards consistent with or exceeding the silver building rating of the Leadership in Energy and Environmental Design's rating system for new commercial construction and major renovation projects, as established by the United States Green Building Council, or an equivalent standard, including, but not limited to, a two-globe rating in the Green Globes USA design program. The inspector and the committee shall provide for an exemption for any building if the Institute for Sustainable Energy finds, in a written analysis, that the cost of such compliance significantly outweighs the benefits.

Sec. 24. Subsection (b) of section 32-317 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) Except as provided under subsection (c) of this section, any such loan or deferred loan shall be available only for a residential structure containing not more than four dwelling units, shall be not less than four hundred dollars and not more than [fifteen] twenty-five thousand dollars per structure and shall be made only to an applicant who submits evidence, satisfactory to the commissioner, that the adjusted gross income of the household member or members who contribute to the support of his household was not in excess of one hundred fifty per cent of the median area income by household size. Repayment of all loans or deferred loans made under this subsection shall be subject to a rate of interest to be determined in accordance with subsection (t) of section 3-20 and such terms and conditions as the commissioner may establish. The State Bond Commission shall establish a range of rates of interest payable on all loans or deferred loans under this subsection and shall apply the range to applicants in accordance with a formula which reflects their income. Such range shall be not less than zero per cent for any applicant in the lowest income class and not more than one per cent above the rate of interest borne by the general obligation bonds of the state last issued prior to the most recent date such range was established for any applicant for whom the adjusted gross income of the household member or members who contribute to the support of his household was at least one hundred fifteen per cent of the median area income by household size.

Sec. 25. (Effective July 1, 2007) The sum of five million dollars is appropriated to the Department of Public Utility Control, from the General Fund, for the fiscal year ending June 30, 2008, for the purposes of carrying out the requirements of sections 4 to 8, inclusive, of this act.

Statement of Legislative Commissioners:

In section 24, new provisions were inserted into section 32-317 of the general statutes.

The following fiscal impact statement and bill analysis are prepared for the benefit of members of the General Assembly, solely for the purpose of information, summarization, and explanation, and do not represent the intent of the General Assembly or either chamber thereof for any purpose:

OFA Fiscal Note

State Impact: See Below

Municipal Impact: See Below

Explanation

The bill makes various changes in the electric industry structure and energy related programs that could affect rates paid by the state and municipalities, the extent of which cannot be determined at this time.

The bill also results in other fiscal impacts, as follows:

Section 1 requires the Department of Public Utility Control (DPUC) to disclose to the Office of the Attorney General (OAG) the bids for standard offer service. There is no fiscal impact to OAG to receive information in accordance with this provision. However, if OAG engages a consultant to assist in its review of the bids, the agency would incur a minimal cost whenever the standard offer is put out to bid.

This section also requires DPUC to hire additional staff to comply with provisions set forth in this section. These provisions involve a more intensive, complex, and frequent new supply procurement process. Specifically, the agency would require an additional Attorney, Utilities Examiner, and a Lead Rate Specialist, totaling approximately $390,620 in FY 08 and $402,336 in FY 09, including fringe benefits.

Section 2 also results in the need for additional staff for DPUC for energy resource planning proposed in this section and for reviewing the proposed resource plan. These staff include an Engineer and two Energy Planners. DPUC's cost for these positions is approximately $393,043 in FY 08 and $404,834 in FY 09, including fringe benefits.

Sections 4-7 require DPUC, in coordination with the Energy Conservation Management Board (ECMB), to establish an energy efficiency and outreach marketing campaign, which would result in a cost, the extent of which cannot be determined at this time.

Section 8 results in an estimated cost to the State Department of Education (SDE) of approximately $125,000 due to the requirements surrounding “See the Light Week.” Currently the agency has no staff with expertise in the duties and knowledge areas contained in the section, thus new staff would need to be hired or contracted in order to meet the section's requirements.

This section also requires the ECMB to coordinate with DPUC and SDE for the development and implementation of this fundraiser program. Any costs incurred to ECMB would be paid through the ratepayer surcharge. This surcharge could affect the state and municipalities as ratepayers, the extent of which cannot be determined at this time.

Section 10 requires DPUC to establish a grant program for clean and distributed generation projects, which has no fiscal impact. This section also requires the Department of Public Works (DPW) to establish this grant program with DEP, which can be accommodated within DPW's budgetary resources. To the extent that the information necessary to establish the grant program is readily available, DEP can consult within existing agency resources.

Section 12 establishes a $500 rebate for the purchase and installation of replacement residential gas and oil heating equipment in residential structures containing up to four dwelling units from July 1, 2007 through July 1, 2017. Up to $5 million is to be provided annually from the systems benefits charge on electric bills to fund these rebates. There is no fiscal impact to the Office of Policy and Management.

Section 13 allows DEP, in conjunction with DPUC, to auction the carbon dioxide credits under the Regional Greenhouse Gas Initiative cap and trade program (which allows power plant owners to buy and sell credits to comply with emission caps). This will result in millions of dollars being raised for consumer benefits, including energy efficiency programs. The bill requires that 100% of these funds be used for this purpose, currently estimated at $20 million to $50 million dollars. The extent to which this program affects the state and municipalities as ratepayers is unknown at this time.

Section 14 requires that new state facilities costing $5.0 million or more must comply with energy efficiency building standards adopted by the Office of Policy and Management (OPM). This section extends the requirement to: (1) all new construction (including schools) costing at least $5 million if at least $2 million of the funding comes from the state and (2) renovation projects at state facilities costing at least $2 million. It also requires the Institute for Sustainable Energy rather than OPM to determine whether the cost of compliance significantly outweighs the benefits. It is anticipated that any additional construction costs associated with the energy efficiency building standards will only be incurred in cases where the operational savings exceed the cost, over the life of the building.

These provisions potentially have an impact on the operating budgets and debt service accounts of both the General Fund and Transportation Fund. Since building construction is financed with bond funds, any increase in construction costs would result in an increase in General Fund or Transportation Fund debt service costs.

The additional construction costs could be offset by savings in the operations of the new buildings over their lifetime, especially in heating and ventilation costs. These savings are estimated by industry sources to be up to 30% of annual utility costs. Any General Fund operating budget savings would be achieved through the Department of Public Works, the Judicial Department, the University of Connecticut, and any agency with care and control if its buildings. Any Transportation Fund operating budget savings would be achieved through the Department of Transportation and the Department of Motor Vehicles.

Passage of this bill could substantially increase the state's costs for school construction projects¹. Based on recent school construction trends, costs could range between $7.5 million and $15 million per year. Since school construction projects are financed with General Fund bond funds, any increase in construction costs would result in an increase in General Fund debt service costs. It should be noted that the operating cost savings for these buildings would accrue to the municipalities.

This section also results in an estimated cost with regard to public school buildings of approximately $10 million per year beginning in FY 09, due to the requirement of meeting green building standards. This cost would be shared on an approximate equal basis between the state, local, regional school districts through the school construction grant program. The local and regional school districts will recoup their costs in an estimated seven years through energy savings.

Section 15 of the bill allows municipalities to exempt hybrid motor vehicles and vehicles with fuel efficiencies of at least 40 miles per gallon from the property tax. Municipalities electing to exempt these vehicles from the property tax will experience a loss to their net grand list (assessed value less exemptions permitted under state law) and will likely necessitate an increase in a municipality's mill rate to offset the loss of taxable property

Section 16 of bill establishes a sales tax exemption for vehicles with fuel efficiencies of at least 40 miles per gallon from 1/1/08 to 7/1/10. This is anticipated to result in a General fund revenue loss of up to $1 million in FY 08 and up to $2 million² in FY 09 and FY 10.

Sections 17 and 18 of the bill require, rather than allow, municipalities to exempt class I renewable resources and hydropower facilities from the property tax. It also requires them to exempt solar water or space heating systems and geothermal energy resources from the tax. Municipalities will experience a loss to their net grand list (assessed value less exemptions permitted under state law) as a result of having to exempt this property and will likely necessitate an increase in a municipality's mill rate to offset the loss of taxable property.

Section 19 requires the Department of Social Services (DSS) to (a) maintain basic and contingency heating assistance program benefits under the Connecticut Energy Assistance Program (CEAP) at 2006/2007 levels during the 2007/2008 heating season; (b) increase the number of households weatherized pursuant to CEAP; and (c) increase the number of households receiving home heating equipment tune-ups and home energy efficiency measures pursuant to the HEARTH program³.

The ability of the agency to comply with Section 19's provisions without needing to expend state dollars during 2008 will depend upon (a) the amount of federal dollars received by Connecticut in FY 08; (b) whether CEAP enrollment is restricted or open, and (c) the number of households weatherized, and receiving heating tune-ups/other home energy efficiency measures.

CEAP is funded with federal Low Income Home Energy Assistance Program (LIHEAP) dollars. To date, a total of approximately $60.1 million has been made available to support the state's 2006/2007 plan. Additional federal dollars may be received if the President releases previously authorized contingency funding, and/or if supplemental FY 07 appropriations bills are passed.

Original estimates indicated that the 2006/2007 CEAP plan would result in program costs of approximately $64.3 million ($4.2 million more than currently available funding). If no additional federal funding is forthcoming, the DSS may incur unbudgeted state costs in 2007. (While the Commissioner of Social Services has the discretion to limit program enrollment to operate within available funding, he does not intend to close enrollment this year.) The President's FY 08 proposed LIHEAP budget includes an estimated $30.8 million for Connecticut. Final federal appropriations will likely not be known until Fall 2007.

The CEAP plan has traditionally included moneys (usually $0.5 or $1.0 million annually) for emergency heating system repairs/replacement for heating systems determined to be unsafe or inoperable. It is assumed that comparable funding would be proposed within the 2007/2008 plan, and would meet Section's 19 requirement that the agency increase the number of households receiving home heating equipment tune-ups and home energy efficiency measures. CEAP eligible households have also historically been allowed to use a portion of their basic or crisis benefits to cover the cost of a clean, tune and test of their deliverable fuel heating system.

However, the state has not historically utilized LIHEAP dollars for household weatherization activities. Estimated average costs per household of $3,000 would be incurred. The ability of the agency to support these costs within available LIHEAP funding will depend upon the number of households receiving these weatherization services (not specified in the bill), and overall available program funding, as discussed above.

Section 21 permits the Connecticut Health and Educational Facilities Authority (CHEFA) to provide financial assistance to certain organizations for (1) energy efficient construction or renovation projects, or (2) renewable energy contruction or renovation programs using bonds issued by CHEFA. This has no state fiscal impact, because the bonds are not obligations of the state.

Section 22 reinstates the reduction in the potential maximum interest rate for loans under the Energy Conservation Loan Program from provisions in PA 05-2 Special Session, but excludes siding and replacement roofs from these rates. This is anticipated to have a minimal impact on the number of loans closed in a year and have no impact on costs to the state. The Connecticut Housing Investment Fund Inc. (CHIF) has the contract to administer the Energy Conservation Loan (ECL) program for the Department of Economic and Community Development (DECD). The ECL revolving loan fund has an estimated balance of $4.9 million and the current unallocated General Obligation (GO) bond balance for the ECLF is $5 million as of 3/23/07. The administrative costs will be handled through program funds.

Section 24 reinstates the reduction in the potential maximum interest rate for loans under the Energy Conservation Loan Program from provisions in PA 05-2 Special Session, but excludes siding and replacement roofs from these rates. In addition, the bill increases the maximum loan to owners of residential properties with no more than 4 units from $15,000 to 25,000. The change in the maximum loan is anticipated to have a very minimal impact on the number of loans closed in a year and have no impact on costs to the state. The Connecticut Housing Investment Fund Inc. (CHIF) has the contract to administer the Energy Conservation Loan (ECL) program for the Department of Economic and Community Development (DECD). The ECL revolving loan fund has an estimated balance of $4.9 million and the current unallocated General Obligation (GO) bond balance for the ECLF is $5 million as of 3/23/07. The administrative costs will be handled through program funds.

Section 25 would require DPUC to hire an additional Lead Rate Specialist to carryout the outreach campaign and compact fluorescent bulb program provided in this section, for a cost of $124,326 in FY 08 and $128,056 in FY 09, including fringe benefits.

The Out Years

Except as otherwise described above, the impact in the out years would continue subject to inflation. In addition, effects on state and municipal electric ratepayers in the future are uncertain and cannot be determined at this time.



OLR Bill Analysis

sSB 1374

AN ACT CONCERNING ELECTRICITY PROCUREMENT AND ENERGY EFFICIENCY.

SUMMARY:

This bill establishes several energy initiatives, mainly affecting electric power. Among other things, the bill:

1. changes the rules governing the acquisition of power by electric companies for small- and medium-size standard service customers who do not choose a competitive supplier;

2. requires the companies to develop a plan that analyzes the state's resources, including energy efficiency, new and existing conventional and renewable generation, and distributed generation (small-scale generators), and specifies actions to acquire such resources;

3. allows the Department of Public Utility Control (DPUC) to develop a mechanism that decouples the amount of money gas and electric companies make from their sales;

4. expands “green building” standards for state facilities and extends them to state-funded school projects and large private-sector building projects; and

5. authorizes $50 million in bonding for a distributed generation grant program.

The bill requires DPUC to establish a (1) statewide energy efficiency and outreach marketing campaign, (2) program to promote the sale of compact fluorescent lights (CFLs) in schools, and (3) voluntary rate program to reduce electricity use during peak demand periods. It appropriates $5 million to DPUC for the efficiency and outreach and CFL programs.

EFFECTIVE DATE: Various, see below

§ 1: PROCUREMENT OF POWER FOR STANDARD SERVICE

The bill changes the rules governing the acquisition of power by electric companies for their standard service customers, i.e., small- and medium-sized customers who do not choose a competitive supplier. By law, the electric companies must submit a procurement plan to the DPUC, which must mitigate variation in prices over time. Under current law, the plan must require the procurement of a portfolio of overlapping wholesale supply contracts. The portfolio must be assembled in a way that produces just, reasonable, and reasonably stable retail prices while reflecting the underlying wholesale market. The contracts generally must run for at least six months.

The bill instead requires, starting January 1, 2008, that the plan specify how the power will be procured. The plan may require the company to (1) procure load following, full requirements service contracts in a way similar to that required under current law; (2) procure individual electric supply components directly from a supplier, or generator, such as base load, intermediate and peaking energy resource, capacity and other power supply services, using both requests for proposals (RFPs) and bilateral contracts outside the RFP process; and (3) procure physical and financial hedges to manage prices, including tolling arrangements and financial transmission rights.

The plan must describe how the company will, over time, transition from its current procurement methods to its new supply aggregation role. Once DPUC approves the procurement plan, a company must be allowed to manage the power supply portfolio on a real-time basis to allow it to optimize supply for the benefit of customers.

DPUC must annually set standard service rates by combining the costs of the arrangements undertaken under the procurement plan. The rates must be adjusted twice per year to reflect actual revenues and expenses, with any adjustment being included in either the current period or subsequent standard service rate, as determined by DPUC. An electric company is entitled to collect the reasonable costs it incurs to provide such service. As under current law, DPUC, in consultation with the Office of Consumer Counsel (OCC), can retain a consultant with expertise in energy procurement to help DPUC develop the RFP and oversee the procurement process. The consultant's costs are recovered in rates.

Under current law, each bidder must submit its bid to the electric company and the DPUC consultant, who must jointly review the bids submitted in the RFP and make a recommendation to DPUC. The bill continues this requirement for that part of the power procured through RFPs, but it reduces the amount of time DPUC has to reject a recommendation from 10 to two days after DPUC receives it. It requires DPUC to make the bids available to OCC and the attorney general, but prohibits them from publicizing the bids until DPUC does. With regard to power procured by means other than an RFP, the bill requires the electric companies to submit information regarding the acquisition to DPUC as specified in the procurement plan.

EFFECTIVE DATE: Upon passage

§ 2: INTEGRATED RESOURCES PLAN

The bill requires the electric companies, in consultation with the entity that manages the regional wholesale electric market and the Energy Resources Procurement Board, to develop an integrated resources plan. (The board does not currently exist, and the bill does not create it.) The plan must analyze the state's electricity energy resources, over the short and long term, and specify actions to acquire such resources into the future from the broadest possible range of options. The plan must consider and enable the use of all forms of resources that would provide benefits to customers, including energy efficiency, new and existing conventional and renewable generation, and distributed generation. The plan must focus on obtaining resources on a cost-of-service basis. The companies must submit the plan to DPUC by January 1, annually, beginning in 2008.

EFFECTIVE DATE: Upon passage

§ 3: DECOUPLING

By law, DPUC can approve an energy adjustment clause for electric companies and a purchased gas adjustment clause for gas companies. These clauses adjust rates for such things as changes in the cost of purchased power and natural gas. They can include a provision that further adjusts rates to allow the electric or gas company to charge or reimburse customers for over- or under-recovery of its overhead or fixed costs due solely to actual sales varying from projected sales. For example, an electric company would over-recover its fixed costs in a particularly hot summer, because it would sell more power than it had projected in which case it would reimburse consumers. Similarly, a gas company would under-recover its fixed costs in a warm winter, because it would sell less than had been projected in which case it would add an adjustment charge to the consumer's bills.

The bill specifically allows this type of provision in order to ensure that the interests of the company and its customers' interest in saving energy are aligned by severing the link between the company's sales levels and its recovery of its costs. The bill requires DPUC to include this type of provision in the company's next rate case, or January 1, 2009, whichever comes first. DPUC cannot consider the existence of this provision in determining the return the company is allowed to earn on its equity.

EFFECTIVE DATE: July 1, 2007

§§ 4-7: ENERGY EFFICIENCY OUTREACH CAMPAIGN

Campaign Goals and Plan

The bill requires DPUC, in coordination with the Energy Conservation Management Board (ECMB), to establish a statewide energy efficiency and outreach marketing campaign to target the following sectors: (1) commercial, including small businesses; (2) industrial; (3) governmental; (4) institutional, including schools, hospitals and nonprofit organizations; (5) agricultural; and (6) residential. The bill expands ECMB's membership to include representatives of the educational, agricultural, and transportation sectors; hospitals; and nonprofit organizations, all appointed by DPUC.

The campaign's goals must include: (1) educating residents on the benefits of energy efficiency, (2) motivating them to achieve lasting energy savings, (3) educating and informing them about the real-time energy reports and the real-time alert system prepared under the bill, and (4) supporting existing energy efficiency programs.

By October 1, 2007, DPUC must develop a plan to meet the program's goals and must implement it by January 1, 2008. The plan must include coordinated marketing activities and outreach strategies, including television, radio, and newspaper advertisements; printed educational materials; events; a comprehensive website resource serving all sectors; a biweekly electronic newsletter; planning forums and meetings throughout the state; and partnerships with businesses, government entities, and nonprofit organizations.

Real-Time Energy Report and Alert System

As part of the campaign, DPUC, in consultation with ECMB, must develop a real-time energy report for use on TV and other media as part of daily weather reports. The report must:

1. identify the state's current energy demand, along with how the demand has changed over the course of the day, and in the case of TV news broadcasts, the real-time change between the beginning and end of the broadcast;

2. emphasize the importance of reducing peak demand and estimate the money leaving the state and country because of Connecticut's dependence on fossil fuels;

3. provide tips on conservation measures;

4. promote community and business competition to reduce energy consumption; and

5. publicize communities and businesses that have implemented energy saving changes or that are using renewable resources.

DPUC must get the information needed for the reports from the entity that administers the regional wholesale electric market. DPUC must adopt regulations establishing the program's parameters.

Also as part of the campaign, DPUC, in consultation with ECMB, must develop a real-time system to alert the public via e-mail and cell phone alerts of the need to reduce consumption during peak periods. DPUC must adopt regulations to establish the system's parameters.

EFFECTIVE DATE: July 1, 2007

§ 8: COMPACT FLUORESCENT LIGHT PROMOTIONS

The bill requires the State Department of Education, by September 1, 2007, to (1) establish a week-long promotional event, known as See the Light Week, in late September or early October each year, to promote renewable energy and energy conservation; (2) encourage and solicit school districts, individual schools, and other public educational institutions to participate in a statewide compact fluorescent light (CFL) bulbs fundraiser; and (3) provide outreach, guidance, and training to districts, parent and teacher organizations, and schools concerning the value of renewable energy. The department must consult with DPUC, electric companies, and interested CFL manufacturers in developing this program.

DPUC, in consultation with the Education Department and ECMB, must develop and implement a statewide fundraiser for all elementary and secondary schools in which students sell CFLs, with the participating schools keeping part of each sale. DPUC must establish a sales target for the fundraiser and adopt regulations to determine the program's parameters.

EFFECTIVE DATE: July 1, 2007

§ 9: VOLUNTARY TIME OF USE RATES

By law, the electric companies must develop time-of-use rates, in which the rate charged to customers varies depending on whether they use electricity during a peak, shoulder, or off-peak period. Large customers must participate in this three tier system, and residential customers can choose to participate.

The bill requires DPUC, by October 1, 2007, to establish a plan to implement a voluntary rate program that will add a fourth tier to the rates. The program must (1) establish the surcharge on peak rates for high-demand peak days, for customers choosing to participate in the program; (2) encourage a shift of demand; and (3) include an educational component. DPUC must establish parameters for the program including facilitating the delivery of meters. DPUC must implement the program by June 1, 2008.

EFFECTIVE DATE: July 1, 2007

§§ 10 & 11: GRANTS FOR DISTRIBUTED GENERATION

The bill requires DPUC, by October 1, 2007, to establish a grant program for clean and distributed generation projects in businesses and state buildings powered by a Class I renewable energy source. Distributed resources include technologies such as microturbines and fuel cells; class I resources include power from solar and wind energy, among other sources. DPUC must consult with the departments of Environmental Protection (DEP) and Public Works (DPW) in developing this program. The grants for fuel cell projects cannot exceed $25 million and other types of projects can receive no more than $25 million. DPUC must adopt regulations to set parameters for this program. The bill authorizes $50 million in bonding for this program.

EFFECTIVE DATE: July 1, 2007

§ 12: REPLACEMENT FURNACE REBATE PROGRAM

The bill requires, between July 1, 2007 and July 1, 2017, the Office of Policy and Management (OPM) secretary to provide a $500 rebate for the purchase and installation of replacement residential gas and oil heating equipment that is at least 84% efficient. The rebate is available for equipment installed in residential structures containing up to four dwelling units. The total amount of rebates is capped at $5 million annually, with funding coming from the systems benefits charge on electric bills.

EFFECTIVE DATE: July 1, 2007

§ 13: AUCTION OF GREENHOUSE GAS EMISSION CREDITS

Connecticut is participating in the Regional Greenhouse Gas Initiative, which will cap the amount of carbon dioxide that can be emitted from power plants in the Northeast as part the effort of northeastern states and eastern Canadian provinces to address global warming. The bill authorizes DEP, in consultation with DPUC, to auction the carbon dioxide credits allocated under the initiative. (Under the initiative, power plant owners will be able to buy and sell these credits in order to comply with the emission caps.) The bill requires that 100% of the money raised in the auction be used for consumer benefits, including energy efficiency programs.

EFFECTIVE DATE: July 1, 2007

§ 14: PUBLIC SECTOR GREEN BUILDING STANDARDS

Under current law, most state facility projects costing at least $5 million that are funded on or after January 1, 2007, must comply with specified energy and environmental standards, e. g., earning a silver rating under the Leadership in Energy and Environmental Design (LEED) program. The requirement does not currently apply to parking garages, salt sheds, maintenance facilities, or state-funded school projects.

The bill extends the requirement, starting January 1, 2008, to all new construction, including garages, salt sheds, maintenance facilities, and schools, that costs at least $5 million, if at least $2 million of the funding comes from the state. It also extends the requirement to state facility renovation projects costing the state at least $2 million approved and funded after January 1, 2008.

Under current law, a project can get a waiver from these requirements if OPM, in consultation with DPW and the Institute for Sustainable Energy, finds that the costs of compliance significantly exceed the benefits. The bill eliminates the requirement that OPM consult with the institute, and it transfers from OPM to the institute the responsibility of making the finding.

EFFECTIVE DATE: January 1, 2008

§§ 15 & 16: TAX EXEMPTIONS FOR EFFICIENT VEHICLES

The bill establishes, starting January 1, 2008, a local option property tax exemption for hybrid motor vehicles and those with fuel efficiencies of at least 40 miles per gallon. It creates a sales tax exemption from January 1, 2008, until July 1, 2010, for vehicles with fuel efficiencies of at least 40 miles per gallon.

EFFECTIVE DATE: January 1, 2008

§§ 17 & 18: PROPERTY TAX EXEMPTIONS FOR RENEWABLE ENERGY

The bill requires, rather than allows, municipalities to exempt certain renewable energy systems from the property tax and expands the scope of the systems subject to the exemption. Under current law, municipalities can exempt class I renewable resources (e. g., solar electric, wind, and fuel cell systems) and hydropower facilities in one to four-unit residential buildings. The bill requires them to exempt these resources. It also requires municipalities to exempt any passive or active solar water or space heating system or geothermal energy resource, in any type of building.

EFFECTIVE DATE: October 1, 2007

§ 19: ENERGY ASSISTANCE BENEFITS

The bill requires the Department of Social Services to maintain the energy assistance benefit increases that were adopted in 2005 when it proposes its plan for 2007-2008. Among other things, the 2005 legislation (1) increased, by $200, the basic benefit provided to low income households under the Connecticut Energy Assistance Program and (2) required the program to provide a $300 basic benefit and $200 crisis benefit for moderate income households.

EFFECTIVE DATE: July 1, 2007

§ 20: FUNDING FOR OPERATION FUEL

Under current law, electric and gas companies must allow their customers to donate $1 per billing cycle to Operation Fuel, which helps people ineligible for state energy assistance. The bill extends this requirement to electric and gas municipal utilities. It allows customers to designate any donation amount and requires all utilities to (1) offer $1, $2, $3, or other donation options and (2) allow customers who are billed or pay electronically to participate. It also requires Operation Fuel, Inc. (the group that administers the program) to provide fundraising inserts to fuel oil dealers who choose to participate in the program. It explicitly requires the utilities and dealers who match contributions to send the matching funds to Operation Fuel. It requires the utilities and the participating fuel oil dealers to coordinate their promotions of the program.

EFFECTIVE DATE: Upon passage

§ 21: CONNECTICUT HEALTH AND EDUCATIONAL FACILITIES AUTHORITY

The bill allows the Connecticut Health and Educational Facilities Authority to provide grants or other financial assistance to colleges, health care facilities, nursing homes, day care centers, and other non-profit organizations for energy efficiency and renewable energy construction and renovation projects.

EFFECTIVE DATE: October 1, 2007

§ 22: LOW INTEREST ENERGY CONSERVATION LOANS

The bill reinstates, until June 30, 2008, provisions of PA 05-2, October 25 Special Session that lowered the interest rate for the Connecticut Housing Investment Fund's (CHIF) energy efficiency loan program. But it excludes siding and replacement roof projects from the interest rate reduction.

EFFECTIVE DATE: Upon passage

§ 23: GREEN BUILDING STANDARDS IN THE PRIVATE SECTOR

The bill requires the state building inspector and the Codes and Standards Committee to amend the State Building Code to require large private sector construction projects to meet the green building standards described above in section 14. The requirements apply to (1) buildings costing $5 million or more built on or after January 1, 2009 and (2) renovations costing $2 million or more made on or after January 1, 2010. The requirements do not apply to residential buildings with up to four units. The bill requires the inspector and the committee to waive these requirements if the Institute for Sustainable Energy finds that the cost of compliance significantly outweighs the benefits.

By law, the State Building Code must require that buildings and building elements provide optimum cost-effective energy efficiency over their life. The code must meet standard 90.1 of the American Society of Heating, Refrigerating and Air Conditioning Engineers. The bill extends these requirements to residential buildings as of January 1, 2008.

EFFECTIVE DATE: October 1, 2007

§ 24: LOW INTEREST ENERGY EFFICIENCY LOANS

The bill requires CHIF to provide loans of up to $25,000 to owners of one to four unit residential properties under this program. Under current practice, CHIF has a $15,000 cap on such loans.

EFFECTIVE DATE: Upon passage

§ 25: APPROPRIATIONS

The bill appropriates $5 million to DPUC in FY 08 for its outreach campaign and CFL program.

EFFECTIVE DATE: July 1, 2007

BACKGROUND

Related Bills

sHB 7098, An Act Concerning Connecticut's Energy Future, favorably reported by the Energy and Technology Committee, has several provisions similar to those in this bill, including those dealing with green building standards and energy assistance. SB 1373 has similar standard service power procurement provisions.

COMMITTEE ACTION

Energy and Technology Committee

Joint Favorable Substitute

¹ The state normally provides between 20% and 80% of the construction cost for school building projects and magnet schools receive 95% reimbursement.

² According to fueleconomy.com there are four models with fuel efficiencies of at least 40 miles per gallon: (1) the Honda Civic (automatic 5-speed) , (2) the Toyota Yaris (manual 5-speed), (3) the Toyota Corolla (manual 5-speed), and (4) the Mini Cooper (manual 6-speed). Therefore, the estimates assume only a small number of overall new vehicle sales will be affected.

³ The Office of Policy and Management was authorized to operate the HEARTH program during FY 09. DSS expended $205,744 for HEARTH benefits for CEAP households in that year. The program was not authorized in FY 07.