You asked for a section-by-section summary of HB 7081, AAC Connecticut's Energy, part of the governor's energy package. OLR Report 2007-R-0226 summarizes HB 7080, which would establish a Department of Energy (DOE), which assumes the energy responsibilities of the Office of Policy and Management (OPM) and some of the responsibilities of the Department of Public Utility Control.

Secs. 1-3: Biofuels programs

The bill establishes:

1. a grant program, administered by the Department of Agriculture, to provide matching grants to farmers, agricultural not-for-profit organizations, and agricultural cooperatives for the cultivation and production of crops used for biofuels;

2. a program, administered by the Department of Economic and Community Development (DECD), to provide low interest loans for building processing facilities for local biofuel feedstock crops and production plants; and

3. a low interest forgiveable loan program for service stations, administered by DECD, to reduce or eliminate the upfront costs of installing new alternative fuel pumps or converting gas or diesel pumps to dispense alternative fuels.

The agencies must adopt implementing regulations for each of the programs.

Sec. 4: Small business energy loan program

The bill requires the DECD commissioner, in consultation with the DOE commissioner, to establish a small business energy loan program to provide zero or low interest loans and loan interest rate reductions to small businesses for energy efficiency projects and advanced energy technologies.

As used in the bill, energy efficiency products are any products or alternative energy devices, energy conservation materials, or replacement furnaces and boilers that (1) meet federal Energy Star standards and (2) are approved under regulations adopted by the OPM secretary. These products include: (1) pre-qualified measures that are proven cost effective investments which reduce energy use, as determined by the DOE commissioner; (2) custom measures that pay for themselves in ten years through reduced energy use, as determined by the commissioner; (3) process improvement measures that reduce manufacturing energy use on a cost-per-unit basis, as determined by the commissioner; and (4) renewable technologies that use the sun, wind, water, or ground to generate heat or power.

To be eligible to participate in the loan program, a small business must have an energy audit provided through an authorized energy audit program. The DECD commissioner may provide loans from the loan fund for eligible improvements, i. e. , technologies identified in the audit. To be eligible for a loan, a small business must identify an eligible improvement project and provide necessary documentation.

The commissioner may provide loan interest rate reductions from the loan fund for eligible improvements. To be eligible for an interest rate reduction, a small business must: (1) Identify an eligible improvement project and provide documentation deemed sufficient by the commissioner, and (2) receive a loan commitment from a participating lender, such as a bank or credit union.

The commissioner may buy down the participating lender's interest rate by up to four percentage points or 4% through the loan fund. The reductions must be available for ten years or the life of the loan, whichever is shorter. The maximum value of the loan, whether issued by DECD or a participating lender, is $ 100,000.

The commissioner must review and evaluate applications for assistance using eligibility requirements and criteria established in the regulations. The commissioner must submit an annual report on the loan fund as part of the annual report prepared pursuant to section 32-1m of the general statutes. The report must identify the number of businesses serviced by the loan fund program, the types of improvements implemented and energy cost savings realized by such small businesses.

Sec. 5: Energy efficient air conditioners program

The bill requires the Conservation Advisory Board (apparently the Energy Conservation Management Board), in consultation with the electric companies, to establish a program that provides grants of up to $ 150 to residential electric customers who replace air conditioning units that do not meet the federal Energy Star efficiency standards with ones that do. The program must be funded from the existing electric company conservation funds.

Sec. 6: State grants for property tax exemptions

The bill establishes a state grant for local revenues lost due to property tax exemptions. It appears that this grant applies to all revenues lost due to exemptions, rather than merely the exemptions created by the bill.

Some vehicle leases require the lessee to pay the property tax on the vehicle. In such cases, the bill requires the lessor to return, or cause to be credited under the lease, any amount collected for the property tax payment. The leesor must do this within 30 days after receiving notice from the lessee of the approval of the lessee's application for an exemption.

Sec. 8: Biodiesel tax credit

The bill gives distributors of 100% biodiesel a credit against the corporation business tax of 50 cents per gallon.

Sec. 9: Charges for fuel cell owners

The bill requires an electric company or competitive supplier to waive its demand charge for a fuel cell operator during (1) a loss of power caused by problems with generation facilities or the transmission and distribution infrastructure or (2) a scheduled or unscheduled shutdown of the fuel cell that occurs during off-peak hours.

Sec. 10: Dual fuel capacity at power plants

The bill requires that, starting January 1, 2008, each intermediate electric generating facility with a rating of 65 megawatts or more have the capacity to burn either oil or gas if it is currently fueled by one of these fuels.

Sec. 11: DOE study on electric reliability

The bill requires DOE to conduct a contested case proceeding to: (1) analyze the current compliance of generation facilities with existing on-site fuel storage requirements, (2) determine how much storage is needed to operate a facility at peak loads for 48 hours, and (3) analyze what on-site fuel storage resources are currently available in the state. The department must submit its results to the Energy and Technology Committee by January 1, 2008.

Sec. 12: Electric company linemen staffing levels

The bill requires DOE, by September 1, 2007, to conduct a contested case proceeding to study (1) the appropriate number of linemen needed for an electric company to maintain, repair, and extend its distribution lines under normal circumstances and under extraordinary circumstances, including storms; (2) whether the consolidation of repair facilities results in longer restoration times, (3) whether greater use of shield wire would reduce outages; and (4) the most effective ways of notifying the public of an outage and the status of the company's efforts to restore power. DOE must report the proceeding's results to the Energy and Technology Committee by January 1, 2008.

Sec. 13: DOE study on electric reliability

The bill requires DOE to conduct a contested case proceeding to assess ways the state can ensure and enhance the reliability of generating facilities in the state during peak electric demand periods. The proceeding must address: (1) the current compliance of generation facilities with existing on-site dual fuel storage and operational requirements, (2) the existing inventory of fuel storage and fuel delivery resources available to supply generating facilities in the state, (3) the amount of fuel delivery and storage infrastructure that would be needed to ensure the reliable operation of these facilities during peak demand periods, and (4) the types of incentives that can be offered to the electric and gas industry to enhance the reliability of electric service during peak periods. DOE must begin the case by September 1, 2007 and consult with the electric and gas industries, the Office of Consumer Counsel, OPM, and the entity that operates the New England power grid. DOE must submit its findings and recommendations to the Energy and Technology Committee by January 1, 2008.

Sec. 14: Municipal electric utilities and renewable energy

The bill requires the Connecticut Municipal Electric Energy Cooperative (CMEEC) to develop standards for promoting renewable resources that apply to each municipal electric utility in the state. By April 1 annually, CMEEC must submit the standards to the OPM secretary and DOE commissioner. The bill also requires CMEEC to submit an annual report to these officials on the activities of municipal utilities to promote renewable resources.

Sec. 15-18: Agency studies on biofuels, energy conservation programs, procurement of power for last resort service, and electric aggregation

Sec. 19: Energy efficiency in state purchasing

The bill requires the Department of Administrative Services and other purchasing agencies to buy appliances and equipment that meet federal Energy Star standards.

Sec. 20: Fuel efficiency standards for state vehicles

Under current state law, vehicles that are purchased by the state must meet federal alternative fuel requirements, which specify that 75% of these vehicles must be capable of operating on alternative fuels. The bill specifies that this requirement also applies to state-leased vehicles and that ethanol and biodiesel count as alternative fuels. These provisions are already part of the applicable federal law.

Sec. 21: Low interest energy efficiency 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 energy efficiency loan program.

Sec. 22: Sales tax exemptions for energy efficiency goods

The bill extends, from June 30, 2007 to June 30, 2010, the sunset date for the sales tax exemption for energy efficiency goods such as insulation, programmable thermostats, and furnaces that meet Energy Star standards.

Sec. 23: Green building standards for schools

The bill broadens the state's “green building” requirements. Under current law, state facilities costing $ 5 million or more funded on or after January 1, 2007 (with limited exceptions) must meet specified energy and environmental standards (LEED Silver or its equivalent). The OPM secretary, in consultation with the Public Works commissioner and the Institute for Sustainable Energy, must waive the requirements if he finds that the cost of compliance significantly outweighs the benefits. The secretary, in consultation with the public works commissioner and the institute, must adopt implementing regulations.

The bill extends the requirement to state-funded school construction projects costing $ 5 million or more. It requires the DOE commissioner, in consultation with the OPM secretary, to adopt the regulations. It requires OPM to consult with the Energy commissioner rather than the institute, in determining whether the cost of compliance significantly outweighs the benefits.

Sec. 24: Connecticut Health and Educational Facilities Authority

The bill allows the Connecticut Health and Educational Facilities Authority (CHEFA) to serve as an electric or natural gas aggregator for two or more colleges, health care facilities, nursing homes, day care centers, and other non-profit organizations. An aggregator groups customers together to make them more attractive to suppliers, but does not actually buy power or natural gas on their behalf.

It also allows CHEFA to provide grants or other financial assistance to these entities for energy efficiency and renewable energy construction and renovation projects.

Secs. 25 & 26: Sales tax exemptions

The bill exempts from the sales tax:

1. machinery and equipment used to blend vehicle fuels that contain at least 5% biodiesel;

2. room air conditioners that meet federal Energy Star standards;

3. sales and installation of renewable energy systems, such as those using solar energy, fuel cells, and geothermal systems, but excluding wood stoves; and

4. all electric and gas sales to commercial customers, rather than just the first $ 150 in purchases per month (sales to residential and manufacturing customers are already exempt).

Sec. 27: Cap on petroleum products gross earnings tax

The bill caps the petroleum products gross earnings tax to the first $ 1. 70 per gallon that a distributor receives for first sale of gasoline, gasohol, and diesel fuel in the state.

Sec. 28: Property tax exemptions for hybrid vehicles

The bill exempts the following vehicles from the property tax for the first three years they are registered in the state: (1) hybrid cars and light trucks, (2) other vehicles that get at least 40 miles per gallon, and (3) certain low-emission vehicles.

Sec. 29: Biodiesel fuel quality standards

The bill requires the Transportation commissioner to adopt regulations establishing quality standards for biodiesel and biodiesel blends and requires that they be consistent with those established by the National Institute of Standards and Technology.

Sec. 30: Conforming changes

Sec. 31: DPUC commissioners

The bill requires that as of October 1, 2007, at least one of the DPUC commissioners have experience in utility customer advocacy.

Sec. 32: Biodiesel fuel pumps

The bill requires anyone selling biodiesel or ethanol blends to have a sign on the pump indicating the percentage of biodiesel or ethanol.

Sec. 33: Energy security

The bill makes energy security one of the responsibilities of utilities subject to DPUC regulation.

Sec. 34: Zone pricing for gasoline

The bill bars the practice of zone pricing for gasoline from July 1, 2007 to June 30, 2009. It requires gasoline wholesalers to instead sell gasoline to dealers at their posted rack price, which cannot change more than once per day. It specifies how wholesalers must inform dealers of the rack price and the wholesaler's discount policies. Violation of these provisions is an unfair trade practice.

Sec. 35: Wire maintenance plans

The bill requires each electric company to submit a plan to DPUC, by January 1, 2008, for maintaining transmission and distribution systems along highways, in a format DPUC prescribes. The plan must include a summary of appropriate staffing levels.

Sec. 36: DSS Discounted Fuel Purchasing Program

The bill broadens requirements for the Department of Social Services (DSS) to buy fuel at discounted prices for Connecticut Energy Assistance Program participants. It expands the requirement to include all deliverable fuels, rather than just heating oil. It also requires that DSS ensure that all fuel assistance recipients are treated the same as other similarly situated customers and that fuel dealers do not discriminate against them under their standard payment, delivery, service, or other similar plans. DSS must take advantage of programs offered by dealers that reduce the cost of the fuel, such as fixed price, capped price, pre-purchase or summer-fill options, thereby reducing CEAP's program cost and making the maximum use of its revenues. DSS must ensure that all agencies administering CEAP make payments to participating dealers in advance of the delivery of energy where the dealer provides price-management strategies that require advance payments. The bill requires the community action agencies that administer CEAP provide pricing information from participating dealers.    The information must include the statewide or regional retail price per unit of fuel, the reduced price per unit paid by the state, the number of units delivered to the state under the program, and the total savings under the program due to the purchase of deliverable fuel using the dealers' price-management strategies.

Secs. 37-40: Equipment energy efficiency standards

The bill requires DPUC, in consultation with OPM, to establish energy efficiency standards for various commercial products. These include, among others, medium voltage transformers, bottled water dispensers, commercial hot food holding cabinets, portable electric spas, walk-in refrigerators and freezers, and pool heaters. Unlike the products currently covered by efficiency standards, the bill does not specify minimum efficiency levels or when DPUC must adopt the standards.

Sec. 41: Class III renewable resources

By law, electric companies and suppliers must get part of their supply from class III resources such as cogeneration facilities as part of the renewable portfolio standard (RPS). The bill excludes facilities that violate Department of Environmental Protection (DEP) water quality standards from the class III RPS.

Sec. 42: Conforming changes

Sec. 43: Net metering

By law, electric utilities and competitive suppliers must give a credit to their customers in one- to four-dwelling unit properties who generate electricity using class I renewable resources or hydropower. The bill expands these provisions to cover commercial and larger residential customers with generation capacity up to one megawatt, provides for payments to customers who generate more power than they use in a given billing period, and makes related changes.

Sec. 44: Standard service

By law, electric companies must provide standard service to small and medium size customers who do not choose a competitive supplier. The bill requires DOE to establish the price for this service by December 1, annually, rather than periodically.

The bill requires DOE, in analyzing the bids by wholesalers to provide power for this service, to determine whether they are consistent with the DPUC-approved plan for obtaining generation and other resources each electric company must develop under the bill. The bill requires that all of the bids received during the procurement process be made available for public review within six months after DPUC's approval or rejection.

By law, each company submitting a bid must submit it to the electric company and a third party contractor selected by DPUC. The company and the contractor must review the bids and submit an overview of them, together with their joint recommendation, to DPUC. The bill additionally requires that they conduct a cost-based analysis of the bids. It requires DOE to make all of the bids it receives available to the Office of Consumer Counsel and the attorney general (although it is DPUC that receives the bids). The agencies may not make the bids available to the public until DPUC does so. By law, DPUC can reject the joint recommendation. The bill specifies that DPUC can do this if the bids are not in the customers' best interest. The bill requires that once DPUC approves the bids, the electric company must enter into contracts with the approved bidders.

Under current law, DPUC must adjust the price of standard service periodically, but not more than once per quarter. The bill requires that DPUC set the price on an annual basis, but allows DPUC to adjust it as frequently as once per quarter if it determines that this would be in customers' interests. DPUC must establish rates that ensure that customers who leave standard service continue to pay the appropriate amount of the costs of electricity commitments for their service. By October 1, 2009, and biennially thereafter, DPUC must conduct contested cases to review the efficacy of the process of procuring contracts for this service, including an assessment of the extent to which the integrated resource planning and procurement standards discussed below are met.

Under current law, DPUC can direct the electric companies to offer a “green” option, through licensed suppliers, in which a standard service customer can buy power that exceeds the requirements of the RPS percentage. The bill requires DPUC to direct the companies to offer this option.

Secs. 47 & 48 CHEFA as an electric aggregator

As noted above, the bill allows CHEFA to serve as an electric aggregator. The bill also subjects CHEFA to less rigorous registration requirements, as is currently the case when a municipality serves as an aggregator.

Sec. 49 Clean Energy Fund investments

The bill allows the Clean Energy Fund to invest in (1) alternative fuel, including ethanol, biodiesel, or other fuel, that is produced in Connecticut and derived from agricultural produce, food waste, or waste vegetable oil and (2) hydropower that will meet the low-impact standards of the Low-Impact Hydropower Institute.

Sec. 50: Winter Shut-Off Moratorium Extension

The bill extends, from April 15th to May 1st, the end date of the annual winter moratorium, during which electric and gas utilities cannot terminate service to hardship customers who cannot pay their utility bills (by law, the start date is November 1). Hardship customers include households (1) whose only income is social security or unemployment benefits, (2) who have a seriously ill household member, or (3) with incomes up to 125% of the federal poverty level, among others. The bill also makes related changes.

Sec. 51: DEP hydropower agreements

The bill allows the DEP commissioner to enter lease agreements with private entities to allow them to generate hydroelectricity.

Sec. 52: Climate change

The state has established goals for reducing greenhouse gases and developed plans to meet these goals. Current law requires DEP to submit an annual report to the Environment Committee on progress in reducing these emissions and the appropriateness of the plans in meeting the goals. The bill (1) requires that the report be submitted every two years rather than annually, (2) changes the submission deadline from December 1 to October 1; and (3) requires that the greenhouse gas plan be consistent with the integrated resources plan described below.

Sec. 53: Energy efficiency assistance for small businesses

The bill requires the Office of Small Business Affairs to administer an energy efficiency resource center for small businesses. It requires the Department of Administrative Services, in consultation with DECD, to develop state employee classifications for staff positions in the office.

Sec. 54: Distribution of alternative fuels

The bill bars vehicle manufacturers and distributors from requiring vehicle dealers to only buy alternative fuels from the vehicle manufacturer or distributor. It subjects distributors who violate this provision to a fine of up to $ 1,000. For these purposes, alternative fuels are (1) a blend of 85% ethanol and 15% gasoline (E-85), (2) biodiesel, (3), compressed natural gas, and (4) hydrogen. It appears that the intent of these provisions is to apply to fuel, rather than vehicle, distributors and dealers.

Sec. 55: Sales tax exemption for hybrid cars

The bill extends, from October 1, 2008 to June 30, 2010, the sunset date for the sales tax exemption for hybrid cars that get at least 40 miles per gallon.

Sec. 56: Integrated resources planning

The bill requires each electric company, by January 1 annually, to develop and submit to DPUC an integrated resource plan for DPUC's approval. The companies must consult with CEAB, the entity that administers the regional wholesale electric market, and generators in the state.

The plan must analyze the state's need for generation and transmission over the short and long term, For the following ten years, the plan must specify (1) the total amount of resources to be procured; (2) the location, type, and fuel sources of these resources, which include supply and demand side resources; and (3) how the procurement of these resources will reduce or stabilize rates. The plan must consider (1) generation types and locations that will optimize the generation portfolio in the state, (2) the mix of baseload, cycling, and peaking generation; (3) fuel types, diversity, availability, firmness of supply, and security and environmental impacts; (4) reliability, peak load and energy forecasts, system contingencies, and existing resource availabilities; (5) import limitations and the appropriate reliance on imports; (6) if it is in the best interest of customers, how the new resources would be integrated into the standard service supply; and (6) the impact of the plan on rates, including the effects on capacity and energy costs, rate stability, affordability for low-income customers, and the potential to displace congestion-related charges.

DPUC must give interested parties an opportunity to comment on the plan. Within 120 days after the plan's submission, DPUC must approve or modify the plan, and determine the amount, location, and types of resources to be procured.

Sec. 57: Fund transfers

The bill transfers $ 26. 5 million from the General Fund to the Energy Conservation and Management Fund in FYs 08, 09, and 10 and $ 11. 3 million in FY 11. It transfers $ 8. 8 million from the General Fund to the Clean Energy Fund in FY 08, 09, and 10, and $ 3. 9 million in FY 11.

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