You asked for a summary of HB 7080, An Act Establishing a State Department of Energy.

SUMMARY

The bill establishes a Department of Energy (DOE) and gives it a wide range of energy policy and planning responsibilities. These include (1) developing a detailed integrated resources plan that identifies supply- and demand-side resources (e. g. , power plants and conservation programs, respectively) in order to meet the state's electric demand and (2) overseeing the process by which electric companies procure power for their small and medium size customers. The bill transfers to DOE the responsibilities of the Office of Policy and Management (OPM) with regard to energy policy, the Department of Public Utility Control (DPUC) with regard to electric and natural gas utility planning and policy, and the Department of Public Works (DPW) with regard to certain aspects of energy use in state buildings. The bill transfers the affected OPM staff to DOE, but not the affected DPUC or DPW staff. The bill requires DOE, rather than Connecticut Innovations, Inc. , (CII) to administer the Clean Energy Fund. It allows DOE to enter into agreements with CII to facilitate this transfer.

The bill reduces the number of DPUC commissioners from five to four. It requires DPUC to determine, in rate cases and in the four-year reviews it is required to conduct, whether existing or proposed rates would create an undue hardship on residential or commercial customers in its rate setting proceedings. This provision applies to all of the utilities DPUC regulates, including telecommunications and water companies as well as electric and gas companies. The bill also requires the Office of Consumer Council (OCC), rather than DPUC, to receive consumer complaints regarding electric and gas service.

The bill allows the DOE commissioner to enter into contracts to carry out DOE's functions, powers, and duties, and adopt regulations to carry out DOE's duties. It makes the commissioner a member of the Connecticut Siting Council and makes other changes to the council's membership. The bill eliminates the Connecticut Energy Advisory Board (CEAB), the Consumer Education Advisory Council, the Home Heating Oil Planning Council, and the Nuclear Energy Advisory Council and transfers most of their responsibilities to DOE. Among other things, CEAB is responsible for developing a state energy plan. It also eliminates a requirement that CEAB conduct an alternatives analysis when an energy facility is proposed.

The bill generally funds DOE from the special fund that covers the expenses of the DPUC and OCC. (By law, all of the industries that these agencies deal with, including telecommunications and water companies, are assessed for this fund. ) However, the bill funds consultants DOE may retain to develop the integrated resources from a charge on electric bills.

The bill makes many related changes.

DOE RESPONSIBILITIES

Integrated Resources Planning

The bill requires DOE to prepare an integrated resources plan by January 1 annually. The plan must analyze the state's need for generation, transmission, and supply- and demand-side electric resources. DOE must consult with ISO-New England (the organization that administers the regional wholesale electric market), the Siting Council, DPUC, electric companies, and in-state generators in developing the plan.

The plan must address how to ensure system reliability and the affordability of electricity and include information to improve the design of the regional markets and the system's economic performance and to identify areas where market-based solutions can be used to meet these economic needs. The plan must specify, for the next ten years, the amount of resources needed to meet the state's peak demand, and the location, fuel source, and types of supply- and demand-side resources measures that need to be created or modified. The plan must identify, among other things: (1) types and locations of generation plants that will optimize the generation portfolio in the state; (2) the mix of different types of generating plants; (3) the plants' fuel types, diversity, availability, firmness of supply, and the environmental and security impacts of these variables; (4) reliability, peak load and consumption forecasts, system contingencies, and existing resource availabilities; and (5) import limitations and how much the state should rely on imports.

The plan must also analyze how the procurement of resources should be adjusted, if necessary, to reduce or stabilize rates. It must specify, if it is in customers' best interest, how the new resources would be integrated into the standard service supply for customers and the impact of the plan on rates, rate stability, and affordability for low-income customers.

Participation in DPUC proceedings

The bill allows DPUC, on at the request of the DOE commissioner or on its own motion, to designate the commissioner as a party in any DPUC proceeding. Subject to the restrictions on ex parte communications, the bill (1) gives the commissioner access to DPUC records, (2) entitles him to call upon the assistance of the DPUC's experts, and (3) gives him access to all other DPUC facilities and information to help him carry out his duties and those of the DOE, other than internal documents, information, or data that are not available to parties to DPUC proceedings.

Other DOE responsibilities

The bill also requires DOE to: (1) represent the state in regional energy system planning processes conducted by ISO-New England; (2) encourage representatives from the municipalities that are affected by a proposed regionally significant projects to participate in these planning processes; (3) participate in the Connecticut Siting Council's electric power forecast proceeding; and (4) participate in a Siting Council's analysis of the life cycle costs of burying transmission lines versus placing them overhead. The DOE commissioner can establish advisory groups to help in these areas. The bill also requires DOE to review and, if needed, update by December 1, 2007, the state's guidelines for energy infrastructure.

Other agencies must cooperate with the DOE commissioner and provide him with the information, staff, and other assistance he needs to carry out his duties.

TRANSFERS OF OPM RESPONSIBILITIES AND POWERS TO DOE

The bill transfers the OPM secretary's responsibilities and powers regarding energy to the DOE commissioner. Among other things, these include:

1. serving as the state official to implement federal programs and laws related to energy;

2. coordinating state and local government programs in these areas;

3. planning and managing energy use in state owned and leased buildings;

4. conducting life cycle cost analyses for state-owned and state-financed buildings, including schools; and

5. adopting energy efficiency standards for various appliances.

The bill makes the commissioner, rather than the secretary, a party in DPUC electric and gas rate cases when a company is seeking a rate increase to finance capital expansions.

The bill requires DOE, rather than OPM, to operate an electricity purchasing pool for state agencies. It eliminates a requirement that this pool be open to households receiving state or federal means-tested assistance under the same terms as the state agencies.

Under the bill, the DOE commissioner, rather than the OPM secretary, can:

1. investigate complaints concerning violations of federal or state energy law,

2. conduct public education programs regarding energy conservation; ,

3. employ staff in the classified service, and

4. provide technical assistance to municipalities that want to aggregate electric generation services.

The bill eliminates a requirement that OPM connect all state-owned buildings to district heating and cooling systems where this is practicable and cost-effective.

The bill transfers various responsibilities and powers dealing with energy emergency planning, emergency response, and fuel oil dealers from OPM to DOE. It eliminates requirements that fuel oil dealers register with the state. Existing OPM regulations and orders remain in force until superseded or repealed.

DPUC CHANGES

Transfer of DPUC responsibilities to DOE

By law, electric companies must provide “standard service” to small and medium size electric customers who do not choose competitive suppliers. The bill transfers, from DPUC to DOE, the oversight of how electric companies procure power for this service. Specifically, the bill requires DOE rather than DPUC to:

1. approve the companies' plan to procure power for this service by issuing a request for proposals (RFP);

2. retain, in consultation with OCC, a consultant to oversee the development of the RFP and the contracts between the suppliers and the electric companies;

3. review and approve the bids; and

4. approve the companies' plans to reduce rate volatility.

The bill requires DOE, rather than DPUC, to:

1. adopt regulations establishing procedures by which non-utility entities can propose electric conservation measures as an alternative to building power plants;

2. reviewing such proposals to determine their feasibility;

3. review and approve bids for power for the “green option,” an alternative offered to standard service customers in which the proportion of power coming from renewable resources exceeds the proportion required by law;

4. review and approve bids for power for back-up service when a competitive supplier fails to provide service; and

5. ensure that energy conservation and assistance programs meet the needs of tenants and low-income households

It requires that the green option be consistent with DOE's integrated resources plan.

Under current law, DPUC, in consultation with OCC, must monitor the development of competition in the retail electric industry. DPUC must take specified steps if the ratio of residential and non-residential rates increases by three percentage points or more than was the case in 1998, when competition was authorized. The bill generally makes DOE the lead agency in these areas.

Under current law, the governor can designate DPUC as the state's agent for procuring power and reselling it on a nonprofit basis to electric companies and to other entities designated by the governor. The bill alternatively allows the governor to designate DOE for these purposes.

The bill requires gas companies to file their five-year forecasts and annual conservation plans with DOE rather than DPUC. It requires DOE to submit the plan to DPUC for a determination on how to pay for the costs of implementing the plan out of gas company rates.

The bill requires DOE, rather than DPUC, to convene the Energy Conservation Management Board, and renames this group the Conservation Advisory Board. It adds a representative of heating oil dealers to the board. It only allows this member to vote on matters affecting his industry. This provision is consistent with current law with regard to the electric and gas industry representatives on the board.

DPUC and DOE participation in federal proceedings

Under current law, the DPUC can participate in federal administrative and court proceedings regarding utility services provided in the state. The bill limits this provision to non-energy utility services such as telecommunications and water. Under current law, the attorney general, at DPUC's request, can retain outside counsel to participate in the federal proceedings. The bill limits this provision to proceedings dealing with non-energy utilities.

The bill allows DOE to participate in federal administrative and court proceedings affecting energy utilities and companies. It allows the attorney general, at DOE's request, to retain outside counsel in these proceedings on DOE's behalf. The affected utilities or companies must pay for these costs (including appeals costs), which are limited to $ 250,000 per year unless DOE finds good cause for exceeding the limit after giving them an opportunity to comment on the overage. The costs are shared among the affected utilities and companies based on the current DPUC assessment (one type of affected companies, exempt wholesale generators, is not subject to this assessment). DPUC must recognize this cost as a proper business expense for rate-making purposes, if applicable.

Transfer of responsibilities from DPUC to OCC

By law, OCC represents ratepayer interests before the DPUC and federal agencies. The bill additionally requires it to receive and investigate utility consumer complaints and work with utilities to resolve complaints and concerns.

The bill allows individuals and municipalities to file complaints with OCC rather than DPUC regarding (1) competitive electric suppliers, (2) defects in the property of utilities or competitive electric suppliers, and (3) damage caused by electric discharges. It continues to require DPUC to hold hearings and act upon these complaints. The bill requires utilities and electric suppliers to notify OCC, rather than DPUC, of accidents involving their property.

DPUC Commissioners

The bill reduces the number of DPUC commissioners from five to four as of July 1, 2007, and requires the governor to appoint the four members by this date. The initial terms of these members range from one to four years, subsequent terms are four years. Under current law, commissioners serve four-year terms. Three of the current commissioners have terms that expire on July 1, 2007; the other two expire on July 1, 2009. The bill reduces the salary paid to the chairperson of the commission and eliminates the position of vice-chairperson. It is not clear how this provision would work since neither current law or the bill provide a way of reducing a sitting commissioner's term of office.

By law, the DPUC commissioners and staff cannot appear for pay before the Siting Council, OPM, and the Department of Environmental Protection. The bill additionally prohibits them from appearing before DOE.

Other DPUC changes

By law, DPUC was required to issue an RFP to obtain supply and demand side resources (e. g. , power plants and conservation programs, respectively) to reduce costs associated with congestion on the electric transmission system. The bill eliminates DPUC's authority to issue subsequent RFPs and approve the measures arising from them.

The bill requires DPUC to consult with DOE, rather than OPM, in approving electric and gas company arrearage forgiveness programs.

TRANSFER OF RESPONSIBILITIES FROM DPW TO DOE

The bill requires DOE, rather than DPW to:

1. conduct energy audits of state buildings,

2. adopt regulations establishing energy criteria for selecting equipment to be used in state buildings, and

3. establish lighting efficiency standards for public accommodations and public buildings.

The bill requires DOE, rather then DPW and OPM, to develop state building energy performance standards and standards for life-cycle cost analyses.

CEAB CHANGES

The bill eliminates CEAB and transfers most of its responsibilities to DOE. These include developing a comprehensive energy plan, which is distinct from the new integrated resources plan described above. The bill requires DOE to develop this plan every two years rather than annually, delays the submission date from January 1 to October 1, requires that this plan be consistent with the state's climate change plan, and makes related changes.

By law, electric companies must enter into long-term contracts with renewable resources generators. The bill requires that the contracts be consistent with DOE's integrated resources plan.

By law, energy facility developers must consult with the potential host municipality before filing an application with the Siting Council. The bill requires them to provide a copy of the information filed with the municipality to DOE rather than CEAB.

The bill repeals provisions that require (1) CEAB to issue an RFP in when an application is filed with the Siting Council to build an energy facility, in order to identify potential alternative proposals; (2) CEAB to analyze such alternative proposals; and (3) the Siting Council to choose the best alternative in granting its approval.

OTHER ELIMINATED ORGANIZATIONS

The bill eliminates the following councils, and transfers their responsibilities to DOE:

1. the Consumer Education Advisory Council, which helps consumers make informed choices in choosing an electric supplier;

2. the Nuclear Energy Advisory Council, which advises the governor, legislature, and municipalities within five miles of a nuclear power plant on issues concerning the operation of these plants and their safety; and

3. the Home Heating Oil Planning Council, which addresses issues dealing with heating oil supply, delivery, and prices.

The bill allows the DOE commissioner to establish a nuclear energy advisory group.

SITING COUNCIL

The Siting Council is responsible for approving the location of various energy and telecommunications facilities, as well hazardous waste facilities and ash landfills. The bill adds the DOE commissioner to the council and reduces the number of public members appointed by the governor from five to four. The bill reduces, from four to three, the number of ad hoc members appointed by the governor who serve on the council when it considers proposals for hazardous waste facilities and ash landfills.

The bill requires the council to consult with DOE before holding its hearings on applications, in addition to the other agencies it is already required to consult with.

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