You asked for a section-by-section summary of SB 1373, An Act Concerning Electric Rate Relief.

SECTIONS 1, 2: SALE OF TRANSMISSION LINES

The bill allows an electric company to sell certain transmission lines to other electric company, a municipal electric utility, or the Connecticut Municipal Electric Energy Cooperative (CMEEC). The eligible lines are (1) new or modified lines that operate at 345 kilovolts or more and (2) other transmission lines that provide local service.

Each electric company that sells transmission lines must submit a transfer plan to the Department of Public Utility Control (DPUC). In the case of existing lines, or lines that will be placed in the company's rate base by January 1, 2009, the plan must be submitted by September 30, 2007. For other lines, the plan must be submitted at least 90 days before the construction begins, or at least 90 days before it begins commercial operations if the line is already under construction. The plan must provide for the transfer of the line at its net book value (its capital cost). The plan must include terms that will not harm the customers of the selling company.

DPUC must hold a hearing on the plan and approve or modify it. In the case of plans submitted by the September 30, 2007 deadline, DPUC must issue its final order in time for the transfer to be made by April 1, 2009. In the case of other lines, DPUC must issue its order into before the line goes into the company's rate base. The review conducted under the bill takes the place of a proceeding DPUC must normally hold when a utility seeks to sell its assets.

The purchasing utility must make its payments to the selling company from 30 to 120 days after DPUC issues its final order. If the purchasing utility does not make the payment in this period, the selling company's obligation to transfer the line lapses permanently.

Even though the ownership of the lines changes hands, the selling company or Independent System Operator-New England (ISO-NE), the entity that administers the regional wholesale electric market must retain control over and operational responsibility for the lines.

DPUC must recognize the sales proceeds as a “regulatory asset” of the selling company. As a result, the company will continue to earn a rate of return on its equity investment in the line. By November 1, 2007, DPUC must hold a contested case to determine the rate of return and depreciation life for the transferred lines. The rate of return can be no less than the rate the company would have earned had it continued to own the line. The company is allowed to recover the costs of its investment through its rates over an unspecified period, although presumably the payment from the purchasing utility covers this investment.

The selling company can use the money it receives on specified electric efficiency programs, as described in section 9.

(Effective upon passage, definitions effective July 1, 2007)

SECTION 2: NEW ENERGY EFFICIENCY INITIATIVES AND ADVANCED METERING

Energy Efficiency

The bill requires the Energy Conservation Management Board (ECMB) to develop a “Connecticut energy excellence plan,” which must:

1. describe in detail any existing Connecticut higher educational energy efficiency resources,

2. quantify the role that energy efficiency programs can play in creating a more efficient and competitive business climate,

3. identify measures that can be employed and investments in research that can be made to make Connecticut a national leader in energy efficiency, and

4. detail how energy efficiency efforts can be expanded to reduce the state's peak electric demand by at least 10% by 2010.

Advanced Metering

The bill requires each electric company to submit a plan to DPUC by July 1, 2007 to deploy a system to support advanced metering. The system must support net metering, under which electric companies are currently required to pay residential customers for the power the customers produce from renewable resources. The system must also be capable of tracking hourly changes in a customer's use of power to support time of use pricing. The metering system must be able measure changes in consumption and peak demand on a 15-minute basis. It also must allow the customer or the competitive supplier he has chosen to access the data electronically.

The plan must allow for the deployment of a network capable of supporting advanced metering of 75% of all of the electric company's customers by January 1, 2008 and the rest by January 1, 2009. It must provide for the installation of an advanced meter within 60 days of (1) the customer requesting one or (2) the customer choosing a competitive supplier who requests an advanced meter for the customer. For other customers, the plan must provide for the installation of advanced meters to comply with existing DPUC orders with regard to time of use rates. DPUC must approve the plans by January 1, 2008.

The companies must pay for the cost of the system, including the meters and supporting network, and recover the costs through their rates. They can continue to recover the costs of the existing meters through rates.

DPUC must allocate half of the money restored to the Conservation Fund under section 25 to pay for this initiative.

(Effective upon passage)

SECTION 3: TIME OF USE RATES

The bill requires competitive suppliers and aggregators to offer time of use rates, including hourly and real-time options, to all of their customers by January 1, 2008. Aggregators gather customers together to make them more attractive to suppliers.

(Effective July 1, 2007)

SECTIONS 4, 5: RETAIL SUPPLIER CHOICE AND REFERRAL PROGRAM

Bill Inserts Regarding Competitive Suppliers

The bill establishes several measures to make it easier for an electric customer to choose a competitive supplier. It allows suppliers to provide information on their introductory offers to small and medium size standard service customers as an insert on the customer's electric bill. For participating suppliers, the introductory offer must compare its cost of power to the cost under standard service. Each participating supplier must offer at least one time of use rate. It can offer fixed-priced and “green” options. Participating suppliers must allow customers to enroll by marking the appropriate box on the bill insert, by telephone, or through a DPUC website.

Referral Programs

The bill requires electric companies, at DPUC's direction, to offer customers information on suppliers' introductory offers when the customer starts a new service or moves his home or business. If the customer chooses a specific supplier, he must be enrolled with that supplier. If the customer does not choose a specific supplier, one will be chosen for him on a rotating basis.

In addition, whenever a customer calls the electric company, he must be offered the option of learning about his ability to choose a supplier and be told that they have the option to save money by choosing a supplier (although the bill does not require participating suppliers to offer a discount off of the standard service rate). If the customer expresses an interest, he must be transferred to a customer service representative and told of the available introductory offers. If the customer chooses a specific supplier, he must be enrolled with that supplier.

In all three cases, after the introductory offer ends, the customer can return to standard service or choose another supplier. If the customer takes no action, he stays with the supplier who provided the introductory offer. Under the first provision, the customer must provide 30 days written notice before switching to a new supplier or going back to standard service.

Buying Pool

The bill requires DPUC to establish a voluntary buying pool for standard service customers. DPUC must promote the pool through advertising and marketing. The pool must be created from customers who choose to participate by (1) marking a check box on their electric bills, (2) calling a toll-free number, (3) using a DPUC website, or (4) responding to a non-utility mailing approved by DPUC. It appears that the buying pool operates independently from the referral programs described above.

Enrollment in the initial pool continues for a period specified by DPUC, not to exceed 90 days from the time it announces the pool's creation. Once the pool is closed, DPUC must solicit bids from competitive suppliers to serve the customers in the pool. DPUC can choose one or more bidders in an uncontested proceeding based on their price compared to the price of standard service, the bidder's financial and managerial strength, and its ability to adhere to current retail choice rules. If DPUC finds that none of the bids are acceptable, it must seek new bids within 120 days after rejecting the initial bids. Customers who chose to enter the pool stay in it until DPUC chooses the winning bidders. If DPUC does not choose winning bidders within one year after the initial solicitation for bids, the pool is dissolved.

The winning bidders must provide service to members of the pool for one year. During this time members can, without penalty, choose another supplier or another service offered by their current supplier. After the year ends, the customer can return to standard service or choose another supplier. If the customer takes no action, he stays with the supplier who served the pool.

DPUC can establish subsequent pools, although not in the 30 days after it selects winning bidders in the initial pool. To the extent practicable, customers already served by competitive suppliers must not be solicited to join the new pool.

Electric Company Cost Recovery and Incentives

The bill entitles the electric companies to recover all of the costs they prudently incur in implementing the initiatives described above. It requires DPUC to establish performance-based financial incentives for the companies in operating the programs.

Conservation Programs for Participating Customers

The bill requires DPUC, in consultation with ECMB, to implement cost-effective conservation programs for customers participating in the choice and referral programs described above. The conservation programs may include (1) the use of coupons or vouchers to encourage customers to buy energy-efficient lighting and appliances and (2) promotion of advanced metering systems. Participating suppliers and the electric companies must support the conservation programs, although the bill does not specify how or how the conservation programs would be funded.

Additional Provisions

The bill allows electric companies to provide enhanced billing and related services at DPUC-set rates, which cannot exceed the companies' costs. However, DPUC can establish performance-based financial incentives for the electric companies in connection with these services.

The bill requires each electric company to implement a program in which it buys the accounts receivable from competitive suppliers, with full and timely cost recovery by the electric company under DPUC-set terms and conditions.

The bill requires electric companies to provide certain customer information to a supplier upon request, unless the customer objects. The information includes the account name and number and consumption date for the last 12 months, among other things.

(Effective January 1, 2008)

SECTIONS 4(Q), 6: SWITCHING SUPPLIERS, LAST RESORT SERVICE

The bill allows a customer to switch at any time from a supplier to standard service or last resort service (which is provided to large customers). It allows a customer to switch from an electric company to a supplier at any time without paying a penalty. It repeals a provision that prohibited customers who had received last resort service from returning

to this service unless they agree to stay on this service for at least one year. It requires electric companies to procure power for last resort service at least once per quarter.

(Effective July 1, 2007 for the repeal, January 1, 2008 for the remaining provisions)

SECTION 7: ENERGY SERVICES FOR STATE FACILITIES

The bill requires state agencies and institutions to participate in an integrated energy purchasing and efficiency program and gives DPUC oversight of it.

The program must provide for:

1. consolidated electricity purchases,

2. coordinated deployment of innovative conservation and load management and energy efficiency standards, and

3. coordination and joint management and use of state-owned or operated electric infrastructure used to achieve the lowest possible total energy costs for the state.

Each state agency that implements energy conservation and load management measures under the program may reallocate 50% of the annual net savings in electric costs to its budget for the next fiscal year.

Under the bill, DPUC may contract with a third party, including CMEEC or a project that it owns or controls, to provide all or some of state facility electric services (i. e. , power, conservation, and related services) for up to five years. The contractor must possess the requisite managerial, technical, and financial capacity that DPUC determines necessary to perform the contract. If CMEEC is chosen as the contractor, it does not thereby come under DPUC jurisdiction. The contract may be renewed annually.

The contract must allow for the purchase of electric generation services on a consolidated basis across agencies. It must also require the contractor to:

1. provide electric generation services that he procured at wholesale and credited against the state facility load;

2. use energy conservation and load management services, maximize the use of state facility electric services in combination or coordination with existing or new distributed resources that a state agency owns or operates;

3. purchase or hedge fuels used by any distributed resources owned or operated by any state agency; and

4. measure and report annual electric costs and benefits associated with overall electric procurement strategies for the state and each state agency's or institution's implementation of energy conservation and load management measures.

DPUC, in cooperation with the contractor, must determine (1) how to reduce federally mandated congestion charges by maximizing the value of existing and new load curtailment capability in combination or coordination with existing or new distributed resources owned or operated by any state agency, and (2) feasible options for establishing the most desirable mechanism to monitor electric load levels and hourly energy market prices and initiating curtailment requests to achieve the bill's objectives.

DPUC must order electric companies to (1) at least partially implement, by January 1, 2008, any measures DPUC or the contractor considers appropriate, including the installation of necessary smart metering and communication equipment and (2) consolidate all of the state facilities in their service areas into a single consolidated account so that transmission and distribution services are billed as a single coincident peak demand. If CMEEC is chosen as the contractor, the electric companies must incorporate the state facilities' load into any existing agreement for transmission or related services and under the same terms.

The companies may recover implementation costs through their rates.

(EFFECTIVE UPON PASSAGE)

SECTIONS 8-12: CONNECTICUT ELECTRIC EFFICIENCY PARTNERSHIP PROGRAM

The bill requires DPUC, by July 1, 2007 (the section's effective date) to issue a request for proposals (RFP) from companies formed to provide investments in enhanced demand side initiatives under DPUC-approved terms and conditions. The bill refers to these companies as Connecticut electric efficiency partners. It subjects the partners to DPUC orders and civil penalties if they disobey them. Electric companies and municipal electric utilities can own up to 49% of a partner's equity, but cannot exert direct control over its operations or budget. DPUC must set a goal in the RFP of $ 100 million in investments in 2008, with the goal increasing by $ 50 million in each of the next four years.

The initiatives to be sought in the RFP are:

1. load management measures that can be dispatched, i. e. , centrally controlled;

2. load shifting technologies;

3. dispatchable emergency generation;

4. renewable energy generation; and

5. energy efficient capital equipment.

The RFP must solicit prospective partners to design, develop, own, operate, and maintain these initiatives. DPUC must encourage proposals for investments in class I renewable resources, such as solar technologies and fuel cells. But DPUC must ensure that no one technology accounts for a significant proportion of the total investments in class I resources approved under these provision. Any proposal must describe in detail the initiative to be deployed, its target market, the cost to ratepayers, and its projected load-reduction benefits.

DPUC must review and select cost-effective proposals that target activities to areas not adequately addressed (presumably by existing programs) and offer lasting beneficial changes in the market. When DPUC evaluates proposals, it must determine whether a company seeking to become a partner has experience in implementing demand side management programs and has demonstrated managerial competence. DPUC can only approve proposals that benefit the system as a whole and provide benefits to participating customers that exceed the net costs to ratepayers from recovering the initiatives' of these costs in rates during the life of the contract between the partner and the electric company.

DPUC must evaluate the proposals and choose one or more partners by November 1, 2007. (It may issue a second RFP by July 1, 2008. ) Once it has selected the partners, each one must enter into a contract with the electric companies. The contract must include effectiveness measures, performance milestones, and provisions allowing DPUC or its consultants to audit the partner's books and records and subpoena witnesses and records. The contract must be for at least five years and renewable at DPUC's option (although DPUC is not a party to the contract).

DPUC-approved proposals can include an authorization for an electric company to invest in the partner's initiatives, including discounted financing programs. But electric companies can only do this if the projected system benefits exceed the projected subsidy costs to ratepayers. The costs of the investments by the electric company and the partner are recovered from ratepayers at a return equal to that allowed on transmission line investments. DPUC may also allow electric companies to earn a bonus rate of return, based on the overall net system benefit created from initiatives. However, section 11 provides that the costs of the electric company's investments are recovered in the systems benefit charge on electric bills.

A partner providing discounted financing to end users must, after receiving DPUC approval, enter into an agreement with an electric company for it to provide billing services with respect to the payments due to the partner from the person receiving the financing. The electric company is entitled to recover all of its reasonable implementation costs.

An electric company, through a partner, may propose to DPUC to create a capital-intensive enhanced demand side management financing initiative. DPUC must review the applications to ensure that the projects (1) do not target areas adequately addressed in the marketplace; (2) provide significant system benefits; and (3) offer lasting and beneficial changes in the market. After DPUC review and approval, the company may apply to DPUC for approval to include such projects in its rate base. DPUC's approval may allow the company to defer recovery of such investment to a future rate case.

(Effective July 1, 2007)

SECTIONS 13, 14: PUBLIC EDUCATION PROGRAMS

The bill requires DPUC, in consultation with the Office of Consumer Counsel, to implement an outreach program to inform electric ratepayers about the various programs and options available to them. These include: the choice of alternative electric suppliers, the range of energy efficiency products and options available, time of use rates, and programs that encourage customer-side distributed generation (technologies such as microturbines or fuel cells on the customer's premises). DPUC may retain a consultant to implement the program. (The authorization for DPUC to retain consultants for a prior education program expired December 31, 2005. ) The reasonable expenses for retaining the consultant and implementing the program are recovered from the systems benefits charge on electric bills.

(Effective July 1, 2007)

SECTION 15: DPUC/DEP MEMORANDUM OF UNDERSTANDING ON EMERGENCY GENERATORS

The bill requires DPUC and the Department of Environmental Protection (DEP) to enter into a memorandum of understanding by September 1, 2007. The memorandum must allow for the timely permitting and operation of emergency electric generation resources so that they can participate in the locational forward reserve market (this wholesale electric market will provide incentives for dispatchable generation). The memorandum must also cover (1) the installation of pollution control equipment or measures on these generators and (2) the timely coordination of such installation and any necessary regulatory reviews and approvals. The bill specifies the objectives of the memorandum, which include the maximization of the savings to electric ratepayers while preserving and improving the environment. The agencies must include in the memorandum, among other things, an estimate of the emissions reductions caused by a decreased reliance on traditional power plants in meeting the state's electric reliability needs. The agencies must report to the Energy and Technology and Environment committees on the actions and measures they have taken under the memorandum by September 1, 2007 and whenever the memorandum is modified.

(Effective July 1, 2007)

SECTION 16: DEP PERMITTING

The bill requires DEP to issue a final decision no later than 90 days following the submission of a complete and accurate application for certain permit applications filed with DEP between May 1, 2007 and January 1, 2010. The provision applies to permits for installing emergency generators and distributed resources that will be offered in the locational forward reserve market. Any such permit must run for at least three years.

By August 1, 2007, DEP must notify DPUC of the acceptable pollution control equipment or measures applicable to the various types of emergency electric generation resources that may participate in the locational forward reserve market.

(Effective upon passage)

SECTION 17: PROCURING POWER FOR STANDARD SERVICE

The bill requires each electric company to file with DPUC a new plan for procuring power contracts for standard service by June 1, 2007. Each plan must address: (1) the potential benefits of various types of contracts such as full requirements, unit specific, and block power purchases; (2) how the plan uses all available types of contracts to produce just, reasonable and reasonably stable retail rates; (3) the potential benefits of various term lengths for service contracts and how the plan uses all available term lengths for service contracts to create the most cost-effective portfolio; (4) the potential benefits of procuring contracts separately for particular times of use or seasons and how the plan uses these options to create the most cost-effective portfolio; (5) how the timing of contract procurement affects electric prices and how the plan addresses and mitigates any adverse price impacts related to the timing of procurements; (6) the potential benefits of procuring contracts separately for different customer classes and how the plan uses these options to create the most cost-effective portfolio; (7) how the plan balances the competing needs of transparency and flexibility in the process of procuring contracts; and (8) the need for a third party to acquire and administer the most cost-effective portfolio and the potential net benefit of such a entity. The plan must also address the relationship between any capacity contracts obtained under current law and any existing contracts between non-utility generators and electric companies and the service contracts obtained under the proposed plan and how the plan will make cost-effective use of any such resources. Each plan must address each requirement, identify those provisions of the plan that address each requirement, and demonstrate how the plan will meet each requirement. DPUC must approve or modify each plan by October 1, 2007. The bill does not repeal the existing law governing the electric companies' procurement of power for standard service, which has substantially different requirements.

The bill requires DPUC, on a quarterly basis, to determine the percentage of load served by each competitive supplier in each electric company's service area. Within two months before the delivery date of any standard service contract, DPUC must make available to all competitive suppliers the output of standard service contracts entered into by the electric companies. The quantity of output available to each must be based upon each supplier's share of load in each service area. This provision raises a number of contract questions. The bill also does not specifically require the suppliers to pay the electric companies for the power.

(Effective upon passage)

SECTION 18: POWER PLANT INTERCONNECTION STANDARDS

By law, electric utilities (including municipal electric utilities) must interconnect with non-utility generators. The bill requires DPUC to adopt regulations on interconnection by January 1, 2008 that meet or exceed national standards. (Interconnection standards deal with such things as the transformers that connect generating facilities with transmission lines). If DPUC has not adopted these regulations by October 1, 2008, each of the utilities and the municipal electric energy cooperative must meet New Jersey's interconnection standards.

(Effective October 1, 2007)

SECTION 19: 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 customers with generation capacity up to two megawatts, provides for payments to customers who generate more power than they use in a given billing period, and makes related changes.

(Effective October 1, 2007)

SECTION 20: PROPERTY TAX EXEMPTIONS FOR RENEWABLE RESOURCES

The bill requires, rather than allows, municipalities to exempt class I renewable resources (such as photovoltaic systems) and hydropower facilities at one- to four-unit dwellings from the property tax. It also requires them to exempt any passive or active solar water or space heating system and geothermal energy resources from the tax, regardless of location.

(Effective October 1, 2007)

SECTION 21: SOLAR CONTRACTOR LICENSING

The bill exempts from Department of Consumer Protection licensure requirements employees and subcontractors of licensed solar contractors engaged in solar technology installations.

(Effective upon passage)

SECTION 22: SALES TAX EXEMPTIONS

The bill exempts from the sales tax:

1. sales of active and passive solar energy systems, geothermal resource systems, and related installation services and

2. sales of ice storage systems used for cooling, including related equipment and installation services, for customers who are billed on time of use rates.

(Effective July 1, 2007)

SECTIONS 23, 24: RESTORING UTILITY CONSERVATION FUNDS AND THE CLEAN ENERGY FUND

In recent years, the legislature has diverted part of the revenues that would have otherwise gone into the electric companies' conservation funds and the state's Clean Energy Fund and transferred it into the General Fund. To reduce the impact of the transfer on the conservation and clean energy funds, it authorized the issuance of bonds backed by future revenue from the conservation and renewable energy charges on electric bills.

The bill instead makes these bonds outstanding state indebtedness. It appropriates $ 95 million from the FY 07 budget to defease or buy back the bonds that mature after December 30, 2007, or a combination of these measures. Seventy-five percent of the revenues freed up as a result of this measure (net of the state's administrative costs) would go back into the conservation funds and 25% would go back into the Clean Energy Fund.

(Effective upon passage)

SEC. 25: BONDING FOR RENEWABLE ENERGY PROJECTS IN STATE BUILDINGS

The bill authorizes up to $ 30 million in bonds for the Connecticut Innovations, Inc, which administers the Clean Energy Fund, to fund the net project costs of renewable energy projects in state buildings. To be eligible, the building must be certified in the LEED program or in the process of being certified.

(Effective July 1, 2007)

SECTION 26: DPUC STUDY OF BASELOAD GENERATION

The bill requires DPUC, by January 1, 2008, to evaluate the state's need for baseload generation (power plants that operate most of the time throughout the year). The evaluation must include an assessment of the least cost per kilowatt-hour generation and delivery options for consumers. DPUC can retain a consultant to help it prepare the evaluation. It must report its findings to the Energy and Technology Committee.

(Effective upon passage)

SECTIONS 27, 28: CLASS III RENEWABLE RESOURCES

By law, electric companies and suppliers must get part of their supply from class III resources as part of the RPS. The bill makes several changes regarding these resources. Under current law, they are (1) electricity produced by systems that produce heat and power that are developed at commercial and industrial facilities and (2) electricity savings from conservation and load management programs at these facilities that began on or after January 1, 2006. The bill expands class III resources to include combined heat and power (cogeneration) systems that increase, by at least 10%, the operating efficiency baseload generating plants developed on or after January 1, 2006.

Under current law, electric companies and suppliers must get 1% of their power from class III resources this year, 2% starting in 2008, 3% in 2009, and 4% in 2010 and thereafter. The bill increases the requirements in 2008 through 2010 by 1% in each year, and requires that electric companies and suppliers get at least 6% of their power from class III resources in 2011 and thereafter.

(Effective July 1, 2007)

SECTION 29: STANDARD SERVICE AND LAST RESORT SERVICE

The bill reduces, from 500 kilowatts to 350 kilowatts, the maximum demand a customer can have to be eligible for standard service. As a result, customers with a demand of between 350 and 500 kilowatts would be transferred to last resort service.

(Effective July 1, 2007)

SECTION 30: MUNICIPAL UTILITIES AND DISTRIBUTED GENERATION

PA 05-1, June Special Session, established incentives for new distributed generation (e. g. , small power plants using technologies such as microturbines and fuel cells). Currently, the awards are funded by a charge on the bills of electric company customers.

The bill requires municipal electric utilities to contribute a pro rata share of the awards in order for their customers to be eligible for them. DPUC must conduct a contested case to determine the utility's share, which must be proportional to the municipal utilities' share of the total amount of electricity sold in the state. Funding for the remaining portion of the award continues to come from electric company customers, paid in semiannual payments over a period of up to five years.

(Effective July 1, 2007)

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