You asked for a section by section summary of SB 1374, An Act Concerning Electricity Procurement and Energy Efficiency.

SECTION 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 customers who do not choose a competitive supplier. By law, the electric companies must submit a procurement plan to the Department of Public Utility Control (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 electricity 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 request for proposal 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 set standard service rates annually by combining the costs of the arrangements undertaken under the procurement plan. The rates must 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 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 to help 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 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 ten 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 upon passage)

SECTION 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, over the short term and long term, the state's electricity energy resources, 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.

(Effective upon passage)

SECTION 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. These clauses 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. Similarly, a gas company would under-recover its fixed costs in a warm winter, because it would sell less than had been projected.

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 July 1, 2007)

SECTIONS 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 non-profit 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. By January 1, 2008, DPUC must implement the plan. The plan must include coordinated marketing activities and outreach strategies, including 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.

Real Time Energy Report

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 real-time 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 provide estimates of 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.

Alert System

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

(Effective July 1, 2007)

SECTION 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 the statewide compact fluorescent light (CFL) bulbs fundraiser described below: 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 Department of Education and ECMB, must develop and implement a statewide fundraiser for all elementary and secondary schools, in which students would 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 July 1, 2007)

SECTION 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 it is a peak, shoulder, or off-peak period. Large customers must participate in this three tier system and residential customers can choose to participate in this system.

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, applicable to high-demand peak days, for customers choosing to participate; (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 July 1, 2007)

SECTIONS 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 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 things. DPUC must consult with the departments of Environmental Protection (DEP) and Public Works 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 July 1, 2007)

SECTION 12: REPLACEMENT FURNACE GRANT 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 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 July 1, 2007)

SECTION 13: ALLOCATION 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 July 1, 2007)

SECTION 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-funded renovation projects costing the state at least $ 2 million.

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

(Effective January 1, 2008)

SECTIONS 15, 16: TAX EXEMPTIONS FOR EFFICIENT VEHICLES

The bill establishes, starting January 1, 2008, a local option property tax exemption for hybrid vehicles and vehicles 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 January 1, 2008)

SECTIONS 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) in one to four-unit residential buildings. The bill instead 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 October 1, 2007)

SECTION 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 July 1, 2007)

SECTION 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. The bill requires all of the 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 requires the utilities and the participating fuel oil dealers to coordinate their promotions of the program.

(Effective upon passage)

SECTION 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 October 1, 2007)

SECTION 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 roofs projects from the interest rate reduction.

(Effective upon passage)

SECTION 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. 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 built on or after January 1, 2010. The requirements to 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.

(Effective October 1, 2007)

SECTION 24: LOW INTEREST ENERGY EFFICIENCY LOANS

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

(Effective upon passage)

SECTION 25: APPROPRIATIONS

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

(Effective July 1, 2007)

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