You asked for a description of the provisions of PA 07-242 that affect renewable energy, particularly solar energy.

SUMMARY

The act has a wide range of provisions that affect renewable energy. It restores part of the money diverted from the Clean Energy Fund. It expands the renewable portfolio standard (which requires that electric companies obtain part of the power they buy from renewable resources) and net metering provisions (which require electric companies to pay retail rates for the power their customers produce from renewable resources). It establishes tax exemptions for renewable energy technologies. It expands the state's “green building” requirements. It establishes three new programs which could be used to support renewable energy technologies.

RENEWABLE ENERGY PROVISIONS OF PA 07-242

Clean Energy Fund

In recent years, the legislature has diverted to the General Fund part of the revenue that would have otherwise gone into the state's Clean Energy Fund (which supports solar and other renewable energy technologies) and the electric companies' conservation funds. To reduce the impact of this transfer on the Clean Energy and conservation funds, the legislature authorized the issuance of bonds backed by future revenue from the renewable energy and conservation charges on electric bills.

PA 07-242 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 revenue 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. The governor vetoed these provisions, but the budget reinstated them, with an $ 85 million appropriation.

PA 07-242 specifically allows the Clean Energy Fund to (1) invest in solar thermal and solar photovoltaic energy and (2) be used for demonstration projects for advanced technologies that reduce energy use from traditional sources. It also allows the fund to invest in (1) alternative fuel used for electric generation, including ethanol, biodiesel, or other fuel, produced in Connecticut and derived from agricultural produce, food waste, or waste vegetable oil, if the Department of Environmental Protection (DEP) determines that these fuels reduce greenhouse gas emissions and fossil fuel consumption, (2) geothermal energy and (3) hydropower that will meet the low-impact standards of the Low-Impact Hydropower Institute.

Renewable Portfolio Standard

Under prior law, electric companies and suppliers had to obtain at least 3. 5% of their power from solar energy and other class I renewable resources in 2007, 5% in 2008, 6% in 2009, and 7% in 2010 and subsequent years under the state's renewable portfolio standard (RPS). The act increases the RPS for class I resources to 8% starting in 2011. It increases the class I RPS to 9% in 2012, 10% in 2013, 11% in 2014, 12. 5% in 2015, 14% in 2016, 15. 5% in 2017, 17% in 2018, 19. 5% in 2019, and 20% in 2020 and thereafter (by law, in each year the company or supplier must continue to get an additional 3% of its power from class I or class II resources).

The act allows companies and suppliers to meet the standard by buying power from net-metering customers (customers who generate power from class I resources, as described below) as an alternative to the current options. It allows the companies, starting January 1, 2008, to meet the RPS by procuring renewable energy certificates under long-term contracts. These credits are bought and sold on the New England market as one way of complying with renewable portfolio standards in Connecticut and other states. The credits can be sold separately from the power produced by renewable resources.

Net Metering

By law, electric companies and competitive suppliers must give a credit to their customers in one- to four-dwelling unit properties who generate electricity using class I resources or hydropower. The act expands these provisions to cover all customers with generation capacity up to two megawatts. It provides for credits to customers who generate more power than they use in a given billing period, with annual reconciliation in which the customer would be paid for any excess production at the avoided wholesale cost, and makes related changes.

Green Building Standards

The act broadens and increases the state's “green building” requirements as they apply to public sector buildings. By law, state facilities costing $ 5 million or more, funded on or after January 1, 2007 (with limited exceptions for structures such as garages), must meet specified energy and environmental standards. The standard is a silver rating under the Leadership in Energy and Environmental Design (LEED) program or its equivalent. A building can meet these standards through energy efficiency, renewable energy, water conservation, or other types of environmentally-friendly measures.

Starting January 1, 2008, the act eliminates the exceptions. It extends the requirements to the following types of projects with $ 2 million or more of state funding: (1) renovations to state facilities approved and funded on or after January 1, 2008 that cost $ 2 million or more, (2) new school construction projects authorized by the legislature on or after January 1, 2009 that cost $ 5 million or more, and (3) school renovation projects authorized by the legislature on or after this date costing at least $ 2 million. The act increases, by two percentage points, but not more than 100%, the reimbursement rate under the school construction grant program for projects subject to the green building requirements. (PA 07-249 eliminates the funding provisions).

The act also requires the state building inspector and the Codes and Standards Committee to amend the State Building Code to require (1) buildings costing $ 5 million or more built after January 1, 2009 and (2) renovations costing $ 2 million or more starting January 1, 2010 to meet the LEED silver standard or its equivalent. The requirements apply to private and public sector projects, other than residential buildings with up to four units. The act 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.

Tax Exemptions

The act 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 resources and hydropower facilities in one- to four-unit residential buildings. The act requires rather than allows 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.

The act exempts from the sales tax (1) solar electric and space and water heating systems and related equipment and installation services, (2) geothermal systems and related equipment and installation services, and (3) ice storage systems used for cooling and related equipment and installation services for utility customers billed on time-of-use rates.

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

New Programs

Municipal Grant Program. The act requires Connecticut Innovations Inc. , (CII) to establish a municipal renewable energy and efficient energy generation grant program. CII must make grants under the program to municipalities to purchase and operate, for municipal buildings, (1) renewable energy sources, including solar energy, geothermal energy, and fuel cells or other energy-efficient hydrogen-fueled energy or (2) energy-efficient generation sources, including cogeneration units that are at least 65% efficient. CII must give priority to grant applications for disaster relief centers and high schools. Each grant must make the cost of purchasing and operating the generation source competitive with the municipality's current electricity expenses.

By October 1, 2007, CII must develop an application for these grants and can receive grant applications starting on this date. The act authorizes up to $ 50 million in bonding for the program, with the proceeds going into a separate account within the Clean Energy Fund.

Bonding for Renewable Energy in State Buildings. The act authorizes $ 30 million in bonds for CII to fund the net project costs of renewable energy and cogeneration projects in state buildings. To be eligible, the building must be certified in the LEED program or in the process of being certified.

Electric Efficiency Partnership Program. The act requires the Energy Conservation Management Board (ECMB), in consultation with the Clean Energy Fund advisory committee, to evaluate and approve technologies that can be deployed by electric company, energy management companies, and others to reduce electric demand. These technologies can include demand side measures such as conservation, and supply side measures such as renewable generation and emergency generators that can be centrally dispatched. ECMB must file its evaluation with the Department of Public Utility Control (DPUC) which must approve or modify it by October 15, 2007. Also by this date ECMB must file with DPUC an analysis of growth in overall and peak demand. The analysis must evaluate the costs and benefits of these technologies and set funding levels for the partnership program described below.

Starting April 1, 2008, anyone can seek DPUC approval and funding as a partner by showing that it has adequate financial resources, managerial ability, and technical competence. The application must describe the services and DPUC-approved technologies that the partner will buy or provide and the amount of funding it is seeking. In evaluating the application, DPUC must consider the applicant's potential to reduce overall and peak demand. DPUC must determine how much of the cost of an approved application the customer will bear and how much will be funded by ratepayers. DPUC must ensure that approved applications achieve a two-to-one payback ratio. At least 75% of the investment must be spent on the technologies themselves. Starting February 1, 2010, partners can only receive funding if chosen in a request for proposals conducted by DPUC, subject to the same cost-benefit test. No more than $ 60 million in ratepayer funds can go to this program each year.

Project 100

The law requires the electric companies to enter into long-term contracts with generators of Class I resources. The act requires the companies to enter into contracts for 125, rather than 100, megawatts for the period October 1, 2007 to October 1, 2008. It increases this amount to 150 megawatts starting October 1, 2008. By law, the resources must have received funding from the Clean Energy Fund and individual projects must be at least one megawatt in size.

Other Provisions

The act also:

1. requires the Connecticut Municipal Electric Energy Cooperative to develop standards for promoting renewable resources that apply to each municipal electric utility in the state;

2. exempts from municipal debt limits bonds issued for renewable energy, conservation, and other types of energy projects;

3. requires the Office of Policy and Management to develop a strategic plan to improve the management of energy use in state facilities, which must address such things as energy efficiency, distributed generation, and renewable energy initiatives;

4. allows the DEP commissioner to enter lease agreements with private entities, in consultation with affected towns and watershed organizations, to allow the private entities to generate hydroelectricity that meets the standards of the Low Impact Hydropower Institute;

5. requires the electric companies develop a comprehensive annual plan for procuring energy resources, including energy efficiency, conventional and renewable generating resources, cogeneration, and emerging energy technologies; and

6. exempts from Department of Consumer Protection licensure requirements employees of, and contractors employed by, licensed solar contractors engaged in solar technology installations, if they are (1) working under the direction of a licensed solar contractor and (2) performing only specified tasks such as hoisting solar collectors.

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