REPORT ON BILLS FAVORABLY REPORTED BY COMMITTEE

COMMITTEE:

Energy and Technology Committee

TITLE OF BILL:

AN ACT CONCERNING ELECTRIC RESTRUCTURING.

SPONSORS OF BILL:

Energy & Technology Committee

 

REASONS FOR BILL:

To make revisions to Public Act 98-28 to encourage competition in the State of Connecticut, as well as, protecting ratepayers during the transition of the restructuring process.

RESPONSE FROM ADMINISTRATION/AGENCY:

Department of Public Utility Control (DPUC)-Chairman Donald W. Downes (DPUC) believes that this bill is an evolutionary development in the Restructuring process as it represents the hard work of the Energy & Technology Committee's working group. It is the continuation of the transition that started with Public Act 98-28 and introduces competition to our state at a manageable pace. This bill contains the most comprehensive set of solutions devised. The bill addresses employee protection, supplier requirements, customer acquisition, customer education, environment issues and price. The DPUC believes that we have already seen substantial benefits from Restructuring and it is now time to consolidate those benefits and to build on them. Restructuring will take time to develop. This bill will carry Connecticut through the next several years.

Office of Consumer Counsel (OCC)-The Honorable Mary J. Healey, Consumer Counsel (OCC) believes that the corrections made to Public Act 98-28 does not affect the Standard Offer itself. This bill also attempts to eliminate certain barriers to electric suppliers, seeks a balance between environmental and business needs, recognizes the differing needs and means of electric customers, responds to the need to help the market transition to a more competitive environment through incentives for customers to switch, addresses the price volatility issues post 2003 and sets targets and deadlines for the continuing education of electric consumers in preparation for the end of Standard Offer. There are aspects of this bill that merit discussion, however, The OCC supports this bill and is willing to lend their support and commitment.

Office of the Attorney General-The Attorney General Richard Blumenthal (AG) concurs with the provisions in this bill, which requires the securing of bids for supplying electricity to default customers after the expiration of the standard offer. This bid process has been used successfully in the standard offer to purchase low cost electricity. The AG also concurs with the consumer education provisions of this bill. The AG's office is concerned with the proposed increase of generation rates through a procurement fee. The AG believes this measure is nothing more than a penalty for consumers who do not choose an electric supplier by the end of standard offer. An additional year or two of the standard offer to ensure that customers are treated fairly under the electric deregulation act.

NATURE AND SOURCES OF SUPPORT:

Eastern Connecticut State University Institute for Sustainable Energy-Joel M. Rinebold, Executive Director (ECSU Institute for Sustainable Energy) supports the compliance of renewable portfolio standards by electric distribution companies; the distribution and dissemination of information regarding electric suppliers with information that includes identification of renewable energy sources; enforcement of renewable portfolio standards; the provisions that the DPUC investigate the standardization of interconnection protocols and the provisions that will allow the DPUC to conduct a study to encourage conservation and use of time-of-day metering or seasonal rates. The Institute pledges its availability to work with the Committee.

Connecticut Clean Energy Fund (CEF)-Supports the majority of the bill such as extending the RPS to the standard offer and default service, allowing clean distributed generation to count toward the RPS and strengthening the language relating to tradable renewable credit programs. The only concern the CEF has is with the language relating to low emission distributed generation, which needs clarification. Class I renewable energy sources should only include low emission distributed generation if the distributed generation is generated from a clean and/or renewable energy source.

Connecticut Business & Industry Association (CBIA)-Joseph F. Brennan, CBIA VP of Legislative Affairs strongly supports this bill. CBIA believes the state energy policy should recognize and support conservation and load management efforts as well as the development and deployment of alternative energy technologies; adequate generation capacity and necessary upgrades to our transmission infrastructure for both electricity and natural gas; and a vibrant competitive marketplace for both electricity and natural gas.

Fuel Cell Energy, INC.; UTC Fuel Cells; Proton Energy Systems, INC.-The three companies would like to offer the following comments on several of the provisions that affect our industry. "To enable the development of a robust national market for distributed resources, there needs to be a national uniform technical interconnection standard and simplified contractual and other interconnection requirements at the state level. This framework would help minimize engineering and design costs, streamline the installation and operation of distributed systems, and increase safety by promoting the use of simpler more reliable protective relaying systems.

Connecticut Small Power Producers Association (CSPPA)-Duncan S. Broatch, Chair (CSPPA) commends the committee on this piece of legislation. CSPPA would like to request the addition of "Hydropower" to the list of eligible Class I renewable energy sources, which would promote zero air emissions and is the most popular and efficient technology in CT and the US.

Envirocycle, LLC. -J. Scott Guilmartin (Partner of Envirocycle) supports this bill. He would like to ask if the committee would not postpone the implementation dates for the Renewable Portfolio Standard since we have relied on the existing dates and it is likely that sufficient class 1 will exist to meet them. He would also like to note that the DPUC may waive compliance for up to two years if sufficient supplies are not available.

Connecticut Renewable Energy, LLC-Jerry Lynch (Managing Member) gave testimony in support of this bill, in particular, for the support of the RPS applying to the standard offer. He strongly recommends that the committee not postpone the implementation dates for the RPS. He would like to further propose that any payments made in addition to or in lieu of a penalty for failing to meet the standards should only be allocated to the Renewable Energy Investment Fund. This will ensure that such payments are used to encourage the development of renewable energy projects and enhance the market for renewable energy development in Connecticut.

Environment Northeast-Dan Sosland (Executive Director) supports this legislation because of the competitive market provisions on the procurement of generation services, which achieves a careful balance of protecting consumer interests while supporting the development of a robust competitive market for electricity. The RPS section of this bill will expand the ability of suppliers in Connecticut to provide renewable power while supporting clean energy in states that transport pollutants to Connecticut's air shed. They supports adding clean distributed generation to qualify for the RPS, however, the current language in the bill could allow fossil fuel generation technology to qualify for the RPS which they strongly oppose. Regarding the Energy Conservation and the ECMB portion of the bill, they appreciate efforts to strengthen the current program development and review process but feel some clarification is needed and submitted proposed changes.

Connecticut Energy Cooperative-Lawrence G. Union, Jr. (CEO) gave testimony in support of the proposed structure for "default" service in Connecticut. It is his opinion that this bill represents a good compromise of providing a safety net for low-income consumers while at the same time providing an incentive for other to participate in the competitive market. The request was made for the committee to consider some form of customer assignment and proposed changes were submitted.

Northeast Utilities System (NU/CL&P)-Lisa J. Thibdaue (VP of Rates, Regulatory Affairs & Compliance) recognizes that the State of Connecticut is at the mid-point of the four-year Standard Offer period. CL&P believes that several minor modifications to the bill are necessary to provide a solid foundation for mid-term corrections. A better approach is needed for the utilities and the DPUC to agree on a plan that utilizes (on an ongoing basis) the money collected from its customers for purposes defined in the legislation or approved by the DPUC. CL& P is concerned that the bill seems to contemplate one fund for both CL&P and UI, which would set-up a situation where CL&P customer money could or would be used to support UI customer interests. The procurement fee is a good idea but needs to assess all of the customers (not just residential). If CL&P is not allowed to retain a portion of the procurement fee, then they should be relieved of any obligation to provide any type of generation service-default, back up or supplier of last resort. They also support the concept of paying a credit or rebate to those customers who switch to a competitive supplier. The level of the credit should be established by the DPUC and could be modified from time to time depending on its effectiveness. CL&P looks forward to work with the committee and the DPUC to continue the work that has already begun.

United Illuminating Company-Dennis E. Hrabchak (Vice President-Regulatory Policy) testified regarding the importance of this bill. The goals of 98-28 were to reduce customer prices, separate generation from the electric distribution companies and to promote the competitive generation marketplace which have been successful. UI divested its generation assets and is focusing on its core business...transmission and distribution. As a result, UI has no economic stake in whether customers purchase generation services from UI or from an electric supplier. UI supports the basic premise of this (HB 5428) to get ready to move beyond the standard offer to the next phase of restructuring in 2004 with new pricing mechanisms and means of encouraging customers to select electric suppliers. UI did submit technical changes in their proposed language.

NATURE AND SOURCES OF OPPOSITION:

Connecticut Conference of Municipalities (CCM)-CCM would like for clarification in Section 4 of this bill to provide that municipalities clearly have the ability to utilize the default service price if that is in the best interest of their property taxpayers.

Connecticut Legal Services, INC.-Shirley Bergert submitted several recommendations for this bill. She believes that if the DPUC is authorized to adopt regulations regarding customer switching, and we do not agree this is appropriate, such regulations should be limited by statute to ensure they are not used to create new liability for non-contracting parties or to condition or limit options of parties who seek to contract for service based on liability incurred by others, and to protect consumers from abusive use of credit reporting to force non-liable consumers to assume the bills of others.

 

Kellie M. Guilbert, Clerk

March 13, 2002

 

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