Connecticut Seal

General Assembly

 

Raised Bill No. 5783

February Session, 2008

 

LCO No. 2706

 

*02706_______ET_*

Referred to Committee on Energy and Technology

 

Introduced by:

 

(ET)

 

AN ACT CONCERNING ELECTRICITY MARKET INCENTIVE REBATES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective from passage) (a) On or before July 1, 2008, and in subsequent calendar years as necessary pursuant to subsection (d) of this section, the Department of Public Utility Control shall, through a contested case proceeding, determine the cost of service, including a reasonable rate of return on equity, of each power generation plant in the state that uses uranium fuel or coal to produce all or part of its electric output. The department shall conduct a separate contested case proceeding for each such power generation plant. Each such power generation plant shall be entitled to, but not required to, participate in the investigative proceeding related to its cost of service and in the absence of such participation, the department shall develop the cost of service using reasonable estimates.

(b) Not later than ninety days after a decision by the department in a contested case proceeding pursuant to subsection (a) of this section regarding a power generation plant, the electric distribution company for the territory in which the power generation plant is located shall offer to enter into a contract with the power generation plant of a term of between five and fifteen years. The compensation to the power generation plant under such contract shall reflect the cost of service determination, including a reasonable rate of return, made by the department in the contested case proceeding for the first year of the contract and adjusted each year in an annual retail generation rate contested case to reflect the prudently incurred costs of such power generation plant, including, but not limited to, capital costs, operation and maintenance expenses, depreciation, fuel costs, taxes and other governmental charges, emissions allowances and a reasonable rate of return on equity. A power generation plant may also seek more frequent review by the department if compensation under the contract becomes so low that it jeopardizes continued operation of the plant. A person operating a power generation plant under contract pursuant to this section shall bid the unit into all applicable regional independent system operator markets, including the energy market, capacity market or forward reserve market, using cost-of-service principles and pursuant to guidelines established by the department each year in the annual retail generation rate case pursuant to this section.

(c) The costs and administrative costs of any contracts described in this section shall be recovered from ratepayers through nonbypassable federally mandated congestion charges or other nonbypassable charges.

(d) If a power generation plant declines to enter into a contract with an electric distribution company approved by the department pursuant to subsection (b) of this section, such power generation plant shall be subject to an annual market incentive recovery charge. Each calendar year, the department shall determine the market incentive recovery charge, which shall be the entire amount of the positive difference between (1) what such plant has earned in the calendar year from its power generation operations, including payments received under the regional independent system operator markets and pursuant to bilateral contracts, and (2) the plant's cost of service, including a reasonable rate of return on equity, as determined by the department each calendar year pursuant to subsection (a) of this section. The market incentive recovery charge shall be returned to customers through a credit to nonbypassable federally mandated congestion charges or another nonbypassable charge approved by the department. Such credit shall be in the form of a rebate on customers' monthly electric bills. The department shall determine the market incentive recovery charge for each power generation plant in a contested case in which the power generation plant owner is entitled to, but not required to, participate. If the power generation plant owner does not participate in its market incentive recovery charge proceeding or does not provide information to the department necessary for a determination of the charge, the department shall derive the market incentive recovery charge using reasonable estimates.

This act shall take effect as follows and shall amend the following sections:

Section 1

from passage

New section

Statement of Purpose:

To provide a rebate to the state's electric customers.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]