Connecticut Seal

General Assembly

 

Raised Bill No. 5819

February Session, 2008

 

LCO No. 2793

 

*02793_______ET_*

Referred to Committee on Energy and Technology

 

Introduced by:

 

(ET)

 

AN ACT CONCERNING ENERGY RELIEF AND ASSISTANCE.

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

Section 1. (NEW) (Effective from passage) (a) There is hereby established and created a body politic and corporate, constituting a public instrumentality and political subdivision of the state of Connecticut established and created for the performance of an essential public and governmental function, to be known as the Connecticut Energy Authority. The authority shall not be construed to be a department, institution or agency of the state.

(b) The goals and objectives of such authority shall include, but not be limited to, (1) procure least-cost supply-side and demand-side resources through competitive procurement processes to meet the electricity needs of all retail customers who elect service by said authority; (2) construct and operate generation facilities; and (3) sell electricity at cost to distribution companies and to municipal electric utilities and cooperatives.

(c) The powers of the authority shall be vested in and exercised by a board of directors, which shall consist of seven directors as follows: (1) A representative of the environmental community, (2) the Secretary of the Office of Policy and Management, (3) the Commissioner of Environmental Protection, (4) the Consumer Counsel, (5) a director appointed by the Governor, (6) a director appointed by the president pro tempore of the Senate, and (7) a director appointed by the speaker of the House of Representatives. No director may be a member of the General Assembly. The appointed directors shall serve for terms of four years each and shall have education or expertise in the area of finance or law. Any appointed director who fails to attend three consecutive meetings of the board or who fails to attend fifty per cent of all meetings of the board held during any calendar year shall be deemed to have resigned from the board. Any vacancy occurring other than by expiration of term shall be filled in the same manner as the original appointment for the balance of the unexpired term. At its first meeting, the board shall elect a chairperson.

(d) The chairperson shall, with the approval of the directors, appoint a president of the authority who shall be an employee of the authority and paid a salary prescribed by the directors. The president shall supervise the administrative affairs and technical activities of the authority in accordance with the directives of the board.

(e) Directors may engage in private employment, or in a profession or business, subject to any applicable laws, rules and regulations of the state or federal government regarding official ethics or conflict of interest.

(f) Four directors of the authority shall constitute a quorum for the transaction of any business or the exercise of any power of the authority. For the transaction of any business or the exercise of any power of the authority, and except as otherwise provided in sections 1 to 5, inclusive, of this act, section 11 of this act, sections 16-244b, 16-244d, subsection (c) of section 16-244i, sections 16-245d and 16-245q of the general statutes, as amended by this act, the authority shall have power to act by a majority of the directors present at any meeting at which a quorum is in attendance.

(g) Appointed directors may not designate a representative to perform in their absence their respective duties under sections 1 to 5, inclusive, of this act, section 11 of this act, sections 16-244b, 16-244d, subsection (c) of section 16-244i, sections 16-245d and 16-245q of the general statutes, as amended by this act.

(h) The term "director", as used in this section, shall include such persons so designated as provided in this section and this designation shall be deemed temporary only and shall not affect any applicable civil service or retirement rights of any person so designated.

(i) The authority shall continue as long as it has bonds or other obligations outstanding and until its existence is terminated by law. Upon the termination of the existence of the authority, all its rights and properties shall pass to and be vested in the state of Connecticut.

(j) The directors, members and officers of the authority and any person executing the bonds or notes of the authority shall not be liable personally on such bonds or notes or be subject to any personal liability or accountability by reason of the issuance thereof, nor shall any director, member or officer of the authority be personally liable for damage or injury, not wanton or wilful, caused in the performance of such person's duties and within the scope of such person's employment or appointment as such director, member or officer.

Sec. 2. (NEW) (Effective from passage) On or before January 1, 2009, the Connecticut Energy Authority established pursuant to section 1 of this act shall issue a request for proposals for the purpose of procuring long-term electricity contracts for Connecticut citizens. The authority may, once power is procured, transfer title to such power to the electric distribution companies. The administrative costs of the contracts will be charged to ratepayers on nonbypassable charges.

Sec. 3. (NEW) (Effective from passage) The directors of the Connecticut Energy Authority shall meet at least monthly at the call of the chairperson and may meet more frequently, if necessary and desirable. The first meeting shall be held on or before October 1, 2008. The directors shall maintain at all times minutes of its meetings including the authority's considerations, deliberations, decisions and resolutions, which minutes shall be considered public records. The authority shall maintain all necessary records and data with respect to its operations and shall report annually to the Governor and the General Assembly, upon its operations. Such reports shall include, but not be limited to, a report on the request for proposals, a listing of the contracts entered into for the procurement of electricity; a listing of the outstanding issues of notes and bonds of the authority and the payment status thereof; a budget showing the administrative expenses of the authority; and a report of revenues of the authority from all sources and of the redistribution of any surplus revenues. The authority shall be subject to audit by the Auditors of Public Accounts in accordance with normal auditing practices prescribed for departments, boards, commissions and other agencies of the state.

Sec. 4. (NEW) (Effective from passage) The Connecticut Energy Authority shall make the following information available to the public through the Internet, except for any such information which is not required to be disclosed to the public pursuant to the Freedom of Information Act, as defined in section 1-200 of the general statutes:

(1) The schedule of meetings of the board of directors of the authority and each committee established by said board, not later than seven days after such schedule is established;

(2) Draft minutes of each meeting of the board of directors of the authority and each committee established by said board, not later than seven days after each such meeting is held;

(3) An annual plan of operations, not later than seven days after the plan is promulgated;

(4) Each report that the authority is required to submit to the General Assembly pursuant to the general statutes, not later than seven days after the report is submitted;

(5) Each audit of the authority conducted by the Auditors of Public Accounts, each compliance audit of the authority's activities conducted pursuant to section 1-122 of the general statutes and each audit conducted by an independent auditing firm, not later than seven days after each such audit is received by the board of directors of the authority; and

(6) A report on any contract between the authority and a person, other than a director, officer or employee of the authority, for the purpose of influencing any legislative or administrative action on behalf of the authority or providing legal advice to the authority. The report shall indicate for each such contract (A) the names of the parties to the contract, (B) the cost of the contract, (C) the term of the contract, (D) a summary of the services to be provided under the contract, (E) the method used by the authority to award the contract, and (F) a summary of the authority's need for the services provided under the contract. Such report shall be made available through the Internet not later than fifteen days after the contract is executed between the authority and the person.

Sec. 5. (NEW) (Effective from passage) The Connecticut Energy Authority shall have power to:

(1) Employ a staff and hire consultants;

(2) Establish offices where necessary in the state of Connecticut;

(3) Make and enter into any contract or agreement necessary or incidental to the performance of its duties and execution of its powers;

(4) Sue and be sued;

(5) Have a seal and alter it at pleasure;

(6) Make and alter bylaws and rules and regulations with respect to the exercise of its own powers;

(7) Conduct such hearings, examinations and investigations as may be necessary and appropriate to the conduct of its operations and the fulfillment of its responsibilities;

(8) Obtain access to public records and apply for the process of subpoena if necessary to produce books, papers, records and other data;

(9) Charge reasonable fees for the services it performs and waive, suspend, reduce or otherwise modify such fees, in accordance with criteria established by the authority;

(10) Purchase, lease or rent such real and personal property as it may deem necessary, convenient or desirable;

(11) Appoint such state and local advisory councils as it may from time to time deem advisable;

(12) Otherwise, do all things necessary for the performance of its duties, the fulfillment of its obligations and the conduct of its operations;

(13) Receive and accept, from any source, aid or contributions, including money, property, labor and other things of value;

(14) Invest any funds not needed for immediate use or disbursement in obligations issued or guaranteed by the United States of America or the state of Connecticut and in obligations that are legal investments for savings banks in this state; and

(15) Adopt regular procedures for exercising its power under sections 1 to 5, inclusive, of this act, section 11 of this act, sections 16-244b, 16-244d, subsection (c) of section 16-244i, sections 16-245d and 16-245q of the general statutes, as amended by this act. not in conflict with other provisions of the general statutes.

Sec. 6. Section 16-244c of the 2008 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) (1) On and after January 1, 2000, each electric distribution company shall make available to all customers in its service area, the provision of electric generation and distribution services through a standard offer. Under the standard offer, a customer shall receive electric services at a rate established by the Department of Public Utility Control pursuant to subdivision (2) of this subsection. Each electric distribution company shall provide electric generation services in accordance with such option to any customer who affirmatively chooses to receive electric generation services pursuant to the standard offer or does not or is unable to arrange for or maintain electric generation services with an electric supplier. The standard offer shall automatically terminate on January 1, 2004. While providing electric generation services under the standard offer, an electric distribution company may provide electric generation services through any of its generation entities or affiliates, provided such entities or affiliates are licensed pursuant to section 16-245.

(2) Not later than October 1, 1999, the Department of Public Utility Control shall establish the standard offer for each electric distribution company, effective January 1, 2000, which shall allocate the costs of such company among electric transmission and distribution services, electric generation services, the competitive transition assessment and the systems benefits charge. The department shall hold a hearing that shall be conducted as a contested case in accordance with chapter 54 to establish the standard offer. The standard offer shall provide that the total rate charged under the standard offer, including electric transmission and distribution services, the conservation and load management program charge described in section 16-245m of the 2008 supplement to the general statutes, the renewable energy investment charge described in section 16-245n of the 2008 supplement to the general statutes, electric generation services, the competitive transition assessment and the systems benefits charge shall be at least ten per cent less than the base rates, as defined in section 16-244a, in effect on December 31, 1996. The standard offer shall be adjusted to the extent of any increase or decrease in state taxes attributable to sections 12-264 and 12-265 and any other increase or decrease in state or federal taxes resulting from a change in state or federal law and shall continue to be adjusted during such period pursuant to section 16-19b. Notwithstanding the provisions of section 16-19b, the provisions of said section 16-19b shall apply to electric distribution companies. The standard offer may be adjusted, by an increase or decrease, to the extent approved by the department, in the event that (A) the revenue requirements of the company are affected as the result of changes in (i) legislative enactments other than public act 98-28*, (ii) administrative requirements, or (iii) accounting standards occurring after July 1, 1998, provided such accounting standards are adopted by entities independent of the company that have authority to issue such standards, or (B) an electric distribution company incurs extraordinary and unanticipated expenses required for the provision of safe and reliable electric service to the extent necessary to provide such service. Savings attributable to a reduction in taxes shall not be shifted between customer classes.

(3) The price reduction provided in subdivision (2) of this subsection shall not apply to customers who, on or after July 1, 1998, are purchasing electric services from an electric company or electric distribution company, as the case may be, under a special contract or flexible rate tariff, and the company's filed standard offer tariffs shall reflect that such customers shall not receive the standard offer price reduction.

(b) (1) (A) On and after January 1, 2004, each electric distribution company shall make available to all customers in its service area, the provision of electric generation and distribution services through a transitional standard offer. Under the transitional standard offer, a customer shall receive electric services at a rate established by the Department of Public Utility Control pursuant to subdivision (2) of this subsection. Each electric distribution company shall provide electric generation services in accordance with such option to any customer who affirmatively chooses to receive electric generation services pursuant to the transitional standard offer or does not or is unable to arrange for or maintain electric generation services with an electric supplier. The transitional standard offer shall terminate on December 31, 2006. While providing electric generation services under the transitional standard offer, an electric distribution company may provide electric generation services through any of its generation entities or affiliates, provided such entities or affiliates are licensed pursuant to section 16-245.

(B) The department shall conduct a proceeding to determine whether a practical, effective, and cost-effective process exists under which an electric customer, when initiating electric service, may receive information regarding selecting electric generating services from a qualified entity. The department shall complete such proceeding on or before December 1, 2005, and shall implement the resulting decision on or before March 1, 2006, or on such later date that the department considers appropriate. An electric distribution company's costs of participating in the proceeding and implementing the results of the department's decision shall be recoverable by the company as generation services costs through an adjustment mechanism as approved by the department.

(2) (A) Not later than December 15, 2003, the Department of Public Utility Control shall establish the transitional standard offer for each electric distribution company, effective January 1, 2004.

(B) The department shall hold a hearing that shall be conducted as a contested case in accordance with chapter 54 to establish the transitional standard offer. The transitional standard offer shall provide that the total rate charged under the transitional standard offer, including electric transmission and distribution services, the conservation and load management program charge described in section 16-245m of the 2008 supplement to the general statutes, the renewable energy investment charge described in section 16-245n of the 2008 supplement to the general statutes, electric generation services, the competitive transition assessment and the systems benefits charge, and excluding federally mandated congestion costs, shall not exceed the base rates, as defined in section 16-244a, in effect on December 31, 1996, excluding any rate reduction ordered by the department on September 26, 2002.

(C) (i) Each electric distribution company shall, on or before January 1, 2004, file with the department an application for an amendment of rates pursuant to section 16-19, which application shall include a four-year plan for the provision of electric transmission and distribution services. The department shall conduct a contested case proceeding pursuant to sections 16-19 and 16-19e of the 2008 supplement to the general statutes to approve, reject or modify the application and plan. Upon the approval of such plan, as filed or as modified by the department, the department shall order that such plan shall establish the electric transmission and distribution services component of the transitional standard offer.

(ii) Notwithstanding the provisions of this subparagraph, an electric distribution company that, on or after September 1, 2002, completed a proceeding pursuant to sections 16-19 and 16-19e of the 2008 supplement to the general statutes, shall not be required to file an application for an amendment of rates as required by this subparagraph. The department shall establish the electric transmission and distribution services component of the transitional standard offer for any such company equal to the electric transmission and distribution services component of the standard offer established pursuant to subsection (a) of this section in effect on July 1, 2003, for such company. If such electric distribution company applies to the department, pursuant to section 16-19, for an amendment of its rates on or before December 31, 2006, the application of the electric distribution company shall include a four-year plan.

(D) The transitional standard offer (i) shall be adjusted to the extent of any increase or decrease in state taxes attributable to sections 12-264 and 12-265 and any other increase or decrease in state or federal taxes resulting from a change in state or federal law, (ii) shall be adjusted to provide for the cost of contracts under subdivision (2) of subsection (j) of this section and the administrative costs for the procurement of such contracts, and (iii) shall continue to be adjusted during such period pursuant to section 16-19b. Savings attributable to a reduction in taxes shall not be shifted between customer classes. Notwithstanding the provisions of section 16-19b, the provisions of section 16-19b shall apply to electric distribution companies.

(E) The transitional standard offer may be adjusted, by an increase or decrease, to the extent approved by the department, in the event that (i) the revenue requirements of the company are affected as the result of changes in (I) legislative enactments other than public act 03-135* or public act 98-28*, (II) administrative requirements, or (III) accounting standards adopted after July 1, 2003, provided such accounting standards are adopted by entities that are independent of the company and have authority to issue such standards, or (ii) an electric distribution company incurs extraordinary and unanticipated expenses required for the provision of safe and reliable electric service to the extent necessary to provide such service.

(3) The price provided in subdivision (2) of this subsection shall not apply to customers who, on or after July 1, 2003, purchase electric services from an electric company or electric distribution company, as the case may be, under a special contract or flexible rate tariff, provided the company's filed transitional standard offer tariffs shall reflect that such customers shall not receive the transitional standard offer price during the term of said contract or tariff.

(4) (A) In addition to its costs received pursuant to subsection (h) of this section, as compensation for providing transitional standard offer service, each electric distribution company shall receive an amount equal to five-tenths of one mill per kilowatt hour. Revenues from such compensation shall not be included in calculating the electric distribution company's earnings for purposes of, or in determining whether its rates are just and reasonable under, sections 16-19, 16-19a and 16-19e of the 2008 supplement to the general statutes, including an earnings sharing mechanism. In addition, each electric distribution company may earn compensation for mitigating the prices of the contracts for the provision of electric generation services, as provided in subdivision (2) of this subsection.

(B) The department shall conduct a contested case proceeding pursuant to the provisions of chapter 54 to establish an incentive plan for the procurement of long-term contracts for transitional standard offer service by an electric distribution company. The incentive plan shall be based upon a comparison of the actual average firm full requirements service contract price for electricity obtained by the electric distribution company compared to the regional average firm full requirements service contract price for electricity, adjusted for such variables as the department deems appropriate, including, but not limited to, differences in locational marginal pricing. If the actual average firm full requirements service contract price obtained by the electric distribution company is less than the actual regional average firm full requirements service contract price for the previous year, the department shall split five-tenths of one mill per kilowatt hour equally between ratepayers and the company. Revenues from such incentive plan shall not be included in calculating the electric distribution company's earnings for purposes of, or in determining whether its rates are just and reasonable under sections 16-19, 16-19a and 16-19e of the 2008 supplement to the general statutes. The department may, as it deems necessary, retain a third party entity with expertise in energy procurement to assist with the development of such incentive plan.

(c) (1) On and after January 1, 2007, each electric distribution company shall provide electric generation services through standard service to any customer who (A) does not arrange for or is not receiving electric generation services from an electric supplier, and (B) does not use a demand meter or has a maximum demand of less than five hundred kilowatts.

(2) Not later than October 1, 2006, and [periodically as required by subdivision (3) of this subsection, but not more often than every calendar quarter] annually thereafter, the Department of Public Utility Control shall establish the standard service price for such customers pursuant to [subdivision (3)] of this subsection, except the department may adjust the price more frequently if it determines that such adjustment would be in the best interest of ratepayers, but no more than once every six months. Each electric distribution company shall recover the actual net costs of procuring and providing electric generation services pursuant to this subsection, provided such company mitigates the costs it incurs for the procurement of electric generation services for customers who are no longer receiving service pursuant to this subsection.

(3) On or before August 1, 2008, the electric distribution companies shall file with the Department of Public Utility Control a proposal to establish principles and standards that shall govern the manner in which the companies enter into, and the department reviews and grants approval to, bilateral contracts to provide standard service supply. The department, in consultation with the Office of Consumer Counsel, shall conduct a contested case proceeding to approve, modify or reject such proposal. No electric distribution company may initiate any bilateral negotiations for standard service contracts before the department's adoption of the principles and standards required pursuant to this section.

[(3) An] (4) Until December 31, 2008, an electric distribution company providing electric generation services pursuant to this subsection shall mitigate the variation of the price of the service offered to its customers by procuring electric generation services contracts in the manner prescribed in a plan approved by the department. Such plan shall require the procurement of a portfolio of service contracts sufficient to meet the projected load of the electric distribution company. Such plan shall require that the portfolio of service contracts be procured in an overlapping pattern of fixed periods at such times and in such manner and duration as the department determines to be most likely to produce just, reasonable and reasonably stable retail rates while reflecting underlying wholesale market prices over time. The portfolio of contracts shall be assembled in such manner as to invite competition; guard against favoritism, improvidence, extravagance, fraud and corruption; and secure a reliable electricity supply while avoiding unusual, anomalous or excessive pricing. The portfolio of contracts procured under such plan shall be for terms of not less than six months, provided contracts for shorter periods may be procured under such conditions as the department shall prescribe to (A) ensure for end-use customers the lowest rates possible, [for end-use customers] giving due consideration to risk and amount of volatility in the overall rates; (B) ensure reliable service under extraordinary circumstances; and (C) ensure the prudent management of the contract portfolio. An electric distribution company may receive a bid for an electric generation services contract from any of its generation entities or affiliates, provided such generation entity or affiliate submits its bid the business day preceding the first day on which an unaffiliated electric supplier may submit its bid and further provided the electric distribution company and the generation entity or affiliate are in compliance with the code of conduct established in section 16-244h.

[(4) The] (5) On and after January 1, 2008, an electric distribution company providing electric generation services pursuant to this subsection shall mitigate the variation of the price of the service offered to its customers by procuring electric generation services in the manner prescribed in a standard service procurement plan approved by the department. Such plan shall be consistent with the resource procurement plan approved pursuant to this section, when available, and shall specify the method for purchasing power for standard service, and may require the electric distribution company to (A) procure load following full requirements service contracts in a manner similar to that pursuant to subdivision (3) of this subsection; (B) procure individual electric supply components directly from a supplier or generator, including, but not limited to, base load, intermediate and peaking energy resource, capacity and other power supply services, using both requests for proposals and bilateral contracts outside the request for proposal process; and (C) procure physical and financial hedges to manage prices, including, but not limited to, tolling arrangements and financial transmission rights. Such plan shall describe how an electric distribution company shall, over time, transition to its new supply aggregation role as described in this section from the current method of procuring power supply pursuant to subdivision (4) of this subsection to a mix of the procurement options described in this section. Once its procurement plan has been approved by the department, an electric distribution company shall be allowed to manage the power supply portfolio on a real-time basis, thereby enabling it to optimize supply for the benefit of customers. The department shall set standard service rates annually by combining the costs of the arrangements undertaken under the procurement plan, provided such rates will 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 the department. An electric distribution company shall be entitled to collect the reasonable costs it incurs to provide such service.

(6) In approving the plans pursuant to subdivisions (4) and (5) of this subsection, the department, in consultation with the Office of Consumer Counsel, shall retain the services of a third-party entity with expertise in the area of energy procurement to oversee the initial development of the request for proposals and the procurement of contracts by an electric distribution company for the provision of electric generation services offered pursuant to this subsection. Costs associated with the retention of such third-party entity shall be included in the cost of electric generation services that is included in such price.

[(5) Each] (7) For resources acquired pursuant to a request for proposal process, each bidder for a standard service contract shall submit its bid to the electric distribution company and the third-party entity who shall jointly review the bids, conduct an analysis of the cost of such proposal and submit an overview of all bids together with a joint recommendation to the department as to the preferred bidders. The department shall make available to the Office of Consumer Counsel and the Attorney General all bids it receives pursuant to this subsection, provided the bids and any analysis of such bids shall not be subject to the disclosure under the Freedom of Information Act for a period of three months. The department may, [within ten] not later than two business days of submission of the overview, reject the recommendation regarding preferred bidders. In the event that the department rejects the preferred bids, the electric distribution company and the third-party entity shall rebid the service pursuant to this subdivision. For other resources acquired by an electric distribution company pursuant to subdivision (5) of this subsection, such company shall submit information on such acquisitions to the department as shall be specified in the procurement plan.

(8) Upon approval of the preferred bids by the department, the respective electric distribution company shall enter into contracts with approved bidders. The department shall approve or reject such contracts not later than seven calendar days after such contracts are entered into, but can extend such period an additional seven days with the consent of all parties.

(9) Not later than October 1, 2009, and biennially thereafter, the department shall conduct a contested case proceeding in accordance with chapter 54 to review the efficacy of the process of procuring contracts pursuant to this subsection including as assessment of the extent to which the standards set forth in this section are met.

(d) (1) [Notwithstanding] Not later than January 1, 2008, and on a continuing basis, notwithstanding the provisions of this section regarding the electric generation services component of the transitional standard offer or the procurement of electric generation services under standard service, section 16-244h or 16-245o, the Department of Public Utility Control [may, from time to time, direct an electric distribution company] shall direct the electric distribution companies to offer, through an electric supplier or electric suppliers, [before January 1, 2007, one or more alternative transitional standard offer options or, on or after January 1, 2007,] one or more [alternative standard] renewable service options. Such [alternative] renewable service options shall include, but not be limited to, an option that consists of the provision of electric generation services that exceed the renewable portfolio standards established in section 16-245a of the 2008 supplement to the general statutes and an option that allows consumers to purchase renewable energy directly and may include an option that utilizes strategies or technologies that reduce the overall consumption of electricity of the customer.

(2) (A) The department shall develop such [alternative] renewable service option or options in [a contested case] contested cases, as necessary, conducted in accordance with the provisions of chapter 54. The department shall determine the terms and conditions of such alternative option or options, including, but not limited to, (i) the minimum contract terms, including pricing, length and termination of the contract, and (ii) the minimum percentage of electricity derived from Class I or Class II renewable energy sources, if applicable. The electric distribution [company] companies shall, under the supervision of the department, subsequently conduct a bidding process in order to solicit electric suppliers to provide such [alternative] renewable service option or options.

(B) The department may reject some or all of the bids received pursuant to the bidding process.

(3) The department may require an electric supplier to provide forms of assurance to satisfy the department that the contracts resulting from the bidding process will be fulfilled.

(4) An electric supplier who fails to fulfill its contractual obligations resulting from this subdivision shall be subject to civil penalties, in accordance with the provisions of section 16-41 of the 2008 supplement to the general statutes, or the suspension or revocation of such supplier's license or a prohibition on the acceptance of new customers, following a hearing that is conducted as a contested case, in accordance with the provisions of chapter 54.

(e) (1) On and after January 1, 2007, an electric distribution company shall serve customers that are not eligible to receive standard service pursuant to subsection (c) of this section as the supplier of last resort. This subsection shall not apply to customers purchasing power under contracts entered into pursuant to section 16-19hh.

(2) An electric distribution company shall procure electricity at least every calendar quarter to provide electric generation services to customers pursuant to this subsection. The Department of Public Utility Control shall determine a price for such customers that reflects the full cost of providing the electricity on a monthly basis and that is consistent with the approved procurement and deployment plan pursuant to this section or, on an alternative basis as determined pursuant to subdivision (3) of this subsection. Each electric distribution company shall recover the actual net costs of procuring and providing electric generation services pursuant to this subsection, provided such company mitigates the costs it incurs for the procurement of electric generation services for customers that are no longer receiving service pursuant to this subsection.

(3) On and after July 1, 2008, the Department of Public Utility Control may conduct a contested case proceeding to study the frequency with which it should determine that price for supplier of last resort service.

(f) On and after January 1, 2000, and until such time the regional independent system operator implements procedures for the provision of back-up power to the satisfaction of the Department of Public Utility Control, each electric distribution company shall provide electric generation services to any customer who has entered into a service contract with an electric supplier that fails to provide electric generation services for reasons other than the customer's failure to pay for such services. Between January 1, 2000, and December 31, 2006, an electric distribution company may procure electric generation services through a competitive bidding process or through any of its generation entities or affiliates. On and after January 1, 2007, such company shall procure electric generation services through a competitive bidding process pursuant to a plan submitted by the electric distribution company and approved by the department. Such company may procure electric generation services through any of its generation entities or affiliates, provided such entity or affiliate is the lowest qualified bidder and provided further any such entity or affiliate is licensed pursuant to section 16-245.

(g) An electric distribution company is not required to be licensed pursuant to section 16-245 to provide standard offer electric generation services in accordance with subsection (a) of this section, transitional standard offer service pursuant to subsection (b) of this section, standard service pursuant to subsection (c) of this section, supplier of last resort service pursuant to subsection (e) of this section or back-up electric generation service pursuant to subsection (f) of this section.

(h) The electric distribution company shall be entitled to recover reasonable costs incurred as a result of providing standard offer electric generation services pursuant to the provisions of subsection (a) of this section, transitional standard offer service pursuant to subsection (b) of this section, standard service pursuant to subsection (c) of this section or back-up electric generation service pursuant to subsection (f) of this section. The provisions of this section and section 16-244a shall satisfy the requirements of section 16-19a until January 1, 2007.

(i) The Department of Public Utility Control shall establish, by regulations adopted pursuant to chapter 54, procedures for when and how a customer is notified that his electric supplier has defaulted and of the need for the customer to choose a new electric supplier within a reasonable period of time.

(j) (1) Notwithstanding the provisions of subsection (d) of this section regarding [an alternative transitional standard offer option or an alternative standard] a renewable service option, an electric distribution company providing transitional standard offer service, standard service, supplier of last resort service or back-up electric generation service in accordance with this section shall contract with its wholesale suppliers to comply with the renewable portfolio standards. The Department of Public Utility Control shall annually conduct a contested case, in accordance with the provisions of chapter 54, in order to determine whether the electric distribution company's wholesale suppliers met the renewable portfolio standards during the preceding year. An electric distribution company shall include a provision in its contract with each wholesale supplier that requires the wholesale supplier to pay the electric distribution company an amount of five and one-half cents per kilowatt hour if the wholesale supplier fails to comply with the renewable portfolio standards during the subject annual period. The electric distribution company shall promptly transfer any payment received from the wholesale supplier for the failure to meet the renewable portfolio standards to the Renewable Energy Investment Fund for the development of Class I renewable energy sources. Any payment made pursuant to this section shall not be considered revenue or income to the electric distribution company.

(2) Notwithstanding the provisions of subsection (d) of this section regarding [an alternative transitional standard offer option or an alternative standard] a renewable service option, an electric distribution company providing transitional standard offer service, standard service, supplier of last resort service or back-up electric generation service in accordance with this section shall, not later than July 1, 2008, file with the Department of Public Utility Control for its approval one or more long-term power purchase contracts from Class I renewable energy source projects that receive funding from the Renewable Energy Investment Fund and that are not less than one megawatt in size, at a price that is either, at the determination of the project owner, (A) not more than the total of the comparable wholesale market price for generation plus five and one-half cents per kilowatt hour, or (B) fifty per cent of the wholesale market electricity cost at the point at which transmission lines intersect with each other or interface with the distribution system, plus the project cost of fuel indexed to natural gas futures contracts on the New York Mercantile Exchange at the natural gas pipeline interchange located in Vermillion Parish, Louisiana that serves as the delivery point for such futures contracts, plus the fuel delivery charge for transporting fuel to the project, plus five and one-half cents per kilowatt hour. The department shall approve or reject such contracts not later than thirty calendar days after such contract is filed, unless the department determines before the expiration of that period that additional time is needed, but in no event longer than a total of sixty days. If the department does not issue a decision within sixty calendar days, the contract shall be deemed to have been approved. In its approval of such contracts, the department shall give preference to purchase contracts from those projects that would provide a financial benefit to ratepayers or would enhance the reliability of the electric transmission system of the state. Such projects shall be located in this state. The owner of a fuel cell project principally manufactured in this state shall be allocated all available air emissions credits and tax credits attributable to the project and no less than fifty per cent of the energy credits in the Class I renewable energy credits program established in section 16-245a of the 2008 supplement to the general statutes attributable to the project. On and after October 1, 2007, and until September 30, 2008, such contracts shall be comprised of not less than a total, apportioned among each electric distribution company, of one hundred twenty-five megawatts; and on and after October 1, 2008, such contracts shall be comprised of not less than a total, apportioned among each electrical distribution company, of one hundred fifty megawatts. The cost of such contracts and the administrative costs for the procurement of such contracts directly incurred shall be eligible for inclusion in the adjustment to the transitional standard offer as provided in this section and any subsequent rates for standard service, provided such contracts are for a period of time sufficient to provide financing for such projects, but not less than ten years, and are for projects which began operation on or after July 1, 2003. Except as provided in this subdivision, the amount from Class I renewable energy sources contracted under such contracts shall be applied to reduce the applicable Class I renewable energy source portfolio standards. For purposes of this subdivision, the department's determination of the comparable wholesale market price for generation shall be based upon a reasonable estimate. On or before September 1, 2007, the department, in consultation with the Office of Consumer Counsel and the Renewable Energy Investments Advisory Council, shall study the operation of such renewable energy contracts and report its findings and recommendations to the joint standing committee of the General Assembly having cognizance of matters relating to energy.

(k) (1) As used in this section:

(A) "Participating electric supplier" means an electric supplier that is licensed by the department to provide electric service, pursuant to this subsection, to residential or small commercial customers.

(B) "Residential customer" means a customer who is eligible for standard service and who takes electric distribution-related service from an electric distribution company pursuant to a residential tariff.

(C) "Small commercial customer" means a customer who is eligible for standard service and who takes electric distribution-related service from an electric distribution company pursuant to a small commercial tariff.

(D) "Qualifying electric offer" means an offer to provide full requirements commodity electric service and all other generation-related service to a residential or small commercial customer at a fixed price per kilowatt hour for a term of no less than one year.

(2) In the manner determined by the department, residential or small commercial service customers (A) initiating new utility service, (B) reinitiating service following a change of residence or business location, (C) making an inquiry regarding their utility rates, or (D) seeking information regarding energy efficiency shall be offered the option to learn about their ability to enroll with a participating electric supplier. Customers expressing an interest to learn about their electric supply options shall be informed of the qualifying electric offers then available from participating electric suppliers. The electric distribution companies shall describe then available qualifying electric offers through a method reviewed and approved by the department. The information conveyed to customers expressing an interest to learn about their electric supply options shall include, at a minimum, the price and term of the available electric supply option. Customers expressing an interest in a particular qualifying electric offer shall be immediately transferred to a call center operated by that participating electric supplier.

(3) Not later than September 1, 2007, the department shall establish terms and conditions under which a participating electric supplier can be included in the referral program described in subdivision (2) of this subsection. Such terms shall include, but not be limited to, requiring participating electrical suppliers to offer time-of-use and real-time use rates to residential customers.

(4) Each calendar quarter, participating electric suppliers shall be allowed to list qualifying offers to provide electric generation service to residential and small commercial customers with each customer's utility bill. The department shall determine the manner such information is presented in customers' utility bills.

(5) Any customer that receives electric generation service from a participating electric supplier may return to standard service or may choose another participating electric supplier at any time, including during the qualifying electric offer, without the imposition of any additional charges. Any customer that is receiving electric generation service from an electric distribution company pursuant to standard service can switch to another participating electric supplier at any time without the imposition of additional charges.

(l) Each electric distribution company shall offer to bill customers on behalf of participating electric suppliers and to pay such suppliers in a timely manner the amounts due such suppliers from customers for generation services, less a percentage of such amounts that reflects uncollectible bills and overdue payments as approved by the Department of Public Utility Control.

(m) On or before July 1, 2007, the Department of Public Utility Control shall initiate a proceeding to examine whether electric supplier bills rendered pursuant to section 16-245d and any regulations adopted thereunder sufficiently enable customers to compare pricing policies and charges among electric suppliers.

(n) Nothing in the provisions of this section shall preclude an electric distribution company from entering into standard service supply contracts or standard service supply components with electric generating facilities.

Sec. 7. (NEW) (Effective from passage) (a) The Department of Public Utility Control shall conduct a contested case proceeding to develop and issue a request for proposals to solicit the development of demand response, efficiency and load management and new, expanded or repowered cost-of-service generation to address any deficiencies or needs identified in the assessment prepared pursuant to section 55 of this act. A person that is not an electric distribution company submitting a proposal pursuant to this subsection shall include draft contracts containing information required by subsection (d) of this section in its submission, with compensation based exclusively on cost-of-service. An electric distribution company submitting a proposal or proposals pursuant to this subsection shall only recover up to the reasonable level of any costs of construction of such facility. An electric distribution company, in an annual retail generation rate contested case, shall be entitled to recover its prudently incurred costs of such project, including, but not limited to, capital costs, operation and maintenance expenses, depreciation, fuel costs, taxes and other governmental charges and a reasonable rate of return on equity. The department shall review such recovery of costs consistent with the principles set forth in sections 16-19, 16-19b and 16-19e of the general statutes, as amended by this act, provided the return on equity associated with such project shall be established in the initial annual contested case proceeding under this subsection and updated at least once every four years. The department may retain a third-party consultant to help determine whether projected costs submitted by an electric distribution company are reasonable preliminary estimates or whether the department should reject or require modification of any proposals that do not reflect reasonable estimates. The department may request that a person submitting a proposal submit further information that the department determines to be in the public interest, which the department may use in evaluating the proposal. The department shall approve contracts consistent with the principles set forth in sections 16-19, 16-19b and 16-19e of the general statutes, as amended by this act. The department shall reject proposals that are not in the best interests of customers.

(b) The Department of Public Utility Control shall evaluate proposals received pursuant to subsection (a) of this section and may approve one or more of such proposals. The department shall evaluate the proposals based on an analysis of the expected costs and benefits of the proposals, consistency with environmental sustainability, reduction and stabilization of electric rates, the promotion of fuel diversity and the reduction or overall minimization of increases in greenhouse gas emissions. The department shall only approve such proposals that have expected benefits in excess of expected costs and are in the best long-term interest of the customers of the state. All proposals received by the department pursuant to this section shall be available for public review six months after department approval or rejection.

(c) The Department of Public Utility Control shall publish requests for proposals under this section in one or more newspapers or periodicals, as selected by the department, and shall post such request for proposals on its web site. The department may retain the services of a third-party entity with expertise in the area of energy procurement to oversee the development of the requests for proposals and to assist the department in its approval of proposals pursuant to this section. The reasonable and proper expenses for retaining such third-party entity shall be recoverable through federally mandated congestion charges, as defined in section 16-1 of the general statutes, as amended by this act, which charges the department shall allocate to electric distribution companies in proportion to their revenue.

(d) Any person, other than an electric distribution company, submitting a proposal pursuant to this section shall include with its proposal a draft of a contract that includes the transfer to the electric distribution company of all rights to payment or assignment of credits related to the facility, including, but not limited to, energy, installed capacity, forward reserve capacity, locational forward reserve capacity, environmental credits and all other similar or ancillary products associated with such proposal. The draft contract shall also include compensation based on cost-of-service and security for ensuring performance of the contractual obligations. No such draft of a contract shall have a term exceeding fifteen years. Such draft contract shall include such provisions as the Department of Public Utility Control directs.

(e) An electric distribution company shall enter into contracts to implement those proposals approved pursuant to this section, and shall apply to the Department of Public Utility Control for approval of each such contract. After thirty days, either party may request the assistance of the department to resolve any outstanding issues. No such contract may become effective without approval of the department. The department shall hold a hearing that shall be conducted as a contested case, in accordance with the provisions of chapter 54 of the general statutes, to approve, reject or modify an application for approval of such contracts. Such a contract shall contain terms that mitigate the long-term risk assumed by customers. No contract approved by the department shall have a term exceeding fifteen years. The electric distribution company shall recover all reasonable costs incurred in implementing this section, including all costs incurred as a result of such contracts, through nonbypassable federally mandated congestion charges.

(f) Projects approved pursuant to this section are eligible for expedited siting through a petition for declaratory ruling pursuant to subsection (a) of section 16-50k of the general statutes, as amended by this act. The provisions of section 16a-7c of the general statutes shall not apply to projects approved pursuant to this section.

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

Section 1

from passage

New section

Sec. 2

from passage

New section

Sec. 3

from passage

New section

Sec. 4

from passage

New section

Sec. 5

from passage

New section

Sec. 6

from passage

16-244c

Sec. 7

from passage

New section

Statement of Purpose:

To help Connecticut ratepayers.

[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.]