Topic:
CONNECTICUT SITING COUNCIL; ELECTRIC UTILITIES; MUNICIPALITIES; TAX CREDITS; WIND POWER; ZONING;
Location:
ENERGY - RENEWABLE RESOURCES;

OLR Research Report


June 20, 2008

 

2008-R-0367

STATE LAW AND INCENTIVES REGARDING WIND POWER

By: Kevin E. McCarthy, Principal Analyst

You asked for a description of (1) state law regarding the siting of wind machines and (2) state and federal incentives for wind power. You also asked whether state law requires the electric companies (Connecticut Light and Power and United Illuminating) to buy excess power produced by wind machines. We answer each question in turn.

SITING

The siting of wind machines is subject to local zoning unless the machine qualifies as a facility under CGS 16-50l, in which case it is regulated by the Connecticut Siting Council. To qualify as a facility, the wind machine must have a capacity of more than one megawatt (MW) and meet several other criteria. Most wind machines have a generating capacity of much less than one MW (1,000 kilowatts), which is the amount of power needed to serve 750 to 1,000 homes.

Zoning regulations vary by municipality but most impose limits on the height of structures, particularly in residential areas, that are substantially less than the height of a typical wind machine. Zoning regulations also often require that tall structures such as wind machines be located so that they cannot land in adjoining properties if they fall. These types of restrictions may preclude the siting of wind machines in residential areas. The zoning regulations may permit wind machines in areas where they would otherwise be prohibited if the property owner obtains a variance or special permit. In addition to zoning, a wind machine would be subject to local inland wetland regulations if the site encompasses a wetland.

If a wind machine has a generating capacity of more than one MW, it is subject to the Siting Council's jurisdiction rather than local land use regulations. The law requires the Siting Council to hold a public hearing on applications for the facilities it regulates and imposes substantial notice requirements on applicants for a Siting Council certificate. In determining whether to grant a certificate for a generating facility, the Siting Council must find that the public benefit produced by the facility outweighs its environmental impacts. OLR Report 2003-R-0915 describes the specific factors the Siting Council must consider in its decision-making; OLR Report 2008-R-0279 describes the role of municipalities in siting power plants, among other things.

FEDERAL AND STATE INCENTIVES

Under federal law, power produced from wind machines and several other renewable technologies is eligible for a production tax credit against the corporate income tax. The credit runs for 10 years. In the case of wind power, the credit is currently 2.0 per kilowatt-hour. Under current law, new credits will not be granted after December 31, 2008, although there are proposals before Congress to extend the credit. This credit does not apply to residential or other small-scale wind machines, although there are proposals before Congress to create tax incentives for such machines.

Connecticut has a “net metering” law, described below, that requires electric companies to pay owners of wind machines for the power they produce in excess of their consumption. In addition, the state requires municipalities to exempt wind machines and other class 1 renewable resources installed at one- to four-family dwellings from the property tax.

The state also requires electric companies and competitive suppliers to obtain part of their power from wind and other class 1 renewable resources. The proportion is currently 5% and will rise in several steps to 20%. The law requires the companies and suppliers to get an additional 3% of its power from class I or class II resources (e.g., the power produced from resources recovery facilities) each year. It allows companies and suppliers to meet this renewable portfolio standard by buying power or the renewable energy credits associated with this power from residential net-metering customers.

PAYING FOR EXCESS PRODUCTION

Connecticut has a net metering law (CGS 16-243h) that requires the electric companies to purchase the power produced by wind machines and other renewable energy technologies with generating capacity up to 2 MW. If a customer supplies more electricity from these technologies to the electric distribution system than the company delivers to the customer, the company must credit the customer for the excess by reducing the customer's bill for the next monthly billing period to compensate for the excess power produced by the customer in the previous billing period. (In effect, the meter runs backwards for the excess power produced.) The electric company must carry over the credits earned from one monthly billing period to the next. If there are still credits at the end of the billing year, the electric company must pay for them at its wholesale cost for power. A customer who generates electricity from a generating unit with a capacity of more than ten kilowatts must pay the competitive transition assessment and the systems benefits charge based on his gross, rather than net, consumption. These charges pay for various public policy costs and account for about 7% of a typical residential customer's total bill.

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