OLR Bill Analysis

sSB 1131

AN ACT CONCERNING RENEWABLE ENERGY AND WEATHERIZATION.

SUMMARY:

This bill allows each electric company to implement a green community pilot program in one municipality in its service territory. The company must select the municipality and collaborate with it in designing the program. The pilot municipality must be selected based on several factors, including its level of support, energy usage, customer base (which the bill does not define), and the circumstances that would effectively demonstrate the pilot program technologies.

The bill establishes an energy efficiency improvement program to develop, install, and recover the costs of energy efficiency equipment at municipal or state facilities. A nonprofit hospital may participate in this program at the electric company's discretion and under its terms.

For both programs, the bill entitles the electric company to recover all of its incurred costs. This includes a return on its investment with the return on equity (the part of the investment that comes from shareholders as distinct from debt) based on the rate of return the Department of Public Utility Control (DPUC) in the company's last rate case.

The bill requires electric companies, starting January 1, 2010, to implement a tiered distribution charge for residential customers in which the charge varies with the amount of electricity used by the customer. The electric companies must determine the tiers. The tiered charge does not apply to customers who use electricity for space heating. The bill requires that any additional money produced by this system be transferred to the Conservation and Load Management Fund (commonly known as the Electric Efficiency Fund) to be used to install solar thermal hot water systems.

The bill requires the Office of Policy and Management (OPM) to develop a plan to use federal stimulus funds to develop a weatherization program for residents who heat their homes with oil or gas and do not qualify for other weatherization programs. By July 1, 2009, OPM must report to the Energy and Technology Committee on the program.

By law, electric companies and competitive electric suppliers must obtain part of their power from renewable resources under a renewable portfolio standard (RPS). They must get part of this power from class III resources, which include cogeneration (combined heat and power) systems that operate at an efficiency level of at least 50%. The bill specifies that the efficiency level is measured on an annual basis.

By law, electric companies and competitive suppliers must buy power their customers produce from certain renewable resources and pay the customer their retail rate for the power. The bill counts the power purchased from the company's or supplier's non-residential customers towards its RPS obligation. This provision already applies to the power bought from residential customers.

EFFECTIVE DATE: July 1, 2009 for the energy efficiency improvement program and the change to the class III resource definition; upon passage for the remaining provisions.

GREEN COMMUNITY PILOT PROGRAM

The program must involve the company, municipality, and local customers in demonstrating the effectiveness of state-of-the-art energy efficiency, load management, and control and renewable technologies. It may include, among other things, the development, promotion and installation of:

1. cost-effective efficiency measures and equipment,

2. fuel cells,

3. thermal storage,

4. controls and monitoring equipment,

5. renewable or emergency generation,

6. cogeneration systems,

7. light-emitting diode street lights,

8. smart appliances,

9. electric vehicle charging infrastructure,

10. advanced metering infrastructure, or

11. other relevant energy technologies. The program may provide for enhanced financial incentives to customers, including up to 100% financing of the technologies.

The municipality and electric company may negotiate and enter into an arrangement under the program, notwithstanding other provisions of the law. Arrangements between the company and a municipality or other customer must provide for payments from the company based on a formula to calculate monthly charges. The formula must provides for full recovery of any incurred costs, including a return on investment based on that allowed by DPUC in the company's last rate case, using standard utility ratemaking principals. The formula and facility-specific charges must be included in each agreement, and monthly charges may be included in the customer's electric bill or charged separately. The projects are eligible for any state or federal incentives, grants or credits, including those available under Clean Energy Fund programs, and any proceeds realized from these sources must be used to offset costs for projects undertaken under the program. The net costs of the program are paid from the systems benefits charge (SBC), a charge on electric bills used to pay for various policy costs.

The municipality and company must develop a plan for the program and submit it to DPUC for its approval. DPUC must approve the program within 60 days of submittal if the program is consistent with the bill and increases the SBC by no more than one mill (one tenth of a cent) per kilowatt-hour.

ENERGY EFFICIENCY IMPROVEMENT PROGRAM

The program must include developing and installing cost-effective energy efficiency measures and equipment, fuel cells, thermal storage, high efficiency gas and oil boilers and burners, controls and monitoring equipment, renewable or emergency generation, cogeneration systems, and other relevant systems. It must establish arrangements between an electric company and a municipal or state customer in which the company develops projects designed to provide energy savings from all fuel sources and other benefits for its facilities. The company must use contractors and installers who provide services in its service territory to help develop and install the technologies at these facilities to the extent practicable and economical.

The arrangement for most measures can be up to 10 years but up to 20 years for renewable, emergency, or cogeneration projects; building envelope improvements (e. g. , insulating attics); thermal storage; or cooling equipment. Arrangements between the company and a municipality or the state must provide for payments from the company based on a formula to calculate monthly charges that provides for full recovery of any incurred costs, including a return on investment based on that allowed by DPUC in the company's last rate case, using standard utility ratemaking principals. The formula and facility-specific charges must be included in each agreement and monthly charges may be included in the customer's electric bill or charged separately.

If a company seeks to include monthly charges in a customer's bill, it may seek approval of a rate or tariff from DPUC. DPUC must approve the rate or tariff within 60 days from the request. The projects are eligible for any state or federal incentives, grants, or credits, including those available under Clean Energy Fund programs, and any proceeds realized from these sources must be used to offset costs for projects undertaken under the program.

A company that implements this program must determine the duration and level of annual funding for its program, which may not exceed 1% of its total annual revenue for the last calendar year as reported to DPUC. The company may terminate the program at any time, but arrangements in place must continue to be enforced.

COMMITTEE ACTION

Energy and Technology Committee

Joint Favorable

Yea

21

Nay

0

(03/19/2009)