Energy and Technology Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-6636

Title:

AN ACT CONCERNING THE CONNECTICUT CLEAN ENERGY FUND.

Vote Date:

3/19/2009

Vote Action:

Joint Favorable

PH Date:

3/10/2009

File No.:

SPONSORS OF BILL:

Energy & Technology Committee

REASONS FOR BILL:

To make certain modifications to Project 150 and to the renewable Energy Investment Board.

RESPONSE FROM ADMINISTRATION/AGENCY:

Chairman Don Downes, DPUC, testified that “the proposed revisions in the bill were developed by the Department and the OCC, after consultation with project sponsors and the CCEF. The department believes that these revisions are necessary to conclude the successful implementation of the goals of the Project 150 statute.”

Joseph Rosenthal, OCC, testified that the OCC “enthusiastically” supports the bill. They feel that the revisions “should break the logjam and lead to the successful completion of the Project 150 program while minimizing the total costs of doing so for ratepayers.”

NATURE AND SOURCES OF SUPPORT:

Richard Soderman, CL&P and Yankee Gas testified that with regard to the provision that new contracts should be based upon cost-based rates, their recommendation is there should be a cap on prices so as to protect customers from clearly uneconomic projects. Further, with regard to the rate component in which such payments are recovered, they recommend that it be in either the systems benefits charge or nonbypassable federally mandated congestion charges, and not in standard service rates.

FuelCell Energy, Inc, testified that while they are not in favor of applying a cost based contract to all future projects, they are supportive of the provisions in the bill which allow the projects currently under contract the one-time option of converting their existing contracts to cost-based contracts. They also noted that the requested date change for placing the initial 150 megawatts under contract by July 1, 2011 is unwarranted and suggested the date be January 2010.

The CCEF supports the provision converting existing long term projects to cost based projects stating that the provision enables several of the large renewable projects already approved under Project 150, a greater opportunity to obtain private financing at reasonable terms. They do not support the portion of the bill which would force the projects approved in future Project 150 solicitations to enter into cost based contracts. They suggest that the bill should address the issue of “project attrition”.

James Potter, on behalf of Clearview Renewable Energy, testified in favor of the bill stating that it provides the underlying pricing structure necessary to finance a power project in todays' capital markets.

Mark Mirabito, project manager for Tamarack Energy's Watertown Renewable Power Project testified that the revised pricing structure in the bill gives potential project investors the stable revenues and fuel price risk mitigation required in order to finance renewable projects and also provides ratepayers with the protection of a locked-in, stable energy rate not found in the original pricing structure.

John Schopffer, managing Director, Mesirow Financial, INC, supports the bill stating that it enhances financeability and will help projects attract equity investors.

United illuminating spoke in favor of the bill stating that it's adoption could help the development of cost-effective renewable generation in Connecticut.

William Corvo, on behalf of O&G Renewability, LLC, spoke in favor of the bill stating that they believe that “implementation of the legislative changes proposed in the bill are critical for the development of all renewable energy projects proposed for construction in the State of Connecticut. Specifically the language allowing the modifications to existing contracts is critical to the construction of these projects.”

NATURE AND SOURCES OF OPPOSITION:

Richard Soderman, CL&P and Yankee Gas testified in opposition to the provision of the bill that would enable an existing contract to seek renegotiation of terms for their contract. “Substantial work has been done by all parties to develop a standardized contract that strikes an appropriate balance between project needs and customer needs. We should not throw that process out so that projects can get a “second bite of the apple.”

Jonathan Gordon, manager for NRG opposes the legislation testifying that it will increase costs to the state's customers by increasing the pricing terms of exisiting agreements,. It unfairly allows companies who won contracts through a competitive process based on price, now to modify those contracts and the legislation would inhibit development of instate renewable projects that could be built faster and at a lower cost.

New England Power Generators Association opposes the provision that revise the competitively procured contracts as this unfairly allows companies that were awarded contracts through a competitive process based on price to modify those contracts outside of the established process. They believe that the ultimate affect of this legislation would be to undermine confidence and discourage future participation by renewable energy providers in CCEF solicitations.

Daniel Donovan of Plainfield Renewable Energy spoke in opposition to the bill stating that these proposed changes to the rules will only continue to confuse and frustrate those who have spent significant time and money to make CT's renewable market a reality.

Reported by: Patricia K. Askham

Date: March 25, 2009