PA 10-97—SB 493 (VETOED)

Emergency Certification

AN ACT REDUCING ELECTRICITY COSTS AND PROMOTING RENEWABLE ENERGY

SUMMARY: This act establishes several programs to promote solar energy, including ones that (1) provide incentives for people to install photovoltaic (PV) systems on their homes, (2) require electric companies to enter into long-term contracts with developers of large-scale PV systems and provide payments that are based on the energy produced by such systems, and (3) require the Department of Public Utility Control (DPUC) to study the feasibility of installing PV systems on state facilities. The act also promotes other renewable energy systems, including fuel cells, wind, and hydropower.

The act requires DPUC to establish a pilot program to provide loans for installing combined heat and power (cogeneration) systems and energy-efficient replacement furnaces and related equipment. DPUC must arrange with an electric or gas company to allow borrowers to pay a loan made under the program for furnaces and related equipment on their monthly electric or gas bill, as applicable.

The act allows municipalities to establish loan programs for residents and local businesses to make energy efficiency and renewable energy improvements to their property. It allows participating municipalities to issue bonds for these programs that are backed by an assessment on the participant's property that is treated like a property tax.

The act establishes a program for energy conservation and load management projects for customers in municipalities with enterprise zones. The program must provide funding at a level equal to at least 3% of the total collected for (1) the Energy Efficiency Fund and (2) the Clean Energy Fund. The money must (1) be used for programs directly benefiting residential or small business electric customers in municipalities with enterprise zones and (2) include a job training component for existing or potential minority business enterprises.

The act establishes energy efficiency standards for compact audio players, televisions, DVD players, and DVD recorders. The standards go into effect January 1, 2013.

By law, electric companies must provide standard service to small- and medium-size electric customers who do not choose a competitive supplier. The electric companies procure the power to provide this service. The act requires DPUC to review the companies' performance in providing standard service every two years and allows DPUC to transfer this responsibility to another entity. It changes the rules that govern procuring power for this service.

The act establishes a code of conduct for competitive suppliers and related entities. Among other things, the code regulates when and how they can conduct door-to-door sales. It also limits the fee suppliers can charge a residential customer for termination or early cancellation of a contract.

The act establishes a new division within DPUC that is responsible for power procurement, conservation and renewable energy, and research. It creates a working group to develop plans to implement organizational and structural changes in state government related to the establishment of the new division.

EFFECTIVE DATE: July 1, 2010, except the (1) provisions (a) establishing the working group, (b) requiring DPUC to analyze the wholesale electric market, and (c) modifying the 2010 integrated resources plans are effective on passage; (2) authorization for a condominium renewable energy program is effective October 1, 2010; and (3) provisions establishing the new DPUC division are effective July 1, 2011.

RENEWABLE ENERGY

19-26 — Solar Programs

Residential. Under the act, the Clean Energy Fund board must offer financial incentives to buy or lease PV systems for residential buildings that have one to four units. The incentive can be paid out on either a per kilowatt-hour basis or as a one-time upfront incentive based on expected system performance. Funding for these incentives must come from the renewable energy surcharge on electric bills, but this program may not use more than one-third of this revenue, plus any federal funding that becomes available.

Large Systems. Starting January 1, 2011 and ending December 31, 2021, each electric company must solicit and file with DPUC, for its approval, one or more long-term (at least 15 years) power purchase contracts with owners or developers of PV generation projects located in the state of less than 2,000 kilowatts (2 megawatts or MW) capacity. These systems must be located on the customer side of the meter and serve the electric company's distribution system. Developers cannot participate in both this program and the feed-in tariff program described below.

Solicitations conducted by a company must be for the purchase of solar renewable energy credits (solar RECs) produced by eligible projects or the actual power produced by these projects. (Owners of renewable generation facilities can sell the power they produce on the wholesale electric market as “green power,” or they can sell the RECs associated with this power separately from the power. )

The electric companies must procure a total of at least 4. 35 million solar RECs. The production of a megawatt hour of electricity from a solar energy source placed in service on or after July 1, 2010 creates one solar REC. These credits count against the companies' obligations under the renewable portfolio standard (RPS), under which electric companies and competitive suppliers must get part of their power from renewable resources.  

Electric companies are not required to enter into a contract that provides a payment of more than $650 per megawatt-hour (65 cents per kilowatt-hour) in its initial year. The costs of the electric companies and DPUC in implementing these provisions are recovered in electric rates.

Feed-in Tariff. The act requires each electric company, by July 1, 2011, to file with DPUC, for its approval, a tariff for production-based payments to owners or operators of in-state, grid-connected solar projects that are one megawatt or larger. The tariffs must provide production-based payments for at least 15 years from the project's in-service date.

The tariffs must include an aggregate eligibility cap of 50 MWs, apportioned among each electric company in proportion to its distribution load. The costs of the tariff can be included in any subsequent rates, so long as they are for projects that begin operating on or after July 1, 2010.

Starting July 1, 2011, electric companies may build, own, and operate solar electric generating facilities up to one-third of their proportional share of the 50 MW cap. These projects must be located on brownfields or other locations in municipalities with enterprise zones. DPUC must authorize the electric company to recover in rates its costs to construct, own, and operate the facilities, including a return on its investment capped at 8%.

The amount of renewable energy produced from energy sources receiving tariff payments or included in utility rates counts against the electric company's RPS.

Solar on State Buildings. The act requires DPUC, by July 1, 2011, to complete, or have private vendors complete, a comprehensive solar feasibility survey of facilities owned or operated by the state with a load of 50 kilowatts or more. DPUC must issue one or more requests for proposals (RFP) for deploying PV systems at state facilities. In the RFPs, DPUC may seek the services of an entity to finance, design, construct, own, or maintain PV systems under a long-term solar services agreement.

Solar Thermal Technologies. The act requires DPUC, in consultation with the Clean Energy and Energy Efficiency funds, to develop coordinated programs to create a self-sustaining market for solar thermal systems (e. g. , solar hot water systems) for electricity, natural gas, and fuel oil customers.

Added Incentives for Using Connecticut Components. The act requires DPUC to increase the incentive provided under the residential solar and solar thermal programs by up to 5% if the solar system uses major components that are manufactured or assembled in Connecticut, and another 5% if they are manufactured or assembled in a distressed municipality in the state or a municipality with an enterprise zone.

Funding Cap on Solar Programs. The act establishes a funding cap for all of the solar programs described above. From January 1, 2011 to June 30, 2013, the aggregate net annual cost recovered from electric ratepayers cannot exceed 0. 5% of total retail electricity sales revenues of each electric company. Between July 1, 2013 and June 30, 2015, the cap is 0. 75% of these revenues, and for each 12-month period starting July 1, 2015 and each July 1 thereafter for the duration of the programs established under the act, the cap is 1% of these revenues.

If DPUC projects that the annual cost cap is within 20% of being exceeded, it must report to the Energy and Technology Committee and take specified steps to ensure that the cap is not exceeded.

By January 1, 2014, DPUC must report to the committee on the cost and charges involved in implementing this program (apparently all of the programs subject to the cap), including a cost-benefit analysis

13(j) & 27 — Other Renewable Energy Programs

The act requires the Clean Energy Fund board to establish a pilot program to install fuel cells in state buildings using $5 million from the renewable energy surcharge on electric bills. As part of the program, the board must (1) identify state buildings where installing fuel cells would provide the greatest public benefit and cause the greatest reduction in total energy consumption and (2) consider a fuel cell's reliability and environmental characteristics. The board must require state buildings to undergo energy efficiency upgrades before receiving fuel cells under this program.

By December 31, 2012, the board and the Connecticut Center for Advanced Technology must jointly report to the Energy and Technology Committee on whether the program reduced the cost of producing fuel cells by 25% and the total cost of energy from fuel cells compared to other Class I renewable resources. The board must also (1) report on whether the projects reduced the state's cost of power and (2) provide recommendations on whether providing an additional $5 million in funding would make fuel cells competitive with other Class I resources.

By law, the electric companies must enter into long-term contracts with renewable energy generators that meet certain criteria. Under prior law, they had to sign contracts for at least 150 MW of generating capacity. The act requires the companies to file contracts with DPUC, by July 1, 2011, for 25 MW of capacity from wind projects, 15 MW from low-head hydropower, and five MW from other class I renewable resources located in Connecticut that receive funding from the Clean Energy Fund. The act eliminates a requirement that projects have a generating capacity of at least one MW to be eligible for the program. It also changes one of the pricing options available to generators who participate in the program.

DPUC, in consultation with the Clean Energy Fund board, must solicit offers, apparently from developers eligible under prior law and the act, by October 1, 2010. The act allows the existing target to be exceeded only if the newly eligible projects and the projects for which contracts had been signed as of July 1, 2010 exceed 150 MW.

LOAN PROGRAMS

31-33 — DPUC Program

The act requires DPUC to establish a pilot program to provide loans for installing combined heat and power (CHP) systems; energy efficient heating oil burners, boilers, and furnaces; and natural gas boilers and furnaces by eligible entities. Among the individuals and entities who may participate in the program are residential, commercial, institutional, or industrial electric or gas company customers who use or install an eligible in-state energy savings technology. In addition to the costs of the tangible equipment, the following can be covered by the program: installation, labor, engineering costs, permits, application fees, and other reasonable costs incurred by eligible entities for operating eligible technologies. DPUC must arrange with an electric or gas company to provide for paying a loan made under the program for furnaces and related equipment through the borrower's monthly electric or gas bill, as applicable.

By law, gas companies must develop conservation plans that are funded by any growth in the utility company gross receipts tax from the time that the revenue estimate is adopted for a fiscal year until the end of that fiscal year. The act requires, for FYs 11, 12, and 13, that half this funding be used for the loan program for gas projects.

By law, the Electric Efficiency Partners Program provides electric ratepayer funding for various efficiency projects. The act reduces, from 2 to 1 to 1. 5 to 1, the minimum payback ratio that a project must achieve to be eligible for funding under the program. It requires, for FYs 11, 12, and 13, that $5 million of the funding for the partners program be used for CHP projects and $5 million be used for the other projects funded under the loan program.

12 — Municipal Program

The act allows any municipality to establish a loan program for financing energy improvements to real property located within the municipality. Under the act, the energy improvements are (1) any renovation or retrofitting of qualifying real property to reduce energy consumption or (2) installation of a renewable energy system to serve the property. Qualifying real properties are single- or multi-family residential dwellings or commercial or industrial buildings that a municipality determines can benefit from energy improvements.

A municipality that establishes a loan program may issue bonds to (1) offer loans to participating property owners to finance energy improvements, (2) conduct related energy audits, and (3) conduct renewable energy system feasibility studies and verify the installation of any improvements. The bonds and financing must be backed by special assessments on the benefitted property, which are treated like property taxes.

Program participants must meet various requirements, including undergoing an energy audit or renewable system feasibility study, before getting a loan. The assessment on the benefitted property can not run longer than the time needed to pay for the cost of the improvement through energy savings.

11 — ELECTRIC DISCOUNTS FOR LOW-INCOME CUSTOMERS

The act requires DPUC to conduct a proceeding, by June 30, 2011, to develop discounted rates for electric company customers whose household income is up to 60% of the state median. The discounts must be funded by transferring money from existing programs that serve low-income customers and from other resources.

By July 1, 2012, DPUC must report to the Energy and Technology Committee on the benefits and costs of the discounted rates and any recommended modifications. If the low-income rate is not at least 10% below the standard service rate, DPUC must include steps to reach this goal in the report.

34 — Energy Efficiency in Poorer Municipalities

Under the act, DPUC must require the Energy Conservation Management Board, the Clean Energy Fund board, and electric companies to establish a program for energy conservation and load management projects for customers in municipalities with enterprise zones. The program must provide funding at a level equal to at least 3% of the total collected for the (1) Energy Efficiency Fund and (2) Clean Energy Fund. This money must be derived initially from funds made available to the state under the federal American Recovery and Reinvestment Act of 2009, if available, and then from state funds. The money must be used for programs directly benefiting residential or small business electric customers in municipalities with enterprise zones. The program must include a job training component for existing or potential minority business enterprises.

5 — ENERGY EFFICIENCY STANDARDS

TVs and Other Consumer Electronics

The act establishes energy efficiency standards for compact audio players, televisions, DVD players, and DVD recorders. The standards go into effect January 1, 2013. Under the act, starting January 1, 2013, compact audio players, DVD players, and DVD recorders must meet the requirements of regulations adopted in California in November 2009. As of January 1, 2013, televisions manufactured on or after July 1, 2010 and those manufactured on or after January 1, 2013 must meet additional requirements specified in the same regulations.

By law, energy efficiency standards do not apply to (1) new products manufactured in the state and sold elsewhere, (2) new products manufactured outside the state and sold at wholesale here for final retail sale and installation outside the state, (3) products installed in mobile manufactured homes at the time of construction, or (4) products designed expressly for installation and use in recreational vehicles.

Other Products

By law, the Office of Policy and Management (OPM) must adopt regulations establishing energy efficiency standards for products not covered by the statutes if it determines that (1) such standards would promote energy conservation in the state, (2) they would be cost-effective for consumers who purchase and use the new products, and (3) multiple products are available that meet such standards. These standards may not become effective until one year after OPM adopts them.

The act additionally requires OPM, in consultation with the Multi-State Appliance Standards Collaborative, to identify additional appliance and equipment efficiency standards. Within six months after a cooperative member state (California, New York, Oregon, Rhode Island, or Washington) adopts an efficiency standard for a product that is not subject to an equivalent Connecticut or federal standard, OPM must adopt regulations adopting this efficiency standard unless it specifically finds that the standard does not meet the three criteria listed above.

13(c) — PROCURING POWER FOR STANDARD SERVICE

By law, the electric companies must provide standard service to small- and medium-size electric customers who do not choose a competitive supplier. The electric companies procure the power to provide this service.

The act requires, by July 1, 2012, and every two years thereafter, DPUC to conduct an uncontested proceeding including a public hearing to review the companies' performance in providing standard service. If it determines that it is in the best interest of standard service customers to seek an alternative to the companies' procurement of electricity, DPUC must conduct a request for proposals for the procurement services. Any contract for these services must be for two years or less.

The act eliminates existing rules governing how the companies procure power for this service. Among other things, prior law generally required that the purchased power contracts be for at least six months and they overlap in time. The act establishes rules for the electric company or procurement entity that vary somewhat by the length of the proposed contract. The goal of the new rules is to reduce the average cost of standard service over time, compared to current costs, while seeking to limit cost volatility.

17 — CODE OF CONDUCT FOR ELECTRIC SUPPLIERS

The act imposes rules, starting July 1, 2010, governing sales and solicitation of generation services to customers having a demand of up to 100 kilowatts by a supplier, aggregator, or its agent that are conducted and consummated entirely by mail, door-to-door sales, or certain other means. Among other things, these sales must be conducted in accordance with any municipal ordinances regarding door-to-door solicitations and may not be conducted before 10 a. m. or after 6 p. m. The act prohibits anyone who sells any electric generation services for a supplier from engaging in any deceptive acts or practices in the marketing, sale, or solicitation of these services. It imposes additional disclosure requirements on “green” suppliers that claim they get more power from renewable resources than the law requires.

The act requires each supplier to provide customers with a demand of less than 100 kilowatts with a written contract and specifies the contents of these contracts. Under the act, a supplier may not make a material change in the terms or duration of any contract without the customer's express consent. The act bars suppliers from charging a residential customer a fee for termination or early cancellation of a contract of more than (1) $100 or (2) twice the estimated bill for energy services for an average month, whichever is less. The supplier must provide a residential customer an estimate of the customer's average monthly bill when it offers a contract.

The act allows DPUC to impose the following sanctions for any violation or failure to comply with existing law's consumer protection provisions, as expanded by the act: (1) civil penalties of up to $10,000; (2) suspension or revocation of a supplier's or aggregator's license; or (3) a prohibition, following a contested case hearing, on accepting new customers.

1-4 — DPUC REORGANIZATION

The act renames DPUC as the Connecticut Energy and Technology Authority (CETA). It creates two divisions within CETA: (1) the Division of Research, Energy and Technology (DRET) consisting of three bureaus: power procurement, conservation and renewable energy, and research and (2) the Division of Public Utility Control (essentially DPUC's existing staff).

The act requires DRET to:

1. increase the state's energy independence and security by promoting conservation and efficiency and the use of diverse indigenous and regional electric resources;

2. encourage the use of renewable resources and new electric technologies, particularly those supporting economic development and environmental sustainability;

3. minimize costs of electric services to state consumers while maintaining reliable service;

4. discourage undue electric service price volatility; and

5. encourage competition, if in the interests of state consumers.

DRET must do these things in accordance with the integrated resources plan, under which electric companies use savings from conservation programs and other resources to meet their customers' needs. The act also specifies the duties of the procurement and conservation and renewables bureaus and sets up a study to plan the operation of the research bureau.

The act establishes a working group consisting of the OPM secretary, consumer counsel, DPUC chairperson, attorney general, executive director of Connecticut Innovations, Incorporated, or their designees, and the chairpersons and ranking members of the Energy and Technology Committee.

The group must develop plans to implement organizational and structural changes in state government related to the establishment of CETA and the two divisions and to provide recommendations for the most efficient and effective way to meet the act's goals. By January 1, 2011, the group must issue a report of its findings, including draft legislation needed for this implementation.

OTHER PROVISIONS

9-10 — Integrated Resources Plan

By law, the electric companies must develop an integrated resources plan that meets customers' needs by a mix of savings from conservation and electric generation. The act specifically requires the plan to include options for reducing the price of electricity. It also requires that the plan to be adopted in 2010 indicate options to reduce the price of electricity by at least 15% less than the current price by July 1, 2012, and maintain at least this decrease for another five years. The options may include procuring new sources of generation.

In reviewing new sources of generation, the plan must determine whether the private wholesale market can supply such additional sources or whether state financial assistance, long-term purchasing of electricity contracts, or other interventions are needed to achieve the goal. If, starting July 1, 2010, the 2010 plan contains an option to procure new sources of generation, DPUC must pursue the most cost-effective approach. If DPUC seeks new sources of generation, it must issue a notice of interest for generation without any financial assistance, such as long-term contract financing or ratepayer guarantees. If DPUC fails to receive any responsive proposal, it must issue a request for proposals that may include such financial assistance.

39 — Review of Wholesale Market

By August 1, 2010, the act requires DPUC to initiate a proceeding to identify the impact on Connecticut ratepayers and the New England and state wholesale electric power market of the operation of the Independent System Operation-New England and the rules it uses to set wholesale prices. By January 1, 2011, the DPUC must report to the Energy and Technology Committee.

40 — Energy Performance-based Contracting

The act explicitly allows municipalities to enter into performance-based energy contracts. Typically, under these contracts a private firm installs energy efficiency measures at its own cost in exchange for part of the resulting energy cost savings.

13(k) Referral Program

By law, suppliers can participate in a program where electric companies must provide (1) information regarding the suppliers when customers begin service with an electric company and at other times and (2) other services for suppliers. The act requires DPUC to determine the cost of billing, collections, and other services provided by the electric companies or DPUC that solely benefit suppliers and aggregators and equitably allocate these costs on such suppliers and aggregators. DPUC must also determine costs that electric companies incur solely for the benefit of customers to whom they sell power and provide for the equitable recovery of these costs from these customers.

16 — Direct Billing by Suppliers and Information on Bills

Under prior law, competitive suppliers could provide billing and collection services for their customers that have at least 100 kilowatts of demand. The act requires suppliers, starting October 1, 2010, to provide these services or obtain these services from the electric company, paying their pro rata share of these costs. A customer who is directly billed by a supplier who paid the electric company the cost of billing and other services must receive a credit on his or her monthly bill.

Prior law required DPUC to adopt regulations specifying the billing format for electric companies and suppliers that directly bill their customers. The regulations had to provide guidelines for determining the billing relationship between the companies and suppliers, addressing such things as allocation of partial bill payments. The act terminates these guidelines as of October 1, 2010.

The act also modifies the information that must be provided on electric company and competitive suppliers' bills.

18 & 28 — Time of Use Rates

The act requires suppliers, as a condition of maintaining their licenses, to offer a time of use rate that reduces rates for non-peak use and charges at least five times the non-peak rate for peak use. The peak period must be no more than four hours per day. The supplier can offer other time of use rates.

Under the act, DPUC must require electric companies to notify their customers on the availability of time of use meters, if applicable.

8 & 29 — Condominium Program

The act allows the Clean Energy Fund board, in consultation with DPUC, to establish a program within available funds to provide grants to residential condominium associations and owners to buy renewable energy sources, including solar energy, geothermal, fuel cell, and other hydrogen-fueled systems. It requires that the board's annual report to DPUC cover this program.

35 — Bilateral Contract with Generator

The act requires DPUC, by September 1, 2010, to initiate a request for proposals to award one bilateral purchasing contract for electricity from an existing generator. The contract must be for a term of five to 15 years and (1) provide electricity at lower rates for Connecticut consumers or (2) based on the DPUC's determination, be used in combination with other initiatives to lower or stabilize electric rates. The contract must reduce rates by pricing electricity on a cost-of-service basis.

36 — Transmission Lines

Also by September 1, 2010, DPUC must review any proposed commercial transmission line project (1) in which a Connecticut electric company may have a financial interest or (2) that may be constructed in whole or in part in this state to determine whether to obtain electricity from these lines at a rate that will lower electricity rates for Connecticut consumers.

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