OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http: //www.cga.ct.gov/ofa

SB-493

AN ACT REDUCING ELECTRICITY COSTS AND PROMOTING RENEWABLE ENERGY.

AMENDMENT

LCO No.: 4919

OFA Fiscal Note

SEE BELOW

Sections 1-3 result in significant cost beginning in FY 12 by expanding the administration1 of public utility control through the creation of two offices assigned to oversee energy procurement of energy for the standard offer and implementation of conservation and renewable goals to be developed.

These provisions require the Connecticut Academy of Science and Engineering to determine the organization of a new research division for energy and technology matters. It is anticipated that the total cost to conduct this study will be greater than $100, 000.

Section 4 could result in a minimal cost by establishing a working group that will develop plan for the implementation and organization of the new administration. It would result in a minimal cost to the Office of Legislative Management for mileage reimbursement, as it requires certain legislators to participate on the task force.  The current rate of mileage reimbursement is $0.50 per mile.

Section 5 results in one-time cost of $25, 000 to the Office of Policy and Management for a consultant to monitor other states' adoption of appliance and equipment efficiency standards for a product where no Connecticut or federal standard exists.

Sections 6-10 make changes that have no fiscal impact.

Section 11 requires electric and gas companies to establish a rate discount for low income customers, which more than 78, 000 households. The costs for the discounts will be recovered from the rate adjustments, the systems benefits charge, or from savings from other program that the Division of Public Utility Control (DPUC) terminates or reduces. As the state and municipalities are electric ratepayers, this provision would result in an uncertain cost, dependant upon the rate of the discount.

Section 12 permits municipalities to establish a loan program, supported by the issuance of municipal bonds, to finance sustainable energy improvements. The net impact of this provision is uncertain, pending implementation by municipalities. Provided that municipalities receive sufficient loan repayments to cover: 1) the debt service costs on the bonds issued to fund the program and 2) the administrative costs of the program, there is no fiscal impact.

Sections 13-16 make changes that do not result in a fiscal impact.

Section 17 may result in a revenue gain from fines imposed by the Department of Consumer Protection due to an expansion of areas covered by the Connecticut Unfair Trade Practice Act.

Section 18 makes changes that have no fiscal impact.

Section 19 sets aside a portion of funds in the Clean Energy Fund2 to offer direct incentives for the purchase or lease of qualifying residential solar photovoltaic (PV) systems. Funding for the incentive program would come from the renewable energy surcharge on electric bills3 and may not use more than one-third of the revenue from this surcharge, plus any federal funding that becomes available. It is anticipated that any costs incurred would come from its operating funds, which reduces funding available for current investments and programs but would not alter rates and therefore has no fiscal impact.

Sections 20-21 require electric companies to propose a 10-year solicitation plan for review and approval by the DPUC. The DPUC may retain an independent consultant at an estimated one-time cost of approximately $100, 000 with energy procurement expertise for the purpose of reviewing and approval of said plans. The potential costs for the consultant would be recovered by a reconciling component of electric rates, as determined by DPUC. These costs would increase electric rates, including the rates the state and municipalities pay. Any resultant costs to the state and municipalities would be negligible.

Section 22 results in a cost of approximately $50, 000 by requiring the DPUC to complete a comprehensive solar feasibility survey of facilities owned or operated by the state and issue at least one request for proposal (RFP) to deploy a PV system at state-owned or operated facilities.

Requiring the DPUC to do so within available appropriations will likely result in one of four outcomes: (1)  DPUC will proceed, and require a deficiency appropriation in FY 11; (2)  DPUC will delay the implementation of the bill pending the approval of additional appropriations; (3)  DPUC will shift resources from other agency priorities to develop the RFP thereby impacting existing departmental programs; or (4)  DPUC will not implement the bill.

The deployment of a PV system would result in significant costs.  

Section 23 authorizes electric companies to build, own and operate solar electric generating facilities. Any such costs would be recovered through a rate filing with the DPUC.

Sections 24-26 make changes that have no fiscal impact.

Section 27 requires the Renewable Energy Investment Board (Clean Energy Board) to establish and administer a pilot program to install fuel cells in state building. Funding for the pilot program will be $5 million from the Clean Energy Fund. It is anticipated that any costs incurred would come from its operating funds, which reduces funding available for current investments and programs but would not alter rates and therefore has no fiscal impact.

Section 28 makes changes that have no fiscal impact.

Section 29 allows the Renewable Energy Board to establish a Condominium Renewable Energy Grant program and permits the board to provide grants to condominium associations within available appropriations. There are no such funds provided for this purpose. It is anticipated that any costs incurred would come from its operating funds, which reduces funding available for current investments and programs but would not alter rates and therefore has no fiscal impact.

Section 30 makes changes that have no fiscal impact.

Sections 31-33 establish an energy infrastructure loan program. The program could receive up to $5 million annually from the gas conservation plan account and up to $5 million annually from the electric efficiency partner account.

Section 34 sets aside approximately $3.5 million annually from the Clean Energy Fund and the Energy Efficiency Fund combined to support a program for energy conservation and load management projects in municipalities with enterprise zones.4 The program established in the bill would be supported initially through federal stimulus funds.

Sections 35-40 make changes that have no fiscal impact.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

1 The amendment replaces the Public Utility Control Authority with the Connecticut Energy and Technology Authority (CETA) . The scope of CETA includes a new Division of Research, Energy and Technology.

2 The Renewable Energy Investment Fund/Clean Energy Fund (CEF) is funded through a surcharge on rate payer electric company bills and from federal American Recovery Reinvestment Act (ARRA) funds. The CEF annually receives approximately $28 million. The December 31, 2009, CEF balance totaled $66.11 million, yet commitments of $77.29 million exceed the current CEF balance, and will be paid from future deposits to the CEF.

3 The surcharge for renewable energy on electric ratepayer bills is one mill/kWh of 1/10 one cent per kWh.

4 The Clean Energy Fund and Energy Efficiency Fund are expected to receive approximately $115 million combined in FY 11. The bill would set aside 3% of this, or approximately $3.5 million, for the purpose of the bill.