June 17, 2011
BRIEF SUMMARY OF SB 1243
By: Kevin McCarthy, Principal Analyst
You asked for a brief summary of “An Act Concerning the Establishment of the Department of Energy and Environmental Protection and Planning for Connecticut's Energy Future,” (SB 1243), particularly those provisions that affect consumers.
SB 1243, passed by the House and the Senate but not yet signed by the governor, establishes the Department of Energy and Environmental Protection (DEEP) by merging the departments of Environmental Protection and Public Utility Control.
The act has a number of consumer protection provisions, including a code of conduct for competitive electric suppliers. It has many provisions promoting renewable energy and energy efficiency, including a residential photovoltaic (PV) program and a program to finance the replacement of inefficient residential heating equipment.
The act has many other provisions, only some of which are described in this report. A full summary of the act's provisions is available on the legislature's website, www.cga.ct.gov, by entering the bill number on the quick search function at the top of the page.
The act establishes a code of conduct for competitive electric suppliers that regulates door-to-door sales and telemarketing, limits early termination fees, bars unfair trade practices, and establishes civil and administrative penalties for violations.
The act requires each supplier to give a written contract to customers with a demand of less than 100 kilowatts (i.e., residential and small business customers). Each contract must contain:
1. all material terms of the agreement;
2. a clear and conspicuous statement explaining the rates that the customer will pay and how they may change;
3. information about how those rates compare with the customer's current costs and for how long those rates are guaranteed;
4. a clear and conspicuous statement providing the customer's right to cancel the contract within three days of signing it; and
5. a description of the circumstances, if any, when the supplier may terminate the contract and any early termination penalty.
Each contract must be signed by the customer.
The act requires DEEP to study the feasibility of establishing discounted electric and gas rates for low-income customers by reallocating existing supports for these customers.
The act bars electric and gas utilities from terminating service year-round to hardship customers with children under 24 months old who are hospitalized if the attending physician determines that utility service is needed for the child's well-being.
The act (1) expands the resources that can go into the Clean Energy Fund to include private capital and revenues reallocated to the fund by the legislature; (2) expands the types of projects the fund can support to include electric and natural gas vehicle infrastructure, electricity storage, and the financing of energy efficiency; and (3) creates a quasi-public authority (the Clean Energy Finance and Investment Authority) to administer the fund, rather than Connecticut Innovations, Inc. The act allows the authority to provide financing support to clean energy projects if it determines that the amount to be financed by the authority and other non-equity financing sources does not exceed 80% of the cost to develop and deploy a project, or for an energy efficiency project, up to 100% of the cost.
Under the act, the authority must implement a residential PV solar program, which must result in at least 30 megawatts of new PV generating capacity being installed in the state by December 31, 2022. Under the act, the authority must offer direct financial incentives to buy or lease qualifying residential PV systems. 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. The incentive is increased by up to 5% if the PV 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. The program must be funded with up to one-third of the annual revenue from the existing renewable energy charge on electric bills.
The authority must identify barriers to developing a permanent Connecticut-based solar workforce and provide for comprehensive training, accreditation, and certification programs through institutions and individuals accredited and certified to national standards.
The act requires the authority 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 energy, fuel cells, and other hydrogen-fueled systems.
The act also establishes:
1. a program that requires electric companies to enter into long-term contracts to buy renewable energy credits from zero-emission generators (e.g., solar, wind, hydro);
2. a similar program for low-emission technologies; and
3. pilot programs to develop combined heat and power (cogeneration) and anaerobic digester projects.
The act allows each electric company to own up to 10 megawatts of renewable energy generating capacity. It allows municipal customers of electric companies to share renewable energy net metering credits among buildings the municipality owns (virtual net metering).
The act requires DEEP to establish a program to finance replacement residential heating equipment that is more energy efficient than the customer's current equipment. It allows municipalities to establish a loan program to finance energy efficiency and renewable energy projects, with costs recovered by an assessment on the benefitted property.
The act requires that each customer, regardless of heating source, be assessed the same fees, charges, co-pays, and other similar terms to access any audits administered by the Home Energy Solutions program. The costs of subsidizing audits for ratepayers whose primary source of heat is not electricity or natural gas may not exceed $500,000 per year.
The act also
1. requires DEEP to establish a program to allow a gas or heating oil company to finance residential customers' conversion to gas or oil heating in place of electricity;
2. establishes energy efficiency standards for televisions, DVD players, and similar products and broadens circumstances when efficiency standards would be implemented for other consumer products;
3. requires DEEP to develop a plan to reduce energy use in state buildings by at least 10% by 2013 and another 10% by 2018; and
4. requires the Energy Conservation Management Board to develop standardized performance contracting procedures that state agencies must use and municipalities may use.
The act requires DEEP to employ an electric power procurement manager. The manager, rather than the electric companies, must develop the plan for procuring power for the standard service the companies must provide to small customers who do not choose a competitive supplier. It modifies how this power is procured, allowing for short term power purchase contracts and making other changes.
The act requires the energy efficiency and renewable energy plans developed under prior law to provide equitable funding for low-income neighborhoods. It requires DEEP, by January 1, 2012, to analyze the potential of on-bill financing of energy efficiency and renewable power investments. DEEP must report its findings to the Energy and Technology Committee.
The act establishes a task force to study power plant safety. It must examine developing regulations for power plant safety, training protocols, auditing, reporting requirements, qualifications and potential licensing requirements for power plant inspectors or operators, penalties for failing to comply with the requirements, and the best practices of other states. It must also evaluate which agency should be responsible for plant safety oversight and have access to facilities and records. It must cover plants being built and those in operation.