OLR Bill Analysis

sSB 570

AN ACT CONCERNING ELECTRIC FIXED BILL FEES AND GRID MODERNIZATION.

SUMMARY:

Starting the next time each electric distribution company (EDC, i.e., Eversource and United Illuminating) files for a rate change, this bill imposes a $10 per month cap on the company's fixed charge for its residential electric customers. The Public Utilities Regulatory Authority (PURA) must initiate a proceeding on or after October 1, 2025 to determine whether fixed charges should be eliminated or the cap should be increased. PURA must report the proceeding's results to the Energy and Technology Committee by January 1, 2026.

The bill also requires the Department of Energy and Environmental Protection (DEEP) commissioner to hold a series of meetings and an uncontested proceeding to (1) determine the net value of distributed energy resources (DER) and (2) consider establishing a methodology to credit DER owners. If he establishes such a methodology, he can require the EDCs to provide a new tariff (rate payments) to DER owners, which must be applied to new net metering and virtual net metering facilities under certain circumstances.

Lastly, the bill allows EDCs, in consultation with the Connecticut Green Bank and within certain limitations, to own or operate energy storage devices. Under the bill, such devices are any technology used to store electric energy, including a conventional battery, advanced battery, flywheel, electric vehicle, electrochemical capacitor, superconducting magnetic energy storage, power electronics, or control system.

EFFECTIVE DATE: July 1, 2015

1 – EDC RESIDENTIAL FIXED CHARGE CAP

The bill requires PURA to adjust an EDC's residential fixed charge to no more than $10 per monthly billing cycle the next time the EDC files a request to amend its rate schedule. Under the bill, a “residential fixed charge” is any fixed fee charged to residential electric customers separate and distinct from any distribution charge per kilowatt-hour, including (1) a fixed charge for distribution basic service, (2) a distribution customer service charge, (3) a customer charge, (4) a basic service fee, or (5) other fixed charge. Once PURA adjusts the fixed charge, it cannot be adjusted to more than $10 per billing cycle in any future rate case.

2-3, 5-7 – DISTRIBUTED ENERGY RESOURCE VALUE

The bill requires the DEEP commissioner, by October 1, 2015, to open an uncontested proceeding or proceedings to (1) determine the net value that DERs provide to EDCs and ratepayers and (2) consider whether to establish a methodology to credit DER owners. (An “uncontested” proceeding is one which, among other things, cannot be appealed to the Superior Court under the Uniform Administrative Procedure Act.) In determining a DER's value, the commissioner must consider the costs and benefits associated with (1) energy, (2) capacity, (3) grid support services, (4) financial risk, (5) reliability, (6) resiliency, and (7) environmental attributes.

Under the bill, a “distributed energy resource” is:

1. any zero-emission customer-side distributed resource (e.g., residential solar panels);

2. demand response (e.g., programs that pay certain customers to reduce usage during times of peak demand);

3. end user energy efficiency and conservation measure;

4. combined heat and power system;

5. thermal energy generated by a thermal energy transportation company;

6. distributed intelligence;

7. microgrid; or

8. energy storage device.

By law, unchanged by the bill, a “customer-side distributed resource” includes an electricity generator rated at 65 megawatts or less on a retail end user's premises, including fuel cells, among other things. (Fuel cells would presumably not be considered “zero-emission” resources and thus not be included as DERs under the bill.) The bill does not define “distributed intelligence.”

The bill also requires the commissioner to hold various meetings and meet certain procedural steps before opening the proceeding. The testimony, public comments, and remarks made at the proceeding and meetings must be transcribed and made available on DEEP's website.

Pre-Proceeding Meetings

Public Information Meeting. The bill requires the DEEP commissioner, by August 1, 2015, to conduct a public information meeting and hear public comments on methods to (1) analyze the costs and benefits that different DERs provide to EDCs and ratepayers, (2) account for those costs and benefits, and (3) implement changes to EDC regulation that conform electric rate and revenue structures to state energy policy.

The commissioner must submit a report on his findings from the meeting to the Energy and Technology Committee. (The bill does not specify a deadline for this report.) The bill allows him to initiate additional proceedings if he determines that substantial changes are needed to properly account for DER's costs and benefits.

Stakeholder Meeting. The bill requires the DEEP commissioner, at least 60 days before opening the uncontested proceeding, to convene a meeting with interested stakeholders to determine the scope of the DERs to be evaluated and any other issues the commissioner deems relevant.

Proposed Recommendations, Public and Technical Meetings. The bill requires the commissioner to make proposed recommendations available for public comment, at least 30 days before opening the uncontested proceeding.

It also requires him, before opening the uncontested proceeding, to conduct at least one public meeting and one technical meeting where technical personnel must be available to respond to questions. The commissioner must publish a notice at least 15 days before either meeting. The notice must include the commissioner's proposed recommendations on DERs' net value; the time period for public comment; and the meeting's date, time, and location.

Final Valuation and EDC Tariffs

The bill requires the commissioner to fully consider all oral and written public comments about the proposed DER valuation methodology before he issues a final valuation methodology through the uncontested proceeding. If he does so, the bill allows him to direct the EDCs to provide a tariff to DER owners. The EDCs must file the tariff for approval by PURA by the time that DEEP publishes a final valuation methodology. (It is unclear how the EDCs will be able to prepare and file a new tariff before DEEP publishes its final valuation methodology.) The bill does not specify what criteria PURA must use to evaluate and approve the tariff.

The tariff must at least include new qualifying net metering facilities and virtual net metering facilities. In general, “net metering” provides billing credits that allow customers with certain renewable energy systems to “run their meters backwards” based on how much excess electricity they generate. Under current law, net metering customers who have excess net metering credits at the end of an annual period are paid the avoided cost of wholesale power for their excess kilowatt hours of electricity produced. Under the bill, such excess generation produced by any new facilities (presumably, those that begin operating after the new tariff is implemented) would instead be paid according to the new tariff.

“Virtual net metering” generally allows certain net metering customers to assign their excess net metering billing credits to other meters and also run them “backwards.” When a virtual net metering customer produces excess electricity and assigns billing credits to another meter, current law requires the credits to be applied against the other meter's generation service component and a declining percentage of its transmission and distribution charges, prorated according to their past 12 months of consumption. Under the bill, the value of the credit that a new virtual net metering customer (presumably, one that begins operating a virtual net metering facility after the new tariff is implemented) assigns to another meter must be established under the new tariff.

The bill also allows the commissioner to update the final valuation methodology as needed and require the EDCs to revise their tariffs accordingly. (It does not specify any procedural requirements for these updates.)

2, 4 – ENERGY STORAGE

The bill allows the EDCs, in consultation with the Green Bank, to submit a proposal to DEEP to build, own, or operate energy storage devices to demonstrate and investigate how they can be reliably and efficiently integrated into the electric distribution system's operation in a way that maximizes their value to EDCs, ratepayers, and society. The EDCs can enter into joint ownership agreements, partnerships, or other contractual agreements for services with private entities to carry out the proposals.

DEEP, in consultation with the Green Bank, must evaluate the proposals and may approve them as long as the total net cost of all approved proposals does not exceed $5 million. (The bill does not specify whether the EDCs will be able to recover their costs for the proposals through rates.) By July 1, 2016, DEEP must evaluate the approved proposals and submit a report to the Energy and Technology Committee on performance, costs, and benefits.

COMMITTEE ACTION

Energy and Technology Committee

Joint Favorable Substitute

Yea

21

Nay

2

(03/24/2015)