OLR Bill Analysis

sSB 1078

AN ACT CONCERNING AFFORDABLE AND RELIABLE ENERGY.

SUMMARY:

This bill transfers, from the Public Utilities Regulatory Authority (PURA) to the Department of Energy and Environmental Protection (DEEP), the ability and requirement to issue a request for proposals related to the Integrated Resource Plan (IRP) and broadens the circumstances under which such a request is issued. It adds reporting and public hearing requirements, and changes how costs related to third-party entities are recovered. By law, every two years, DEEP, in consultation with the electric companies, must review the state's energy and capacity resources and develop an IRP for procuring energy resources.

The bill requires the Energy and Technology Committee to hold a public hearing on DEEP's selected proposals and authorizes the committee to advise DEEP of its approval or modification of the proposals.

The bill also allows the DEEP commissioner, in consultation with the procurement manager, the Office of Consumer Council (OCC), and the attorney general, to solicit proposals for long term contracts with generating facilities or demand response resources (e.g., conservation programs). The bill specifies criteria the DEEP commissioner must consider when selecting proposals and subjects any resulting agreement to PURA's review and approval. The bill requires the net costs of any such agreement to be recovered through a fully reconciling component of electric rates for all electric company customers. It also allows electric companies to recover the costs of purchasing new natural gas capacity through a rate proceeding.

EFFECTIVE DATE: July 1, 2015

INTEGRATED RESOURCES PLAN IMPLEMENTATION

The bill transfers, from PURA to DEEP, a requirement to issue an IRP-related request for proposals, makes conforming changes, and broadens the circumstances when an RFP is required. Current law requires PURA to issue a request for proposals when the IRP contains an option to procure new sources of generation. The bill instead requires DEEP to issue a request for proposals as needed to meet IRP goals, which include:

1. meeting electric energy or capacity needs,

2. meeting renewable portfolio standards,

3. improving energy system reliability,

4. lowering energy costs, and

5. reducing greenhouse gas emissions.

Under the bill, proposals selected by DEEP are subject to PURA's approval and DEEP must report on such proposals to the Energy and Technology Committee. Within 60 days of receiving such a report, the committee must hold a public hearing on the proposals. Within 30 days of the public hearing, the committee must advise DEEP of its approval or modification of any selected proposals.

The bill makes conforming changes to provisions related to the RFPs, including one allowing PURA to retain the services of a third-party entity with expertise in energy procurement to oversee the development of the request for proposals and help PURA approve proposals. The bill instead allows DEEP to retain a third-party entity for this purpose, but changes the way associated costs are recovered. Under current law, costs associated with retaining such a third-party entity are recovered through the generation services charge. The bill instead allows DEEP to recover the costs through the Consumer Counsel and Public Utility Control Fund.

LONG TERM CONTRACTS

Solicitation

The bill allows the DEEP commissioner, in consultation with the procurement manager, the OCC, and the attorney general, to solicit proposals for long term contracts from providers of:

1. natural gas pipeline capacity constructed on or after January 1, 2016;

2. liquefied natural gas;

3. Class I renewable energy sources (e.g., wind, solar, or fuel cell power);

4. active demand response resources, including load management;

5. distributed generation, including combined heat and power; or

6. verifiable large-scale hydropower (see BACKGROUND).

The bill allows the DEEP commissioner to solicit such proposals on his own or in coordination with other states in the region served by the Independent System Operator of New England (ISO-NE).

Evaluation and Selection

When reviewing proposals, the DEEP commissioner must consider:

1. economic benefits to the state,

2. fuel diversity,

3. whether the benefits of the proposal outweigh its costs, and

4. the delivered price of such sources.

He must also consider whether the proposal is:

1. consistent with state requirements to reduce greenhouse gas emissions;

2. in ratepayers' best interest; and

3. aligned with the state's Comprehensive Energy Strategy, including environmental impacts.

If he finds proposals in the best interests of ratepayers, the commissioner may select proposals from generating facilities or demand response resources for up to the state's proportional share of the regional energy load of natural gas capacity.

PURA Review

Under the bill, any agreement between the DEEP commissioner and a generating facility or demand response resource is subject to PURA's review and approval. The bill allows the DEEP commissioner to file an application with PURA for review and approval of the agreement. PURA must issue a decision on the application within 60 days of this filing. Under the bill, if PURA does not issue a decision within 60 days of receiving the application, or within 90 days with DEEP's consent, the application is deemed approved.

Cost Recovery

Under the bill, the net costs of any such agreement must be recovered through a fully reconciling component of electric rates for all electric company customers. The net costs include (1) the electric companies' costs incurred under the agreement and (2) reasonable costs incurred in connection with the agreement.

Beginning July 1, 2015, the bill allows electric companies to seek to recover, through a rate application filed with PURA, the costs of purchasing new natural gas capacity incurred when procuring contracts for new pipeline capacity or otherwise, as directed by the DEEP commissioner in relation to a long term contract agreement.

BACKGROUND

Large-Scale Hydropower

By law, large-scale hydropower is any hydropower facility that (1) began operation on or after January 1, 2003; (2) meets certain geographic eligibility criteria; (3) delivers power to its geographic eligibility area; and (4) has a generating capacity of over 30 megawatts (CGS 16-1 (a) (47)).

COMMITTEE ACTION

Energy and Technology Committee

Joint Favorable Substitute

Yea

20

Nay

3

(03/24/2015)