Energy and Technology Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-5427

Title:

AN ACT CONCERNING THE SHARED CLEAN ENERGY FACILITY PILOT PROGRAM.

Vote Date:

3/17/2016

Vote Action:

Joint Favorable Substitute

PH Date:

3/1/2016

File No.:

SPONSORS OF BILL:

Energy and Technology Committee

REASONS FOR BILL:

This bill is a fix to the shared solar pilot program bill passed last session. This bill allows development of Shared Clean Energy Facilities pilot program regarding utilities' cost recovery, tariff mechanisms for a term of not more than 20 years to finance the projects, and other technical changes. Under this program, customers could subscribe to purchase electricity output or a percentage interest in a solar facility on another's premises.

The substitute language as contained in LCO # 2958 modifies in line 74 as contained in Sec. 2. Subsection (d) of public act 15-1113 is repealed and the following is substituted in lieu thereof (Effective July 1, 2016) to establish the power purchase requirement for a maximum of twenty years.

Due to the nature of the substitute language, testimony submitted in support of the bill as originally drafted may now be in opposition, and testimony submitted in opposition to the bill as originally drafted advocating may now be in support.

RESPONSE FROM ADMINISTRATION/AGENCY:

Testimony Submitted by Commissioner Robert J. Klee

Presented By Deputy Commissioner Katie S. Dykes

On behalf of The Department of Energy and Environmental Protection (DEEP)

(Prior to Substitute language) DEEP supports the deployment of clean energy as an essential component to meeting our energy and environmental goals and look forward to taking this step to implement the shared clean energy facility pilot program through a procurement process that is open, transparent, and competitive to bring forward clean energy projects that are cost-effective and in the best interests of ratepayers, and increasing customer access to clean energy resources.

Testimony of Elin Swanson Katz, Consumer Counsel

On behalf of The Office of Consumer Counsel (OCC)

(Prior to Substitute language) The Office of Consumer Counsel (OCC) has carefully reviewed Raised Bill No. 5427 and supports the bill. The present bill would clarify that the pilot program would be funded through an electric distribution company tariff. Although this will have a small impact on electric bills, OCC supports the pilot so that we can examine how best to create opportunities for customers who would like to support solar development for environmental or financial reasons but who cannot install solar at their own homes or businesses.

Testimony of the Connecticut Green Bank (“Green Bank”)

(Prior to Substitute language) The Green Bank looks forward to supporting the legislature's and Governor's vision of cleaner, cheaper and more reliable energy sources for Connecticut while creating jobs and supporting local economic development. The Green Bank respectfully suggests that even though this is a pilot program, allowing for PPA terms of only 15 years or fewer may adversely affect the terms available to offer to SCEF subscribers, and the diversity of the mix of proposed pilot projects.

NATURE AND SOURCES OF SUPPORT:

Testimony of Joel M. Rinebold, Director of Energy Initiatives

On behalf of The Connecticut Center for Advanced Technology, Inc. (CCAT)

(Prior to Substitute language) CCAT is supportive of the concept raised in this bill to establish a funding mechanism for the pilot, with cost recovery for the utilities, which would support the development and sharing of class I renewable energy sources, such as fuel cells. The proposed bill could benefit Connecticut's emerging hydrogen and fuel cell industry, which provides significant employment and economic activity in the state.

Testimony of Roddy Diotalevi, Senior Director of Sales & Marketing

On behalf of The United Illuminating Company (UI)

(Prior to Substitute language) UI supports Connecticut's clean energy and climate goals and is committed to help the State meet them. They welcome the opportunity to work with policy makers and others to be an enabler, not an impediment, in establishing a framework that meets evolving stakeholder expectations regarding the development of clean energy facilities while balancing cost and system. UI continues to support the establishment of a pilot program and the requirement of a competitive solicitation by the Department of Energy and Environmental Protection (“DEEP”) as sound approaches to control costs and minimize negative rate impacts to non-participating customers. UI believes that the modifications to the prior Shared Clean Energy pilot program, including billing credits issued through the electric distribution companies (“EDCs”), tariff mechanisms to purchase the energy products produced by the facilities, and the EDCs recovery of reasonable costs, are workable and endorsed by UI. Lastly, the requirement of a report to be filed at the end of the three year pilot program will allow all stakeholders to fully analyze the costs and benefits associated with the Shared Clean Energy pilot. This analysis, using the data collected specific to the Connecticut program, will determine whether a permanent program should be established.

Testimony of Michael G. Heller,

Principal National Sector Leader Energy, Power Generation and Transmission

On behalf of Terracon

(Prior to Substitute language) Mr. Heller strongly supports Bill HB 5427 Shared Solar. He testified that by passing this bill you will be able to offer clean energy to so many residents in CT that just can't obtain this on their own due to numerous constraints.

In his business role for their firm he interacts with and manages many solar company relationships. Their firm has benefited from Shared Solar or as known in other markets as Community Solar. They have been able to create jobs in the environmental, geotechnical and construction inspection service lines during early development and construction of these facilities. Their local office in Rocky Hill has experience with solar projects throughout the Northeast and would benefit directly by this bill passing.

Testimony of Paul Michaud, Executive Director

On behalf of the Renewable Energy and Efficiency Business Association, Inc. (“REEBA”)

(Prior to Substitute language) REEBA supports this bill, which will make important changes to the program in connection with utility cost recovery, tariff mechanisms, and other technical changes. Regarding the proposed 15-year financing mechanism, REEBA believes that this is too short. A 20-year financing mechanism is much more in line with industry financing and is consistent with other long-term renewable contracts supported by this legislature.

Testimony of Angela Ruggiero, Senior Counsel

Joined by Edward Davis, Director of Rates

On behalf of Eversource Energy

(Prior to Substitute language) Eversource supports this bill and is committed to this pilot. They have been working closely with DEEP, PURA, and UI on the shared solar pilot program. This bill, as presented, represents the cooperation and collaboration between the entire stakeholder as sound approaches to control costs and minimize negative rate impacts to non-participating customers. Eversource believes that the modifications to the prior Shared Clean Energy pilot program, including billing credits issued through the electric distribution companies (“EDCs”), tariff mechanisms to purchase the energy products produced by the facilities, and the EDCs' ability to recover reasonable costs, are workable and are endorsed by Eversource. Lastly, the requirement that a report be filed at the end of the pilot program will allow all stakeholders to fully analyze the costs and benefits associated with the Shared Clean Energy pilot. This analysis, using the data collected specific to the Connecticut program, will shape the determination of whether a permanent program should be established.

Testimony of Joel N. Gordes, Consultant, DBA Center

On behalf of Energy Security Solutions

(Prior to Substitute language) Mr. Gordes support this bill to amend last year's bill, SB 928, to allow development of Shared Clean Energy Facilities. He testified that these facilities are already underway in 15 other states without the pilot program status and severe size limitations in our legislation. Many in the environmental community will well cover the valuable contributions SCEF's can make to furthering environmental goals but he will concentrate on other points and less recognized value streams such as state budget deficit reductions, the 15 year term for the facilities may not be sufficient for developers to take the economic risk, the Committee ought to expand the scope from the 6 MW pilot to a far less limited program with portions tied to reducing the state budget deficit, mandate a professionally-conducted value of solar/DG study to end equity issue allegations that PV users are “subsidized” by other ratepayers or actually aid all ratepayers, consider provisions for a 1% -5% bonus rate of return for utilities to reward their role in successfully facilitating SCEFs ,and the core problem faced is inaction to mandate changes to the over 100 year old utility business model.

Testimony of Mickey Toro; President,

Alex Fox; Commercial Sales Manager and

Josh Caley; Commercial Sales

On behalf of C-TEC Solar, LLC

(Prior to Substitute language) C-TEC Solar, LLC aspire to promote and be a part of the expansion of Community Solar programs adopted by the CT State Legislature. CT is of the financial capacity to consider the funding of such as, “affordable”. Further, the general political attitude towards clean energy supports its expansion: they want it.

Testimony of Dan Bosley, Government Relations Executive

On behalf of the Northeast Clean Energy Council NECEC

(Prior to Substitute language) NECEC supports this bill with amendment. They urges the committee to amend the bill to extend the period of time for the tariff mechanism to implement larger and broader deployment of community shared solar as expeditiously as possible so that more citizens and businesses can take advantage of solar, limiting the tariff mechanism to 15 years will increase the costs of the pilot to customers by increasing financing costs for developers.

Additional Testimony

(Prior to substitute language) Testimony was offered by the following people in support of the shared solar program to make the use of solar powered renewable energy more accessible to more citizens in Connecticut, leading the way on green energy production for reduction of carbon footprints in the state and to go forward with financing projects of solar share:

Christina Brown, Avon

Philip J Bonang, Mystic

Carol M. Thomas, Storrs Mansfield

Walter G. Johnson, Southbury

Martin Kaplan Ph.D., Avon

William M. Musser IV, Fairfield

Lauren Pelletier, Avon

Marge and David Schneider, Tolland

NATURE AND SOURCES OF OPPOSITION:

Testimony of Judi Friedman, chairperson

On behalf of PACE (PEOPLE'S ACTION FOR CLEAN ENERGY)

(Prior to Substitute language) Hundreds of PACE members strongly support the issue of community shared solar. PACE testified that Four out of five people cannot access it, even if they want to, they believes that state would authorize unlimited shared solar without limiting the number of projects or total number of megawatts. There must be no delay in implementation. They strongly feel that this pilot program is inadequate. PACE members are interested in this safe, less vulnerable, fair, less discriminatory, more economic, inclusive, relevant and modern technology. Ms. Friedman also speaks for the many Connecticut solar installers with whom she have worked with. They want to work in Connecticut, but they need assurance of financing for the life of the equipment (25 to 30 years). Financing for only 15 years will make it virtually impossible for developers to support HB 5427 in its present state. Delay of this bill and inadequate financing provisions force their supporters to adamantly oppose this bill.

Testimony of Melissa Arminio Kops, AIA, LFA, LEED AP BD+C

Nora Rizzo, LEED AP BD+C, LFA

Larry Jones, LEED AP BD+C

Ariana Bain

Anne Lissett, AIA, OAQ, LEED AP BD+C

Amy Vigneux, LEED GA

On behalf of The Connecticut Living Building Challenge Collaborative

(Prior to Substitute language) The Connecticut Living Building Challenge Collaborative believes Connecticut should drop the pilot program and authorize unlimited shared solar, using New York and Massachusetts as examples for moving forward. Shared Solar will allow this clean renewable energy to be available to energy customers at all socioeconomic levels, and to those who cannot install solar panels due to shade, or building orientation. Due to an increase in efficiency and a reduction in cost, solar panels are ready to be implemented at a large scale, and at great savings to the consumer. Other communities with Shared Solar legislation are leaving Connecticut behind in the implementation of renewable energy. The solar industry is growing exponentially in Connecticut, creating jobs and bolstering the economy. Its growth can be ensured by passing Shared Solar or it may be stunted if Connecticut fails to act.

Testimony of William E. Dornbos, Senior Attorney & Connecticut Director

On behalf of Acadia Center

(Prior to Substitute language) Acadia Center opposes due to the 15 year finance limitation on the revenue that the pilot facilities would receive form selling clean energy to the distribution utilities, they strongly support increasing the deployment of distributed clean energy, including the shared solar facilities that are almost certain to bid into the existing Shared Clean Energy Facility Pilot Program. They added that we need to accelerate the clean energy future in Connecticut to take advantage of all the significant benefits such economic, energy, environmental, and consumer that it will produce for residents and businesses.

Testimony of Brian Sullivan, Manager of the multifamily energy efficiency and solar lending programs

On behalf of the Connecticut Housing Investment Fund, or “CHIF”

(Prior to Substitute language) CHIF believes that shared solar is an equitable means of delivering energy cost savings to many more Connecticut residents than the current framework allows, and they are asking the Committee to eliminate some of the unnecessary delays and opportunity-killing provisions of HB 5427, they know from the results of their own solar financing program that multifamily solar projects rarely make economic sense unless the financing term can be extended to at least 20 years, and projects amortized over that term length are still barely viable, even with a 30% tax equity contribution toward the cost. They need to allow for financing term lengths for these projects to extend for the full useful life of the equipment, which is 25-30 years. CHIF added that Connecticut should look to the benefits being reaped by other states who have implemented full-scale shared solar programs, and proceed with a full rollout, rather than spending another two years in a pilot phase. During those two years, jobs in the solar industry that could have been created in Connecticut will be going to other states with more friendly legal and regulatory environments. They have an excellent opportunity to be on the cutting edge of this market, and they all know how important it is for Connecticut to improve its current business creation reputation.

Testimony of Sean Garren, Regional Manager – Northeast

On behalf of Vote Solar

(Prior to Substitute language) Vote Solar oppose HB 5427, because it would further delay the shared clean energy facility pilot program and drive up the cost of the shared clean energy facilities. HB 5427 would push back the implementation of the pilot program by several months and render the program overly costly. The stipulation that utilities only be required to compensate shared clean energy facilities for their valuable clean energy for no more than 15 years would lead to developers having to recover costs and deliver electric bill savings to customers during only the first half of the facility's lifetime. This will make project financing and sales either impossible or quite expensive, thereby drastically driving up the cost of the program and skewing the results of the pilot.

Testimony of Shannon Laun, Energy & Environment Attorney

On behalf of Connecticut Fund for the Environment

(Prior to Substitute language) CFE opposes H.B. 5427 because: (1) it would add unnecessary delays to the state's pilot program, which is already far behind schedule, and (2) because it would render shared solar projects financially unviable. Connecticut can greatly benefit from shared solar, and the state should implement a full-scale program that does not cap the number of projects or total megawatts as soon as possible. H.B. 5427 would instead stifle clean energy in Connecticut by imposing additional delays and creating new obstacles for shared solar.

Testimony of Susan Eastwood, Chair

On behalf of Ashford Clean Energy Task Force

(Prior to Substitute language) Ms. Eastwood opposes H.B. 5427; she testified that the pilot program is already behind schedule. In her opinion, the pilots are unnecessary because there is plenty of evidence that it can work from the other states where it is in practice now. HB 5427 has good intentions but is flawed by the 15 year time frame, which may cause the financing models not to work. She concurs with the many others who have given testimony on the need to lengthen the time period to 25 years or more. It only makes sense to make it correspond with the expected life of the solar panels, and to be consistent with how most solar financing plans work.

Testimony of Martin Mador, Legislative Chair

On behalf of Sierra Club Legislative

(Prior to Substitute language) The Sierra Club Legislative opposes this bill; they testified that HB 5427 is an unnecessary pilot and should move immediately to a full scale Shared Solar Program. The pilot program is nothing more than a 2 year delay which makes only the electric distribution companies (Eversource and UI) happy. They added that we need vastly more solar electricity generation than we have and we lag way behind other states, like Massachusetts. Any promotion of fossil fuel expansion in the state must be countered by every possible effort to expand renewable energy. A full Shared Solar program is the most effective way to do exactly that.

Testimony of Louis W. Burch, Connecticut Program Coordinator

On behalf of Citizens Campaign for the Environment

(Prior to Substitute language) CCE is opposed to HB 5427, but supports the concept of a shared solar program for Connecticut and welcomes changes to the original law that would expand or expedite the current process. Shared solar can help provide extensive benefits to energy consumers across our state, and the program should not be delayed or limited due to the agency's inability to meet requirements in a timely fashion. CCE respectfully urges this committee to reject this proposal and to expedite a full-scale shared solar program with no limits on project scale or capacity.

Testimony of Chris Phelps, State Director

On behalf of Environment Connecticut

(Prior to substitute language) Environment Connecticut opposes HB 5427, They testified that this bill unnecessarily delays implementation of the pilot program. Many other states, including our neighbors in Massachusetts, have already implemented full-scale shared solar programs that are producing significant gains in solar power and economic growth. Connecticut should follow suit. If not with a full scale program (which they believe would be the best course of action) then at least with a full pilot program on the timeline originally enacted by the General Assembly in 2015.

Second, subsection (d) of HB 5427 creates a new and significant financial obstacle to development of shared solar projects in Connecticut by restricting shared solar projects to 15 year agreements with the utilities to purchase their power.

They respectfully offer these suggestions to the committee: (1) eliminate or amend subsection (d) of the bill. A workable alternative might be to require that the EDCs purchase power from shared solar projects for their full viable lifespan. (At least 25 years.), (2) lift the unnecessarily restrictive 6 megawatt cap on the program. This cap can only serve to restrain the pace of growth in this potentially large market in Connecticut at a time when our state urgently needs to both cut pollution and create new jobs for its residents and (3) retain the existing timeline for implementation of the program. Changes such as these would make HB 5427 a strong bill that Environment Connecticut could enthusiastically support.

Testimony of Michael Trahan, Executive Director

On behalf of the State's Solar Industry Business Association - SolarConnecticut

(Prior to substitute language) SolarConnecticut opposes HB 5427. Their central concern with this bill is in Section 2 (d) "(1) Such pilot program shall utilize one or more tariff mechanisms with the electric distribution companies for a term not to exceed fifteen years, ..." Developers I talk to feel that limiting the economic life of a project to 15 years is a death-blow, as it forces all of the costs to be recovered in a truncated period far shorter than the life of the equipment. They made this point two years ago, in 2014, when a 15-year power purchase agreement was suggested during community solar stakeholder meetings. Mr. Trahan arranged for developers that construct these projects across the country and national policy experts that have written community DG state legislation to attend these meeting. They stated, emphatically, that no community solar projects in America were tied to a 15-year term. Today's solar modules have a life of 25+ years. Under the bill as drafted, developers would need to fit 25 years of cash flow into 15 years to make the project pencil out. The cost per credit would have to go up and in the end state ratepayers would be spending more per year then if they went with the 25 year tariff which more accurately reflects the useful life of the project.

We also feel that language should be added to HB 5427 that provides a carve out for low or moderate income ratepayers. Many city dwellers, who are renters, currently pay into the benefits surcharge off their electric bill will never see a solar system on their home. Community DG, in this case, community solar, would be a big benefit to them. In addition, the pilot should also seek to prove the viability of smaller community DG projects in the 50kw-200kw range. Community solar began with small groups of homeowners partnering up to site clean generation in their neighborhoods to reduce their electric bills. Large solar fields are important. So are small and medium size projects.

Testimony of Paula and Frank Panzarella

On behalf of fight the Hike

(Prior to substitute language) Ms. And Mr. Panzarella deeply regret that HB-5427 states that the electric companies would only be required to buy the power from shared solar projects for only fifteen years. The life of the solar equipment is about 30 years, and by cutting the purchase requirement to only fifteen will make it much harder for developers to get financing and continue running the installation long enough to realize a profit. They strongly urge State to amend HB-5427 to make the power purchase requirement for a maximum of thirty years, instead of the current fifteen. In addition, this will be a tremendous economic boon for the local manufacturing of renewable products and the training and employment of solar technicians and electricians in Connecticut. This legislation will promote the growth of Connecticut's solar and renewable businesses that have sprung up in the past decade.

It is necessary to implement shared solar. So necessary, in fact, that Connecticut should forego the pilot phase and move right ahead into full-fledged shared solar projects.

Testimony of David Sutherland, Director of Government Relations

On behalf of The Nature Conservancy

(Prior to substitute language) The Nature Conservancy would favor the adoption of a broader program with no, or a much bigger, program enrollment limit than the six megawatts currently mandated in PA 15-113. They also testified that a fifteen-year term would likely render projects financially infeasible and the pilot program inoperable so they recommend that the term be “the projected life of the facility or 25 years, whichever is a shorter length of time”.

Additional Testimony

(Prior to substitute language) Testimony was offered by the following people in opposition of the shared solar program in its current form, they testified that the state should implement a full-scale program that does not cap the number of projects or total megawatts, and they added that it places an unnecessary 15-year limitation that does not correspond with the typical measure life of a solar photovoltaic installation. But they support the concept of a shared solar program for Connecticut to expand green energy to all and to take advantage of all the significant benefits such economic, energy, environmental, and consumer:

Craig Machado, Branford

Shawn Anne O'Sullivan, Fairfield

Royal Graves, Wethersfield

Janet Heller, Manchester

Cathy Cementina, Coventry

Marie Cantino, Mansfield

Joseph Wasserman, West Hartford

Philip Dooley, Tolland

Adelheid Koepfer, Wallingford

Sean Hutton, Avon

David B. Bingham, MD, Salem

Henry S. Lowendorf, New Haven

Gary Bent, Mansfield

Frederic Fischer, Noank

David Schonfeld, West Hartford

David Hines, West Hartford

Edith Allison, Storrs

Jean Galli, Guilford

Laura Donnelly, New Canaan

Justin Paglino, Guilford

Leslie S. Lee, Stamford

Chris Schweitzer, New Haven

Elaine Piraino-Holevoet, New Haven

Donald F. Holevoet, New Haven

Anthony Dominski, New Haven

Lynne Bonnett, New Haven

Jacek Ziemski, DDS, CT

Marianne Horn, CT

Jaime, solar developer headquartered in CT

Russell Heller, freshman at Yale University

Chelsea Watson, Yale University '17 Environmental Studies

Andrew Peklo III AIA, Peklo Design & Joinery pc, Woodbury

Tom Swang, Executive Director of the CT Citizen Action Group (CCAG)

Reported by: Natalia Giraldo

Date: 03/28/2016