PA 16-173—sSB 334

Energy and Technology Committee

AN ACT CONCERNING REVISIONS TO CERTAIN ENERGY PURCHASING POOL AND LIFE-CYCLE COST ANALYSES STATUTES

SUMMARY: This act makes several unrelated changes to the energy statutes.

It restructures the state's electricity purchasing pool, which the Department of Energy and Environmental Protection (DEEP) operates to buy electricity for state operations and certain low-income households. The act requires the Department of Administrative Services (DAS) commissioner to negotiate electricity purchases in cooperation with the DEEP commissioner, rather than the Office of Policy and Management.

The act eliminates a requirement for the DEEP and DAS commissioners to jointly establish standards for life cycle cost analyses and energy performance standards for state-owned and -leased buildings and authorization for them to establish such standards for equipment and state-owned and -leased appliances. It correspondingly requires DEEP to establish specific objectives for state agencies to meet any applicable performance standards, rather than those the commissioners establish. The act makes numerous other conforming changes.

The act also eliminates certain requirements state agencies must meet when proposing major capital improvements, including (1) a requirement that the DAS commissioner make a written determination that an improvement's preliminary design is cost effective on a life cycle cost basis and (2) various other requirements for design proposals.

The act extends, from 15 to 20 years, the limit on the financing payback period for energy-savings measures implemented by a municipality or state agency under an energy-savings performance contract (i. e. , a contract with a third party to find savings through energy efficiency measures). The act also applies the limit to a comprehensive package of measures, rather than each energy-savings measure. Under existing law, unchanged by the act, the financing payback period for each proposed energy-savings measure cannot exceed its functional life.

The act removes a requirement that the social services commissioner administer the weatherization assistance program funded by the U. S. Department of Energy. In practice, DEEP administers this program.

EFFECTIVE DATE: Provisions related to life cycle cost analyses, energy performance standards, and state agency major capital projects are effective July 1, 2016; sections on the electricity purchasing pool, energy savings performance contracting, and the weatherization assistance program are effective upon passage.

1 & 2 — ELECTRICITY PURCHASING POOL

Municipal Participation

The act eliminates provisions allowing (1) municipalities to elect to participate in DEEP's electricity purchasing pool and (2) the DEEP commissioner to make grants to those municipalities that elect to join the pool and commit to achieving the state's solid waste management goals.

Solicitation Requirements

The act eliminates the DEEP commissioner's option, when operating the purchasing pool, to solicit proposals for electric generation services on behalf of any state agency, municipality, or higher education institution to (1) buy electricity for state and municipal operations and (2) meet the state's energy policy goals.

The act eliminates a requirement that DEEP solicit proposals on behalf of state agencies, participating municipalities, and higher education institutions from specific types of electric energy suppliers and renewable energy sources. By January 1, 2020, DEEP had to (1) solicit proposals from retail electric suppliers and municipal electric energy cooperatives and (2) select proposals that meet certain requirements to provide at least 370,000 megawatt hours of electricity per year for at least five consecutive years with at least 60% of it supplied by Class II renewable energy sources. The act eliminates these requirements and related provisions regarding the following:

1. proposal requirements for minimum proportions of power from certain trash-to-energy facilities and criteria the DEEP commissioner must use to select the proposals,

2. caps on the term length (five years) and price (one-half cent per kilowatt hour above the standard generation service price) of selected proposals,

3. the DEEP commissioner's authority to select proposals with the highest percentage of electricity from Class II renewable energy sources generated at certain trash-to-energy facilities if no proposal meets the minimum requirements, and

4. the DEEP commissioner's authority to select proposals that do not meet the minimum requirement for additional power if the pool exceeds 370,000 megawatt hours per year.

Municipal Electric Energy Cooperatives

The act eliminates the authorization for the Connecticut Municipal Electric Energy Cooperative (CMEEC), which supplies power for municipal electric utilities, to contract with the purchasing pool or any energy improvement district to buy and sell power. Additionally, the act makes conforming changes by removing related provisions (1) prohibiting CMEEC from charging electric cooperative participants for costs of providing these generation services and (2) requiring CMEEC, when supplying such services, to comply with the state's renewable portfolio standard but exempting it from electric supplier licensing requirements.

4-17 — ENERGY REQUIREMENTS FOR STATE PURCHASES

Commissioners' Life Cycle Cost Analyses

The act eliminates a requirement that the DEEP and DAS commissioners jointly establish and publish standards for life cycle cost analyses for state-owned or -leased buildings. Prior law required the standards to provide the following information:

1. the estimated initial cost of each energy-consuming system being compared and evaluated,

2. annual operating and maintenance costs of all energy-consuming systems over the building's useful life,

3. cost of energy,

4. salvage value, and

5. the estimated replacement cost for each energy-consuming system or component expressed in annual terms for the building's useful life.

The act also eliminates provisions allowing the commissioners to establish standards for life cycle cost analyses for state-owned or -leased equipment and appliances. Prior law specified factors the commissioners had to consider when establishing standards. Under prior law, the standards had to (1) require maximum energy efficiency and (2) be more stringent than federal standards, for those products with standards defined in federal law.

Under existing law, unchanged by the act, “life cycle cost” is the cost of a major facility, determined through methodology published by the National Institute of Standards and Technology, including (1) the initial cost of construction or renovation; (2) the marginal cost of future energy capacity; (3) the cost of energy the facility consumes over its expected useful life or, for leased facilities, over the remaining term of the lease; and (4) the costs of operating and maintaining the facility as such cost affects energy consumption. The act makes conforming changes by referencing life cycle cost analyses generally, rather than those life cycle cost analyses established by the commissioner, applicable to the following:

1. state agency evaluation of bids for the purchase of certain equipment and appliances ( 6),

2. the study the DAS commissioner must conduct for proposed facilities in the Office of Policy and Management's (OPM) integrated state facility plan ( 8),

3. the installation of systems using renewable energy sources in newly constructed state buildings ( 9),

4. application requirements for grants for school building projects ( 10), and

5. the summary included in DEEP's annual report to the Energy and Technology Committee on energy use planning and management in state buildings ( 12).

The act requires OPM to include in its integrated state facility plan measures to attain any applicable energy performance standards, rather than life cycle cost analyses established by the commissioners. By law, unchanged by the act, an “energy performance standard” is the minimum rate of energy consumption one can practically achieve, on a life cycle cost basis, by adjusting maintenance or operating procedures, modifying a building's equipment or structure, and using renewable sources of energy.

The act requires the DAS and DEEP commissioners to take necessary and appropriate actions to enable all state facilities to meet energy performance standards generally, rather than those standards based on life cycle cost analyses established by the commissioners. The act requires the DAS commissioner to give preference to buildings that meet any applicable energy performance standards, rather than life cycle cost analyses established by the commissioners.

Commissioners' Energy Performance Standards

The act eliminates a requirement that the DEEP and DAS commissioners jointly establish and publish energy performance standards for existing and new state-owned or -leased buildings. Under prior law, such standards required maximum efficiency in energy use and maximum practicable use of renewable energy sources. The act also eliminates provisions allowing the commissioners to establish energy performance standards for state-owned or -leased equipment and appliances. Prior law specified factors the commissioners had to consider when establishing such standards for buildings, equipment, and appliances. Under prior law, the standards had to (1) require maximum energy efficiency and (2) be more stringent than federal standards for those products with standards defined in federal law.

The act continues to allow the DAS commissioner to adopt energy performance standards as a requirement for state purchases of supplies, materials, and equipment but no longer references those standards established by the commissioners. It makes similar conforming changes in provisions requiring DAS and other state agencies to procure equipment and appliances that meet or exceed energy performance standards.

Under the act, to purchase equipment and appliances with any established energy performance standard, DAS and other state agencies must make purchases from specific equipment and appliance models that meet such standards, and the purchases must be based on competitive bids when possible. Under prior law, these requirements applied only to equipment and appliances for which the commissioners established energy performance standards.

4 — STATE AGENCY MAJOR CAPITAL PROJECT APPROVAL

The act eliminates provisions related to state agency major capital projects. By law, unchanged by the act, major capital projects are for construction or renovation of any building (1) owned by the state or constructed or renovated with state funds and (2) used or intended to be used as a school, over 10,000 square feet, or designated as a major facility by the DAS commissioner.

The act eliminates a requirement for the DAS commissioner to make a written determination that a preliminary design for a major capital project is cost effective on a life cycle cost basis in order for the preliminary design to be approved. It also repeals requirements that design proposals for such projects include (1) at least two differing energy systems for space heating, cooling, and hot water to supplement passive features designed into the building and (2) a life cycle cost analysis for each competing energy system. It eliminates requirements that (1) approved projects achieve, to the maximum extent practicable, energy standards established by the commissioners and (2) applications for state funding for major capital projects include a life cycle cost analysis.

OLR Tracking: MF, JR; VR; cmg