Energy and Technology Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-6304

Title:

AN ACT REQUIRING A STUDY OF THE VIABILITY OF NEW DISTRICT HEATING NETWORKS IN THE STATE.

Vote Date:

3/21/2017

Vote Action:

Joint Favorable

PH Date:

2/21/2017

File No.:

SPONSORS OF BILL:

Energy and Technology Committee

REASONS FOR BILL:

This bill will require a study on the viability of a heating network in Bridgeport.  It will study the creating of a Combined Heat and Power plant within a Heating District.  Specifically, the project would be a low temperature, flexible pipe buried in shallow trenches through the Downtown and South end of the city that would provide hot water for heat to homes and businesses in the area.

RESPONSE FROM ADMINISTRATION/AGENCY:

None submitted.

NATURE AND SOURCES OF SUPPORT:

Testimony of Representative Jack Hennessy, State of Connecticut

Representative Hennessy submitted testimony in support of this bill on behalf of Bridgeport South End Neighborhood Revitalization Zone (NRZ). This project is projected to decrease heating costs for its customers while significantly reducing use of carbon fuels. This results in a significant cut in greenhouse gas emissions, as well as a reduction in project costs, which directly benefits customers.

Testimony of Representative Santiago and Representative Rosario, State of Connecticut

Representative Santiago and Representative Rosario submitted testimony in support of this bill. Although several power plants in Bridgeport are committed to supply heat to the Heating District, a centrally located heat source will minimize the length of pipe needed to supply both Bridgeport's downtown and the South End. A Combined Heat and Power plant, when combined with the Heating District, will have a combined efficiency of over 70 percent and provide greater grid reliability through decentralized power production.

Testimony of Mayor Joseph Ganim, Bridgeport

Mayor Joseph Ganim testified in support of this bill on behalf of Bridgeport. Bridgeport is in a position to help establish the first-of-its kind thermal loop downtown heating district that-once established-will provide heat to a significant number of downtown buildings. IN doing so, it would make a major reduction in the carbon footprint of the downtown of Connecticut's largest city.

By providing hot water for heat, the downtown Bridgeport buildings in the thermal loop will no longer need to burn natural gas. This will reduce fossil fuel consumption and emissions as well as utility costs which are a major burden on business.

Testimony of President and CEO Mickey Herbert, Bridgeport Regional Business Council

President Mickey Herbert testified in support of this bill on behalf of the Bridgeport Regional Business Council (BRBC). BRBC believes that this bill will continue the progress of growing green businesses in Bridgeport by supporting Bridgeport's District Heating Project.

Testimony of Greg Breland, Resident/Stakeholder of the Neighborhood Revitalization Zone and Carmen Nieves, Bridgeport resident

Grey Breland submitted testimony in support of this bill on behalf of the Neighborhood Revitalization Zone (NRZ) and Carmen Nieves submitted in support of this bill on behalf of herself. The proposed District Energy project could be very beneficial to the South End. The project is projected to decrease heating costs for its customers while significantly reducing use of carbon fuels. This results in a significant cut in greenhouse gas emissions because it's providing energy through hot water generated from waste heat; 1 Mega Watt could produce energy to as much as 1,000 homes.

Both ask the committee to support this effort by review two bills:

● HB 6312-clarifies the District Heating grant methodology used in the Conservation and Load Management Plan to be consistent with the intent of the General Statute. In this way, the full District Heating grant amount will be correctly calculated and made available for this exciting technology. It is understood that nine million dollars was allocated for a district heating grant program, but a change in the formula after the legislation passed has decreased the award. Both ask the committee to hear and consider this argument.

● HB 6304-will strongly support development efforts by establishing a pilot program consisting of a small combined heat and power plant between downtown and the South End. This CHP plant will help reduce overall project costs, which directly benefits the customers. The lowering of heating costs to the residents of the South End is the most important consideration in my opinion. It is understood that the group would like to install and maintain a pilot plant in the South End that would serve residents in the South End and within a three mile radius and could provide power for up to 10,000 homes.

Testimony of Consultant Joel Gordes, dba Center for Energy Security Solutions

Joel Gordes testified in support of this bill. As a coastal state, Connecticut must redouble local efforts on adaptation for security of our citizens. Because of the distributed generation attributes, units such as this contribute to those local adaptation efforts, which, in energy supply decisions, are currently being mostly used to fund greenhouse gad mitigation efforts that are often large, distant, transmission-dependent projects and do not promote local jobs. For these reasons, this project should be afforded the maximum RPS credit rating for its category and also should be considered for firm natural gas contracts rather than interruptible service.

Testimony of John Humphries

John Humphries testified in support of this bill. This bill will help Connecticut achieve the mandated reduction goal of greenhouse gas emissions by heating buildings more efficiently. District heating has proven to be a very efficient way to heat buildings in dense areas. Most of the district heat loops currently in operation in CT rely on steam transported through high pressure pipes, which can be difficult and expensive to maintain. The proposed project in Bridgeport will apply an approach perfected in Denmark that uses low-temperature flexible pipe and valves buried in shallow trenches. This project will provide customers with long-term savings on heating costs. It will also provide construction jobs and allow local contractors to acquire experience in the installation of this new technology, facilitating its future expansion in the state.

Testimony of Eco-Technology Park Manager Jeff Leichtman, Center for Sustainable Business Growth

Jeff Leichtman submitted testimony in support of this bill on behalf of the Center for Sustainable Business Growth. The Center believes that this bill will continue their progress to become a sustainable community and a leader in fighting climate change. This project with be one of the nation's first large scale hot water heating loops, creating a model for others to emulate and adding another innovative energy project to the Eco-Technology Park. By using clean renewable energy instead of oil or natural gas, Connecticut can continue reducing that carbon footprint of its largest city, according to a goal of the B Green 2020 Sustainability Plan.

Testimony of NuPower Thermal

NuPower Thermal testified in support of this bill. The benefits of District Energy are well known: buildings and residences reduce their carbon footprint by approximately 80 percent, there is a significant reduction in use of carbon fuels while achieving high heating efficiency, lower energy and operating costs for consumers, and according to the United Nations “affordable district energy systems in cities is one of the least cost and most efficient solutions for reducing greenhouse gas emissions and primary energy demand.”

In regards to reducing the construction expenses, the largest cost would be in the installation of the pipe. This bill would allow for a location to be determined for a modest combined head and power plant, central to Bridgeport's downtown and the South End. This would allow for a reduction in construction costs for customers and economics that support project financing.

With respect to financing, the Bridgeport project is privately developed so the financing terms available are far shorter than those that would be provided by government sponsorship.

Additionally, sitting a combined heat and power plants in an urban location is practical since the plant will provide local distributed energy to the City of Bridgeport and a reliable thermal source for the heating district.

Testimony of the Renewable Energy and Efficiency Business Association, Inc.

The Renewable Energy and Efficiency Business Association (REEBA) testified in support of this bill. Locating a heat source central to Bridgeport's downtown and the South End will allow the developer to reduce installation costs and minimize roadwork. Lower capital costs will result in lower heating costs for customers.

A project of this nature requires a power purchase agreement with the utilities as a prerequisite for financing. A fair and transparent formula set electricity pricing should be a part of this legislation.

Testimony of President and CEO Robert Thornton, International District Energy Association

President Robert Thornton testified in support of this bill on behalf of the International District Energy Association (IDEA). District energy/CHP systems can strengthen the resiliency of the local power grid, dramatically increase energy efficiency and reduce regional greenhouse gas emissions. With the energy density, load characteristics and aggregate thermal loads of multiple prospective customers in downtown Bridgeport, this project holds excellent economic and environmental potential. District Energy provides cost-effective, efficient, and resilient energy services to buildings of multiple varieties while offering campuses, municipalities, cities and neighborhoods a host of benefits that include:

Significantly improved energy efficiency with the use of CHP

Fuel-flexibility made possible due to the scale of generation at a central plant compared to an individual building

Ease of building level operation and maintenance

Reliability and resiliency through well maintained district heating system

Comfort and convenience for customers who can reply on district energy service

Decreased building capital costs as buildings served by a district energy system don't need to install, own or operate their own boilers or furnaces, chillers and cooling towers

Freed up mechanical space including roods for improved architectural design flexibility for buildings

Use of local resources resulting in job development through system design, construction, equipment manufacturing, and operation and maintenance work and circulating economic benefits in the local economies

NATURE AND SOURCES OF OPPOSITION:

Testimony of UIL Holdings Corporation

UIL Holdings Corporation submitted testimony in opposition to this bill. UIL opposes this bill because of it appears to be duplicative of statutes that are already in place to support district heating projects. Specifically, Section 16-258(d) of the Connecticut General Statutes provides for incentives to support district heating systems. This bill also provides for additional incentive payments to end use customers who connect to a district heating system based on a customer's projected natural gas demand reduction, not to exceed similar incentives already available for equivalent natural gas demand reductions through the State's conservation and load management programs (C&LM). Current statute already provides incentives for district heating systems and aligns those incentives with t he State's broader C&LM programs for similar systems. In doing so, the incentive accounts for the value of the reduction in energy consumption, regardless of how that reduction is achieved, without favoring a particular project or technology.

Testimony of Senior Counsel Angela Ruggiero, Eversource Energy

Senior Counsel Angela Ruggiero testified in opposition of this bill on behalf of Eversource Energy. It appears that the proponents of a Bridgeport district heating project are expecting to sell surplus electricity generated from this district heating project to the State's electric distribution companies. Eversource Energy does not feel that its customers benefit from subsidizing a district heating project in Bridgeport.

Reported by: Jessica Topper

Date: April 3, 2017