Connecticut Seal

General Assembly

File No. 283

    February Session, 2018

Substitute Senate Bill No. 337

Senate, April 5, 2018

The Committee on Energy and Technology reported through SEN. WINFIELD of the 10th Dist. and SEN. FORMICA of the 20th Dist., Chairpersons of the Committee on the part of the Senate, that the substitute bill ought to pass.

AN ACT REQUIRING THE PUBLIC UTILITIES REGULATORY AUTHORITY TO INITIATE A DOCKET TO STUDY RENEWABLE NATURAL GAS AND CONCERNING CONTRACTS FOR ELECTRICITY GENERATED FROM A BIOMASS FACILITY.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective from passage) (a) The Public Utilities Regulatory Authority shall initiate a docket to study renewable natural gas. On or before November 1, 2018, the authority shall submit a report, in accordance with the provisions of section 11-4a of the general statutes, including a review and any recommendations concerning renewable natural gas to the joint standing committee of the General Assembly having cognizance of matters relating to energy.

(b) The authority shall, in the docket initiated pursuant to subsection (a) of this section, review and make recommendations regarding a definition of "renewable natural gas", a renewable portfolio standard for renewable natural gas, a procurement process for renewable natural gas and the establishment of a quality standard for renewable natural gas.

Sec. 2. Subsection (h) of section 16-244c of the 2018 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2018):

(h) (1) Notwithstanding the provisions of subsection (b) of this section regarding an alternative standard service option, an electric distribution company providing standard service, supplier of last resort service or back-up electric generation service in accordance with this section shall contract with its wholesale suppliers to comply with the renewable portfolio standards. The Public Utilities Regulatory Authority shall annually conduct an uncontested proceeding in order to determine whether the electric distribution company's wholesale suppliers met the renewable portfolio standards during the preceding year. On or before December 31, 2013, the authority shall issue a decision on any such proceeding for calendar years up to and including 2012, for which a decision has not already been issued. Not later than December 31, 2014, and annually thereafter, the authority shall, following such proceeding, issue a decision as to whether the electric distribution company's wholesale suppliers met the renewable portfolio standards during the preceding year. An electric distribution company shall include a provision in its contract with each wholesale supplier that requires the wholesale supplier to pay the electric distribution company an amount of: (A) For calendar years up to and including calendar year 2017, five and one-half cents per kilowatt hour if the wholesale supplier fails to comply with the renewable portfolio standards during the subject annual period, and (B) for calendar years commencing on and after January 1, 2018, five and one-half cents per kilowatt hour if the wholesale supplier fails to comply with the renewable portfolio standards during the subject annual period for Class I renewable energy sources, and two and one-half cents per kilowatt hour if the wholesale supplier fails to comply with the renewable portfolio standards during the subject annual period for Class II renewable energy sources. The electric distribution company shall promptly transfer any payment received from the wholesale supplier for the failure to meet the renewable portfolio standards to the Clean Energy Fund for the development of Class I renewable energy sources, provided, on and after June 5, 2013, any such payment shall be refunded to ratepayers by using such payment to offset the costs to all customers of electric distribution companies of the costs of contracts entered into pursuant to sections 16-244r and 16-244t. Any excess amount remaining from such payment shall be applied to reduce the costs of contracts entered into pursuant to subdivision (2) of this subsection, and if any excess amount remains, such amount shall be applied to reduce costs collected through nonbypassable, federally mandated congestion charges, as defined in section 16-1.

(2) Notwithstanding the provisions of subsection (b) of this section regarding an alternative standard service option, an electric distribution company providing transitional standard offer service, standard service, supplier of last resort service or back-up electric generation service in accordance with this section shall, not later than July 1, 2008, file with the Public Utilities Regulatory Authority for its approval one or more long-term power purchase contracts from Class I renewable energy source projects with a preference for projects located in Connecticut that receive funding from the Clean Energy Fund and that are not less than one megawatt in size, at a price that is either, at the determination of the project owner, (A) not more than the total of the comparable wholesale market price for generation plus five and one-half cents per kilowatt hour, or (B) fifty per cent of the wholesale market electricity cost at the point at which transmission lines intersect with each other or interface with the distribution system, plus the project cost of fuel indexed to natural gas futures contracts on the New York Mercantile Exchange at the natural gas pipeline interchange located in Vermillion Parish, Louisiana that serves as the delivery point for such futures contracts, plus the fuel delivery charge for transporting fuel to the project, plus five and one-half cents per kilowatt hour. In its approval of such contracts, the authority shall give preference to purchase contracts from those projects that would provide a financial benefit to ratepayers and would enhance the reliability of the electric transmission system of the state. Such projects shall be located in this state. The owner of a fuel cell project principally manufactured in this state shall be allocated all available air emissions credits and tax credits attributable to the project and no less than fifty per cent of the energy credits in the Class I renewable energy credits program established in section 16-245a attributable to the project. On and after October 1, 2007, and until September 30, 2008, such contracts shall be comprised of not less than a total, apportioned among each electric distribution company, of one hundred twenty-five megawatts; and on and after October 1, 2008, such contracts shall be comprised of not less than a total, apportioned among each electrical distribution company, of one hundred fifty megawatts. The Public Utilities Regulatory Authority shall not issue any order that results in the extension of any in-service date or contractual arrangement made as a part of Project 100 or Project 150 beyond the termination date previously approved by the authority established by the contract, provided any party to such contract may provide a notice of termination in accordance with the terms of, and to the extent permitted under, its contract, except the authority shall grant, upon request, an extension of the latest of any such in-service date by (i) twelve months for any project located in a distressed municipality, as defined in section 32-9p, with a population of more than one hundred twenty-five thousand, and (ii) not more than thirty-six months for any project having a capacity of less than five megawatts, provided any such project (I) commences construction by April 30, 2015, and (II) the authority has provided previous approval of such contract. The cost of such contracts and the administrative costs for the procurement of such contracts directly incurred shall be eligible for inclusion in the adjustment to any subsequent rates for standard service, provided such contracts are for a period of time sufficient to provide financing for such projects, but not less than ten years, and are for projects which began operation on or after July 1, 2003. Except as provided in this subdivision, the amount from Class I renewable energy sources contracted under such contracts shall be applied to reduce the applicable Class I renewable energy source portfolio standards. For purposes of this subdivision, the authority's determination of the comparable wholesale market price for generation shall be based upon a reasonable estimate. On or before September 1, 2011, the authority, in consultation with the Office of Consumer Counsel and the Connecticut Green Bank, shall study the operation of such renewable energy contracts and report its findings and recommendations to the joint standing committee of the General Assembly having cognizance of matters relating to energy.

(3) Notwithstanding the provisions of subsection (b) of this section regarding an alternative standard service option, an electric distribution company providing transitional standard offer service, standard service, supplier of last resort service or back-up electric generation service in accordance with this section that has within its service territory a biomass facility that is a Class I renewable energy source and began operation after December 1, 2013, shall, not later than July 1, 2018, file with the Public Utilities Regulatory Authority for its approval a ten-year power purchase contract with such facility for generation equivalent to seven and one-half megawatts of electric capacity.

This act shall take effect as follows and shall amend the following sections:

Section 1

from passage

New section

Sec. 2

October 1, 2018

16-244c(h)

Statement of Legislative Commissioners:

In Sec. 2, new Subdiv. (3) was added to existing Subsec. (h) for consistency with standard drafting conventions.

ET

Joint Favorable Subst.

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 19 $

FY 20 $

Public Utilities Regulatory Authority (PURA)

CC&PUCF - Cost

Up to $125,000

None

Consumer Counsel

CC&PUCF - Cost

Up to $125,000

None

Note: CC&PUCF=Consumer Counsel and Public Utility Control Fund

Municipal Impact: None

Explanation

The bill requires the Public Utilities Regulatory Authority (PURA) to open a proceeding to study and make recommendations about renewable natural gas no later than November 1, 2018. As PURA and the Office of the Consumer Counsel currently do not have expertise in renewable natural gas, the two agencies would each incur one-time costs of up to $125,000 in FY 19, to hire outside consultants for this purpose.

The Out Years

The bill requires an electric distribution company (i.e., Eversource or United Illuminating) to file for PURA's approval for a 10-year contract to purchase 7.5 megawatts of electric capacity from a certain renewable energy facility. Contracts of this type are anticipated to be above current market rates, and therefore are anticipated to result in increased electricity rates for the state and municipalities, as ratepayers, in the outyears.

OLR Bill Analysis

sSB 337

AN ACT REQUIRING THE PUBLIC UTILITIES REGULATORY AUTHORITY TO INITIATE A DOCKET TO STUDY RENEWABLE NATURAL GAS AND CONCERNING CONTRACTS FOR ELECTRICITY GENERATED FROM A BIOMASS FACILITY.

SUMMARY

This bill requires an electric distribution company (EDC, i.e., Eversource or United Illuminating) to file for the Public Utilities Regulatory Authority's (PURA) approval a 10-year contract to purchase 7.5 megawatts of electric capacity from a Class I renewable energy biomass facility that began operating after December 1, 2013, if such a facility is within the EDC's service territory (see BACKGROUND). It requires the EDC to file the contract with PURA by July 1, 2018 (however, the requirement to file the contract does not become effective until October 1, 2018).

The bill also requires PURA to open a proceeding to study renewable natural gas. Under the bill, PURA must review and make recommendations on a renewable natural gas (1) definition, (2) renewable portfolio standard (i.e., requirement to buy a certain percentage of the gas), (3) procurement process, (4) and quality standard. The authority must submit a report of its review and recommendations to the Energy and Technology Committee by November 1, 2018.

EFFECTIVE DATE: October 1, 2018, except the provision regarding renewable natural gas is effective upon passage.

BACKGROUND

Class I Biomass Facility

By law, a Class I renewable energy biomass facility must (1) use a sustainable biomass fuel (e.g., waste wood) and have an average emission rate of no more than 0.075 pounds of nitrogen oxides per million BTU of heat input per quarter or (2) be a biomass facility with a capacity under 500 kilowatts that began construction before July 1, 2003 (CGS 16-1(a)(20)). The Plainfield Renewable Energy biomass facility is currently the state's only Class I biomass facility that began operating after December 1, 2013. It is within Eversource's service territory.

COMMITTEE ACTION

Energy and Technology Committee

Joint Favorable Substitute

Yea

25

Nay

0

(03/20/2018)

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