2002 -- H 7786 SUBSTITUTE B AS AMENDED

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LC00909/SUB B/2

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2002

____________

A N A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS

     Introduced By: Representatives Kennedy, Lewiss, Barr, Palangio, and D Caprio

     Date Introduced: February 27, 2002

     Referred To: House Corporations

It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 39-1-4, 39-1-8, 39-1-18, 39-1-27.3, and 39-1-27.6 of the

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General Laws in Chapter 39-1 entitled "Public Utilities Commission" are hereby amended to

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read as follows:

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     39-1-4. Composition of commission -- Terms -- Vacancies. -- (a) The public utilities

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commission shall consist of three (3) five (5) electors selected with regard to their qualifications

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and experience in law and government, energy matters, economics and finance, engineering and

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accounting, and appointed by the governor with the advice and consent of the senate. At least

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three (3) of the five (5) commissioners shall not be, nor shall have been within the previous five

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(5) years, an employee, officer or director of any business whose activities are subject to

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regulation by the commission, or any affiliate thereof. The term of each commissioner shall be six

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(6) years. The director of administration, with the approval of the governor, shall allocate the

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position of each commissioner to one of the grades established by the pay plan for unclassified

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employees.

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      (b) Within thirty (30) days after May 16, 1968, the governor, with the advice and consent

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of the senate, shall appoint one commissioner and designate him or her as chairperson to serve

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until the first day of March, 1975, and until his or her successor is appointed and qualified, one

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commissioner to serve until the first day of March, 1973, and until his or her successor is

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appointed and qualified, and one commissioner to serve until the first day of March, 1971, and

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until his or her successor is appointed and qualified. Within thirty (30) days after January 1, 2004,

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the governor, with the advice and consent of the senate, shall appoint one commissioner to serve

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until the first day of March, 2010, and until his or her successor is appointed and qualified, and

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one commissioner to serve until the first day of March, 2008, and until his or her successor is

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appointed and qualified. During the month of February, 1971, and during the month of February

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biennially, thereafter, During the month prior to the expiration of the term of a commissioner, the

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governor, with the advice and consent of the senate shall appoint a commissioner to succeed the

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commissioner whose term will then next expire, to serve for a term of six (6) years commencing

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on the first day of March then next following, and until his or her successor is appointed and

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qualified. A commissioner shall be eligible to succeed him or herself. Upon the expiration of the

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term of the chairperson, the governor may designate any commissioner as chairperson.

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      (c) A vacancy in the office of a commissioner, other than by expiration, shall be filled in

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like manner as an original appointment, but only for the unexpired portion of the term. If a

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vacancy occurs when the senate is not in session, the governor shall appoint a person to fill the

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vacancy, but only until the senate shall next convene and give its advice and consent to a new

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appointment.

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     39-1-8. Quorum -- Meetings. -- Two (2) A majority of the commissioners shall

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constitute a quorum for the transaction of any business, except as provided in section 39-1-11.

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Meetings of the commission may be held at any time or place upon the call of any member, after

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a reasonable notice by mail or telegraph to the other members, and shall be held at such times and

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places as in the judgment of the commission will best serve the convenience of all parties in

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interest.

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     39-1-18. Hearings and records -- Certified copies. – (a) All hearings and orders of the

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commission and of the division, and the records thereof, shall be public and as such, any person

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shall be permitted to record all or any portion of a hearing by way of camera, video or tape

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recorder of any kind, unless a party to the hearing requests, and the chairperson or administrator

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grants the request, that such recording be prohibited for the protection of attorney-client privilege,

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confidentiality or other interest of the parties. All reports, records, files, books, and accounts in

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the possession of the commission or the division shall be open to inspection by the public at all

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reasonable times. The division may charge and collect reasonable fees for copies of official

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documents, orders, papers, and records, and for authenticating or certifying the same; provided

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that no fee shall be charged for single copies of official documents, orders, papers, and records,

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furnished to public officers of the state for use in their official capacity, nor for the annual reports

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in the ordinary course of distribution.

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     (b) Effective as of September 1, 2003, all filings made to the division or commission

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shall also be provided digitally in a manner established by the division. The commission may

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adopt rules exempting filings from this requirement provided that (i) no such exemption shall be

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made for filings by a state agency or by a utility serving fifty thousand (50,000) or more

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customers in the state and (ii) any filing so exempted shall be converted to digital format by the

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division so as to facilitate public access to such filings using the internet.

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     (c) In order to support the ability of the public and interested parties to stay informed of

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the activities of the commission and the division, and to promote awareness of utility

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restructuring, the division shall maintain a site on the internet through which the public may

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access:

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     (1) notices of and agendas of hearings;

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     (2) all filings that are available in digital format and that are not subject to protective

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orders;

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     (3) all orders, rules and regulations of the commission or administrator;

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     (4) announcements of, agendas for, and minutes of open meetings;

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     (5) a calendar of all forthcoming public meetings and hearings;

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     (6) current tariffs of all public utilities;

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     (7) a listing of all public utilities and nonregulated power producers, together with

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consumer contact information for each;

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     (8) consumer information on billing dispute resolution, retail access, conservation, and

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consumer assistance programs;

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     (9) demand side management programs available to residential, commercial and

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industrial customers;

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     (10) other information as the division deems relevant and useful to the public.

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     39-1-27.3. Electric distribution companies required to provide retail access and

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standard offer. – Electric distribution companies required to provide retail access,

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standard offer and last resort service. -- (a) To promote economic development and the

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creation and preservation of employment opportunities within the state, on July 1, 1997, each

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electric distribution company shall offer retail access from nonregulated power producers to all

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customers.

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      (1) All new commercial and industrial customers, including new manufacturing

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customers, commencing service on or after July 1, 1997, with an anticipated average annual

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demand of two hundred (200) kilowatts or greater;

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      (2) All existing manufacturing customer with an average annual demand of fifteen

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hundred (1500) kilowatts or greater; and

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      (3) All accounts in the name of the state, provided, however, no electric distribution

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company shall be required to release more than ten percent (10%) of its total kilowatt-hour sales

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to retail access pursuant to this subsection.

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      (b) On January 1, 1998, all electric distribution companies shall expand their offer of

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retail access to include existing manufacturing customers with an average annual demand of two

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hundred (200) kilowatts or greater and all accounts in the name of the cities and towns in Rhode

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Island, provided, however, no electric distribution company shall be required to release a total of

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more than twenty percent (20%) of its total kilowatt-hour sales to retail access pursuant to

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subsections (a) and (b).

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      (c) Retail access shall be implemented for all customers in Rhode Island within three (3)

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months after retail access is available to forty percent (40%) or more of the kilowatt-hour sales in

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New England including the total kilowatt-hour sales in Rhode Island; provided however, that if

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such retail access in New England has not occurred by July 1, 1998, then each electric

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distribution company shall expand its offer of retail access to all of the electric distribution

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company's remaining customers. The commission may extend this deadline for up to six (6)

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months for some or all customers if it determines that additional time is necessary to ensure that

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retail access can be extended to all customers on reasonable terms. Each electric distribution

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company shall notify all customers in its service territory of the options available to them to

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procure electric service at lease ninety (90) days before such customers become eligible for retail

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access. Upon request from any nonregulated power producer, an electric distribution company

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shall make available a list of the names and addresses of its customers that are, or within sixty

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(60) days are expected to become, eligible for retail access; provided, however, such lists shall

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not include customers that have submitted written requests to the electric distribution company

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that they be excluded from such lists.

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      (d) (b) Within three (3) months after retail access is available to forty percent (40%) or

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more of the kilowatt-hour sales in New England and extending tThrough year 2009, each electric

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distribution company shall arrange for a standard power supply offer ("standard offer") to

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customers that have not elected to enter into power supply arrangements with other nonregulated

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power suppliers. The power supply contract required for the standard offer shall be awarded by

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public competitive bidding to the lowest priced power supplier. The standard offer shall be priced

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such that the average revenue per kilowatt-hour received from the customer for such power

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together with approved distribution, transmission and transition charges shall equal the price that

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would have been paid under rates in effect during the twelve (12) month period ending September

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30, 1996 adjusted annually for eighty percent (80%) of the change in the consumer price index

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for the immediately preceding twelve (12) month period, and also for other factors reasonably

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beyond the control of the electric distribution company and its former wholesale power supplier

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including but not limited to changes in federal, state or local taxes or extraordinary fuel costs;

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provided, however, that adjustments to the standard offer for factors other than inflation must be

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approved by the commission. The standard offer is to be a price cap and may, after notice to the

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commission, be less than the maximum allowed at anytime for the generation component of the

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standard offer. The rates that are charged by the electric distribution company to customers for

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standard offer service shall be approved by the commission and shall be designed to recover the

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electric distribution company's costs and no more than the electric distribution company's costs;

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provided, that the commission may establish and/or implement a rate that averages the costs over

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periods of time. The electric distribution company shall not be entitled to recover any profit

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margin on the sale of standard offer power. The electric distribution company will be entitled to

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recover its costs incurred from providing the standard offer arising out of: (1) wholesale standard

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offer supply agreements with power suppliers in effect prior to January 1, 2002; (2) power supply

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arrangements that are approved by the commission after January 1, 2002; (3) power supply

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arrangements made pursuant to section 39-1-27.3.1; and (4) any other power supply related

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arrangements prudently made after January 1, 2002 to provide standard offer supply or to

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mitigate standard offer supply costs; provided, however, to the extent there are any cost recovery

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matters relating to the provision of standard offer service that have been deferred and are pending

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before the commission as of the effective date of this section, such cost recovery matters shall be

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governed by the statutory provisions in effect on the date of the action of the commission to defer

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its decision on the cost recovery matter. Subject to commission approval, the electric distribution

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company may enter into financial contracts designed to hedge fuel-related or other variable costs

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associated with power supply arrangements and the costs of any such financial contracts shall be

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recoverable in standard offer rates. The electric distribution company's standard offer revenues

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and its standard offer costs shall be accounted for and reconciled with interest at least annually.

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Any over recoveries shall be refunded and any under recoveries shall be recovered by the electric

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distribution company through a uniform adjustment factor approved by the commission. The

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commission shall have the discretion to apply such adjustment factor in any given instance to all

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customers or to such specific class of customers that the commission deems equitable under the

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circumstances provided that the distribution company recovers any under recovery in its entirety.

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Once a customer has elected to enter into a power supply arrangement with a nonregulated power

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producer, the electric distribution company shall not be required to arrange for the standard offer

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to such customer except as provided in section 39-1-27.3.1. No customer who initially elects the

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standard offer and then chooses an alternative supplier shall be required to pay any withdrawal

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fee or penalty to the provider of the standard offer unless such a penalty or withdrawal fee was

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agreed to as part of a contract; however, no residential customer shall be required to pay a penalty

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or withdrawal fee for choosing an alternative supplier. Nothing in this subsection shall be

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construed to restrict the right of any nonregulated power producer to offer to sell power to

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customers at a price comparable to that of the standard offer specified pursuant to this subsection.

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The electric distribution company may not terminate an existing standard offer wholesale supply

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agreement without the written consent of the division.

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      (e) On or before January 1, 1997, each retail distribution company shall file with the

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commission unbundled rates which separately identify charges for use of transmission and

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distribution facilities and provide for retail access in accordance with the schedule set forth in this

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section. Such unbundled rates shall also include transition charges calculated in accordance with

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section 39-1-27.4 and shall become effective on July 1, 1997. Such unbundled rates shall also

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include just and reasonable terms, conditions, and procedures for interconnection with small scale

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generating units located on the distribution system. If the federal energy regulatory commission

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(FERC) also requires such filings, then the retail distribution or transmission company may

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submit to the commission the same filing as provided to FERC to meet the intent of this

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subsection.

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     (f) (c) In recognition that electricity is an essential service, each electric distribution

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company shall, within three (3) months after retail access is available to forty percent (40%) or

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more of the kilowatt-hour sales in New England, arrange for a last resort power supply for

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customers who are no longer eligible to receive service under the standard offer and not

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adequately supplied by the market because they are unable to obtain or retain have left the

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standard offer for any reason and are not otherwise receiving electric service from nonregulated

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power producers. The electric distribution company shall periodically solicit bids from

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nonregulated power producers for such service at market prices plus a fixed contribution from the

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electric distribution company. Acceptance of bids by the electric distribution company and the

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terms and conditions for such last resort service shall be subject to approval by the commission.

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The bids requiring the lowest fixed contribution from the electric distribution company shall be

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accepted. procure last resort service supply from wholesale power suppliers. Prior to acquiring

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last resort supply, the electric distribution company will file with the commission a supply

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acquisition plan or plans that include the acquisition procedure, the pricing options being sought,

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and a proposed term of service for which last resort service will be acquired. The term of service

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may be short or long term and acquisitions may occur from time to time and for more than one

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supplier for segments of last resort service load over different terms, if appropriate. All such

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components of the acquisition plans, however, shall be subject to commission review and

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approval. Once an acquisition plan is approved by the commission, the electric distribution

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company shall be authorized to acquire last resort service supply consistent with the approved

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acquisition plan and recover its costs incurred from providing last resort service pursuant to the

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approved acquisition plan. The commission may periodically review the acquisition plan to

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determine whether it should be prospectively modified due to changed market conditions. The

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commission shall have the authority and discretion to approve special tariff conditions and rates

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proposed by the electric distribution company that the commission finds are in the public interest,

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including without limitation: (1) short and long term optional service at different rates; (2) term

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commitments or notice provisions before individual customers leave last resort service; (3) last

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resort service rates for residential or any other special class of customers that are different than

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the rates for other last resort customers; and/or (4) last resort service rates that are designed to

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encourage any class of customers to return to the market. The electric distribution company's last

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resort service revenues and its last resort service costs shall be accounted for and reconciled with

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interest at least annually. Any over recoveries shall be refunded and any under recoveries shall

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be recovered by the electric distribution company through a uniform adjustment factor approved

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by the commission. The commission shall have the discretion to apply such adjustment factor in

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any given instance to all customers or to such specific class of customers that the commission

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deems equitable under the circumstances provided that the distribution company recovers any

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under recovery in its entirety. Nothing in this section shall be construed to prohibit an electric

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distribution company or nonregulated power producer from terminating service provided

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hereunder in accordance with commission rules and regulations in the event of nonpayment of

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such service. All fixed contributions and any reasonable costs incurred by the electric distribution

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company in arranging this service shall be included in the distribution rates charged to all other

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customers. The commission may promulgate regulations to implement this section including the

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terms and conditions upon which last resort service is offered and provided to customers.

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     (d) If a customer being served by a nonregulated power producer pays any taxes assessed

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for electric service to the electric distribution company and the electric distribution company

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forwards such tax payment for the power portion of the bill to a nonregulated power producer for

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payment by the nonregulated power producer to the state, neither the customer nor the electric

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distribution company shall be liable for such taxes forwarded if the nonregulated power producer

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fails to remit such taxes to the state for any reason.

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     39-1-27.6. Standards of conduct. -- (a) An electric distribution company must conduct

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its business to conform with the standards of conduct specified in subsections (b) through (e) of

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this section.

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      (b) (1) Except as provided in subdivision (2) of this subsection and as authorized by the

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commission pursuant to section 39-1-27(g), the employees of the electric distribution company

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engaged in distribution system operations must function independently of its employees, or the

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employees of any of its affiliates, who are engaged in the business of a nonregulated power

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producer.

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      (2) Notwithstanding any other provisions in this section, in emergency circumstances

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affecting system reliability, electric distribution companies may take whatever steps are necessary

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to keep the system in operation. Electric distribution companies must report to the commission

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each emergency that resulted in any deviation from the standards of conduct, within twenty-four

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(24) hours of such deviation.

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      (c) (1) Any employee of any affiliate of an electric distribution company who is engaged

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in the business of a nonregulated power producer is prohibited from: conducting distribution

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system operations or reliability functions; and having access to the system control center or

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similar facilities used for distribution operations or reliability functions that differs in any way

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from the access available to other nonregulated power producers.

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      (2) Employees engaged in either an affiliated nonregulated power producer function or

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an electric distribution function are not precluded from transferring between such functions as

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long as such transfer is not used as a means to circumvent the standards of conduct of this section.

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Notices of any employee transfer to or from electric distribution company operation or reliability

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functions must be reported to the commission. The information to be reported must include: the

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name of the transferring employee, the respective titles held while performing each function (i.e.

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on behalf of the electric distribution company and the nonregulated power producer), and the

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effective date of the transfer.

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      (3) Any employee of any affiliate of an electric distribution company who is engaged in

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the nonregulated power producer function must not have preferential access to any information

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about the electric distribution company's distribution system that is not available to all

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nonregulated power producers.

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      (4) An electric distribution company is responsible for ensuring that any employee of the

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electric distribution company may not disclose to employees of any affiliate engaged in a

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nonregulated power producer function any information concerning the distribution system of the

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electric distribution company or the distribution system of another (including information

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received from non-affiliates or information about distribution system operations, capability, price,

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curtailments, auxiliary services, and the like) through non-public communications that is not at

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the same time available to all nonregulated power producers without restriction. If an employee

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of the electric distribution company engaged in distribution system operations or reliability

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functions discloses information in a manner contrary to the requirements of the standards of

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conduct, the electric distribution company must immediately report such information to the

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commission. An electric distribution company may not share any market information, acquired

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from nonaffiliated, nonregulated power producers or developed in the course of responding to

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requests for distribution service, with any employee of an affiliate engaged in a nonregulated

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power producer function.

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      (5) Employees of the electric distribution company engaged in distribution system

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operations or reliability functions must strictly enforce all tariff provisions relating to the sale or

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purchase of retail access distribution service, if these provisions did not provide for the use of

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discretion. Employees of the electric distribution company engaged in distribution system

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operations must apply all tariff provisions relating to the sale or purchase of retail access

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distribution service in a fair and impartial manner that treats all customers (including the electric

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distribution company and any affiliate) in a non-discriminatory manner, if these provisions

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involve discretion. The electric distribution company must keep a log, available for commission

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audit, detailing the circumstances and manner in which it exercised its discretion under any terms

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of its tariffs. The electric distribution company may not, through its tariffs or otherwise, give

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preference to purchases or sales made on behalf of its own power customers, or those of an

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affiliate, over the interests of any other customer in matters relating to the sale or purchase of

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distribution service (including issues of price, curtailments, scheduling, priority, ancillary

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services, and the like). If the electric distribution company offers a discount on purchases of

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distribution service made on behalf of its own power customers or those of any affiliate, then, at

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the same time, it must offer to provide the same discount to all similarly situated distribution

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service customers. All employees of the electric distribution company must apply all tariff

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provisions in a fair and impartial manner that treats all customers (including those of an affiliated

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nonregulated power producer) in a nondiscriminatory manner. The electric distribution company

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may not offer a discount on purchases of distribution service where such discount is conditioned

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upon such customers purchasing power from a nonregulated power producer that is affiliated with

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the electric distribution company, nor shall an electric distribution company give preferences of

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any type in the provision of distribution service for customers purchasing power supply from a

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nonregulated power producer that is affiliated with the electric distribution company.

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      (d) An electric distribution company must maintain its books of accounts and records

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separately from those of its affiliates and these must be available for commission inspection.

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      (e) The electric distribution company must maintain in a public place, and file with the

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commission, current written procedures implementing the standards of conduct in such detail as

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will enable customers and the commission to determine that the electric distribution company is

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in compliance with the requirements of this section.

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     SECTION 2. Chapter 39-1 of the General Laws entitled "Public Utilities Commission" is

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hereby amended by adding thereto the following section:

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     39-1-27.3.1. Option to return to standard offer. – (a) The commission may,

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notwithstanding the provisions of section 27.3, allow customers no longer eligible for standard

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offer service to return to standard offer service, subject to the process set forth in this section.

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The process shall be as follows: first, the commission shall hold hearings to determine whether

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there is a sufficient presence of nonregulated power producers offering reasonably priced power

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supply service to customers in Rhode Island. If the commission determines that such market

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conditions are not present, the commission shall direct the electric distribution company to

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prepare and file a plan that creates an option for customers to return to the standard offer

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including terms and conditions for customers returning and the manner in which the power supply

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will be procured. Such plan may include term commitments or notice provisions before

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nonresidential customers are permitted to leave standard offer service once they return. The

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commission shall conduct hearing to review the electric distribution company's plan and issue an

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order approving the plan, including any modifications the commission deems appropriate.

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     (b) Once the plan is approved by the commission, the electric distribution company and

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the division shall jointly prepare a request for power supply proposals ("RFP") consistent with the

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commission's order, develop reasonable bidder qualification, issue the RFP, review the bids, and

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jointly select a winning bidder or bidders to supply power. If the electric distribution company

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and the division mutually agree that the bids are unreasonably high, they shall have the discretion

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to reject all bids and re-issue an RFP at a later date that they deem appropriate. If the electric

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distribution company and the division cannot agree on any matter, the dispute shall be submitted

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to the commission for resolution. Once the winning bidder or bidders are selected, a supply

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contract or contracts on terms reasonably acceptable to the distribution company and the division

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will be executed by the electric distribution company and no further regulatory approval shall be

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required. However, the results of the bidding process shall be filed with the commission.

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     (c) All of the costs associated with the new supply contract(s) will be recovered through

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standard offer rates and the electric distribution company's fully reconciling adjustment provision.

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     (d) The standard offer rates for the residential customers returning to the standard offer

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shall be the same as the standard offer rate paid by all other standard offer customers. The

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standard offer rates for the nonresidential customers returning to the standard offer shall be

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determined by the commission after the commission reviews the costs of the power supply

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resulting from the bid process. The rate for nonresidential customers returning to the standard

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offer may differ from those of other customers, if the commission deems such rate differential to

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be appropriate.

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     (e) Any customer returning to the standard offer may not enter into any agreement to use

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standard offer service to arbitrage the market with any supplier while such customer is on the

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standard offer and it shall be unlawful for any nonregulated power producer to enter into such an

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agreement.

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     (f) Nothing in this section shall be construed to create a legally enforceable entitlement

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for any supplier to require the electric distribution company to select any particular bid and/or

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sign a contract with such supplier.

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     (g) The requirements set forth in this section shall not apply to Pascoag Fire District or

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Block Island Power Company.

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     SECTION 3. Section 39-2-1.2 of the General Laws in Chapter 39-2 entitled "Duties of

11-18

Utilities and Carriers" is hereby amended to read as follows:

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     39-2-1.2. Utility base rate -- Prohibition of inclusion of advertising in base rate. –

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Utility base rate – Advertising, demand side management and renewables. -- (a) In addition

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to costs prohibited in section 39-1-27.4(b), no public utility distributing or providing heat,

11-22

electricity, or water to or for the public shall include as part of its base rate any expenses for

11-23

advertising, either direct or indirect, which promotes the use of its product or service, or is

11-24

designed to promote the public image of the industry. No public utility may furnish support of

11-25

any kind, direct, or indirect, to any subsidiary, group, association, or individual for advertising

11-26

and include the expense as part of its base rate. Notwithstanding the foregoing, nothing contained

11-27

in this section shall be deemed as prohibiting the inclusion in the base rate of expenses incurred

11-28

for advertising, informational or educational in nature, which is designed to promote public safety

11-29

conservation of the public utility's product or service. The public utilities commission shall

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promulgate such rules and regulations as are necessary to require public disclosure of all

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advertising expenses of any kind, direct or indirect, and to otherwise effectuate the provisions of

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this section.

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      (b) Effective as of January 1, 1997, and for a period of ten (10) years thereafter, each

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electric distribution company shall include a charge of 2.3 mills per kilowatt-hour delivered to

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fund demand side management programs and renewable energy resources. The allocation of this

12-2

revenue between demand side management programs and renewable energy resources shall be

12-3

determined by the commission. (b) Effective as of January 1, 2003, and for a period of ten (10)

12-4

years thereafter, each electric distribution company shall include charges of 2.0 mills per

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kilowatt-hour delivered to fund demand side management programs and 0.3 mills per kilowatt-

12-6

hour delivered to fund renewable energy programs. Existing charges for these purposes and their

12-7

method of administration shall continue through December 31, 2002. Thereafter, the electric

12-8

distribution company shall establish two (2) separate accounts, one (1) for demand side

12-9

management programs, which shall be administered and implemented by the distribution

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company, subject to the regulatory reviewing authority of the commission, and one (1) for

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renewable energy programs, which shall be administered by the state energy office.

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     During the ten (10) year period the commission may, in its discretion, after notice and

12-13

public hearing, increase the sums for demand side management and renewable resources;

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thereafter, the commission shall, after notice and public hearing, determine the appropriate charge

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for these programs. The energy office and the administrator of the renewable energy programs

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shall seek to secure for the state an equitable and reasonable portion of renewable energy credits

12-17

or certificates created by projects funded through those programs. As used in this section,

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renewable energy resources shall mean power generation technologies that produce electricity

12-19

from wind energy, small scale (less than 100 megawatts) hydropower plants that do not require

12-20

the construction of new dams, solar energy, and sustainably managed biomass. Fuel cells may be

12-21

considered an energy efficiency technology to be included in demand sided management

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programs. Special rates for low income customers in effect as of August 7, 1996 shall be

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continued, and the costs of all such discounts shall be included in the distribution rates charged to

12-24

all other customers. Nothing in this section shall be construed as prohibiting an electric

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distribution company from offering any special rates or programs for low income customers

12-26

which are not in effect as of August 7, 1996, subject to the approval by the commission.

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     (c) The director of the state energy office is authorized and shall enter into a contract with

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a contractor for the effective administration of the renewable energy programs funded by this

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section. The director shall initiate the competitive bid process by the issuance and advertisement

12-30

of specifications and request for proposals, on or before September 1, 2002. The contract

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resulting from the competitive bid process shall be awarded to become effective for a three (3)

12-32

year period commencing no later than January 1, 2003. A competitive bid and contract award for

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administration of the renewable energy programs shall occur every three (3) years thereafter.

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     SECTION 4. Chapter 39-2 of the General Laws entitled "Duties of Utilities and

13-1

Carriers" is hereby amended by adding thereto the following section:

13-2

     39-2-1.4. Reasonable backup or supplemental rates. -- (a) Electricity produced by

13-3

cogeneration and small power production can be of benefit to the public as part of the total energy

13-4

supply of the entire electric grid of the state or consumed by a cogenerator or small power

13-5

producer. Subject to compliance with applicable rules governing such service, public utilities

13-6

shall provide transmission or distribution service to enable a retail customer to transmit electrical

13-7

power generated by the customer at one (1) location to the customer's facilities at another

13-8

location, if the commission finds that the provision of this service, and the charges, terms, and

13-9

other conditions associated with the provision of this service, are not likely to result in higher cost

13-10

electric service to the utility's general body of retail and wholesale customers or adversely affect

13-11

the adequacy or reliability of electric service to all customers.

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     (b) Each electric distribution company shall provide backup and supplemental service to

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any customer who is self-generating electricity and meets reasonable interconnection

13-14

requirements designed to protect the distribution and transmission system. The commission shall

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ensure that such backup and supplemental rates made, exacted, demanded or collected by any

13-16

public utility from a customer who is self-generating shall be just and reasonable and may not be

13-17

unduly discriminatory. Any backup and supplemental rate tariffs in effect as of May 2002 may

13-18

remain in effect as designed through December 31, 2004. Commencing January 1, 2005, the

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backup and supplemental rates shall be cost based but may be discounted as provided for in

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paragraph (c) below.

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     (c) Notwithstanding the rate design criteria set forth in paragraph (b) above, the

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commission may permit or require discounted backup distribution service rates in order to

13-23

encourage economically efficient cogeneration or small power production projects if it finds such

13-24

discounts to be in the public interest, provided, however, that any revenue not recovered by the

13-25

electric distribution company as a result of such discounted distribution rates shall be accounted

13-26

for and recovered in the rates assessed on all customers. The commission shall, in determining

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the public interest in distributed generating facilities, consider reduced environmental impacts,

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increased energy efficiency, reduced transmission losses and congestion, effects on electric

13-29

system reliability and other factors the commission may deem relevant.

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     (d) The provisions of this section shall be effective as of January 1, 2005.

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     SECTION 5. Chapter 39-3 of the General Laws entitled "Regulatory Powers of

13-32

Administration" is hereby amended by adding thereto the following sections:

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     39-3-1.2. Aggregation of electrical load by municipality or group of municipalities. –

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(a) The legislative authority of a municipality may adopt an ordinance or resolution, under which

14-1

it may aggregate in accordance with this section one or more classes of the retail electrical loads

14-2

located, respectively, within the municipality or town and, for that purpose, may enter into service

14-3

agreements to facilitate for those loads the sale and purchase of electricity. The legislative

14-4

authority also may exercise such authority jointly with any other such legislative authority. An

14-5

ordinance or resolution under this section shall specify whether the aggregation will occur only

14-6

with the prior consent of each person owning, occupying, controlling, or using an electric load

14-7

center proposed to be aggregated or will occur automatically for all such persons pursuant to the

14-8

opt-out requirements of this section. Nothing in this section, however, authorizes the aggregation

14-9

of retail electric loads of an electric load center that is located in the certified territory of a

14-10

nonprofit electric supplier or an electric load center served by transmission or distribution

14-11

facilities of a municipal electric utility. If an ordinance or resolution adopted under this section

14-12

specifies that aggregation will occur automatically as described in this section, the ordinance or

14-13

resolution shall direct the board of canvassers to submit the question of the authority to aggregate

14-14

to the electors of the respective municipality or town at a special election on the day of the next

14-15

primary or general election in the municipality or town. The legislative authority shall certify a

14-16

copy of the ordinance or resolution to the board of canvassers not less than seventy-five (75) days

14-17

before the day of the special election. No ordinance or resolution adopted under this section that

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provides for an election under this section shall take effect unless approved by a majority of the

14-19

electors voting upon the ordinance or resolution at the election held pursuant to this section.

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     No legislative authority pursuant to an ordinance or resolution under this section that

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provides for automatic aggregation as described in this section, shall aggregate the electrical load

14-22

of any electric load center located within its jurisdiction unless it in advance clearly discloses to

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the person owning, occupying, controlling, or using the load center that the person will be

14-24

enrolled automatically in the aggregation program and will remain so enrolled unless the person

14-25

affirmatively elects by a stated procedure not to be so enrolled. The disclosure shall state

14-26

prominently the rates, charges, and other terms and conditions of enrollment. The stated

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procedure shall allow any person enrolled in the aggregation program the opportunity to opt-out

14-28

of the program every two (2) years, without paying a switching fee. Any such person that leaves

14-29

the aggregation program pursuant to the stated procedure shall default to the last resort service

14-30

until the person chooses an alternative supplier.

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     A governmental aggregator under this section is not a public utility engaging in the

14-32

wholesale purchase and resale of electricity, and the aggregated service is not a wholesale utility

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transaction. A governmental aggregator shall be subject to supervision and regulation by the

14-34

commission only to the extent of any competitive retail electric service it provides and

15-1

commission authority.

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     A town may initiate a process to authorize aggregation by a majority vote of town

15-3

meeting or town council. A city may initiate a process to authorize aggregation by a majority

15-4

vote of the city council, with the approval of the mayor, or the city manager. Two (2) or more

15-5

municipalities may as a group initiate a process jointly to authorize aggregation by a majority

15-6

vote of each particular municipality as herein required.

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     Upon the applicable requisite authority under this section, the legislative authority shall

15-8

develop a plan of operation and governance for the aggregation program so authorized. Before

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adopting a plan under this section, the legislative authority shall hold at least two (2) public

15-10

hearings on the plan. Before the first hearing, the legislative authority shall publish notice of the

15-11

hearings once a week for two (2) consecutive weeks in a newspaper of general circulation in the

15-12

jurisdiction. The notice shall summarize the plan and state the date, time, and location of each

15-13

hearing. A municipality or group of municipalities establishing load aggregation pursuant to this

15-14

section shall, in consultation with the commission, develop a plan, for review by its citizens,

15-15

detailing the process and consequences of aggregation. The plan shall identify which classes of

15-16

customers may participate, based on their applicable electric distribution company tariff or rate

15-17

schedule. Any municipal load aggregation plan established pursuant to this section shall provide

15-18

for universal access to all applicable customers and equitable treatment of applicable classes of

15-19

customers and shall meet any requirements established by law or the commission concerning

15-20

aggregated service. Said plan shall be filed with the commission, for its final review and

15-21

approval, and shall include, without limitation, an organizational structure of the program, its

15-22

operations, and its funding; methods of establishing rates and allocating costs among participants;

15-23

the methods for entering and terminating agreements with other entities; the rights and

15-24

responsibilities of program participants; and termination of the program. The plan must also

15-25

include the terms and conditions under which retail customers who have chosen to opt-out of the

15-26

aggregated service may take service from the aggregated entity. Prior to its decision, the

15-27

commission shall conduct a public hearing. Following approval of said plan, the legislative

15-28

authority may solicit bids from nonregulated power producers pursuant to the methods

15-29

established by the plan. The legislative authority shall report the results of this solicitation and

15-30

proposed agreement awards to the commission, which shall have five (5) business days in which

15-31

it may suspend such awards if the solicitation or awards are not in conformance with the plan or if

15-32

the cost for energy would in the first year exceed the cost of that energy on the standard offer, as

15-33

established pursuant to this chapter, for citizens in the municipality or group of municipalities,

15-34

unless the applicant can demonstrate that the cost for energy under the aggregation plan will be

16-1

lower than the standard offer in the subsequent years or the applicant can demonstrate that such

16-2

excess cost is due to the purchase of renewable energy as described by the commission. If the

16-3

commission does not suspend the proposed contract awards within five (5) business days of

16-4

filing, the legislative authority shall have the right to award the proposed agreements.

16-5

     Any retail customer in a municipality with an approved aggregation plan may elect

16-6

instead to receive retail supply from another licensed retail supplier or from the local distribution

16-7

company. Within thirty (30) days of the date the aggregated entity is fully operational,

16-8

ratepayers who have not affirmatively elected an alternative authorized supplier shall be

16-9

transferred to the aggregated entity subject to the opt-out provision herein. Following adoption of

16-10

aggregation as specified above, the program shall allow any retail customer to opt-out and choose

16-11

any supplier or provider such retail customer wishes. Nothing in this section shall be construed

16-12

as authorizing any city or town or any municipal retail load aggregator to restrict the ability of

16-13

retail electric customers to obtain or receive service from any authorized provider thereof.

16-14

     It shall be the duty of the aggregated entity to fully inform participating ratepayers in

16-15

advance of automatic enrollment that they are to be automatically enrolled and that they have the

16-16

right to opt-out of the aggregated entity without penalty. In addition, such disclosure shall

16-17

prominently state all charges to be made and shall include full disclosure of the standard offer

16-18

rate, how to access it, and the fact that it is available to them without penalty, if they are currently

16-19

on standard offer service. The commission shall furnish, without charge, to any citizen a list of all

16-20

other supply options available to them in a meaningful format that shall enable comparison of

16-21

price and product.

16-22

     (b) The commission shall promulgate rules by which the legislative authority may request

16-23

information from the electric distribution company or companies whose customers would be

16-24

included in its plan. Such rules shall ensure that municipalities have reasonable and timely access

16-25

to information pertinent to the formation of the plan and solicitation of bids to serve customers,

16-26

that confidentiality of individuals is protected, that charges for production of such data are

16-27

reasonable and not unduly burdensome to the legislative authority.

16-28

      SECTION 6. This act shall take effect upon passage.

=======

LC00909/SUB B/2

=======

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS

***

17-1

     This act would make various amendments to the public utilities law.

17-2

     This act would take effect upon passage.

=======

LC00909/SUB B/2

=======

S. 2002 -- H 7786

SUBSTITUTE B

A N A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS

======================================================================

Presented by