2012 -- S 2792

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LC02253

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS - PUBLIC UTILITIES COMMISSION

     Introduced By: Senators Walaska, Lombardo, Sosnowski, Bates, and McCaffrey

     Date Introduced: March 21, 2012

     Referred To: Senate Environment & Agriculture

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 39-1-27.7 of the General Laws in Chapter 39-1 entitled "Public

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Utilities Commission" is hereby amended to read as follows:

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     39-1-27.7. System reliability and least-cost procurement. -- Least-cost procurement

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shall comprise system reliability and energy efficiency and conservation procurement as provided

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for in this section and supply procurement as provided for in section 39-1-27.8, as complementary

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but distinct activities that have as common purpose meeting electrical and natural gas energy

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needs in Rhode Island, in a manner that is optimally cost-effective, reliable, prudent and

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environmentally responsible.

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      (a) The commission shall establish not later than June 1, 2008, standards for system

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reliability and energy efficiency and conservation procurement, which shall include standards and

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guidelines for:

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      (1) System reliability procurement, including but not limited to:

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      (i) Procurement of energy supply from diverse sources, including, but not limited to,

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renewable energy resources as defined in chapter 26 of this title;

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      (ii) Distributed generation, including, but not limited to, renewable energy resources and

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thermally leading combined heat and power systems, which is reliable and is cost-effective, with

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measurable, net system benefits;

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      (iii) Demand response, including, but not limited to, distributed generation, back-up

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generation and on-demand usage reduction, which shall be designed to facilitate electric customer

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participation in regional demand response programs, including those administered by the

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independent service operator of New England ("ISO-NE") and/or are designed to provide local

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system reliability benefits through load control or using on-site generating capability;

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      (iv) To effectuate the purposes of this division, the commission may establish standards

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and/or rates (A) for qualifying distributed generation, demand response, and renewable energy

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resources; (B) for net-metering; (C) for back-up power and/or standby rates that reasonably

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facilitate the development of distributed generation; and (D) for such other matters as the

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commission may find necessary or appropriate.

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      (2) Least-cost procurement, which shall include procurement of energy efficiency and

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energy conservation measures that are prudent and reliable and when such measures are lower

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cost than acquisition of additional supply, including supply for periods of high demand.

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      (b) The standards and guidelines provided for by subsection (a) shall be subject to

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periodic review and as appropriate amendment by the commission, which review will be

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conducted not less frequently than every three (3) years after the adoption of the standards and

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guidelines.

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      (c) To implement the provisions of this section:

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      (1) The commissioner of the office of energy resources and the energy efficiency and

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resources management council, either or jointly or separately, shall provide the commission

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findings and recommendations with regard to system reliability and energy efficiency and

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conservation procurement on or before March 1, 2008, and triennially on or before March 1,

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thereafter through March 1, 2017.

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      (2) The commission shall issue standards not later than June 1, 2008, with regard to

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plans for system reliability and energy efficiency and conservation procurement, which standards

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may be amended or revised by the commission as necessary and/or appropriate.

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      (3) The energy efficiency and resources management council shall prepare by July 15,

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2008, a reliability and efficiency procurement opportunity report which shall identify

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opportunities to procure efficiency, distributed generation, demand response and renewables,

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which report shall be submitted to the electrical distribution company, the commission, the office

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of energy resources and the joint committee on energy.

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      (4) Each electrical and natural gas distribution company shall submit to the commission

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on or before September 1, 2008, and triennially on or before September 1, thereafter through

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September 1, 2017, a plan for system reliability and energy efficiency and conservation

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procurement. In developing the plan, the distribution company may seek the advice of the

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commissioner and the council. The plan shall include measurable goals and target percentages for

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each energy resource, pursuant to standards established by the commission, including efficiency,

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distributed generation, demand response, combined heat and power, and renewables.

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      (5) The commission shall issue an order approving all energy efficiency measures that

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are cost effective and lower cost than acquisition of additional supply, with regard to the plan

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from the electrical and natural gas distribution company, and reviewed and approved by the

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energy efficiency and resources management council, and any related annual plans, and shall

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approve a fully reconciling funding mechanism to fund investments in all efficiency measures

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that are cost effective and lower cost than acquisition of additional supply, not greater than sixty

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(60) days after it is filed with the commission.

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      (6) Each electrical and natural gas distribution company shall provide a status report,

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which shall be public, on the implementation of least cost procurement on or before December

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15, 2008, and on or before February 1, 2009, to the commission, the division, the commissioner

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of the office of energy resources and the energy efficiency and resources management council

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which may provide the distribution company recommendations with regard to effective

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implementation of least cost procurement. The report shall include the targets for each energy

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resource included in the order approving the plan and the achieved percentage for energy

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resource, including the achieved percentages for efficiency, distributed generation, demand

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response, combined heat and power, and renewables.

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      (i) Beginning on or before January 1, 2013 each electric distribution company shall, to

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the extent eligible projects are available and conforming applications are submitted, fund

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investments in at least twenty megawatts (20 MW) of combined heat and power installations at

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commercial, institutional or industrial facilities. The distribution company and commission shall

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allocate at least fifteen percent (15%) of the demand side management funds collected pursuant to

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section 39-2-1.2 to fund combined heat and power installations. Such investments shall be made

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to achieve the energy efficient targets established in the triennial plan for system reliability and

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energy efficiency and conservation procurement, and shall be included in the distribution

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company’s 2013 energy efficiency program plan submitted to the commission. In order to

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effectuate this provision, the commission shall amend or revise as necessary the standards

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adopted pursuant to subdivision (c)(2) of this section no later than September 1, 2012.

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      (d) If the commission shall determine that the implementation of system reliability and

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energy efficiency and conservation procurement has caused or is likely to cause under or over-

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recovery of overhead and fixed costs of the company implementing said procurement, the

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commission may establish a mandatory rate adjustment clause for the company so affected in

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order to provide for full recovery of reasonable and prudent overhead and fixed costs.

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      (e) The commission shall conduct a contested case proceeding to establish a performance

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based incentive plan which allows for additional compensation for each electric distribution

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company and each company providing gas to end-users and/or retail customers based on the level

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of its success in mitigating the cost and variability of electric and gas services through

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procurement portfolios.

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     SECTION 2. This act shall take effect upon passage.

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LC02253

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS - PUBLIC UTILITIES COMMISSION

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     This act would require all electrical distribution companies to fund a percentage of the

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investments in twenty megawatts (20 MW) combined heat and power facilities, in order to

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achieve the energy efficiency targets, and would require the public utilities commission to amend

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or revise its standards accordingly.

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     This act would take effect upon passage.

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LC02253

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