2013 -- S 0901

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LC02392

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

____________

A N A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- THE ENERGY REFORM ACT

OF 2013

     Introduced By: Senator V. Susan Sosnowski

     Date Introduced: May 02, 2013

     Referred To: Senate Environment & Agriculture

It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 39-26-2, 39-26-4 and 39-26-5 of the General Laws in Chapter 39-

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26 entitled "Renewable Energy Standard" are hereby amended to read as follows:

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     39-26-2. Definitions. -- When used in this chapter:

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      (1) "Alternative compliance payment" means a payment to the Renewable Energy

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Development Fund of fifty dollars ($50.00) per megawatt-hour of renewable energy obligation, in

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2003 dollars, adjusted annually up or down by the consumer price index, which may be made in

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lieu of standard means of compliance with this statute;

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      (2) "Commission" means the Rhode Island public utilities commission;

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      (3) "Compliance year" means a calendar year beginning January 1 and ending December

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31, for which an obligated entity must demonstrate that it has met the requirements of this statute;

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      (4) "Customer-sited generation facility" means a generation unit that is interconnected on

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the end-use customer's side of the retail electricity meter in such a manner that it displaces all or

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part of the metered consumption of the end-use customer;

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      (5) "Electrical energy product" means an electrical energy offering, including, but not

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limited to, last resort and standard offer service, that can be distinguished by its generation

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attributes or other characteristics, and that is offered for sale by an obligated entity to end-use

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customers;

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      (6) "Eligible biomass fuel" means fuel sources including brush, stumps, lumber ends and

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trimmings, wood pallets, bark, wood chips, shavings, slash and other clean wood that is not

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mixed with other solid wastes; agricultural waste, food and vegetative material; energy crops;

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landfill methane; biogas; or neat bio-diesel and other neat liquid fuels that are derived from such

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fuel sources;

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      (7) "Eligible renewable energy resource" means resources as defined in section 39-26-5;

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      (8) "End-use customer" means a person or entity in Rhode Island that purchases

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electrical energy at retail from an obligated entity;

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      (9) "Existing renewable energy resources" means generation units using eligible

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renewable energy resources and first going into commercial operation before December 31, 1997

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January 1, 2005, with the exception of a large-scale hydropower facility as defined under

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subdivision 39-26-2(12);

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      (10) "Generation attributes" means the nonprice characteristics of the electrical energy

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output of a generation unit including, but not limited to, the unit's fuel type, emissions, vintage

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and policy eligibility;

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      (11) "Generation unit" means a facility that converts a fuel or an energy resource into

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electrical energy;

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     (12) "Large-scale hydropower facility" means an existing or new facility greater than

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thirty megawatts (30 MW) and which includes one or more hydroelectric turbine generators. An

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existing or new large-scale hydropower facility shall be eligible to apply under the long-term

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contracting standard as defined under chapter 39-26.1, but is not eligible to apply under section

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39-26-4.

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     (12)(13) "NE-GIS" means the generation information system operated by NEPOOL, its

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designee or successor entity, which includes a generation information database and certificate

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system, and that accounts for the generation attributes of electrical energy consumed within

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NEPOOL;

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      (13)(14) "NE-GIS certificate" means an electronic record produced by the NE-GIS that

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identifies the relevant generation attributes of each megawatt-hour accounted for in the NE-GIS;

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      (14)(15) "NEPOOL" means the New England Power Pool or its successor;

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      (15)(16) "New renewable energy resources" means generation units using eligible

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renewable energy resources and first going into commercial operation after December 31, 1997

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January 1, 2005, with the exception of a large-scale hydropower facility, which is only eligible to

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apply under chapter 39-26.1; or the incremental output of generation units using eligible

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renewable energy resources that have demonstrably increased generation in excess of ten percent

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(10%) using eligible renewable energy resources through capital investments made after

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December 31, 1997 January 1, 2005; but in no case involve any new impoundment or diversion

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of water with an average salinity of twenty (20) parts per thousand or less;

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      (16)(17) "Obligated entity" means a person or entity that sells electrical energy to end-

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use customers in Rhode Island, including, but not limited to: nonregulated power producers and

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electric utility distribution companies, as defined in section 39-1-2, supplying standard offer

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service, last resort service, or any successor service to end-use customers; including Narragansett

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Electric, but not to include Block Island Power Company as described in section 39-26-7 or

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Pascoag Utility District;

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      (17)(18) "Off-grid generation facility" means a generation unit that is not connected to a

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utility transmission or distribution system;

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     (19) "Office" means the Rhode Island office of energy resources;

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      (18)(20) "Reserved certificate" means a NE-GIS certificate sold independent of a

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transaction involving electrical energy, pursuant to Rule 3.4 or a successor rule of the operating

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rules of the NE-GIS;

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      (19)(21) "Reserved certificate account" means a specially designated account established

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by an obligated entity, pursuant to Rule 3.4 or a successor rule of the operating rules of the NE-

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GIS, for transfer and retirement of reserved certificated from the NE-GIS;

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      (20)(22) "Self-generator" means an end-use customer in Rhode Island that displaces all

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or part of its retail electricity consumption, as metered by the distribution utility to which it

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interconnects, through the use of a customer-sited generation facility, the ownership of any such

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facility shall not be considered an obligated entity as a result of any such ownership arrangement;

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      (21)(23) "Small hydro Small-scale hydropower facility" means a facility employing one

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or more hydroelectric turbine generators and with an aggregate capacity not exceeding thirty (30)

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megawatts. For purposes of this definition, "facility" shall be defined in a manner consistent with

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Title 18 of the Code of Federal Regulations, section 92.201 et seq.; provided, however, that the

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size of the facility is limited to thirty (30) megawatts, rather than eighty (80) megawatts.

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      (22)(24) "Renewable energy resource" means any one or more of the renewable energy

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resources described in subsection 39-26-5(a) of this chapter.

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     39-26-4. Renewable energy standard. -- (a) Starting in compliance year 2007, all

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obligated entities shall obtain at least three percent (3%) of the electricity they sell at retail to

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Rhode Island end-use customers, adjusted for electric line losses, from eligible renewable energy

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resources, with the exception of a large-scale hydropower facility, which is only eligible to apply

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under chapter 39-26.1, escalating, according to the following schedule:

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      (1) At least three percent (3%) of retail electricity sales in compliance year 2007;

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      (2) An additional one half of one percent (0.5%) of retail electricity sales in each of the

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following compliance years 2008, 2009, 2010;

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      (3) An additional one percent (1%) of retail electricity sales in each of the following

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compliance years 2011, 2012, 2013, 2014, provided that the commission has determined the

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adequacy, or potential adequacy, of renewable energy supplies to meet these percentage

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requirements;

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      (4) An additional one and one half percent (1.5%) of retail electricity sales in each of the

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following compliance years 2015, 2016, 2017, 2018 and 2019, provided that the commission has

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determined the adequacy, or potential adequacy of renewable energy supplies to meet these

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percentage requirements;

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      (5) In 2020 and each year thereafter, the minimum renewable energy standard

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established in 2019 shall be maintained unless the commission, in consultation with the office,

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shall determine that such maintenance is no longer necessary for either amortization of

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investments in new renewable energy resources or for maintaining targets and objectives for

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renewable energy.

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      (b) For each obligated entity and in each compliance year, the amount of retail electricity

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sales used to meet obligations under this statute that is derived from existing renewable energy

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resources shall not exceed two percent (2%) of total retail electricity sales.

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      (c) The minimum renewable energy percentages set forth in subsection (a) above shall be

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met for each electrical energy product offered to end-use customers, in a manner that ensures that

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the amount of renewable energy of end-use customers voluntarily purchasing renewable energy is

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not counted toward meeting such percentages.

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      (d) To the extent consistent with the requirements of this chapter, compliance with the

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renewable energy standard may be demonstrated through procurement of NE-GIS certificates

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relating to generating units certified by the commission as using eligible renewable energy

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sources, as evidenced by reports issued by the NE-GIS administrator. Procurement of NE-GIS

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certificates from off-grid and customer-sited generation facilities, if located in Rhode Island and

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verified by the commission as eligible renewable energy resources, may also be used to

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demonstrate compliance. With the exception of contracts for generation supply entered into prior

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to 2002, initial title to NE-GIS certificates from off-grid and customer-sited generation facilities

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and from all other eligible renewable energy resources shall accrue to the owner of such a

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generation facility, unless such title has been explicitly deemed transferred pursuant to contract or

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regulatory order.

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      (e) In lieu of providing NE-GIS certificates pursuant to subsection (d) of this section, an

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obligated entity may also discharge all or any portion of its compliance obligations by making an

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alternative compliance payment to the Renewable Energy Development Fund established

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pursuant to section 39-26-7.

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     (f) The electric distribution company shall, in consultation with the office and the

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commission, participate in regional procurements for renewable energy resources.

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     39-26-5. Renewable energy resources. -- (a) Renewable energy resources are:

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      (1) Direct solar radiation;

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      (2) The wind;

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      (3) Movement or the latent heat of the ocean;

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      (4) The heat of the earth;

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      (5) Small hydro Small-scale hydropower facilities;

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     (6) Large-scale hydropower facilities, as defined in subdivision 39-26-2(12);

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      (6)(7) Biomass facilities using eligible biomass fuels and maintaining compliance with

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current air permits; eligible biomass fuels may be co-fired with fossil fuels, provided that only the

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renewable energy fraction of production from multi-fuel facilities shall be considered eligible;

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      (7)(8) Fuel cells using the renewable resources referenced above in this section;

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      (8)(9) Waste-to-energy combustion of any sort or manner shall in no instance be

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considered eligible except for fuels identified in section 39-26-2(6).

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      (b) For the purposes of the regulations promulgated under this chapter, eligible

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renewable energy resources are generation units in the NEPOOL control area using renewable

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energy resources as defined in this section.

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      (c) A generation unit located in an adjacent control area outside of the NEPOOL may

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qualify as an eligible renewable energy resource, but the associated generation attributes shall be

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applied to the renewable energy standard only to the extent that the energy produced by the

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generation unit is actually delivered into NEPOOL for consumption by New England customers.

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The delivery of such energy from the generation unit into NEPOOL must be generated by:

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      (1) A unit-specific bilateral contract for the sale and delivery of such energy into

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NEPOOL; and

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      (2) Confirmation from ISO-New England that the renewable energy was actually settled

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in the NEPOOL system; and

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      (3) Confirmation through the North American Reliability Council tagging system that

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the import of the energy into NEPOOL actually occurred; or

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      (4) Any such other requirements as the commission deems appropriate.

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      (d) NE-GIS certificates associated with energy production from off-grid generation and

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customer-sited generation facilities certified by the commission as eligible renewable energy

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resources may also be used to demonstrate compliance, provided that the facilities are physically

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located in Rhode Island.

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     SECTION 2. Sections 39-26.1-2, 39-26.1-3, 39-26.1-4, 39-26.1-5 and 39-26.1-8 of the

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General Laws in Chapter 39-26.1 entitled "Long-Term Contracting Standard for Renewable

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Energy" are hereby amended to read as follows:

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     39-26.1-2. Definitions. -- Terms not defined in this chapter shall have the same meaning

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as contained in chapter 26 of title 39 of the general laws. When used in this chapter:

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      (1) "Commercially reasonable" means terms and pricing that are reasonably consistent

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with what an experienced power market analyst would expect to see in transactions involving

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newly developed renewable energy resources. Commercially reasonable shall include having a

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credible project operation date, as determined by the commission, but a project need not have

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completed the requisite permitting process to be considered commercially reasonable. If there is a

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dispute about whether any terms or pricing are commercially reasonable, the commission shall

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make the final determination after evidentiary hearings;

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      (2) "Commission" means the Rhode Island public utilities commission;

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     (3) "Consultation" means seeking the advice and opinion of the Rhode Island office of

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energy resources, the Rhode Island division of public utilities and carriers, and the commission;

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     (4) "Division" means the Rhode Island division of public utilities and carriers;

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      (3)(5) "Electric distribution company" means a company defined in subsection 39-1-

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2(12), supplying standard offer service, last resort service, or any successor service to end-use

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customers, but not including the Block Island Power Company or the Pascoag Utility District;

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      (4)(6) "Eligible renewable energy resource" means resources as defined in section 39-26-

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5 and any references therein;

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      (5)(7) "Long-term contract" means a contract of not less than ten (10) years;

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      (6)(8) "Newly developed renewable energy resources" means electrical generation units,

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with the exception of large-scale hydropower facilities as defined under subdivision 39-26-2(12),

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that use exclusively an eligible renewable energy resource, and that have neither begun operation,

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nor have the developers of the units implemented investment or lending agreements necessary to

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finance the construction of the unit; provided, however, that any projects using eligible renewable

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energy resources and located within the state of Rhode Island which obtain project financing on

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or after January 1, 2009, shall qualify as newly developed renewable energy resources for

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purposes of the first solicitation under this chapter;

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      (7)(9) "Minimum long-term contract capacity" means ninety (90) megawatts of which

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three (3) megawatts must be solar or photovoltaic projects located in the state of Rhode Island. In

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determining whether the minimum long-term contract capacity has been reached, the capacity

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under contract shall be adjusted by the capacity factor of each renewable generator as determined

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by the ISO-NE rules, as they may change from time to time. By way of example, a contract with a

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one hundred (100) megawatt facility with a thirty percent (30%) capacity factor would be counted

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as providing thirty (30) megawatts to the minimum long-term contract capacity requirement.

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     39-26.1-3. Long-term contract standard. -- (a)(1) Beginning on or before July 1, 2010,

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each electric distribution company shall be required to annually solicit proposals from renewable

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energy developers and, provided commercially reasonable proposals have been received, enter

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into long-term contracts with terms of up to fifteen (15) years for the purchase of capacity, energy

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and attributes from newly developed renewable energy resources. Subject to commission

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approval, the electric distribution company may enter into contracts for term lengths longer than

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fifteen (15) years. Notwithstanding any other provisions of this chapter, on or before August 15,

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2009, the electric distribution company shall solicit proposals for one newly developed renewable

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energy resources project as required in section 39-26.1-7. Proposals for the sale of output from an

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offshore wind project received under the provisions of this section shall be diligently and fully

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considered without prejudice, regardless of the status of any proceedings under sections 39-26.1-7

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or 39-26.1-8.

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     (2) Beginning on or before July 1, 2013, each electric distribution company shall, in

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consultation with the office and the division, be required to solicit a power purchase agreement

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for a one hundred fifty megawatt (150 MW) large-scale hydropower proposal from renewable

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energy developers and, provided commercially reasonable proposals have been received, enter

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into long-term contracts with terms of up to fifteen (15) years for the purchase of capacity and

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energy. The electric distribution company shall, in consultation with the office and the division,

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identify any opportunities with other states and their electric distribution companies for regional

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and international procurement of large-scale hydropower.

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     (3) The office, the division, and the commission shall have the authority to allow a power

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purchase agreement to be below one hundred fifty megawatts (150 MW), if it is determined that a

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regional or international procurement opportunity does not allow for the full one hundred fifty

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megawatt (150 MW) obligation to be procured. The electric distribution company shall not be

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required to acquire beyond the one hundred fifty megawatt (150 MW) target for a large-scale

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hydropower facility.

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     (b) The timetable and method for solicitation and execution of such contracts shall be

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proposed by the electric distribution company, and shall be subject to review and approval by the

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commission in consultation with the office and the division prior to issuance by the company;

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provided that the timetable is reasonably designed to result in the electric distribution company

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having the minimum long-term contract capacity under contract within four (4) years of the date

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of the first solicitation; it is not necessary that the projects associated with these contracts be

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operational within these four (4) years periods, as the operational dates shall be specified in the

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contract. The electric distribution company shall, subject to review and approval of the

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commission, in consultation with the office and the division, select a reasonable method of

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soliciting proposals from renewable energy developers, which shall include, at a minimum, an

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annual a public solicitation, but may also include individual negotiations. The electric distribution

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company's solicitation for up to one hundred fifty megawatt (150 MW) large-scale hydropower

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power purchase agreement shall be posted on the website maintained by the electric distribution

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company. The solicitation process shall permit a reasonable amount of negotiating discretion for

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the parties to engage in commercially reasonable arms-length negotiations over final contract

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terms. Each The long-term contract entered into pursuant to this section shall contain a condition

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that it shall not be effective without commission review and approval. The electric distribution

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company shall file such contract, along with a justification for its decision, within a reasonable

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time after it has executed the contract following a solicitation or negotiation. The commission

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shall hold public hearings to review the contract within forty-five (45) days of the filing and issue

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a written order approving or rejecting the contract within sixty (60) days of the filing; in rejecting

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a contract the commission may advise the parties of the reason for the contract being rejected and

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direct the parties to attempt to address the reasons for rejection in a revised contract within a

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specified period not to exceed ninety (90) days. The commission shall approve the contract if it

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determines that: (1) the contract is commercially reasonable; (2) the requirements for the annual

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solicitation have been met; and (3) the contract is consistent with the purposes of this chapter. A

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report on each solicitation shall be filed with the commission each year within a reasonable time

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after decisions are made by the electric distribution company regarding the solicitation results,

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even if no contracts are executed following the solicitation.

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      (c)(1) No electric distribution company shall be obligated to enter into long-term

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contracts for newly developed renewable energy resources on terms which the electric

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distribution company reasonably believes to be commercially unreasonable; provided, however, if

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there is a dispute about whether these terms are commercially unreasonable, the commission, in

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consultation with the office and the division, shall make the final determination after an

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evidentiary hearing. The electric distribution company shall not be obligated to enter into long-

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term contracts pursuant to this section that would, in the aggregate, exceed the minimum long-

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term contract capacity, but may do so voluntarily subject to commission approval. As long as the

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electric distribution company has entered into long-term contracts in compliance with this

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section, the electric distribution company shall not be required by regulation or order to enter into

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power purchase contracts with renewable generation projects for power, renewable energy

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certificates, or any other attributes with terms of more than three (3) years in meeting its

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applicable annual renewable portfolio standard requirements set forth in section 39-26-4 or

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pursuant to any other provision of the law.

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      (2) Except as provided in section 39-26.1-7, and 39-26.1-8, and 39-26.1-10, an electric

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distribution company shall not be required to enter into long-term contracts for newly developed

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renewable energy resources that exceed the following four (4) year phased schedule:

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      By December 30, 2010: Twenty-five percent (25%) of the minimum long-term contract

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capacity;

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      By December 30, 2011: Fifty percent (50%) of the minimum long-term contract

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capacity;

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      By December 30, 2012: Seventy-five percent (75%) of the minimum long-term contract

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capacity;

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      By December 30, 2013: One hundred percent (100%) of the minimum long-term

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contract capacity; but may do so earlier voluntarily, subject to commission approval.

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     No later than December 30, 2014: Execute up to a one hundred fifty megawatt (150 MW)

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power purchase agreement with a large-scale hydropower facility. The deadline shall be extended

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by the office if it is determined in coordination with the division that the procurement deadline for

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a large-scale hydropower facility needs to be extended.

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     (d) Compliance with the long-term contract standard shall be demonstrated through

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procurement pursuant to the provisions of a long-term contract of energy, capacity and attributes

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reflected in NE-GIS certificates relating to generating units certified by the commission as using

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newly developed renewable energy resources, with the exception of a large-scale hydropower

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facility as defined under subdivision 39-26-2(12), as evidenced by reports issued by the NE-GIS

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administrator and the terms of the contract; provided, however, that the NE-GIS certificates were

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procured pursuant to the provisions of a long-term contract. The electric distribution company

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also may purchase other attributes from the generator as part of the long-term contract.

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      (e) After the adoption of the rules and regulations promulgated by the commission

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pursuant to this chapter, an electric distribution company may, at its sole election, immediately

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and from time to time, procure additional commercially reasonable long-term contracts for newly

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developed renewable energy resources on an earlier timetable or above the minimum long-term

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contract capacity, subject to commission approval.

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     39-26.1-4. Financial remuneration and incentives. -- In order to achieve the purposes

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of this chapter, electric distribution companies shall be entitled to financial remuneration and

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incentives for long-term contracts for newly developed renewable energy resources, which are

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over and above the base rate revenue requirement established in its cost of service for distribution

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ratemaking. Such remuneration and incentives shall compensate the electric distribution company

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for accepting the financial obligation of the long-term contracts. The financial remuneration and

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incentives described in this subsection shall apply only to long-term contracts for newly

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developed renewable energy resources. The financial remuneration and incentives shall be in the

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form of annual compensation, equal to two and three quarters percent (2.75%) of the actual

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annual payments made under the contracts for those projects that are commercially operating.

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Effective January 1, 2013, the financial remuneration and incentives described above shall not

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apply to projects, as defined in sections 39-26.1-8 and 39-26.1-10.

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     39-26.1-5. Commission approvals and regulations. -- (a) Electric distribution

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companies shall submit to the commission for review and approval all long-term contracts for

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newly developed renewable energy resources proposed to be entered into in accordance with this

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chapter.

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      (b) Unless the commission approves otherwise, all energy and capacity purchased by an

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electric distribution company pursuant to this chapter shall be immediately sold by the electric

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distribution company into the wholesale spot market; provided, however, that all such sales shall

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be made through arms-length transactions.

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      (c) Unless the commission approves otherwise, any attributes including NE-GIS

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certificates purchased by an electric distribution company pursuant to this chapter shall be sold

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through a competitive bidding process in a commercially reasonable manner.

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      (d) Notwithstanding any term or provision to the contrary contained in subsection (b) or

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(c) hereof, subject to commission approval, electric distribution companies shall be permitted, but

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shall not be required: (1) to use the energy, capacity and other attributes purchased for resale to

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customers; and/or (2) to use the NE-GIS certificates for purposes of meeting the obligations set

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forth in chapter 26 of title 39; provided, however, that the commission finds that such sales would

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not have a detrimental impact on energy markets, on the market for NE-GIS certificates, and is

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otherwise in the interest of utility customers.

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      (e) The commission shall promulgate regulations by April 1, 2010, that shall, as a

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condition of contract approval, require all approved projects, regardless of their location, to

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provide other direct economic benefits to Rhode Island, such as job creation, increased property

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tax revenues or other similar revenues, deemed substantial by the commission.

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      (f) The electric distribution company shall file tariffs with the commission for

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commission review and approval that net the cost of payments made to projects under the long-

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term contracts against the proceeds obtained from the sale of energy, capacity, RECs or other

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attributes. A large-scale hydropower facility, as defined in subdivision 39-26-2(12), shall not be

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eligible for RECs under any long-term contract. The difference shall be credited or charged to all

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distribution customers through a uniform fully reconciling annual factor in distribution rates,

11-7

subject to review and approval of the commission. The reconciliation shall be designed so that

11-8

customers are credited with any net savings resulting from the long-term contracts and the electric

11-9

distribution company recovers all costs incurred under such contracts, as well as, recovery of the

11-10

financial remuneration and incentives specified in section 39-26.1-4.

11-11

     39-26.1-8. Utility-scale offshore wind project -- Separate proceedings. -- (a) Upon

11-12

certification by the department of administration identifying the developer selected by the state to

11-13

develop a utility-scale offshore wind farm, such developer may file an application under this

11-14

section within one hundred eighty (180) days of such certification by the department. For the

11-15

purposes of this section, "utility-scale offshore wind farm" shall mean a wind power project

11-16

located offshore in the waters of Rhode Island or adjacent federal waters of at least one hundred

11-17

(100) megawatts but not more than one hundred fifty (150) megawatts. The purpose of the

11-18

application shall be for the applicant to request that the commission require a long term contract

11-19

with the electric distribution company. Should the commission approve a contract pursuant to this

11-20

section 39-26.1-8, it shall not be counted towards the minimum long-term contract capacity

11-21

specified in section 39-26.1-2(7). The electric distribution company shall, in consultation with the

11-22

office, identify any opportunities for regional procurement of utility-scale offshore wind, if an

11-23

opportunity is identified with other states and their electric distribution companies.

11-24

      (b) The commission shall hold proceedings to review the proposal contained in the

11-25

application. In reviewing the application, the commission shall determine whether the proposal is

11-26

in the best interests of electric distribution customers in Rhode Island. In making this

11-27

determination, the commission shall consider the following factors: (i) The economic impact and

11-28

potential risks, if any, of the proposal on rates to be charged by the electric distribution company;

11-29

(ii) The potential benefits of stabilizing long-term energy prices; (iii) Any other factor the

11-30

commission determines necessary to be in the best interest of the rate payers.

11-31

      (c) The application will contain the following information:

11-32

      (i) A complete description of the proposed project,

11-33

      (ii) A description of the legal entity that will enter into a long term contract,

12-34

      (iii) A time line for permitting, licensing, and construction,

12-35

      (iv) Pricing projected under the long term contract being sought, including prices for all

12-36

market products that would be sold under the proposed long term contract, subject to any contract

12-37

negotiations between the applicant and the electric distribution company,

12-38

      (v) Projected electrical energy production profiles,

12-39

      (vi) The proposed term for the long term contract,

12-40

      (vii) Economic justification for the proposal, including projection of market prices,

12-41

      (viii) A description of the economic benefits to Rhode Island, including the creation of

12-42

jobs in Rhode Island,

12-43

      (ix) All filings with state and federal regulatory agencies related to the proposal,

12-44

      (x) All interconnection filings related to the proposal,

12-45

      (xi) A proposed initial term sheet for a long-term contract between the applicant and the

12-46

electric distribution company.

12-47

      The information submitted in the application shall be subject to modification as a result

12-48

of any negotiation of a contract ordered by the commission.

12-49

      (d) The commission shall promulgate rules and regulations governing the proceedings

12-50

outlined in this section by April 30, 2010.

12-51

      (e) The applicant must serve copies of the application to the electric distribution

12-52

company with whom the applicant is seeking a long term contract, the division of public utilities

12-53

and carriers, the office of energy resources, the department of administration, the economic

12-54

development corporation and the attorney general. Prior to the filing of any information, the

12-55

applicant may seek a protective order to protect the confidentiality of information for good cause

12-56

shown, to the extent that such information is proprietary or confidential business information, but

12-57

unredacted copies of the entire filing must be provided to the parties identified in this paragraph,

12-58

who shall be bound by any protective order that may be issued regarding further disclosure.

12-59

      (f) The electric distribution company, the division of public utilities and carriers and the

12-60

office of energy resources shall be mandatory parties to the proceeding. The applicant must pay

12-61

for the reasonable costs of consultants or counsel that may be hired by the commission and the

12-62

division for the proceeding, but in no case shall the applicant be liable for the costs in excess of

12-63

$100,000 for the division and $100,000 for the commission, respectively.

12-64

      (g) The commission shall issue a final order in the proceedings required by section 39-

12-65

26.1-8(b) within eight (8) months of the filing of the application. If the commission determines

12-66

that the proposal meets the standard outlined in section 39-26.1-8(b), the commission shall

12-67

require the electric distribution company to negotiate a long-term contract with the applicant. The

12-68

applicant, however, may decline to continue with the project for any reason at any time during the

13-1

process outlined in this section. The commission may require changes to the applicant's proposal

13-2

as a condition to a long-term contract, as the commission determines are just and reasonable. The

13-3

contract shall contain terms that are commercially reasonable. The contract also shall require that

13-4

the electric distribution company purchase all of the output of the entire project, unless otherwise

13-5

authorized by the commission. The parties shall present a proposed contract for review by the

13-6

commission within three (3) months of the order requiring negotiations. If the parties are unable

13-7

to reach agreement on a contract within three (3) months of the order requiring negotiations the

13-8

commission shall have the discretion to order the parties to arbitrate the dispute on an expedited

13-9

basis. Once the contract terms are finalized by negotiation or arbitration, the contract shall be

13-10

filed with the commission for review and approval. The commission shall approve the contract

13-11

upon a finding that the contract is consistent with the purposes of this chapter and the standards

13-12

set forth in section 39-26.1-1.8(b). The commission shall issue its final decision on the proposed

13-13

contract within sixty (60) days of receiving the proposed contract. Upon execution of the contract,

13-14

the provisions of sections 39-26.1-4 and 39-26.1-5 shall apply, and all costs incurred in the

13-15

negotiation, administration, enforcement, and implementation of the agreement shall be recovered

13-16

annually by the electric distribution company in electric distribution rates. To the extent the

13-17

application cites significant economic benefits to Rhode Island that require commitments from

13-18

the applicant outside of the long term contract to achieve such benefits, and those economic

13-19

benefits are ultimately relied upon by the commission in authorizing a long term contract to be

13-20

negotiated, the commission may require that appropriate legally binding commitments be made

13-21

by the applicant as a condition to a long term contract, unless the commission finds that such

13-22

commitments are not necessary.

13-23

      (h) Notwithstanding any other provision of this section, the application process does not

13-24

convey a legal entitlement to the applicant to a long term contract. Rather, the purpose of the

13-25

proceeding is to leave the final decision as to whether a long term contract should be required to

13-26

the discretion of the commission, subject to the standards outlined in this section and the purposes

13-27

of this chapter.

13-28

      (i) An applicant under this section shall not be permitted to submit a proposal under the

13-29

solicitations required in section 39-26.1-3, except that such applicant shall be permitted to submit

13-30

a proposal under section 39-26.1-7.

13-31

      (j) Should a proceeding pursuant to this section result in the commission not ordering the

13-32

distribution company to enter into a long-term contract for a utility-scale offshore wind project, or

13-33

should the certified developer fail to file an application with the commission within one hundred

13-34

eighty (180) days of certification, the certification shall be deemed void. In such case, if the

14-1

commission determines it is in the interest of electric distribution customers to have another

14-2

utility-scale project considered for a long term contract, the commission has the discretion to

14-3

request the department of administration to certify a different developer to make another proposal

14-4

for a utility-scale offshore wind project per this section, provided that the commission makes such

14-5

request within ninety (90) days of the certification becoming void. If the commission makes such

14-6

request, the department of administration may, but is not required to, certify another project and

14-7

shall have ninety days to submit another certification. If such certification is not made within the

14-8

time allowed, no further action shall be taken by the commission pursuant to this section. Under

14-9

no circumstances is a distribution company required to enter into more than one contract under

14-10

this section 39-26.1-8.

14-11

      (k) Approval of a contract under this section shall not be interpreted to prevent, hinder or

14-12

diminish the ability of any offshore wind project or developer to pursue, finance, seek the

14-13

development of, or secure permits or electrical interconnection for offshore wind projects in or

14-14

adjacent to the state, or whose output may be utilized in the state.

14-15

     SECTION 3. Chapter 39-26.1 of the General Laws entitled "Long-Term Contracting

14-16

Standard for Renewable Energy" is hereby amended by adding thereto the following section:

14-17

     39-26.1-10. International and regional renewable energy project. -- (a) Upon

14-18

selection of a renewable energy developer for up to a one hundred fifty megawatt (150 MW)

14-19

large-scale hydropower facility long-term power purchase agreement contract, the electric

14-20

distribution company in consultation with the office shall file an application with the commission

14-21

under this section within one hundred eighty (180) days.

14-22

     (b) The application shall contain the following information:

14-23

     (1) A complete description of the existing or newly developed renewable energy resource

14-24

project, including any upgrades or new transmission lines;

14-25

     (2) A description of the legal entity that will enter into a long-term contract;

14-26

     (3) A timeline for permitting, licensing, and construction, including any necessary

14-27

transmission line upgrades;

14-28

     (4) Pricing projected under the long-term contract being sought, including prices for all

14-29

market products that would be sold under the proposed long-term contract at fixed or variable

14-30

rates. If variable rates are proposed they must be fully specified in the power purchase agreement.

14-31

A contract may have a different term, and/or variable rate structure, if these are mutually agreed

14-32

to by the seller and the electric distribution company and are approved by the commission,

14-33

subject to any contract negotiations between the applicant and the electric distribution company;

15-34

     (5) Projected electrical energy production profiles;

15-35

     (6) The proposed term for the long-term contract;

15-36

     (7) Economic justification for the proposal, including projection of market prices;

15-37

     (8) All filings with state and federal regulatory agencies related to the proposal;

15-38

     (9) All interconnection filings related to the proposal; and

15-39

     (10) A proposed initial term sheet for a long-term contract between the applicant and the

15-40

electric distribution company.

15-41

     The information submitted in the application shall be subject to modification as a result

15-42

of any negotiation of a contract ordered by the commission.

15-43

     (c) The applicant must serve copies of the application to the electric distribution company

15-44

with whom the applicant is seeking a long-term contract, the division of public utilities and

15-45

carriers, the office of energy resources, and the attorney general. Prior to the filing of any

15-46

information, the applicant may seek a protective order to protect the confidentiality of

15-47

information for good cause shown, to the extent that such information is proprietary or

15-48

confidential business information, but unredacted copies of the entire filing must be provided to

15-49

the parties identified in this paragraph, who shall be bound by any protective order that may be

15-50

issued regarding further disclosure.

15-51

     (d) The commission shall hold proceedings to review the proposal contained in the

15-52

application. In reviewing the application, the commission shall determine whether the proposal

15-53

meets the requirement of the chapter. In making this determination, the commission shall

15-54

consider the following factors:

15-55

     (1) The economic impact and potential risks, if any, of the proposal on rates to be charged

15-56

by the electric distribution company;

15-57

     (2) The potential benefits of stabilizing long-term energy prices;

15-58

     (3) Environmental benefits;

15-59

     (4) System reliability benefits; and

15-60

     (5) The potential benefits of diversifying the state’s energy resources in order to increase

15-61

energy security.

15-62

     (e) The commission shall promulgate rules and regulations governing the proceedings

15-63

outlined in this section by December 31, 2013.

15-64

     (f) The electric distribution company, the division of public utilities and carriers and the

15-65

office shall be mandatory parties to the proceeding. The applicant must pay for the reasonable

15-66

costs of consultants or counsel that may be hired by the commission, the division, and the office

15-67

of energy resources for the proceeding, but in no case shall the applicant be liable for the costs in

15-68

excess of one hundred thousand dollars ($100,000) for the division of public utilities and carriers,

16-1

one hundred thousand dollars ($100,000) for the commission, and one hundred thousand dollars

16-2

($100,000) for the office.

16-3

     (g) The commission shall issue a final order in the proceedings within six (6) months of

16-4

the filing of the application. If the commission determines that the proposal meets the standard

16-5

outlined in subsection 39-26.1-3(b), the commission shall require the electric distribution

16-6

company to negotiate a long-term contract with the applicant. The applicant, however, may

16-7

decline to continue with the project for any reason at any time during the process outlined in this

16-8

section. The commission may require changes to the applicant's proposal as a condition to a long-

16-9

term contract, as the commission determines are just and reasonable. The contract shall contain

16-10

terms that are commercially reasonable at fixed or variable rates. If variable rates are proposed

16-11

they must be fully specified in the power purchase agreement. A contract may have a different

16-12

term, and/or variable rate structures, if these are mutually agreed to by the seller and the electric

16-13

distribution company and are approved by the commission, subject to any contract negotiations

16-14

between the applicant and the electric distribution company. The contract also shall require that

16-15

the electric distribution company purchase all of the output of the entire project, unless otherwise

16-16

authorized by the commission. The parties shall present a proposed contract for review by the

16-17

commission within three (3) months of the order requiring negotiations. If the parties are unable

16-18

to reach agreement on a contract within three (3) months of the order requiring negotiations the

16-19

commission shall have the discretion to order the parties to arbitrate the dispute on an expedited

16-20

basis. Once the contract terms are finalized by negotiation or arbitration, the contract shall be

16-21

filed with the commission for review and approval. The commission shall approve the contract

16-22

upon a finding that the contract is consistent with the purposes of this chapter. The commission

16-23

shall issue its final decision on the proposed contract within ninety (90) days of receiving the

16-24

proposed contract. Upon execution of the contract, the provisions of section 39-26.1-5 shall

16-25

apply, and all costs incurred in the negotiation, administration, enforcement, and implementation

16-26

of the agreement shall be recovered annually by the electric distribution company in electric

16-27

distribution rates.

16-28

     (h) Should a proceeding pursuant to this section result in the commission not ordering the

16-29

distribution company to enter into a long-term contract for a newly developed renewable energy

16-30

resource, or should the certified developer fail to file an application with the commission within

16-31

one hundred eighty (180) days of certification, the certification shall be deemed void. In such

16-32

case, if the commission in consultation with the office determines it is in the interest of electric

16-33

distribution customers to have another newly developed renewable energy project be considered

16-34

for a long-term contract, the commission has the discretion to request the electric distribution

17-1

company to solicit another proposal for a newly developed renewable energy project per this

17-2

section, provided that the commission makes such request within ninety (90) days of the

17-3

certification becoming void. If the commission makes such request, the electric distribution

17-4

company in consultation with the office may, but is not required to, certify another project and

17-5

shall have ninety (90) days to submit another certification. If such certification is not made within

17-6

the time allowed, no further action shall be taken by the commission pursuant to this section.

17-7

Under no circumstances is a distribution company required to enter into more than one, one

17-8

hundred fifty megawatt (150 MW) contract under section 39-26.1-10.

17-9

     (i) Notwithstanding any other provision of this section, the application process does not

17-10

convey a legal entitlement to the applicant to a long-term contract. Rather, the purpose of the

17-11

proceeding is to leave the final decision as to whether a long-term contract should be required to

17-12

the discretion of the commission, subject to the standards outlined in this section and the purposes

17-13

of this chapter.

17-14

     SECTION 4. Sections 39-26.2-3, 39-26.2-4, 39-26.2-6, 39-26.2-7, 39-26.2-8 and 39-

17-15

26.2-12 of the General Laws in Chapter 39-26.2 entitled "Distributed Generation Standard

17-16

Contracts" are hereby amended to read as follows:

17-17

     39-26.2-3. Definitions. -- When used in this chapter, the following terms shall have the

17-18

following meanings:

17-19

      (1) "Annual target" means the target for total renewable energy nameplate capacity of

17-20

new distributed generation standard contracts set out in section 39-26.2-3.

17-21

      (2) "Commission" means the Rhode Island public utilities commission.

17-22

      (3) "Board" shall mean the distributed generation standard contract board established

17-23

pursuant to the provisions of chapter 39-26.2-9, or the office of energy resources. Until such time

17-24

as the board is duly constituted, the office of energy resources shall serve as the board with the

17-25

same powers and duties pursuant to this chapter.

17-26

      (4) "Distributed generation contract capacity" means ten percent (10%) of an electric

17-27

distribution company's minimum long-term contract capacity under the long-term contracting

17-28

standard for renewable energy in section 39-26.1-2, inclusive of solar capacity. The distributed

17-29

generation contract capacity shall be reserved for acquisition by the electric distribution company

17-30

through standard contracts pursuant to the provisions of this chapter.

17-31

      (5) "Distributed generation facility" means an electrical generation facility that is a

17-32

newly developed renewable energy resource as defined in section 39-26.1-2, located in the

17-33

electric distribution company's load zone with a nameplate capacity no greater than five

17-34

megawatts (5 MW), using eligible renewable energy resources as defined by section 39-26-5,

18-1

including biogas created as a result of anaerobic digestion, but, specifically excluding all other

18-2

listed eligible biomass fuels, and connected to an electrical power system owned, controlled, or

18-3

operated by the electric distribution company.

18-4

      (6) "Distributed generation project" means a distinct installation of a distributed

18-5

generation facility. An installation will be considered distinct if it is installed in a different

18-6

geographical location and at a different time, or if it involves a different type of renewable energy

18-7

class.

18-8

      (7) "Electric distribution company" means a company defined in subdivision 39-1-2(12),

18-9

supplying standard offer service, last resort service, or any successor service to end-use

18-10

customers, but not including the Block Island Power Company or the Pascoag Utility District.

18-11

      (8) "Large distributed generation project" means a distributed generation project that has

18-12

a nameplate capacity that exceeds the size of a small distributed generation project in a given

18-13

year, but is no greater than five megawatts (5 MW) nameplate capacity.

18-14

     (9) "Office" means the Rhode Island office of energy resources;

18-15

      (9)(10) "Program year" means a calendar year beginning January 1 and ending

18-16

December 31.

18-17

      (10)(11) "Renewable energy classes" means categories for different renewable energy

18-18

technologies using eligible renewable energy resources as defined by section 39-26-5. For each

18-19

program year, the board shall determine the renewable energy classes as are reasonably feasible

18-20

for use in meeting distributed generation objectives from renewable energy resources and are

18-21

consistent with the goal of meeting the annual target for the program year. For the program year

18-22

ending December 31, 2012, there shall be at least four (4) technology classes and at least two (2)

18-23

shall be for solar generation technology, and at least one shall be for wind. The board may add,

18-24

eliminate, or adjust renewable energy classes for each program year with public notice given at

18-25

least sixty (60) days previous to any renewable energy class change becoming effective. For each

18-26

program year, the board shall set renewable energy class targets for each class established. Class

18-27

targets are the total program-year target amounts of nameplate capacity reserved for standard

18-28

contracts for each renewable energy class. The sum of all the class targets shall equal the annual

18-29

target.

18-30

      (11)(12) "Renewable energy credit" means a New England Generation Information

18-31

System renewable energy certificate as defined in subdivision 39-26-2(15);

18-32

      (12)(13) "Small distributed generation project" means a distributed generation renewable

18-33

energy project that has a nameplate capacity no larger than within the following: Solar: fifty (50)

18-34

to five hundred kilowatts (500 KW); Wind: fifty (50) to one and one-half megawatts (1.5 MW).

19-1

For technologies other than solar and wind, the board shall set the nameplate capacity size limits,

19-2

but such limits may not exceed one megawatt. The board may lower the nameplate capacity from

19-3

year to year for any of these categories, but may not increase the capacity beyond what is

19-4

specified in this definition. In no case may a project developer be allowed to segment a

19-5

distributed generation project into smaller sized projects in order to fall under this definition.

19-6

      (13)(14) "Standard contract" means a contract with a term of fifteen (15) twenty (20)

19-7

years at a fixed rate for the purchase of all capacity, energy, and attributes generated by a

19-8

distributed generation facility. A contract may have a different term if it is mutually agreed to by

19-9

the seller and the electric distribution company and it is approved by the commission. The terms

19-10

of the standard contract for each program year and for each renewable energy class shall be set

19-11

pursuant to the provisions of this chapter.

19-12

      (14)(15) "Standard contract ceiling price" means the standard contract price for the

19-13

output of a distributed generation facility which price is approved annually for each renewable

19-14

energy class pursuant to the procedure established in this chapter, for the purchase of energy,

19-15

capacity, renewable energy certificates, and all other environmental attributes and market

19-16

products that are available or may become available from the distributed generation facility.

19-17

     39-26.2-4. Standard contracts -- Annual targets. -- (a) To the extent eligible projects

19-18

are available and submit conforming applications, an electric distribution company shall enter

19-19

into standard contracts for an aggregate nameplate capacity of at least forty megawatts (40 MW)

19-20

one hundred twenty megawatts (120 MW) of distributed generation projects by the end of 2014

19-21

2018, unless such schedule is extended by the board. The contracting shall be spread over four

19-22

(4) eight (8) years, based on the annual targets, aggregated to reflect annual targets from prior

19-23

program years, contained in the following four (4) eight (8) year phased schedule, unless such

19-24

schedule is adjusted by the board in any given year:

19-25

      (1) By December 30, 2011: a minimum of five megawatts (5 MW) nameplate;

19-26

      (2) By December 30, 2012: a minimum aggregate of twenty megawatts (20 MW)

19-27

nameplate;

19-28

      (3) By December 30, 2013: a minimum aggregate of thirty megawatts (30 MW)

19-29

nameplate;

19-30

      (4) By December 30, 2014: a minimum aggregate of forty megawatts (40 MW)

19-31

nameplate.

19-32

     (5) By December 30, 2015: a minimum of sixty megawatts (60 MW) nameplate;

19-33

     (6) By December 30, 2016: a minimum aggregate of eighty megawatts (80 MW)

19-34

nameplate;

20-1

     (7) By December 30, 2017: a minimum aggregate of one hundred megawatts (100 MW)

20-2

nameplate;

20-3

     (8) By December 30, 2018: a minimum aggregate of one hundred twenty megawatts (120

20-4

MW) nameplate.

20-5

     (b) By October 15, 2011 and each calendar year following until October 15, 2013 2018,

20-6

the board may recommend to the commission that the annual target for the following program

20-7

year be adjusted upward to reflect any shortfalls in meeting the previous program year's annual

20-8

target or to reflect any standard contracts entered into during prior program years that are voided.

20-9

The board may also recommend to the commission that the annual target for the following

20-10

program year be adjusted downward by any amounts that the previous program year's annual

20-11

targets were exceeded by the standard contracts entered into during that program year.

20-12

      (c) The board may, based on market data and other information available to it including

20-13

pricing for standard contracts received during previous program years, recommend a reduction of

20-14

the annual target for the upcoming program year where the board determines that market

20-15

conditions would be likely to produce unfavorably high target pricing for standard contracts

20-16

during that upcoming program year. In considering such issues, the board may take into account

20-17

the reasonableness of current pricing and its impact on all electric distribution customers who will

20-18

be paying for the output for up to twenty (20) years at such prices. The board may also

20-19

recommend an extension of time to achieve the forty megawatt (40 MW) one hundred twenty

20-20

megawatts (120 MW) target, to allow for contracting to occur after 2014, if necessary.

20-21

      (d) The electric distribution company must contract for at least forty megawatt (40 MW)

20-22

one hundred twenty megawatts (120 MW) of nameplate capacity distributed generation projects

20-23

by the end of 2014 2018, unless such schedule is extended by the board. The electric distribution

20-24

company may not be required to contract for more than forty megawatt (40 MW) one hundred

20-25

twenty megawatts (120 MW) or the distributed generation contract capacity, but may do so

20-26

voluntarily, subject to commission approval.

20-27

      (e) Each year, the board shall file its recommendations relating to the schedule, along

20-28

with its report and recommendations regarding ceiling prices, for the commission's review and

20-29

approval as specified in subsection 39-26.2-5(b).

20-30

      (f) Nothing in this chapter shall derogate from the statutory authority of the commission

20-31

or the division, including, but not limited to, the authority to protect ratepayers from unreasonable

20-32

rates.

20-33

     39-26.2-6. Standard contract enrollment program. -- (a) Each electric distribution

20-34

company shall conduct at least three (3) standard contract enrollments during each program year;

21-1

however, during 2011 the electric distribution company need only conduct one enrollment. Each

21-2

enrollment shall be open for a two (2) week period during which the electric distribution

21-3

company is required to receive standard short-form applications requesting standard contracts for

21-4

distributed generation energy projects. The short-form applications shall require the applicant to

21-5

provide the project owner's identity and the project's proposed location, nameplate capacity, and

21-6

renewable energy class and allow for additional information relative to the permitting, financial

21-7

feasibility, ability to build, and timing for deployment of the proposed projects. For small

21-8

distributed generation projects, the applicant must submit an affidavit confirming that the project

21-9

is not a segment of a larger project being planned for enlargement over time. For large distributed

21-10

generation projects, the short-form application shall also require the applicant to bid a bundled

21-11

price for the sale of the energy, capacity, renewable energy certificates, and all other

21-12

environmental attributes and market products that are available or may become available from the

21-13

distributed generation facility, on a per kilowatt-hour basis for the output of the project. Subject

21-14

to the provisions of subsections (b) and (c) below, the electric distribution company shall not be

21-15

required to enter into standard contracts in excess of the annual target for the applicable program

21-16

year and shall not be required to enter into standard contracts in excess of any limit set by the

21-17

board and approved by the commission for a given enrollment. However, the electric distribution

21-18

company may voluntarily exceed an enrollment period limit as long as it does not exceed an

21-19

annual target for the applicable program year.

21-20

      (b) For small distributed generation projects, the electric distribution company on a first-

21-21

come, first-served basis, shall enter into standard contracts at the applicable standard contract

21-22

ceiling price shall select projects for standard contracts based on the lowest proposed prices

21-23

received with any distributed generation project which meets the requirements of all applicable

21-24

tariffs and regulations, and meets the criteria of a renewable energy class in effect, until the class

21-25

target is met. Enrollment periods will be governed by a solicitation and enrollment process rules

21-26

that shall be filed with the commission each October 15 by the electric distribution company, and

21-27

approved by the commission within sixty (60) days of such filing.

21-28

      (c) For large distributed generation projects, the electric distribution company shall

21-29

select projects for standard contracts based on the lowest proposed prices received, but not to

21-30

exceed the applicable standard contract ceiling price, provided, that the selected projects meet the

21-31

requirements of all applicable tariffs and regulations and meet the criteria of a renewable energy

21-32

class in effect until the class target is met. Except for 2011, no enrollment period shall seek to

21-33

enroll more than one-third (1/3) of the annual goal for the distribution company for large

21-34

distributed generation projects.

22-1

      (d) If there are more projects than what is specified for a class target at the same price,

22-2

the electric distribution company shall review the applications submitted and select first those

22-3

projects that appear to be the furthest along in development and likely to be deployed, in

22-4

consultation with the office. Those projects that are likely to be deployed on the earliest timelines

22-5

shall be selected. To the extent the electric distribution company is unable to make a clear

22-6

distinction on this basis, the electric company shall report the results to the board and not enter

22-7

into contracts with those projects that are tied on pricing. In such case, the board may take such

22-8

action as it deems appropriate for the selection of projects, including seeking more information

22-9

from the projects. Alternatively, the board may consider adjustments to the ceiling price and a

22-10

rebid, or simply wait until the next enrollment. The distribution company shall comply with

22-11

requests for information and data made by the office.

22-12

      (e) Should an electric distribution company determine that it has entered into sufficient

22-13

standard contracts to achieve a program-year class target, it shall immediately report this to the

22-14

board, the office of energy resources, and the commission, and cease entering into standard

22-15

contracts for that renewable energy class for the remainder of the program year. An electric

22-16

distribution company may exceed the renewable energy class target if the last standard contract

22-17

entered into may cause the total purchased to exceed the target.

22-18

      (f) The electric distribution company is authorized to enter into standard contracts up to

22-19

the applicable ceiling price. As long as the terms of the standard contract are materially the same

22-20

as the standard contract terms approved by the commission and the pricing is no higher than the

22-21

applicable ceiling price, such contracts shall be deemed prudent and approved by the commission

22-22

for purposes of recovering the costs in rates.

22-23

      (g) A distributed generation project that also is being employed by a customer for net

22-24

metering purposes may submit an application to sell the excess output from its distributed

22-25

generation project. In such case, however, at the election of the self-generator all of the renewable

22-26

energy certificates and environmental attributes pertaining to the energy consumed on site may be

22-27

sold to the electric distribution company on a month-to-month basis outside of the terms of the

22-28

standard contract. In such case, the portion of the renewable energy certificates that pertain to the

22-29

energy consumed on site during the net metering billing period shall be priced at the average

22-30

market price of renewable energy certificates, which may be determined by using the price of

22-31

renewable energy certificates purchased or sold by the electric distribution company.

22-32

     39-26.2-7. Standard contract -- Form and provisions. -- The following process shall be

22-33

implemented to establish the non-price terms and conditions of the standard contract:

23-34

      (1) A working group ("contract working group") shall be established and supervised by

23-35

the board, consisting of the following members: (i) The director of the office of energy resources;

23-36

(ii) A designee from the division of public utilities and carriers; (iii) Two (2) designees of the

23-37

electric distribution company; (iv) Two (2) individuals designated by the office of energy

23-38

resources who are experienced developers of renewable generation projects; (v) One individual

23-39

designated by the office of energy resources who represents a customer of the electric distribution

23-40

company; and (vi) A lawyer designated by the office of energy resources who has at least three

23-41

(3) years of experience in negotiating and/or developing power purchase agreements. With

23-42

respect to the lawyer designated in (vi) above, the electric distribution company shall enter into a

23-43

cost reimbursement agreement with such lawyer, to compensate the lawyer for the time spent

23-44

serving in the contract working group at the reasonable hourly rate negotiated by the office of

23-45

energy resources. The costs incurred by the electric distribution company under the

23-46

reimbursement agreement shall be recovered in rates by the electric distribution company in the

23-47

year incurred or the year following incurrence through an appropriate filing with the commission.

23-48

The contract working group shall be an advisory group that is not to be considered to be an

23-49

agency for purposes of the administrative procedures act or any other laws pertaining to public

23-50

bodies.

23-51

      (2) The contract working group shall work in good faith to develop standard contracts

23-52

that would be applicable for various technologies for both small and large distributed generation

23-53

projects. The standard contracts should balance the need for the project to obtain financing

23-54

against the need for the distribution company to protect itself and its distribution customers

23-55

against unreasonable risks. The standard contract should be developed from contracting terms

23-56

typically utilized in the wholesale power industry, taking into account the size of each project and

23-57

the technology. The standard contracts shall provide for the purchase of energy, capacity,

23-58

renewable energy certificates, and all other environmental attributes and market products that are

23-59

available or may become available from the distributed generation facility. However, the electric

23-60

distribution company shall retain the right to separate out pricing for each market product under

23-61

the contracts for administrative and accounting purposes to avoid any detrimental accounting

23-62

effects or for administrative convenience, provided that such accounting as specified in the

23-63

contract does not affect the price and financial benefits to the seller as a seller of a bundled

23-64

product. The standard contract also shall:

23-65

      (i) Hold the distributed generation facility owner liable for the cost of interconnection

23-66

from the distributed generation facility to the interconnect point with the distribution system, and

23-67

for any upgrades to the existing distributed generation system that may be required by the electric

23-68

distribution company. However, a distributed generation facility owner may appeal to the

24-1

commission to reduce any required system upgrade costs to the extent such upgrades can be

24-2

shown to benefit other customers of the electric distribution company and the balance of such

24-3

costs shall be included in rates by the electric distribution company for recovery in the year

24-4

incurred or the year following incurrence;

24-5

      (ii) Require the distributed generation facility owner to make a performance guarantee

24-6

deposit to the electric distribution company of fifteen dollars ($15.00) for small distributed

24-7

generation projects or twenty-five dollars ($25.00) for large distributed generation projects for

24-8

every renewable energy certificate estimated to be generated per year under the contract, but at

24-9

least five hundred dollars ($500) and not more than seventy-five thousand dollars ($75,000), paid

24-10

at the time of contract execution;

24-11

      (iii) Require the electric distribution company to refund the performance guarantee

24-12

deposit on a pro-rated basis of renewable energy credits actually delivered by the distributed

24-13

generation facility over the course of the first year of the project's operation, paid quarterly;

24-14

      (iv) Provide that if the distributed generation facility has not generated ninety percent

24-15

(90%) of the output proposed in its enrollment application within eighteen (18) months after

24-16

execution of the contract, the contract is automatically voided shall be terminated and the

24-17

performance guarantee is shall be forfeited. An eligible small-scale hydropower distributed

24-18

generation facility that has not generated ninety percent (90%) of the output proposed in its

24-19

enrollment application within thirty-six (36) months after execution of the contract shall result in

24-20

the contract being terminated and the performance guarantee being forfeited. Any forfeited

24-21

performance guarantee deposits shall be credited to all distribution customers in rates and not

24-22

retained by the electric distribution company;

24-23

      (v) Provide for flexible payment schedules that may be negotiated between the buyer and

24-24

seller, but shall be no longer than quarterly if an agreement cannot be reached;

24-25

      (vi) Require that an electric meter which conforms with standard industry norms be

24-26

installed to measure the electrical energy output of the distributed generation facility, and require

24-27

a system or procedure by which the distributed generation facility owner shall demonstrate

24-28

creation of renewable energy credits, in a manner recognized and accounted for by the GIS; such

24-29

demonstration of renewable energy credit creation to be at the distributed generation facility

24-30

owner's expense. The electric distribution company may, at its discretion, offer to provide such a

24-31

renewable energy credit measurement and accounting system or procedure to the distributed

24-32

generation facility owner, and the distributed generation facility owner may, at its discretion, use

24-33

the electric distribution company's program, or use that of an independent third party, approved

24-34

by the commission, and the costs of such measurement and accounting are paid for by the

25-1

distributed generation facility owner.

25-2

      (3) If the contract working group reaches agreement on the terms of standard contracts,

25-3

the board shall file the contracts with the commission for approval. If there are any

25-4

disagreements, they shall be identified to the commission. The commission shall review the

25-5

standard contracts for conformance with the standards set forth in subsection (2). Should there be

25-6

any disputes, the commission shall issue an order resolving them. To the extent the commission

25-7

needs expert assistance to resolve any disagreements noted in the filing, the commission is

25-8

authorized to hire a consultant to assist it in the proceedings, the costs of which shall be recovered

25-9

from electric distribution customers pursuant to a uniform factor established by the commission

25-10

in rates for recovery by the electric distribution company in the year incurred or the year

25-11

following incurrence, as requested through a filing by the electric distribution company. The

25-12

commission shall issue an order approving standard forms of contract within sixty (60) days of

25-13

the filing.

25-14

     39-26.2-8. Standard contract -- Reporting. -- (a) After each enrollment during a

25-15

program year the electric distribution companies shall provide a report to the board, office of

25-16

energy resources, and the commission of the aggregate amount of project nameplate capacity that

25-17

was the subject of standard contracts entered into during that enrollment and the prices under

25-18

each of the standard contracts that were executed.

25-19

      (b) Each quarter of a program year, the electric distribution company shall provide an

25-20

accounting to the office of energy resource, the board, and the commission of the total amount

25-21

paid to distributed generation facilities under standard contracts during that quarter, until the forty

25-22

megawatt (40 MW) one hundred twenty (120 MW) target is met;

25-23

      (c) Until the forty megawatt (40 MW) one hundred twenty (120 MW) target is met, the

25-24

electric distribution company shall submit preliminary reports to the office of energy resources,

25-25

the board, and the commission indicating the number of standard contracts and total estimated

25-26

annual generation, price, class, and any other relevant information for the purposes of better

25-27

specifying classes, targets, or standard contract prices so as to achieve the purposes set forth in

25-28

this chapter. Such reports shall be submitted no later than sixty (60) days prior to the end of the

25-29

calendar year.

25-30

     (d) The electric distribution company shall in consultation with the office utilize uniform

25-31

standard forms for evaluating project proposals and shall rank projects according to uniform

25-32

criteria.

25-33

     (e) The office shall have staff present as observers at the time project proposals are being

25-34

evaluated and ranked by the electric distribution company. At the end of each enrollment, the

26-1

electric distribution company shall provide all applicants with a copy of their proposal evaluation

26-2

form showing how their project ranked.

26-3

     39-26.2-12. Powers and duties. -- The board shall have the power to:

26-4

      (1) Develop and recommend to the public utilities commission for review and approval

26-5

ceiling prices for standard contracts under the distributed generation standard contracts;

26-6

      (2) Develop and recommend to the commission adjustments up or down to the annual

26-7

target for standard contracts for the following program year;

26-8

      (3) Monitor and evaluate performance under the distributed generation standard

26-9

contracts act, including an assessment of ratepayer impact and the project selection process, to be

26-10

submitted annually in a report to the governor and the general assembly.

26-11

      (4) Participate in proceedings of the public utilities commission that pertain to the

26-12

purposes of the board.

26-13

      (5) In order to provide funding for the purposes of engaging consultants and professional

26-14

services as necessary and appropriate for the board to fulfill its duties and purposes, an allocation

26-15

of no less than fifty thousand dollars ($50,000) from unused portions of Regional Greenhouse

26-16

Gas Initiative ("RGGI") auction proceeds not dedicated to efficiency measures but to overhead

26-17

expenses shall be transmitted from the office of energy resources to the board.

26-18

     SECTION 5. This act shall take effect upon passage.

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LC02392

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- THE ENERGY REFORM ACT

OF 2013

***

27-1

     This act would facilitate, promote, and support the development of newly developed

27-2

renewable energy resources. In addition, the act would extend the distributed generation contracts

27-3

program.

27-4

     This act would take effect upon passage.

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LC02392

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