2014 -- S 2439 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS

     

     Introduced By: Senator William A.Walaska

     Date Introduced: February 27, 2014

     Referred To: Senate Environment & Agriculture

     (Governor)

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 39 of the General Laws entitled "PUBLIC UTILITIES AND

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CARRIERS" is hereby amended by adding thereto the following chapter:

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CHAPTER 31

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AFFORDABLE CLEAN ENERGY SECURITY ACT

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     39-31-1. Legislative Findings. -- (a) The general assembly finds and declares:

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     (1) The state and New England face significant short and long-term energy system

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challenges that may undermine the reliable operation of the bulk electric system and spur

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unsustainable levels of price volatility, and these challenges may have a substantial impact on

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energy affordability for ratepayers and undermine the economic competitiveness of our state by

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serving as a detriment to capital investment and job growth;

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     (2) Planned retirements of fossil fuel, nuclear and other electric generators, along with the

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lack of new interstate natural gas pipeline infrastructure and capacity into the region, may

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exacerbate these conditions;

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     (3) Rhode Island benefits from a holistic energy strategy that pursues both local

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investment in clean energy resources such as energy efficiency and renewable distributed

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generation and regional investment in energy infrastructure projects that strengthen system

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reliability and diversify our supply portfolio, and the combination of these strategies advance our

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economic development interests and environmental quality;

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     (4) Rhode Island is committed to the increased use of no and low carbon energy

 

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resources which diversify our energy supply portfolio, provide affordable energy to consumers,

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and strengthen our shared quality of life and environment, and that new energy infrastructure

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investments may help facilitate the development and interconnection of such resources;

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     (5) Rhode Island is part of an integrated, regional energy system and addressing these

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challenges, while meeting state energy and economic goals, requires a coordinated, multi-state

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approach that takes into account affordability, energy security, reliability, fuel diversity, and

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environmental sustainability.

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     39-31-2. Purpose. -- The purpose of this chapter is to:

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     (1) Secure the future of the Rhode Island and New England economies, and their shared

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environment, by making coordinated, cost-effective, strategic investments in energy resources

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and infrastructure such that the New England states improve energy system reliability and

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security; enhance economic competitiveness by reducing energy costs to attract new investment

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and job growth opportunities; and protect the quality of life and environment for all residents and

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businesses;

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     (2) Utilize coordinated competitive processes, in collaboration with other New England

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states and their instrumentalities, to advance strategic investment in energy infrastructure and

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energy resources provided that the total energy security, reliability, environmental and economic

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benefits to Rhode Island and it’s ratepayers exceed the costs of such projects, and ensure that the

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benefits and costs of such energy infrastructure investments are shared appropriately among the

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New England states; and

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     (3) Encourage a multi-state or regional approach to energy policy that advances the

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objectives of achieving a reliable, clean energy future that is consistent with meeting regional

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greenhouse gas reduction goals at reasonable cost to ratepayers.

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     39-31-3. Commercially reasonable defined.-- When used in this chapter the term

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"commercially reasonable" means terms and pricing that are reasonably consistent with what an

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experienced power market analyst would expect to see in transactions involving regional energy

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resources and regional energy infrastructure. 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.

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Commercially reasonable shall include that the total energy security, reliability, environmental

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and economic benefits to Rhode Island and its ratepayers exceed the costs of such projects. If

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there is a dispute about whether any terms or pricing are commercially reasonable, the

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commission shall make the final determination after evidentiary hearings.

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     39-31-.4. Regional energy planning.-- (a) Consistent with the purposes of this chapter

 

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the office of energy resources, in consultation and coordination with the public utility company

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that provides electric distribution as defined in § 39-1-2(12), as well as natural gas as provided in

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§ 39-1-2(20), the New England States′ Committee on Electricity (NESCOE), ISO-NE and the

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other New England states are authorized to:

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     (1) Participate in the development and issuance of regional or multi-state competitive

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solicitation(s) for the development and construction of domestic electric transmission projects

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that would allow for the reliable transmission of large or small scale regional or international

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hydroelectric power to New England load centers that will benefit the state of Rhode Island and

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it’s ratepayers, and that such solicitations may be issued by NESCOE or the electric or natural gas

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distribution company to further the purposes of this chapter;

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     (2) Participate in the development and issuance of regional or multi-state competitive

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solicitation(s) for the development and construction of regional electric transmission projects that

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would allow for the reliable transmission of eligible renewable energy resources as defined by §

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39-26-5(a) to New England load centers that will benefit Rhode Island and its ratepayers, and that

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such solicitations may be issued by NESCOE or the electric or natural gas distribution company

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to further the purposes of this chapter; and

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     (3) Participate in the development and issuance of regional or multi-state competitive

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solicitation(s) for the development and construction of regional natural gas pipeline infrastructure

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and capacity that will benefit Rhode Island and its ratepayers by strengthening energy system

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reliability and security and, in doing so, potentially mitigate energy price volatility which

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threatens the economic vitality and competitiveness of Rhode Island residents and businesses, and

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that such solicitations may be issued by NESCOE or the electric or natural gas distribution

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company to further the purposes of this chapter.

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     (4) Provide for a thirty (30) day public comment period on infrastructure projects selected

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pursuant to this chapter. During this public comment period, the following state agencies shall

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provide advisory opinions on the topics specified:

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     (i) The department of environmental management (DEM) shall provide an advisory

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opinion on the expected statewide environmental impacts resulting from the proposed project(s).

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     (ii) Commerce RI shall provide an advisory opinion on the expected statewide economic

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impacts resulting from the proposed project(s).

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     (iii) OER shall provide an advisory opinion on the expected energy security, reliability,

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environmental, and economic impacts resulting from the proposed project(s).

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     (iv) The division of public utilities shall provide an advisory opinion on the expected

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ratepayer impacts resulting from the proposed project(s).

 

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     39-31-5. Regional energy procurement.-- (a) Consistent with the purposes of this

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chapter the public utility company that provides electric distribution as defined in § 39-1-2(12) as

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well as natural gas as defined in § 39-1-2(20) in consultation with the office of energy resources

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and the division of public utilities and carriers is authorized to voluntarily participate in multi-

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state or regional efforts to:

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     (1) Procure domestic or international large or small scale hydroelectric power and eligible

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renewable energy resources, including wind, as defined by section 39-26-5(a) on behalf of

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electric ratepayers, provided however that large scale hydroelectric power shall not be eligible

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under the renewable energy standard established by chapter 39-26 of the general laws;

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     (2) Procure incremental natural gas pipeline infrastructure and capacity into New

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England to help strengthen energy system reliability and facilitate the economic interests of the

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state and its ratepayers;

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     (3) Support the development and filing of necessary tariffs and other appropriate cost

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recovery mechanisms as proposed by the office of energy resources or the division of public

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utilities and carriers which allocate the costs of new electric transmission and natural gas pipeline

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infrastructure and capacity projects selected pursuant to the provisions of this chapter to

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ratepayers, such that costs are shared among participating states in an equitable manner; and

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     (4) To the extent that the public utility company that provides electric distribution as

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defined in § 39-1-2(12) as well as natural gas as provided in § 39-1-2(20) pursues the objectives

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identified above, the public utility company shall utilize all appropriate competitive processes,

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and maintain compliance with applicable federal and state siting laws.

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     (b) Any procurement authorized under this section shall be commercially reasonable.

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     39-31-6. Utility filings with the Public Utilities Commission. -- (a) Pursuant to the

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procurement activities in § 39-31-5, the public utility company that provides electric distribution

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as defined in § 39-1-2(12) and public utilities that distribute natural gas as provided by § 39-1-

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2(20) are authorized to voluntarily file proposals with the commission for approval to implement

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these policies and achieve the purposes of this chapter. The company’s proposals may include,

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but are not limited to, the following authorizations:

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     (1) Subject to review and approval of the Public Utilities Commission, to enter into long-

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term contracts through appropriate competitive processes for large or small scale hydroelectric

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power and/or renewable energy resources that are eligible under the renewable energy standard

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established by chapter 26 of title 39; provided, however, that large scale hydroelectric power shall

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not be eligible under the renewable energy standard established by chapter 26 of title 39 and

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provided that:

 

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     (i) The electric distribution company may, subject to review and approval of the

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commission, select a reasonable, open and competitive method of soliciting proposals from

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renewable energy developers, including domestic or international large or small scale

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hydroelectric power, which may include public solicitations and individual negotiations;

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     (ii) The solicitation process shall permit a reasonable amount of discretion for the parties

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to engage in arms-length negotiations over final contract terms;

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     (iii) Each 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;

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     (iv) The electric distribution company shall file such contract(s), along with a

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justification for its decision, within a reasonable time after it has executed the contract following

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a solicitation or negotiation;

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     (v) The commission may approve the contract(s) if it determines that: (A) The contract is

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commercially reasonable; (B) The requirements for the solicitation have been met; and (C) The

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contract is consistent with the purposes of this chapter.

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     (2) Subject to review and approval of the commission, to enter into long-term contracts

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for natural gas pipeline infrastructure and capacity that are commercially reasonable and advance

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the purposes of this chapter at levels beyond those commitments necessary to serve local gas

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distribution customers, and may do so either directly or in coordination with other New England

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states and instrumentalities, utilities, generators, or other appropriate contracting parties.

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     (3) Participate in a multi-state or regional sharing of costs through Federal Energy

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Regulatory Commission (FERC) approved tariffs for the costs of electric transmission and

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pipeline infrastructure projects pursued under this chapter.

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     (b) The commission shall hold public hearings to review any contract filing that may be

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made pursuant to this chapter and issue a written order approving or rejecting the contract within

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one hundred eighty (180) days of filing; in rejecting a contract the commission may advise the

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parties of the reason for the contract being rejected and provide an option for the parties to

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attempt to address the reasons for rejection in a revised contract within a specified period not to

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exceed ninety (90) days.

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     39-31-7. Duties of the Commission. -- (a) The commission may approve any proposals

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made by the electric and gas distribution company that are commercially reasonable and advance

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the purposes of this chapter. The commission′s authority shall include, without limitation, the

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authority to:

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     (1) Approve long-term contracts entered into pursuant to the goals and provisions of this

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chapter for large or small scale hydroelectric power and renewable energy resources that are

 

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eligible under the renewable energy standard established by chapter 26 of title 39; provided,

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however, that large scale hydroelectric power shall not be eligible under the renewable energy

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standard established by chapter 26 of title 39;

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     (2) Approve long-term contracts for natural gas pipeline infrastructure and capacity

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consistent with this chapter;

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     (3) Approve rate-recovery mechanisms proposed by the electric and gas distribution

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companies relating to costs incurred under this chapter by the electric and gas distribution

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company that facilitate the multi-state or regional sharing of costs necessary to implement electric

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transmission and natural gas pipeline infrastructure projects pursued under this chapter, including

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any costs incurred through FERC approved tariffs related to such multi-state or regional energy

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infrastructure procurements;

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     (4) Address any proposed changes to standard offer procurements, standard offer pricing

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and retail choice rules;

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     (5) Provide for the recovery of reasonable costs from all distribution customers incurred

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by the electric and gas distribution company in furtherance of the purposes of this chapter which

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may include, but are not limited to, costs incurred under any contracts approved by the

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commission under this section and costs associated with the management of incremental capacity

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resulting from interstate gas pipeline expansion projects pursued pursuant to this chapter and

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costs associated with investments in local gas distribution network assets necessary to implement

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such interstate gas pipeline expansion projects;

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     (6) Approve cost allocation proposals filed by the gas distribution company and/or the

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electric distribution company that appropriately allocate natural gas infrastructure and capacity

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costs incurred under this section between electric and gas distribution customers of the electric

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and gas distribution company in a manner proportional to the energy benefits accrued by Rhode

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Island’s gas and electric customers from making such investments. In making its determination,

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the commission shall consider projected reductions in regional wholesale electric prices as a

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benefit which accrues to electric ratepayers. The allocation of costs shall include all distribution

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customers, regardless from whom they are purchasing their commodity service; and

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     (7) Approve any other proposed regulatory or ratemaking changes that reasonably

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advance the goals set forth herein.

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     (b) The grant of authorizations under this chapter shall not be construed as creating a

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mandate or obligation on the part of the electric and gas distribution company to enter into any

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contracts or file any proposals pursuant to this chapter.

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     (c) The PUC shall accept public comment on any power purchase agreement filed by the

 

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distribution utility, as authorized under this chapter, for a period no less than thirty (30) days from

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the date of filing.

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     (1) During this public comment period, the following state agencies shall provide

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advisory opinions to the PUC on the topics specified:

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     (i) The department of environmental management (DEM) shall provide an advisory

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opinion on the expected statewide environmental impacts resulting from the proposed power

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purchase agreement(s).

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     (ii) Commerce RI shall provide an advisory opinion on the expected statewide economic

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impacts resulting from the proposed power purchase agreement(s).

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     (iii) OER shall provide an advisory opinion on the expected energy security, reliability,

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environmental, and economic impacts resulting from the proposed power purchase agreement(s).

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     (2) The PUC shall notify the aforementioned agencies upon the filing of any power

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purchase agreement filed by the distribution utility pursuant to this chapter, and notify them of

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any related hearings and/or proceedings.

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     39-31-8. Verification of energy generation and attributes of imported electricity. --

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(a) The office of energy resources and other appropriate state agencies shall work with the New

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England states′ committee on electricity (NESCOE), ISO-NE, NEPOOL, NICE, the GIS

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administrator, and other stakeholders to implement changes to the New England power pool

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generation information system (NEPOOL GIS), and any other mechanisms necessary to track and

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verify the energy generation and attributes of electricity imported into New England as a result of

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projects implemented under the provisions of this chapter.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS

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     This act would create the "Affordable Clean Energy Security Act" to establish a

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framework for the state, in coordination with other New England states, to make strategic

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investments in resources and infrastructure to achieve a clean, reliable energy future.

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     This act would take effect upon passage.

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