2014 -- S 2439 SUBSTITUTE A AS AMENDED

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LC004570/SUB A/2

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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 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. -- 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 that 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; and

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

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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; and

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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. The combination of these strategies advance our

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economic development interests and environmental quality; and

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

 

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resources that diversify our energy supply portfolio, provide affordable energy to consumers, and

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

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

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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 policy goals, requires a coordinated, multi-state approach built

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upon collaboration and utilizing appropriate expertise and stakeholder processes of regional

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entities including, but not limited to, the New England State's Committee on Electricity, ISO-

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New England, Inc. and The New England Power Pool that takes into account affordability,

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energy security, reliability, fuel diversity, and 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 the state of Rhode Island and its ratepayers exceed the costs of such projects, and

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ensure that the benefits and costs of such energy infrastructure investments are shared

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appropriately among the 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 "commercially

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

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

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regional energy infrastructure. Commercially reasonable shall include having a credible project

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

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requisite permitting process to be considered commercially reasonable. Commercially reasonable

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shall require a determination by the commission that the benefits to Rhode Island exceed the cost

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of the project. The commission shall determine, based on the preponderance of the evidence, that

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the total energy security, reliability, environmental and economic benefits to the state of Rhode

 

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Island and its ratepayers exceed the costs of such projects. If there is a dispute about whether any

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terms or pricing are commercially reasonable, the commission shall make the final determination

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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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and utilizing regional stakeholder processes where appropriate, the office of energy resources in

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consultation and coordination with the division of public utilities and carriers, the public utility

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

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defined in § 39-1-2(20), the New England States' Committee on Electricity (NESCOE), ISO-New

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England Inc. and the other New England states is 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 regional electric transmission projects that

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would allow for the reliable transmission of large or small scale domestic 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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its ratepayers, and that such solicitations may be issued by The New England States' Committee

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on Electricity or the electric or natural gas distribution company to further the purposes of this

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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 the state of Rhode Island and its

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ratepayers, and that such solicitations may be issued by The New England States' Committee on

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Electricity or the electric or natural gas distribution company to further the purposes of this

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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 the State of Rhode Island and its ratepayers by strengthening energy

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

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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 The New England States' Committee on Electricity or the

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electric or natural gas distribution company to further the purposes of this chapter; and that such

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solicitations may request proposals that are priced in increments to allow for the evaluation of

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project costs and benefits associated with adding various levels of additional, natural gas pipeline

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capacity into New England and that assist with the optimization of energy system reliability,

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economic, and other benefits consistent with the purposes of this chapter.

 

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     (4) As part of any such regional or multi-state competitive solicitation processes

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conducted pursuant to this chapter, the office of energy resources shall work jointly with the

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division of public utilities and carriers, and with the electric distribution company as appropriate,

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to identify incremental natural gas pipeline infrastructure and capacity and/or electric

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transmission projects that optimize energy reliability, economic, environmental, and ratepayer

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impacts for Rhode Island, consistent with the legislative findings and purpose of this chapter.

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The office of energy resources and division of public utilities and carriers shall be authorized to

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utilize expert consultants, as needed, to assist in any regional, multi-state, or state-level

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determination related to the procurement activities identified in § 39-31-5.

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     (b) Prior to any binding commitments being made by any agencies of the state, the

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electric distribution company, or any other entity that would result in costs being incurred

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directly, or indirectly, by Rhode Island electric and/or gas consumers through distribution or

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commodity rates, the office of energy resources and division of public utilities and carriers shall

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jointly file any energy infrastructure project recommendation(s) with the public utilities

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commission and may make such filing jointly with the electric or natural gas distribution

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company as appropriate. The public utilities commission shall consider any such

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recommendation(s) as specified under § 39-31-7.

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     (c) A copy of the filing made under subsection (b) of this section shall be provided to the

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governor, the president of the senate, the speaker of the house, the department of environmental

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management, and the commerce corporation.

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     (d) The electric distribution company shall be provided with a copy of any filing made

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under this section at least ten (10) business days in advance of its filing with the public utilities

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commission and the electric or gas distribution utility may file separate comments when the filing

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is made.

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     (e) As part of any office of energy resources and division of public utilities and carriers

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filing made pursuant to this chapter, the agencies shall identify the expected energy reliability,

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energy security, and ratepayer impacts that are expected to result from commitments being made

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in connection with the proposed project(s).

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     (f) The office of energy resources and division of public utilities and carriers reserve the

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right to determine that energy infrastructure projects submitted in any regional or multi-state

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competitive solicitation process are not in Rhode Island's energy reliability, energy security,

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and/or ratepayer interests, and shall make such findings available to the governor, the president of

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the senate, and the speaker of the house. The electric or gas distribution utility may attach a

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separate opinion to those findings, at its election.

 

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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

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eligible renewable energy resources, including wind, as defined by § 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 26 of title 39;

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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, that 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 defined 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), as well the public utilities that distribute natural gas as provided by §

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39-1-2(20), are authorized to voluntarily file proposals with the public utilities commission for

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approval to implement these policies and achieve the purposes of this chapter. The company’s

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proposals may include but are not limited to the, following authorizations:

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

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through appropriate competitive processes for large-or small-scale hydroelectric power and/or

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renewable energy resources that are eligible under the renewable energy standard established by

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chapter 26 of title 39; provided, however, that large scale hydroelectric power shall not be eligible

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under the renewable energy standard established by chapter 26 of title 39, and 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, that may include public solicitations and individual negotiations.

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

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the parties 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) Subject to review and approval of the public utilities commission, to enter into long-

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term contracts for natural gas pipeline infrastructure and capacity that are commercially

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reasonable and advance the purposes of this chapter at levels beyond those commitments

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necessary to serve local gas distribution customers, and may do so either directly, or in

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coordination with, other New England states and instrumentalities; utilities; generators; or other

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appropriate contracting parties.

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     (vi) The commission shall accept public comment on any contracts filed by the

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

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     (A) During this public comment period, the contracts shall be reviewed by the following

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state agencies, which shall provide advisory opinions to the public utilities commission on the

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topics specified, and the public utilities commission shall give due consideration to the advisory

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opinions filed:

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

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opinion on the expected greenhouse gas emissions and statewide environmental impacts resulting

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from the proposed contract (s).

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     (II) The commerce corporation shall provide an advisory opinion on the expected

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statewide economic impacts resulting from the proposed contract(s).

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     (III) The office of energy resources shall provide an advisory opinion on the expected

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energy security, reliability, environmental, and economic impacts resulting from the contract(s).

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     (B) The commission shall notify the aforementioned agencies upon the filing of any

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contract filed by the distribution utility pursuant to this chapter, and notify them of any related

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hearings and/or proceedings.

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     (C) Advisory opinions issued by agencies designated under (vi)(A) of this paragraph shall

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not be considered as final decisions of the agencies making the opinions, and shall not be subject

 

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to judicial review under § 42-35-15, or any other provision of the general laws.

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     (vii) The commission may approve the contract(s) if it determines that:

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     (A) The contract is commercially reasonable;

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     (B) The requirements for the solicitation have been met;

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     (C) The contract is consistent with the region's greenhouse gas reduction targets; and

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     (D) The contract is consistent with the purposes of this chapter.

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

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Regulation Commission approved tariffs for the costs of electric transmission and natural gas

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pipeline infrastructure projects pursued under this chapter.

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     (b) The commission shall hold evidentiary hearings and public hearings to review any

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contract filing that may be made pursuant to this section and issue a written order approving or

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rejecting the contract within one hundred twenty (120) days of the filing; in rejecting a contract

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

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

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a specified period not to 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 the purposes of 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 The Federal Energy Regulation Commission approved tariffs related

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to such multi-state or regional energy 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 that

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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 § 39-31-6 between electric and gas distribution customers of the electric and

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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 that 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 public utilities commission shall docket any proposals made by the office of

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energy resources and division of public utilities and carriers pursuant to § 39-31-4. Docket

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materials shall be posted and maintained on the commission’s website. The commission shall

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conduct proceedings, as provided below, solely for the purpose of determining whether the

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proposed infrastructure projects, if implemented, are in the public interest and no commitments

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shall be valid or authorized without such finding being made by the commission. The validity

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and approval of any commitments made by the electric or gas distribution company in furtherance

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of the purposes of this chapter shall be separate and subject to § 39-31-5. The docket opened

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pursuant to this paragraph shall proceed as follows:

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     (1) The following state agencies shall provide advisory opinions to the commission on

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the topics specified below within sixty (60) days from the docketing date:

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

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opinion on the expected greenhouse gas emissions and statewide environmental impacts resulting

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from the proposed project(s).

 

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     (ii) The commerce corporation shall provide an advisory opinion on the expected

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statewide economic impacts resulting from the proposed project(s).

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

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proposal made under this section, and notify them of any related hearings and/or proceedings.

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     (3) Advisory opinions issued by agencies designated under (c)(1) of this section shall not

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be considered as final decisions of the agencies making the opinions and shall not be subject to

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judicial review under § 42-35-15, or any other provision of the general laws.

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     (4) Upon completion of the sixty day (60) advisory opinion period, the commission shall

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provide for a thirty day (30) public comment period on any energy infrastructure project(s)

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selected pursuant to this chapter and hold evidentiary hearings. In addition to evidentiary

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hearings, the commission shall also hold at least one public hearing to accept public comment on

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the proposal(s) prior to an open meeting held pursuant to this section.

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     (5) The commission shall hold an open meeting no later than one hundred twenty (120)

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days from the date of filing by the office of energy resources and division of public utilities and

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carriers filing and shall certify that the proposed project(s) are in the public interest if, in the

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commission’s determination, and in consideration of filed advisory opinions and the opinion of

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the electric or gas distribution utility, the proposed infrastructure project(s):

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     (i) Are consistent with the findings and purposes of this chapter;

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     (ii) Will benefit Rhode Island by improving local and regional energy system reliability

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and security;

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     (iii) Will benefit Rhode Island ratepayers by offering the potential for reduced energy

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price volatility and reduction of energy-supply costs in the context of an integrated regional

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energy system;

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     (iv) Will not cause unacceptable harm to the environment and are consistent with the

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region's greenhouse gas reduction goals; and

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     (v) Will enhance the economic fabric of the state.

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     (6) The commission shall issue a written determination of its findings within ten (10)

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business days of its open meeting decision and provide copies of that determination, along with

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copies of all advisory opinions, public comment, and any other materials deemed relevant to the

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commission determination, to the governor, the president of the senate, the speaker of the house,

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the commissioner of the office of energy resources, and the administrator of the division of public

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utilities and carriers.

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     (d) A determination issued by the commission shall constitute the sole, final, binding, and

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determinative regulatory decision within the state for the purpose of authorizing the state to

 

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support a proposed, regional-energy infrastructure project(s) that is funded through The Federal

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Energy Regulation Commission approved tariffs on a regional and/or multi-state basis pursuant to

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this chapter. Appeals shall be governed by § 39-5-1.

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     (e) Upon issuance of a written determination by the commission finding that the proposed

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project(s) is in the public interest, the office of energy resources and division of public utilities

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and carriers shall, on behalf of the state, be authorized to support any regional and/or multi-state

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process necessary to implement the project(s), including, without limitation, supporting any

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necessary and related Federal Energy Regulation Commission filings; provided, however, that

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any commitments made by the electric or gas distribution company to implement the proposals

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remain voluntary and subject to § 39-31-5.

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     (f) Nothing in this section shall be construed to preclude the electric or gas distribution

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company from making a filing under § 39-31-6, simultaneous with a filing under this section by

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the office of energy resources and the division of public utilities, in which case the filings made

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under §§ 39-31-6 and 39-31-7 of this chapter shall be consolidated.

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

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Energy generation and the attributes of electricity imported into New England shall be tracked

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and verified through the expansion of the New England Pool-Generation Information System or

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the development of another appropriate tracking and verification mechanism.

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     39-31-9. Siting of Regional Energy Infrastructure.-- All regional or multi-state energy

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infrastructure projects authorized under this chapter shall respect and maintain compliance with

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the individual project host state’s siting authority and requirements.  Any projects selected

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pursuant to this chapter must maintain compliance with Rhode Island energy facility siting act

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requirements, where applicable, as authorized under chapter 98 of title 42.

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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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