2015 -- S 0733 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS - PUBLIC UTILITIES COMMISSION

     Introduced By: Senators Miller, Sosnowski, Walaska, Conley, and DiPalma

     Date Introduced: March 19, 2015

     Referred To: Senate Commerce

     (Administration)

It is enacted by the General Assembly as follows:

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

Utilities Commission" is hereby amended to read as follows:

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

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

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

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

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

responsible.

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

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

guidelines for:

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

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

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

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

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

measurable, net system benefits;

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

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

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

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

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

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

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

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

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

commission may find necessary or appropriate.

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

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

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

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

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

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

guidelines.

     (c) To implement the provisions of this section:

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

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

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

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

thereafter through March 1, 20172024. The report shall be made public and be posted

electronically on the website to the office of energy resources.

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

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

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

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

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

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

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

of energy resources and the joint committee on energy.

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

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

September 1, 2017 2024, a plan for system reliability and energy efficiency and conservation

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

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

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

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

shall be made public and be posted electronically on the website to the office of energy resources,

and shall also be submitted to the general assembly.

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

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

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

efficiency and resources management council, and any related annual plans, and shall approve a

fully reconciling funding mechanism to fund investments in all efficiency measures that are cost

effective and lower cost than acquisition of additional supply, not greater than sixty (60) days

after it is filed with the commission.

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

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

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

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

which may provide the distribution company recommendations with regard to effective

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

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

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

response, combined heat and power, and renewables as well as the current funding allocations for

each eligible energy resource and the businesses and vendors in Rhode Island participating in the

programs. The report shall be posted electronically on the website of the office of energy

resources.

     (ii) Beginning on November 1, 2012 or before, each electric distribution company shall

support the installation and investment in clean and efficient combined heat and power

installations at commercial, institutional, municipal, and industrial facilities. This support shall be

documented annually in the electric distribution company's energy efficiency program plans. In

order to effectuate this provision, the energy efficiency and resource management council shall

seek input from the public, the gas and electric distribution company, the economic development

corporation, and commercial and industrial users, and make recommendations regarding services

to support the development of combined heat and power installations in the electric distribution

company's annual and triennial energy efficiency program plans.

      (iii) The energy efficiency annual plan shall include, but not be limited to, a plan for

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identifying and recruiting qualified combined heat and power projects, incentive levels, contract

terms and guidelines, and achievable megawatt targets for investments in combined heat and

power systems. In the development of the plan, the energy efficiency and resource management

council and the electric distribution company shall factor into the combined heat and power plan

and program, the following criteria: (A) Economic development benefits in Rhode Island,

including direct and indirect job creation and retention from investments in combined heat and

power systems; (B) Energy and cost savings for customers; (C) Energy supply costs; (D)

Greenhouse gas emissions standards and air quality benefits; and (E) System reliability benefits.

      (iv) The energy efficiency and resource management council shall conduct at least one

public review meeting annually, to discuss and review the combined heat and power program,

with at least seven (7) business day's notice, prior to the electric and gas distribution utility

submitting the plan to the commission. The commission shall evaluate the submitted combined

heat and power program as part of the annual energy efficiency plan. The commission shall issue

an order approving the energy efficiency plan and programs within sixty (60) days of the filing.

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

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

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

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

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

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

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

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

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

procurement portfolios.

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

Utilities and Carriers" is hereby amended as follows:

     39-2-1.2. Utility base rate -- Advertising, demand side management and renewables -

- (a) In addition to costs prohibited in section 39-1-27.4(b), no public utility distributing or

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

expenses for advertising, either direct or indirect, which promotes the use of its product or

service, or is designed to promote the public image of the industry. No public utility may furnish

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

advertising and include the expense as part of its base rate. Nothing contained in this section shall

be deemed as prohibiting the inclusion in the base rate of expenses incurred for advertising,

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informational or educational in nature, which is designed to promote public safety conservation of

the public utility's product or service. The public utilities commission shall promulgate such rules

and regulations as are necessary to require public disclosure of all advertising expenses of any

kind, direct or indirect, and to otherwise effectuate the provisions of this section.

     (b) Effective as of January 1, 2008, and for a period of ten (10) fifteen (15) years

thereafter, each electric distribution company shall include a charges charge per kilowatt-hour

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

to fund renewable energy programs shall remain in effect until December 31, 2017. The electric

distribution company shall establish and, after July 1, 2007, maintain two (2) separate accounts,

one for demand side management programs (the "demand side account"), which shall be funded

by the electric demand side charge and administered and implemented by the distribution

company, subject to the regulatory reviewing authority of the commission, and one for renewable

energy programs, which shall be administered by the economic development corporation Rhode

Island commerce corporation pursuant to § 42-64-13.2 and, shall be held and disbursed by the

distribution company as directed by the economic development corporation Rhode Island

commerce corporation for the purposes of developing, promoting and supporting renewable

energy programs.

     During the ten (10) year period time periods established in § 39-2-1.2(b), the commission

may, in its discretion, after notice and public hearing, increase the sums for demand side

management and renewable resources.; thereafter, In addition, the commission shall, after notice

and public hearing, determine the appropriate charges for these programs. The office of energy

resources and/or the administrator of the renewable energy programs may seek to secure for the

state an equitable and reasonable portion of renewable energy credits or certificates created by

private projects funded through those programs. As used in this section, "renewable energy

resources" shall mean: (1) power generation technologies as defined in § 39-26-5, "eligible

renewable energy resources", including off grid and on-grid generating technologies located in

Rhode Island as a priority; (2) research and development activities in Rhode Island pertaining to

eligible renewable energy resources and to other renewable energy technologies for electrical

generation; or (3) projects and activities directly related to implementing eligible renewable

energy resources projects in Rhode Island. Technologies for converting solar energy for space

heating or generating domestic hot water may also be funded through the renewable energy

programs. Fuel cells may be considered an energy efficiency technology to be included in

demand sided management programs. Special rates for low-income customers in effect as of

August 7, 1996 shall be continued, and the costs of all of these discounts shall be included in the

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distribution rates charged to all other customers. Nothing in this section shall be construed as

prohibiting an electric distribution company from offering any special rates or programs for low-

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

commission.

     (1) The renewable energy investment programs shall be administered pursuant to rules

established by the economic development corporation. Rhode Island commerce corporation. Said

rules shall provide transparent criteria to rank qualified renewable energy projects, giving

consideration to:

     (i) the feasibility of project completion;

     (ii) the anticipated amount of renewable energy the project will produce;

     (iii) the potential of the project to mitigate energy costs over the life of the project; and

     (iv) the estimated cost per kilo-watt hour (kwh) of the energy produced from the project.

     (c) [Deleted by P.L. 2012, ch. 241, § 14].

     (d) The executive director of the economic development corporation is authorized and

may enter into a contract with a contractor for the cost effective administration of the renewable

energy programs funded by this section. A competitive bid and contract award for administration

of the renewable energy programs may occur every three (3) years and shall include as a

condition that after July 1, 2008 the account for the renewable energy programs shall be

maintained and administered by the economic development corporation as provided for in

subdivision (b) above.

     (e) Effective January 1, 2007, and for a period of eleven (11) sixteen (16) years

thereafter, each gas distribution company shall include, with the approval of the commission, a

charge per deca therm delivered to fund demand side management programs (the "gas demand

side charge"), including, but not limited to, programs for cost effective energy efficiency, energy

conservation, combined heat and power systems, and weatherization services for low income

households.

     (f) The Each gas company shall establish a separate account for demand side

management programs (the "gas demand side account"), which shall be funded by the gas

demand side charge and administered and implemented by the distribution company, subject to

the regulatory reviewing authority of the commission. The commission may establish

administrative mechanisms and procedures that are similar to those for electric demand side

management programs administered under the jurisdiction of the commissions and that are

designed to achieve cost-effectiveness and high life-time savings of efficiency measures

supported by the program.

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     (g) The commission may, if reasonable and feasible, except from this demand side

management charge:

     (i) gas used for distribution generation; and

     (ii) gas used for the manufacturing processes, where the customer has established a self

directed program to invest in and achieve best effective energy efficiency in accordance with a

plan approved by the commission and subject to periodic review and approval by the

commission, which plan shall require annual reporting of the amount invested and the return on

investments in terms of gas savings.

     (h) The commission may provide for the coordinated and/or integrated administration of

electric and gas demand side management programs in order to enhance the effectiveness of the

programs. Such coordinated and/or integrated administration may after March 1, 2009, upon the

recommendation of the office of energy resources, be through one or more third-party entities

designated by the commission pursuant to a competitive selection process.

     (i) Effective January 1, 2007, the commission shall allocate from demand-side

management gas and electric funds authorized pursuant to this section 39-2-1.2, an amount not to

exceed two percent (2%) of such funds on an annual basis for the retention of expert consultants,

and reasonable administration costs of the energy efficiency and resources management council

associated with planning, management, and evaluation of energy efficiency programs, renewable

energy programs, system reliability, least-cost procurement, and with regulatory proceedings,

contested cases, and other actions pertaining to the purposes, powers and duties of the council,

which allocation may by mutual agreement, be used in coordination with the office of energy

resources to support such activities.

     (j) Effective January 1, 2013 2016, the commission shall annually allocate from the

administrative funding amount allocated in (i) from the demand-side management program as

described in subsection (i) as follows: sixty percent (60%) fifty percent (50%) for the purposes

identified in subsection (i) and forty percent (40%) fifty percent (50%) annually to the office of

energy resources for activities associated with planning management, and evaluation of energy

efficiency programs, renewable energy programs, system reliability, least-cost procurement, and

with regulatory proceedings, contested cases, and other actions pertaining to the purposes, powers

and duties of the office of energy resources.

     (k) On April 15, of each year the office and the council shall submit to the governor, the

president of the senate, and the speaker of the house of representatives, separate financial and

performance reports regarding the demand-side management programs, including the specific

level of funds that were contributed by the residential, municipal, and commercial and industrial

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sectors to the overall programs;, the businesses, vendors, and institutions that received funding

from demand-side management gas and electric funds used for the purposes in section 39-2-1.2;

and the businesses, vendors, and institutions that received the administrative funds for the

purposes in sections 39-2-1.2(i) and 39-2-1.2(j). These reports shall be posted electronically on

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

council.

     (l) On or after August 1, 2015, at the request of the Rhode Island infrastructure bank,

each electric distribution company, except for the Pascoag Utility District and Block Island Power

Company, shall remit two percent (2%) of the amount of the 2014 electric demand side charge

collections to the Rhode Island infrastructure bank in accordance with the terms of § 46-12.2-

14.1.

     (m) On or after August 1, 2015, at the request of the Rhode Island infrastructure bank,

each gas distribution company shall remit two percent (2%) of the amount of the 2014 gas

demand side charge collections to the Rhode Island infrastructure bank in accordance with the

terms of § 46-12.2-14.1.

     SECTION 3. 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 - PUBLIC UTILITIES COMMISSION

***

     This act would extend the period over which the commissioner of the officer of energy

resource would report findings and recommendations on a triennial basis to the public utilities

commission to March 1, 2024. This act would also extend certain other time periods for charges

and actions to be taken in regard to the public utilities. This act would also require electric

distribution companies and gas distribution companies to remit two percent (2%) of their demand

side charge collections to the Rhode Island infrastructure bank, effective August 1, 2015.

     This act would take effect upon passage.

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