2017 -- H 5369

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LC000794

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO HEALTH AND SAFETY -- ENERGIZE RHODE ISLAND: CLEAN ENERGY

INVESTMENT AND CARBON PRICING ACT OF 2017

     

     Introduced By: Representatives Regunberg, Carson, Handy, Keable, and Donovan

     Date Introduced: February 03, 2017

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Title 23 of the General Laws entitled "HEALTH AND SAFETY" is hereby

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amended by adding thereto the following chapter:

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CHAPTER 82.1

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ENERGIZE RHODE ISLAND: CLEAN ENERGY INVESTMENT AND CARBON PRICING

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ACT OF 2017

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     23-82.1-1. Short title.

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     This chapter shall be known and may be cited as the "Energize Rhode Island: Clean

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Energy Investment and Carbon Pricing Act of 2017".

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     23-82.1-2. Legislative findings.

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     The general assembly finds and declares that:

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     (1) Climate change increases risks to public health, including health impacts from

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extreme heat events, storms and floods, decreased air quality, and illnesses transmitted from food,

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water, and disease carriers, as reported by the Rhode Island department of health;

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     (2) Climate change increases public safety risks and threats to our private property and

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public infrastructure, including risks associated with storms, floods, and sea level rise, and these

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risks have been recognized by the Rhode Island emergency management agency as warranting

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specific attention;

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     (3) In order to promote the general welfare of the people of the state, Rhode Island must

 

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strengthen its economy and make it more resilient over the long term in order to avoid the

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economic consequences of climate change, which will require initiatives that encourage the

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development and use of innovative technologies and practices;

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     (4) Economic consequences, including widespread damage to seaside communities

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following Hurricane Sandy, the lobster population reaching historic lows, and both coastal and

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river flooding leading to increased costs for and closures of businesses across the state, have been

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well-documented, and failing to address these risks will only lead to more severe and persistent

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impacts upon our local economy;

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     (5) Carbon pricing has been established as the most cost-effective and efficient market-

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based means to achieve carbon emissions reductions;

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     (6) Rhode Island spends over three billion dollars ($3,000,000,000) annually on fossil

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fuels, which are a volatile resource from out-of-state, whereas carbon pricing mechanisms have

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been shown to be effective in creating jobs and stimulating the local economy;

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     (7) The clean energy sector has proven to be one of the fastest growing segments of

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Rhode Island's economy, currently providing nearly fifteen thousand (15,000) jobs and growing

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at a rate much higher than the overall state economy; increased investment will provide even

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more jobs in addition to a higher quality of life;

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     (8) Climate change poses substantial risks to Rhode Island's ecology and natural

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resources, and a fundamental responsibility of the state is to secure the right of the people "to the

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use and enjoyment of the natural resources of the state with due regard for the preservation of

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their values;"

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     (9) In 2014, the general assembly enacted the "Resilient Rhode Island Act", which set

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goals for reducing "greenhouse gas emissions" in Rhode Island, and established affirmative

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obligations to meet these statutory goals.

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     23-82.1-3. Legislative intent.

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     It is the intent of the general assembly to:

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     (1) Create a clean energy and jobs fund to foster innovative practices, which will

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strengthen Rhode Island's position in advancing efficient use of energy, make Rhode Island a

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nationally recognized leader in energy efficiency, stimulate job creation, and enhance innovation-

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based economic growth;

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     (2) Price carbon as an incentive to reduce carbon (greenhouse gas) emissions from use of

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carbon based fuels by residents and businesses in Rhode Island;

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     (3) Provide access to energy efficiency, energy conservation, and renewable energy

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programs for low income families and small businesses;

 

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     (4) Reduce public health, public safety, economic, and natural resource impairment risks

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associated with climate change; and

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     (5) Meet the state emissions goals for 2035 as set in 2014 by the "Resilient Rhode Island

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Act".

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     23-82.1-4. Definitions.

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     As used in this chapter, the following words and terms shall have the following meanings

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unless the context clearly indicates another or different meaning or intent:

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     (1) "Carbon dioxide equivalent ("CO2e") means a unit of measure used to compare the

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emissions from various greenhouse gases based upon their global warming potential;

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     (2) "Carbon price" means the fee imposed by this chapter;

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     (3) "Clean energy and jobs fund" means the fund established under this chapter;

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     (4) "Commission" means the public utilities commission, set forth in chapter 1 of title 39;

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     (5) "Electricity fuel mix" means the mix of fuels for any one year period used to create

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electricity by generators within the control area of ISO-NE;

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     (6) "Employer" means a person, firm, corporation, partnership, association or public

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body, whether for-profit or not-for-profit, that is located in Rhode Island and employs Rhode

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Island residents;

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     (7) "Fossil fuel" means coal, oil, natural gas, propane, or any other petroleum product.

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"Fossil fuel" does not include renewable biomass or waste vegetable oil biodiesel;

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     (8) "Independent System Operator-New England" or "ISO-NE" means the regional

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transmission organization for New England licensed by the Federal Energy Regulatory

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Commission pursuant to the Federal Power Act (16 U.S.C. Chapter 12);

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     (9) "Low-income residential property" means a dwelling unit owned or occupied by a

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household eligible to receive benefits under the low-income home energy assistance program

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(LIHEAP) as set forth in §39-1-27.12; in instances where a premises contains multiple dwelling

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units, the entire premises shall be considered a low-income residential property if fifty percent

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(50%) or more of the dwelling units are occupied by LIHEAP eligible households;

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     (10) "Person" means any individual, partnership, corporation, company, society, or

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association, whether created for-profit or not-for-profit purposes;

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     (11) "Petroleum product" means all petroleum derivatives, whether in bond or not, which

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are commonly burned to produce heat, electricity, or motion, or which are commonly processed

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to produce synthetic gas for burning, including without limitation, propane, gasoline, unleaded

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gasoline, kerosene, heating oil, diesel fuel, kerosene based jet fuel, and number 4, number 5 and

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residual oil for utility and non-utility uses, but not including, petroleum feedstocks to plastics

 

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production or other manufacturing;

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     (12) "Resident" means a person eighteen (18) years of age or older who is a resident of

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Rhode Island. All persons registered to vote in Rhode Island or all persons eighteen (18) years of

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age or older who hold a valid Rhode Island driver's license or photo ID shall be presumptively

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considered residents for the purposes of this chapter. Persons who do not meet the requirements

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for presumptive eligibility may establish eligibility by presenting other acceptable documentation;

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and

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     (13) "Small business property" means the premises, whether owned or leased, of any

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employer, other than a public body, that is a small business as defined by the United States Small

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Business Administration.

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     23-82.1-5. Carbon pricing.

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     (a) A fee shall be collected on all fossil fuels within the state for purposes of distribution

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or use within the state, at the rate specified in subsection (b) of this section, in the manner

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specified in subsections (e) through (l) of this section.

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     (b) Commencing January 1, 2018, and continuing through December 31, 2019, a fee shall

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be charged at a rate of fifteen dollars ($15.00) per ton of CO2e that would be released by burning

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the fuel sold. Commencing January 1, 2020 and thereafter, the rate in every fiscal year shall be

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the rate in the previous fiscal year plus five (5) real 2016 dollars, as calculated before the

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beginning of each fiscal year. In addition, the fee shall increase in accordance with inflation, as

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measured by the United States Bureau of Labor Statistics Consumer Price Index or, if that index

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is not available, another index adopted by the director of revenue.

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     (c) The director of revenue shall calculate and publish the rate in current dollars for each

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year, by December 1.

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     (d) In sales where greenhouse gas emissions from the fossil fuels are to be permanently

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sequestered and not released into the atmosphere, charges on the fossil fuels shall be reduced by

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the director of revenue in proportion to the amount of CO2e that is to be sequestered. The office

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of energy resources shall ensure that in such cases, the emissions are actually sequestered and not

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released into the atmosphere.

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     (e) The fee shall be collected on all petroleum products at their first point of sale within

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the state for consumption or distribution within the state.

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     (f) All suppliers of electricity, including all electric distribution companies operating in

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the state and all competitive suppliers of electricity to end users, shall pay the fee on behalf of all

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of their electricity customers on the basis of each kilowatt-hour of electricity used by each

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distribution customer. The per kilowatt-hour fee to be paid by the supplier of electricity will be

 

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calculated in the following manner:

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     (1) The fee shall be calculated on an annual basis, based on the electricity fuel mix as

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defined above.

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     (2) The CO2e of every kilowatt-hour of electricity shall be determined by taking the

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weighted average of the natural gas, coal, and oil portions of the fuel mix and multiplying each of

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those portions separately by the amount of CO2e emissions created per kilowatt-hour of

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electricity produced by each such fuel, as those carbon intensity levels are from time to time

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determined by the United States Energy Information Administration (EIA).

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     (3) The supplier of electricity shall deduct from the fee calculated by subsections (f)(1)

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and (f)(2) of this section an amount equal to the amount it paid for the same year on account of

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regional greenhouse gas initiative (RGGI) clearing auctions; provided, however, that the amount

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so deducted may be no greater than the total amount of the fee as calculated in subsections (f)(1)

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and (f)(2) of this section. The electricity supplier shall also deduct from the fee calculated an

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amount equal to the amount it may have paid for NE-GIS certificates as defined in §39-26-2.

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     (g) On April 1 of each year, each supplier of electricity shall file with the commission the

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result of its proposed calculation for the year beginning the following July 1. The filing will

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include sufficient supporting data to enable the commission to determine whether the calculation

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by the supplier of electricity was made fully in accordance with subsection (f) of this section.

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Upon receipt of the calculation by the supplier of electricity, the commission shall open a docket.

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The sole purpose of the docket shall be for the commission to determine whether the calculation

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by the supplier of electricity was made fully in accordance with subsection (f) of this section. If

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the commission determines that the calculation by the supplier of electricity was made fully in

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accordance with subsection (f) of this section, the commission shall, no later than May 15 of the

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same year, issue its order approving the calculation. If the commission determines that the

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calculation by the supplier of electricity does not fully comply with subsection (f) of this section,

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the commission shall issue an order stating clearly the errors that were made by the supplier of

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electricity. In that event, the supplier of electricity shall have twenty-one (21) days to make a

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compliance filing with the commission, correcting the errors identified in the commission's order.

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     (h) Any person that generates more than twenty-five thousand kilowatt-hours (25,000

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KWh) of electricity for on-site use using any combination of one or more fossil fuels shall be

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obligated to pay the carbon price, which shall be calculated by multiplying the quantity of each

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separate fossil fuel combusted to produce electricity by the CO2e emissions of each separate fuel

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so combusted. Within one year following the date of enactment of this chapter, the director of

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revenue shall issue rules, pursuant to chapter 35 of title 42, for the regular and efficient

 

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calculation, assessment, and collection of these carbon price amounts. Any fee already paid on

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said fuel pursuant to this section shall be deducted from the fee that would otherwise be due

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under this subsection.

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     (i) The local distribution company for natural gas shall pay the fee on behalf of all of its

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distribution customers. The fee shall be calculated by multiplying the number of cubic feet of

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natural gas used by each customer by the amount of CO2e released by burning one cubic foot of

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natural gas, as that value is from time to time determined by the United States Energy

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Information Administration (EIA).

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     (j) The office of energy resources shall determine the amount of CO2e released in the

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form of escaped methane due to the extraction, transport, or distribution of natural gas before the

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point of consumption in Rhode Island, and shall add an additional charge to the carbon price for

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all natural gas or natural-gas-based electricity, based on the rate specified in subsection (b) of this

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section. This fee shall be published no later than December 10 of each year.

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     (k) Entities whose primary purpose is to provide public transportation that enables energy

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efficiency in the state economy shall not be subject to the cost of any fee set forth in this section

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for the portion of their business that provides public transport.

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     (l) The collection of the fee herein described shall commence upon the promulgation of

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all necessary rules for its collection, but not later than January 1, 2019. The fee established by this

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chapter shall be reduced by the amount of any fee or payment due under any federal law that sets

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a carbon price on the same fossil fuels for the same year as described in this chapter; provided,

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however, that such reduction shall not be in an amount of less than zero.

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     23-82.1-6. Clean energy and jobs fund.

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     (a) There is hereby established a restricted receipt account in the general fund to be

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known as the clean energy and jobs fund. All fees collected under this chapter shall be deposited

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in the clean energy and jobs fund.

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     (b) Unexpended balances remaining in the clean energy and jobs fund shall not be subject

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to the ten percent (10%) charge. Unexpended balances and any earnings thereon shall not revert

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to the general fund but shall remain solely in the clean energy and jobs fund. The clean energy

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and jobs fund shall be used solely to carry out the provisions of this chapter, and to help residents

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and employers transition to cleaner energy options and mitigate any potential economic harm

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from the carbon price imposed by this chapter.

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     (c) Proceeds from the clean energy and jobs fund may only be used for the purposes

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described in §23-82.1-7. Proceeds shall be available for the purposes described in §23-82.1-7

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without appropriation.

 

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     23-82.1-7. Clean energy and jobs fund uses.

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     (a) The department of revenue shall use the funds from the clean energy and jobs fund as

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follows:

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      (1) Thirty percent (30%) shall be used to provide direct dividends to employers in the

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state, in the manner specified in subsections (b) and (d) of this section;

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     (2) Forty percent (40%) shall be used to provide direct dividends to residents in the state,

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in the manner specified in subsections (b) and (c) of this section;

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     (3) Twenty-five percent (25%) shall go to climate resilience, energy efficiency, energy

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conservation, and renewable energy programs that benefit low-income residential properties and

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small business properties, where there have been low levels of participation in energy efficiency

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and renewable energy programs, to be administered under the auspices of the Rhode Island

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infrastructure bank in accordance with rules jointly promulgated by the office of energy resources

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and the Rhode Island infrastructure bank;

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     (4) Up to five percent (5%) shall be used to pay for administrative costs associated with

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collecting the charges, administering the clean energy fund, and carrying out other responsibilities

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assigned to the office of energy resources and department of revenue under this chapter. Any

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unexpended revenue from this five percent (5%) shall be reallocated to the low-income and small

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business program, pursuant to §23-82.1-7(a)(3). From the period commencing on the effective

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date of this chapter through the implementation of the regulations necessary for the collection of

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fees provided for under this chapter, the administrative allocation shall be the actual

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administrative cost, up to ten percent (10%) of the revenue deposited into the clean energy fund,

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and the amount of revenue directed to the weatherization program shall be reduced by the amount

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above five percent (5%) that is used for administrative costs.

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     (b) The dividends specified in subsection (a) of this section shall be implemented, at the

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discretion of the director of revenue, through a refundable credit added to tax returns for residents

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and employers that file tax returns. For residents and employers who do not file taxes, dividends

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will be granted in the form of direct checks. The director of revenue shall make every reasonable

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effort to ensure that every resident and employer, regardless of whether or not a particular

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resident or employer files tax returns or actually owes taxes, including not-for-profit

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organizations and government entities, receives a dividend. Dividends shall be calculated based

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on the estimated increased total costs of energy in Rhode Island and distributed at the beginning

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of each year. The first set of dividends shall be distributed by December 31, 2018, based on

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estimated increased costs from the period of January 1, 2018 through December 31, 2018, which

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may be subject to cost reconciliation based on actual total costs by June 30, 2019.

 

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     (c) Every resident shall receive an equal dividend amount. Every resident who is the head

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of a household with children or dependents under the age of eighteen (18) shall have the dividend

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increased based on the number of children or dependents under the age of eighteen (18) in

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residence, with each child adding the value of one equal dividend amount.

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     (d) Every employer shall receive a dividend proportional, in terms of full-time equivalent

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employees, to the employer's share of total employment in the state.

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     (e) The director of revenue shall issue a public report, submitted to the governor, the

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speaker of the house, and the senate president, by December 31 of each year commencing with

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2018, stating the expenditures from the clean energy fund for the most recently completed fiscal

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year and plans to distribute the balance remaining in the fund, if any.

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     23-82.1-8. Promulgation of rules.

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     The department of revenue, office of energy resources, and any other state agency or

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instrumentality designated by this chapter or by the director of administration to perform

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functions or duties to effectuate the purposes and functions of this chapter are hereby authorized

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to adopt, in accordance with the provisions of chapter 35 of title 42, administer, and enforce any

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rules necessary or convenient to carry out the purposes of this chapter.

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     23-82.1-9. Construction of provisions.

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     The provisions of this chapter shall be liberally construed for the accomplishment of their

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purposes.

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     SECTION 2. This act shall take effect thirty (30) days after the commissioner of the

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office of energy resources certifies in writing to the general assembly that another state in New

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England which borders Rhode Island and has an aggregate population of at least five million

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(5,000,000) persons based on 2010 census figures, has enacted a carbon pricing fee or tax that is

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consistent with the provisions of this act, specifically that a fee shall be charged at a rate of at

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least fifteen dollars ($15.00) per ton of CO2e that would be released by burning fossil fuels sold.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO HEALTH AND SAFETY -- ENERGIZE RHODE ISLAND: CLEAN ENERGY

INVESTMENT AND CARBON PRICING ACT OF 2017

***

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     This act would establish a fee on companies that sell fossil fuels in Rhode Island, paid at

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the point of sale within the state for consumption or distribution within the state. It would also

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establish a "Clean Energy and Jobs Fund" to disburse the collected funds. The funds would be

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disbursed through rebates to all residents and businesses in the state as well as allocated to

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climate resilience, energy efficiency, energy conservation, and renewable energy programs that

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benefit Rhode Islanders, particularly low income residential properties and small business

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properties.

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     This act would take effect thirty (30) days after the commissioner of the office of energy

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resources certifies in writing to the general assembly that another state in New England which

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borders Rhode Island and has an aggregate population of at least five million (5,000,000) persons

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based on 2010 census figures, has enacted a carbon pricing fee or tax that is consistent with the

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provisions of this act, specifically that a fee shall be charged at a rate of at least fifteen dollars

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($15.00) per ton of CO2e that would be released by burning fossil fuels sold.

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