2017 -- H 5640 SUBSTITUTE A

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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 PUBLIC UTILITIES AND CARRIERS - PUBLIC UTILITIES COMMISSION

     Introduced By: Representatives Corvese, McNamara, and Azzinaro

     Date Introduced: March 01, 2017

     Referred To: House Corporations

     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, 2024. 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

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

September 1, 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

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

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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

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.

     (7)(i) The office of energy resources shall conduct a study and analysis of the state

energy efficiency programs that will examine implemented program and planned conservation

measures and verify the claimed energy savings. In carrying out this study, the office shall

include a representative sample of different customer classes and measures that have and will be

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participating in the state energy efficiency programs. This study will include pre- and post-

metering of selected planned energy efficiency measures.

     (ii) The office of energy resources shall consult with the electric and gas distribution

company energy efficiency resource management council and the following energy user

representatives in the development of the request for proposal, in the development of evaluation

methodologies and protocols and also during the course of the study:

     (1) Large commercial and industrial energy users;

     (2) Small business energy users;

     (3) Residential energy users; and

     (4) Low income energy users.

     (iii) The office of energy resources, in consultation with the electric and gas distribution

company and representatives referenced in §39-1-27.7(7)(ii) shall be authorized to hire an energy

consulting company or firm to carry out the energy efficiency verification study. The costs

associated with this study, including, but not limited to, those associated with the consultant or

firm contract and reasonable administrative costs incurred by the office in the execution of

subsection (7) of this section, shall be recoverable through the system benefit charge subject to

commission approval. Commission approval shall be granted within forty-five (45) days of

receipt of such request from the office. The commission authorized funding shall be transferred

from the electric and gas distribution utility to the office of energy resources upon request by the

office and deposited in a restricted receipt account within the general fund. The restricted receipt

account shall be exempt from the indirect cost recovery assessment under §35-4-27.

     (iv) The office of energy resources shall submit this report on or before April 30, 2018 to

the governor, the president of the senate, and the speaker of the house. The office and its selected

energy consulting company or firm shall host two (2) public presentations on the preliminary and

final results of the study.

     (8) Effective June 30, 2017, the 2018 system reliability and energy efficiency and

conservation procurement plans energy efficiency program charge filed with the commission by

the electric and gas distribution utility shall not exceed the commission approved energy

efficiency program charge for the 2017 system reliability and energy efficiency and conservation

procurement plan. The commission shall not approve a 2018 system reliability and energy

efficiency and conservation procurement plan energy efficiency program charge that exceeds the

authorized 2017 system reliability and energy efficiency and conservation procurement plan

energy efficiency program charge.

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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 - PUBLIC UTILITIES COMMISSION

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     This act would place an energy efficiency charge cap on the 2018 state energy efficiency

program plan and require the office of energy resources to conduct a study to verify the energy

savings measures from the state energy efficiency programs.

     This act would take effect upon passage.

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