2018 -- S 2188

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LC003789

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2018

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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 2018

     

     Introduced By: Senators Calkin, Miller, Sosnowski, Coyne, and Seveney

     Date Introduced: February 01, 2018

     Referred To: Senate Environment & Agriculture

     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: ECONOMIC AND CLIMATE RESILIENCE ACT OF 2018

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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: Economic

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and Climate Resilience Act of 2018".

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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) 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 policies, technologies and practices;

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     (2) Rhode Island is committed to the principles of the Paris climate agreement, and

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acknowledges that immediate actions to reduce greenhouse gas emissions, such as those set forth

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in this chapter, are essential to protect our community, our environment, and our economy;

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     (3) In 2014, the general assembly enacted the resilient Rhode Island act, which set goals

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

 

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to meet these statutory goals;

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     (4) Low-income, people of color, handicapped and elderly residents of Rhode Island

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suffer most from climate-related disasters;

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     (5) Climate change increases risks to public health, including from 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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     (6) 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 several branches of the Rhode Island government as warranting

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specific attention;

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     (7) Climate change has severe economic consequences, including widespread damage to

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communities and businesses from catastrophic weather events such as Hurricane Sandy or coastal

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and river flooding, and severe reductions in winter flounder, lobster, and other marine

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populations, and failing to address these risks will only lead to more severe and persistent impacts

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upon our local economy;

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     (8) 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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     (9) Reducing energy waste and demand for fossil fuels can stabilize the state's economy

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and reduce economic uncertainty and risk due to natural gas, gasoline, diesel and heating oil price

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volatility;

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     (10) Carbon pricing is a cost-effective and efficient market-based means to achieve

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significant carbon emissions reductions;

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     (11) 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 over fifteen thousand (15,000) jobs and growing at

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

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jobs in addition to a higher quality of life;

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

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resources, and pursuant to article 1, section 17 of the state constitution, it is the responsibility of

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the state to secure the right of the people "to the use and enjoyment of the natural resources of the

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state with due regard for the preservation of their values;"

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     (13) In the absence of federal action, states cooperating regionally are effective at

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reducing emissions and spurring renewable energy initiatives, as demonstrated by the success of

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the Regional Greenhouse Gas Initiative (RGGI), which has reduced overall emissions and

 

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strengthened the economies of participating states.

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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) Establish a separate and restricted receipt account entitled the Energize Rhode Island

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Fund for creating employment and helping workers transition to low carbon industries, improving

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energy efficiency, advancing adoption of clean energy technology, establishing programs to

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safeguard low-income residents, and protecting businesses that are high energy users;

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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;

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     (5) Meet or exceed the state emissions goals for 2035 as set by the resilient Rhode Island

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act of 2014; and

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     (6) Promote regional cooperation to reduce emissions, build renewable energy and energy

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efficiency programs, and strengthen the economy.

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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) "Climate resilience" means, according to the Intergovernmental Panel on Climate

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Change (IPCC), "the ability of a social, ecological, or socio-ecological system and its components

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to anticipate, reduce, accommodate, or recover from the effects of a hazardous event or trend in a

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timely and efficient manner." Such economic and social stability in the face of climate-related

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disasters can be achieved through preparation, soft and hard infrastructure, emergency warning

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systems, and recovery resources, as well as through quickly decarbonizing the economy to lead

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other jurisdictions in avoiding the worst impacts which come with accumulation of greenhouse

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gases in the atmosphere and oceans.

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     (4) "Commission" means the public utilities commission, set forth in § 39-1-3(a).

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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) "Energize Rhode Island fund" means the fund established under this chapter.

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     (8) "Fossil fuel" means coal, oil, natural gas, propane, and any petroleum product. Fossil

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fuels do not include renewable biomass or waste vegetable oil biodiesel.

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     (9) "Implementation date" means and refers to January 1 of the year following initial

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regional carbon fee enactment.

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     (10) "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 commission

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

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     (11) "Initial regional carbon fee enactment" means the enactment of a fee of at least five

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dollars ($5.00) per metric ton of carbon by the legislatures of at least three (3) states: Rhode

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Island, Massachusetts, and one or more additional states in the regional greenhouse gas initiative

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(RGGI).

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

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association, whether created for-profit or nonprofit purposes.

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     (14) "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 to

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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.

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     (15) "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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     (16) "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 on the implementation date, a fee shall be charged at a rate of fifteen

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dollars ($15.00) per metric ton of CO2e that would be released by burning the fuel sold. In each

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subsequent fiscal year, the rate shall be the rate of the previous fiscal year plus five dollars

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($5.00), until it reaches a rate of fifty dollars ($50.00) per ton. After the rate reaches fifty dollars

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($50.00) per ton, in each subsequent fiscal year the rate will increase in accordance with inflation,

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as measured by Rhode Island's Cost-of-Living-Adjustments calculated using the United States

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Bureau of Labor Statistics Consumer Price Index or, if that index is not available, another index

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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 by 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 GIS certificates as defined in § 39-26-2(13).

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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 did 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 entity which generates more than twenty-five thousand (25,000KWH) kilowatt

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hours 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 § 23-82.1-5 shall be deducted from the fee that would otherwise be due

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under this subsection (f)(1) of this section.

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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) Government agencies whose primary purpose is to provide public transportation by

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bus, van, rail, ferry or other means that reduce the amount of driving by private motor vehicles

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shall be exempt from the fees set forth in § 23-82.15-5 for the portion of their business that

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provides public transport.

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     (l) The fee established by this chapter shall be reduced by the amount of any fee or

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payment due under any federal law or § 23-82.1-5 that sets a carbon price on the same fossil fuels

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for the same year as described in this chapter; provided, however that such reduction shall not be

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in an amount of less than zero.

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     23-82.1-6. Energize Rhode Island 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 energize Rhode Island fund. All fees collected under this chapter shall be deposited

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in the energize Rhode Island fund.

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     (b) Unexpended balances and any earnings thereon shall not revert to the general fund

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but shall remain solely in the energize Rhode Island fund. The energize Rhode Island fund shall

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be used solely to carry out the provisions of this chapter.

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     (c) Proceeds from the energize Rhode Island 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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     (d) An independent energize Rhode Island fund oversight board shall be created, with

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members chosen by the governor, with the advice and consent of the senate, to include nine (9)

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members with one member representing each of the following interests: small business, large

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business, labor, environmental justice, scientific community, low-income, historically

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marginalized groups, community development organizations, and the transportation sector.

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Members shall have staggered three (3) year terms. The director of the RI Infrastructure Bank and

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the commissioner of the office of energy resources shall serve as permanent ex officio nonvoting

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members. The board shall elect a chair from its membership. The oversight board shall convene

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quarterly to carry out roles as specified by subsection (d)(1) of this section with the support of the

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office of energy resources.

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     (1) The energize Rhode Island fund oversight board and the office of energy resources

 

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(OER) shall prepare and deliver an annual report to the house committee on the environment and

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natural resources, the senate committee on the environment and agriculture, the house committee

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on finance, and the senate committee on finance on or before May 1, one year after the

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commencement of the fee, and annually on or before May 1 thereafter, which will:

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     (i) Recommend changes to the fee in order to account for greenhouse gas emissions

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associated with the full lifecycle of all fossil fuels, including emissions prior and subsequent to

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combustion associated with extraction, transportation, or disposal in order to help the state meet

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its greenhouse gas reductions targets;

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     (ii) Recommend changes to the logistics of dividend distribution as currently specified in

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§§ 23-82.1-7(b) and (c) in order to more fully account for equity in the needs of residents and

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consumers, especially low-income residents.

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     (2) Other sources: In addition to the revenue generated by § 23-82.1-5, the board may:

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     (i) Accept and administer grants from both public and private sources for the carrying out

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of any of its functions, which loans or grants shall not be expended for other than the purposes for

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which provided;

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     (ii) apply for, accept and expend allocations, grants and bequests of funds for the purpose

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of carrying out the responsibilities of the board.

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     23-82.1-7. Energize Rhode Island fund uses.

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     (a) The Rhode Island infrastructure bank, under the auspices of the energize Rhode Island

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fund oversight board pursuant to § 23-82.1-6(e), shall use the funds from the energize Rhode

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Island fund as follows:

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     (1) Twenty-eight percent (28%) shall go to support climate resilience, renewable energy,

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energy efficiency, and climate adaptation in Rhode Island,

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     (i) At least one-third (1/3) of funding from the twenty-eight percent (28%) of the energize

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Rhode Island fund that will be distributed to resilience and renewable energy programs shall be

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distributed to neighborhoods, municipalities, groups of municipalities, or regional agencies

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representing neighborhoods or municipalities whose median incomes per household are in the

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lowest third of median incomes for all municipalities in the state. For purposes of this section, to

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calculate the lowest third, the median income of each municipality shall be weighted by the

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number of households in the municipality. When possible, distribution shall prioritize assisting

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municipalities with existing climate action plans in renewable energy and efficiency projects. A

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training session for municipal planners relating to implementing resilience and renewable energy

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programs shall be a prerequisite for the municipalities to receive funds.

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     (2) 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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     (3) 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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     (4) Up to two percent (2%) shall be used to pay for administrative costs associated with

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collecting the charges, administering the energize Rhode Island fund, and carrying out other

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responsibilities assigned to the office of energy resources and department of revenue under this

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chapter. Any unexpended revenue from this two percent (2%) shall be reallocated to climate

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resilience and renewable energy programs, pursuant to § 23-82.1-7(1). None of said proceeds

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shall fund government operations or obligations other than to pay for reasonable administrative

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costs which should not be higher than two percent (2%) of revenue collected. From the period

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commencing on the effective date of this chapter through the implementation of the regulations

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necessary for the collection of fees provided for under this chapter, the administrative allocation

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shall be the actual administrative cost, and the amount of revenue directed to the climate

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resilience and renewable energy program shall be reduced by the amount above two percent (2%)

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that is used for administrative costs.

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     (b) The dividends specified above shall be implemented, at the discretion of the director

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of revenue, through a refundable credit added to tax returns for residents and employers that file

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tax returns. For residents and employers who do not file taxes, dividends will be granted in the

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form of direct checks. The director of revenue shall make every reasonable effort to ensure that

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every resident and employer, regardless of whether or not a particular resident or employer files

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tax returns or actually owes taxes, including not-for-profit organizations and government entities,

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receives a dividend. Dividends will be calculated based on the estimated increased total costs of

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energy in Rhode Island and distributed at the beginning of each year. The first set of dividends

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shall be distributed before the implementation date based on estimated increased costs for the

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period of January 1 through December 31 of that year, which may be subject to cost

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reconciliation based on actual total costs by June 30 of that year.

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

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of 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) Residents and businesses will be given the option to opt out of receiving all or part of

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their dividend payment to allow assistance to low-income residents so they do not experience

 

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increased energy costs.

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     (f) 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 energize Rhode Island fund for the most recently

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

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     23-28.1-8. 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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     23-28.1-9. 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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     23-28.1-10. Implementation.

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     (a) The implementation of the provisions of this chapter shall commence upon initial

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regional carbon fee enactment.

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     (b) If the federal government passes a carbon pricing law at a similar level to this

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legislation, the federal tax will supersede the state law.

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     SECTION 2. This act shall take effect July 1, 2018, or on the date of its enactment,

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whichever date is the later.

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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 2018

***

1

     This act would establish a fee on companies that sell fossil fuels for consumption or

2

distribution within the state. This act would also establish an "energize Rhode Island fund" to

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disburse the collected funds. The funds would be disbursed through rebates to all residents and

4

businesses in the state as well as allocated to climate resilience, renewable energy, energy

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efficiency, and climate adaptation programs that benefit Rhode Islands, including low-income

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residents and small businesses.

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     This act would take effect July 1, 2018, or on the date of its enactment, whichever date is

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the later.

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