2022 -- H 7971

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LC004951

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2022

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A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- AFFORDABLE CLEAN ENERGY

SECURITY ACT

     Introduced By: Representatives Handy, Williams, Edwards, Potter, McNamara, Alzate,
Batista, Carson, Kazarian, and Cassar

     Date Introduced: March 11, 2022

     Referred To: House Corporations

     (Governor)

It is enacted by the General Assembly as follows:

     SECTION 1. Sections 39-31-2, 39-31-4, 39-31-5, 39-31-6 and 39-31-7 of the General

Laws in Chapter 39-31 entitled "Affordable Clean Energy Security Act" are hereby amended to

read as follows:

     39-31-2. Purpose.

     The purpose of this chapter is to:

     (1) Secure the future of the Rhode Island and New England economies, and their shared

environment, by making state and/or coordinated, cost-effective, strategic investments in energy

resources and infrastructure such that the New England states improve energy system reliability

and security; enhance economic competitiveness by reducing energy costs to attract new

investment and job growth opportunities; and protect the quality of life and environment for all

residents and businesses;

     (2) Utilize state and/or coordinated competitive processes, in collaboration with other New

England states and their instrumentalities, to advance strategic investment in energy infrastructure

and energy resources, provided that the total energy security, reliability, environmental, and

economic benefits to the state of Rhode Island and its ratepayers exceed the costs of the projects,

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

appropriately among the New England States; and

     (3) Encourage a multistate or regional an approach to energy policy that advances the

objectives of achieving a reliable, clean-energy future that is consistent with meeting regional

greenhouse gas reduction goals as established by chapter 6.2 of title 42 (the "2021 act on climate")

at reasonable cost to ratepayers.

     39-31-4. Regional energy planning.

     (a) Consistent with the purposes of this chapter, and utilizing regional stakeholder

processes where appropriate, the office of energy resources, in consultation and coordination with

the division of public utilities and carriers, and the public utility company that provides electric

distribution as defined in § 39-1-2(a)(12) as well as natural gas as defined in § 39-1-2(a)(17), the

New England States Committee on Electricity (NESCOE), ISO-New England, Inc., and the other

New England states is authorized to:

     (1) Participate in the development and issuance of state, regional or multistate competitive

solicitation(s) for the development and construction of regional electric-transmission projects that

would allow for the reliable transmission of large- or small-scale domestic or international

hydroelectric power to New England load centers that will benefit the state of Rhode Island and its

ratepayers, and such solicitations may be issued by the New England States Committee on

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

     (2) Participate in the development and issuance of state, regional or multistate competitive

solicitation(s) for the development and construction of regional electric-transmission projects that

would allow for the reliable transmission of eligible renewable energy resources, including offshore

wind as defined by § 39-26-5(a), to New England load centers that will benefit the state of Rhode

Island and its ratepayers, and the solicitations may be issued by the New England States Committee

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

chapter; and

     (3) Participate in the development and issuance of regional or multistate competitive

solicitation(s) for the development and construction of regional natural-gas-pipeline infrastructure

and capacity that will benefit the state of Rhode Island and its ratepayers by strengthening energy

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

threatens the economic vitality and competitiveness of Rhode Island residents and businesses. The

solicitations may be issued by the New England States Committee on Electricity or the electric or

natural gas distribution company to further the purposes of this chapter; and the solicitations may

request proposals that are priced in increments to allow for the evaluation of project costs and

benefits associated with adding various levels of additional, natural gas pipeline capacity into New

England and assist with the optimization of energy system reliability, economic, and other benefits

consistent with the purposes of this chapter.

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     (4) As part of any such state, regional or multistate competitive solicitation processes

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

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

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

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

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

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

expert consultants, as needed, to assist in any state, regional, multistate, or state-level determination

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

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

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

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

the office of energy resources and division of public utilities and carriers shall jointly file any

energy infrastructure project recommendation(s) with the public utilities commission and may

make such filing jointly with the electric or natural gas distribution company as appropriate. The

public utilities commission shall consider any such recommendation(s) as specified under § 39-31-

7.

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

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

management, and the commerce corporation.

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

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

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

is made.

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

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

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

in connection with the proposed project(s).

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

right to determine that energy infrastructure projects submitted in any state, regional or multistate

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

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

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

opinion to those findings, at its election.

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     39-31-5. Regional energy procurement State and regional energy procurement.

     (a) Consistent with the purposes of this chapter, the public utility company that provides

electric distribution as defined in § 39-1-2(a)(12), as well as natural gas as defined in § 39-1-

2(a)(17), in consultation with the office of energy resources and the division of public utilities and

carriers is authorized to voluntarily participate in state, multistate or regional efforts to:

     (1) Procure domestic or international large- or small-scale hydroelectric power and eligible

renewable energy resources, including wind, as defined by § 39-26-5(a), on behalf of electric

ratepayers; provided, however, that large-scale hydroelectric power shall not be eligible under the

renewable energy standard established by chapter 26 of this title;

     (2) Procure incremental, natural-gas-pipeline infrastructure and capacity into New England

to help strengthen energy system reliability and facilitate the economic interests of the state and its

ratepayers;

     (3) Support the development and filing of necessary tariffs and other appropriate cost-

recovery mechanisms, as proposed by the office of energy resources or the division of public

utilities and carriers, that allocate the costs of new, electric-transmission and natural-gas-pipeline

infrastructure and capacity projects selected pursuant to the provisions of this chapter to ratepayers,

such that costs are shared among participating states in an equitable manner; and

     (4) To the extent that the public utility company that provides electric distribution as

defined in § 39-1-2(a)(12), as well as natural gas as defined in § 39-1-2(a)(17), pursues the

objectives identified above, the public utility company shall utilize all appropriate, competitive

processes, and maintain compliance with applicable federal and state siting laws.

     (b) Any procurement authorized under this section shall be commercially reasonable.

     39-31-6. Utility filings with the public utilities commission.

     (a) Pursuant to the procurement activities in § 39-31-5, the public utility company that

provides electric distribution as defined in § 39-1-2(a)(12), as well the public utilities that distribute

natural gas as provided by § 39-1-2(a)(20), are authorized to voluntarily file proposals with the

public utilities commission for approval to implement these policies and achieve the purposes of

this chapter. The company's proposals may include, but are not limited to the, following

authorizations:

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

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

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

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

under the renewable energy standard established by chapter 26 of this title, and provided that:

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     (i) The electric distribution company may, subject to review and approval of the

commission, select a reasonable, open, and competitive method of soliciting proposals from

renewable energy developers, including domestic or international large- or small-scale

hydroelectric power, that may include public solicitations and individual negotiations.

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

the parties to engage in arms-length negotiations over final contract terms.

     (iii) Each long-term contract entered into pursuant to this section shall contain a condition

that it shall not be effective without commission review and approval.

     (iv) The electric distribution company shall file the contract(s), along with a justification

for its decision, within a reasonable time after it has executed the contract following a solicitation

or negotiation. The electric distribution company shall also file tariffs with the commission for

commission review and approval that net the cost of payments made to projects under the long-

term contracts against the proceeds obtained from bid fees and the sale of energy, capacity, RECs,

or other attributes. The difference shall be credited or charged to all distribution customers through

a uniform fully reconciling annual factor in distribution rates, subject to review and approval of the

commission. Nothing herein is intended to prohibit the commission from allowing the electric

distribution company to use the energy, capacity, and other attributes purchased for resale to

customers; and/or to use the NE-GIS certificates for purposes of meeting the obligations set forth

in chapter 26 of title 39 ("renewable energy standard").

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

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

and advance the purposes of this chapter at levels beyond those commitments necessary to serve

local gas distribution customers, and may do so either directly, or in coordination with, other New

England states and instrumentalities; utilities; generators; or other appropriate contracting parties.

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

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

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

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

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

opinions filed:

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

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

from the proposed contract(s), including a determination as to whether the proposed project(s)

advance the goals of chapter 6.2 of title 42 (the "2021 act on climate").

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

economic impacts resulting from the proposed contract(s).

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

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

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

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

hearings and/or proceedings.

     (C) Advisory opinions issued by agencies designated under subsection (a)(1)(vi)(A) of this

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

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

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

     (A) The contract is commercially reasonable;

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

     (C) The contract is consistent with achievement of the region's state's, greenhouse gas

reduction targets as specified in chapter 6.2 of title 42 (the "2021 act on climate"); and

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

     (viii) Participate in a multistate or regional sharing of costs through the Federal Energy

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

pipeline infrastructure projects pursued under this chapter.

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

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

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

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

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

specified period not to exceed ninety (90) days.

     39-31-7. Duties of the commission.

     (a) The commission may shall approve any proposals made by the electric and gas

distribution company that are commercially reasonable and advance the purposes of this chapter.

The commission's authority shall include, without limitation, the authority to:

     (1) Approve long-term contracts entered into pursuant to the goals and provisions of this

chapter for large- or small-scale hydroelectric power and renewable energy resources that are

eligible under the renewable energy standard established by chapter 26 of this title; provided,

however, that large-scale hydroelectric power shall not be eligible under the renewable energy

standard established by chapter 26 of this title;

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     (2) Approve long-term contracts for natural-gas-pipeline infrastructure and capacity

consistent with the purposes of this chapter;

     (3) Approve rate-recovery mechanisms proposed by the electric and gas distribution

companies relating to costs incurred under this chapter by the electric and gas distribution company

that facilitate the multistate or regional sharing of costs necessary to implement electric

transmission and natural-gas-pipeline infrastructure projects pursued under this chapter, including

any costs incurred through the Federal Energy Regulatory Commission approved tariffs related to

such multistate or regional energy infrastructure procurements;

     (4) Address any proposed changes to standard-offer procurements, standard-offer pricing,

and retail-choice rules;

     (5) Provide for the recovery of reasonable net costs from all distribution customers incurred

by the electric and gas distribution company in furtherance of the purposes of this chapter that may

include, but are not limited to, costs to solicit, evaluate, and seek approval of such contracts as well

as net costs incurred under any contracts approved by the commission under this section, as well

as the financial remuneration and incentives specified in § 39-31-11, and costs associated with the

management of incremental capacity resulting from interstate gas-pipeline-expansion projects

pursued pursuant to this chapter and costs associated with investments in local gas-distribution-

network assets necessary to implement such interstate gas-pipeline-expansion projects;

     (6) Approve cost allocation proposals filed by the gas distribution company and/or the

electric distribution company that appropriately allocate offshore wind costs incurred under § 39-

31-10, natural gas infrastructure and capacity costs incurred under § 39-31-6 between electric and

gas distribution customers of the electric and gas distribution company in a manner proportional to

the energy benefits accrued by Rhode Island's gas and electric customers from making such

investments. In making its determination, the commission shall consider projected reductions in

regional, wholesale electric prices as a benefit that accrues to electric ratepayers. The allocation of

costs shall include all distribution customers, regardless from whom they are purchasing their

commodity service; and

     (7) Approve any other proposed regulatory or ratemaking changes that reasonably advance

the goals set forth herein.

     (b) The grant of authorizations under this chapter shall not be construed as creating a

mandate or obligation on the part of the electric and gas distribution company to enter into any

contracts or file any proposals pursuant to this chapter.

     (c) The public utilities commission shall docket any proposals made by the office of energy

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

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be posted and maintained on the commission's website. The commission shall conduct proceedings,

as provided below, solely for the purpose of determining whether the proposed infrastructure

projects, if implemented, are in the public interest and no commitments shall be valid or authorized

without such finding being made by the commission. The validity and approval of any

commitments made by the electric or gas distribution company in furtherance of the purposes of

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

subsection shall proceed as follows:

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

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

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

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

from the proposed project(s), including a determination as to whether the proposed project(s)

advance the goals of chapter 6.2 of title 42 (the "2021 act on climate").

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

economic impacts resulting from the proposed project(s).

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

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

     (3) Advisory opinions issued by agencies designated under subsection (c)(1) of this section

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

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

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

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

pursuant to this chapter and hold evidentiary hearings. In addition to evidentiary hearings, the

commission shall also hold at least one public hearing to accept public comment on the proposal(s)

prior to an open meeting held pursuant to this section.

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

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

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

determination, and in consideration of filed advisory opinions and the opinion of the electric or gas

distribution utility, the proposed infrastructure project(s):

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

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

and security;

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

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

system;

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

region's greenhouse gas reduction goals established in chapter 6.2 of title 42 (the "2021 act on

climate"); and

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

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

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

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

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

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

utilities and carriers.

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

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

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

Regulatory Commission approved tariffs on a regional and/or multistate basis pursuant to this

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

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

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

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

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

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

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

voluntary and subject to § 39-31-5.

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

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

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

filings made under §§ 39-31-6 and 39-31-7 shall be consolidated.

     SECTION 2. Section 39-26.1-4 of the General Laws in Chapter 39-26.1 entitled "Long-

Term Contracting Standard for Renewable Energy" is hereby amended to read as follows:

     39-26.1-4. Financial remuneration and incentives.

     In order to achieve the purposes of this chapter, electric distribution companies shall be

entitled to financial remuneration and incentives for long-term contracts for newly developed

renewable energy resources, which are over and above the base rate revenue requirement

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established in its cost of service for distribution ratemaking. Such remuneration and incentives shall

compensate the electric distribution company for accepting the financial obligation of the long-

term contracts. The financial remuneration and incentives described in this section shall apply only

to long-term contracts for newly developed renewable energy resources. For long-term contracts

approved pursuant to this chapter before January 1, 2022, the The financial remuneration and

incentives shall be in the form of annual compensation, equal to two and three quarters percent

(2.75%) of the actual annual payments made under the contracts for those projects that are

commercially operating, unless determined otherwise by the commission at the time of approval.

For long-term contracts approved pursuant to this chapter on or after January 1, 2022, including

contracts above the minimum long-term contract capacity, the financial remuneration and

incentives shall be in the form of annual compensation equal to two percent (2.0%) of the actual

annual payments made under the contracts for those projects that are commercially operating. For

all long-term contracts approved pursuant to this chapter on or after January 1, 2027, financial

remuneration and incentives shall not be applied, unless otherwise granted by the commission. For

any calendar year in which the electric distribution company’s actual return on equity exceeds the

return on equity allowed by the commission in the electric distribution company’s last general rate

case, the commission shall have the authority to adjust any or all remuneration paid to the electric

distribution company pursuant to this section in order to assure that such remuneration does not

result in or contribute toward the electric distribution company earning above its allowed return for

such calendar year.

     SECTION 3. Chapter 39-31 of the General Laws entitled "Affordable Clean Energy

Security Act" is hereby amended by adding thereto the following sections:

     39-31-10. Offshore Wind Procurement.

     The electric distribution company is hereby authorized and required to issue a request for

proposals for up to approximately six hundred megawatts (600 MW) of newly-developed offshore

wind capacity no later than August 15, 2022. The electric distribution company shall develop the

request for proposals in consultation with the Rhode Island office of energy resources and the

Rhode Island division of public utilities and carriers. Review of any proposed contract(s) resulting

from this procurement shall be conducted by the commission consistent with the requirements of

this chapter. The request for proposals shall require all bidders to provide, at a minimum,

information on potential environmental impacts through the submittal of an environmental and

fisheries mitigation plan, which shall include site and environmental data transparency

requirements; a site layout plan and maps that illustrate the location of all on-shore and offshore

equipment and facilities and clearly delineates the perimeter of the area in which offshore wind

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turbines will be placed; annualized estimates for all economic benefits, including the specific in-

state expenditures and employment proposed during the development, construction and operation

and maintenance phases of the project; a diversity, equity and inclusion plan that, at a minimum,

provides the bidder’s proposed strategy to enable access to employment and vendor opportunities

for historically marginalized communities; identification of Rhode Island vendors and other

domestic offshore wind supply chain opportunities associated with the project; and a plan outlining

the bidder’s intentions with respect to the negotiation of a project labor agreement(s) to cover

construction activities on a proposed project. This information shall be incorporated in the

procurement’s evaluation and scoring criteria.

     39-31-11. Financial remuneration and incentives.

     In order to achieve the purposes of this chapter, electric distribution companies shall be

entitled to financial remuneration and incentives for long-term contracts for newly developed

renewable energy resources, which are over and above the base rate revenue requirement

established in its cost of service for distribution ratemaking. Such remuneration and incentives shall

compensate the electric distribution company for accepting the financial obligation of the long-

term contracts. For long-term contracts approved pursuant to this chapter on or after January 1,

2022, the financial remuneration and incentives shall be in the form of annual compensation equal

to two percent (2.0%) of the actual annual payments made under the contracts for those projects

that are commercially operating. For long-term contracts approved pursuant to this chapter on or

after January 1, 2027, financial remuneration and incentives shall not be applied, unless otherwise

granted by the commission. For any calendar year in which the electric distribution company’s

actual return on equity exceeds the return on equity allowed by the commission in the electric

distribution company’s last general rate case, the commission shall have the authority to adjust any

or all remuneration paid to the electric distribution company pursuant to this section in order to

assure that such remuneration does not result in or contribute toward the electric distribution

company earning above its allowed return for such calendar year.

     39-31-12. Bid fees.

     Bidders submitting project proposals responsive to any competitive procurements issued

pursuant to this chapter may be charged bid fees by the electric distribution company to pay for all

reasonable costs of consultants and counsel that may be hired by the Rhode Island office of energy

resources, the division of public utilities and carriers, the commerce corporation, and/or the

department of environmental management to meet the requirements of this chapter, up to a cap of

two hundred thousand dollars ($200,000) per agency. Any bid fees collected by the electric

distribution company for purposes of implementing this subsection must be specified in

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procurement documents. The electric distribution company shall be required to transfer to each

agency any invoiced funds within thirty (30) days of invoice receipt.

     SECTION 4. This act shall take effect upon passage, except as otherwise provided within

the statute.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- AFFORDABLE CLEAN ENERGY

SECURITY ACT

***

     This act would amend the affordable clean energy security act and the long-term

contracting standard for renewable energy.

     This act would take effect upon passage, except as otherwise provided within the statute.

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