Chapter 032
2010 -- S 2819 SUBSTITUTE A AS
AMENDED
Enacted 06/15/10
A N A C T
RELATING TO
PUBLIC UTILITIES AND CARRIERS -- CONTRACTING STANDARD FOR RENEWABLE ENERGY
Introduced By: Senators Sosnowski, Miller, Felag, Ruggerio, and McCaffrey
Date Introduced: April 28, 2010
It is enacted by the
General Assembly as follows:
SECTION 1. Section 39-26.1-7 of the General Laws in Chapter
39-26.1 entitled "Long-
Term
Contracting Standard for Renewable Energy" is hereby amended to read as
follows:
39-26.1-7.
Town of New Shoreham Project. -- (a) The general assembly finds it is in
the public interest for the state to facilitate the
construction of a small-scale offshore wind
demonstration project off the coast of
interconnects
economic development benefits of the emerging offshore wind
industry; promote the
development of renewable energy sources that increase the
nation’s energy independence from
foreign sources of fossil fuels; reduce the adverse
environmental and health impacts of traditional
fossil fuel energy sources; and provide the Town of
to the mainland. To effectuate these goals, and
notwithstanding any other provisions of the
general or public laws to the contrary, the Town of
purchase agreement, transmission arrangements, and related
costs are authorized pursuant to the
process and standards contained in this section. The
Narragansett Electric Company is hereby
authorized to enter into an amended power purchase agreement
with the developer of offshore
wind for the purchase of energy, capacity, and any other
environmental and market attributes, on
terms that are consistent with the power purchase agreement
that was filed with the commission
on December 9, 2009 in docket 4111, and amendments
changing dates and deadlines, provided
that the pricing terms of such agreement are amended as
more fully described in subsection 39-
26.1-7(e), in addition to other amendments that are
made to take into account the provisions of
this section as amended since the filing of the agreement
in docket 4111. Any amendments shall
ensure that the pricing can only be lower, and never exceed,
the original pricing included in the
power purchase agreement that was reviewed in docket 4111. On or before August 15, 2009, the
electric distribution company shall solicit proposals for one
newly developed renewable energy
resources project of ten (10) megawatts or less that includes a
proposal to enhance the electric
reliability and environmental quality of the Town of
company shall select a project for negotiating a contract
that shall be conditioned upon approval
by the commission. Negotiations shall proceed in good
faith to achieve a commercially
reasonable contract. Should the distribution company and the
selected party agree to a contract,
the contract shall be filed with the commission no later
than October 15, 2009 for commission
approval. The commission shall review the contract and issue
an order approving or disapproving
the contract on or before January 31, 2010. If the
parties are unable to reach agreement on a
contract prior to October 15, 2009, an unsigned copy shall be
filed by the electric distribution
company prior to that same date, and the commission shall
have the discretion to order the parties
to arbitrate the dispute on an expedited basis.
Notwithstanding anything in this section to the
contrary, and notwithstanding any solicitation made pursuant
to this section, the distribution
company and the selected party may agree to a contract for a The demonstration project subject to
the amended power purchase agreement shall that includes include up to (but not
exceeding) eight
(8) wind turbines with aggregate nameplate capacity of
no more than thirty (30) megawatts,
subject to and conditioned upon the approval of the
commission, even if the actual
capacity factor
of the project results in the project technically
exceeding ten (10) megawatts.
(b) The amended power
purchase agreement shall be filed with the Public Utilities
Commission. Upon the filing of the amended power purchase
agreement, the commission shall
open a new docket. The commission shall allow the parties
to docket 4111 to become parties in
the new docket who may file testimony within fifteen (15)
days of the filing of the amended
agreement. The commission shall allow other interventions on an
expedited basis, provided they
comply with the commission standards for intervention. The
developer shall provide funding for
the economic development corporation to hire an expert
experienced in power markets,
renewable energy project financing, and power contracts who
shall provide testimony regarding
the terms and conditions of the power purchase agreement
to assist the commission in its review,
provided that the developer shall be precluded from
influencing the choice of expert, which shall
be in the sole discretion of the economic development
corporation. This testimony shall be filed
within twenty (20) days after the filing of the amended
power purchase agreement. The parties
shall have the right to respond to the testimony of this
expert through oral examination at the
evidentiary hearings. The commission shall hold one public
comment hearing within five (5) days
after the filing of the expert testimony. Evidentiary
hearings shall commence no later than thirty
(30) days from the filing of
the amended power purchase agreement.
(c) The commission
shall review the amended power purchase agreement taking into
account the state’s policy intention to facilitate the
development of a small offshore wind project
in
commission shall review the amended power purchase agreement and
shall approve it if:
(i)
The amended agreement contains terms and conditions that are commercially
reasonable;
(ii) The amended
agreement contains provisions that provide for a decrease in pricing if
savings can be achieved in the actual cost of the project
pursuant to subsection 39-26.1-7(e);
(iii) The amended
agreement is likely to provide economic development benefits,
including: facilitating new and existing business expansion and
the creation of new renewable
energy jobs; the further development of
preparedness of the
(iv)
The amended power purchase agreement is likely to provide environmental
benefits,
including the reduction of carbon emissions. An advisory
opinion on the findings of economic
benefit set forth in (iii) above shall be provided by the
corporation and an advisory opinion on the environmental benefits
set forth in (iv) above shall be
filed by the
be filed with the commission within twenty (20) days of
filing of the amended power purchase
agreement. The commission shall give substantial deference to
the factual and policy conclusions
set forth in the advisory opinions in making the required
findings. Notwithstanding any other
provisions of the general laws to the contrary, for the purposes
of this section, "commercially
reasonable" shall mean terms and pricing that are
reasonably consistent with what an experienced
power market analyst would expect to see for a project of a
similar size, technology and location,
and meeting the policy goals in subsection (a) of this
section.
(d) The commission
shall issue a written decision to accept or reject the amended power
purchase agreement, without conditions, no later than
forty-five (45) days from the filing of the
amended power purchase agreement, without delay or extension
of the timeframes contained in
this section. Any review of the commission's decision
shall be according to chapter 5 of title 39,
and the supreme court shall advance any proceeding under
this section so that the matter is
afforded precedence on the calendar and shall be heard and
determined with as little delay as
possible. Upon
approval of the contract, the The
provisions of section 39-26.1-4 and the
provisions of paragraphs (a), subsections
(b), (c), (d), and (f) of section 39-26.1-5 shall apply, and
all costs incurred in the negotiation, administration,
enforcement, transmission engineering
associated with the design of the cable, and implementation of the project and
agreement shall be
recovered annually by the electric distribution company in
electric distribution rates. To the
extent that there are benefits for customers of the Block
Island Power Company or its successor,
the commission shall determine an allocation of cost
responsibility between customers of the
electric distribution company and customers of Block Island
Power Company or its successor
after the cost estimates are filed with the commission, but
the commission need not determine the
final cost allocation at the time the commission considers
and/or approves the contract between
the electric distribution company and the project
developer. The allocation of costs shall assure
that individual customers in the Town of
on their individual bills than any charges for the same
project that may be included in individual
bills of customers of the electric distribution company.
The commission shall provide for an
appropriate rate design and billing method between the electric
distribution company and Block
Island Power Company at the
appropriate time. The
pricing under the agreement shall not have
any precedential effect for purposes of determining
whether other long-term contracts entered
into pursuant to this chapter are commercially reasonable.
(e) Cap and lower
price. (i) The amended power purchase agreement
subject to
subsection 39-26.1-7(a) shall provide for terms that shall
decrease the pricing if savings can be
achieved in the actual cost of the project, with all realized
savings allocated to the benefit of
ratepayers. (ii) The amended power purchase agreement shall also
provide that the initial fixed
price contained in the signed power purchase agreement submitted
in docket 4111 shall be the
maximum initial price, and any realized savings shall reduce
such price. After making any such
reduction to the initial price based on realized savings, the
price for each year of the amended
power purchase agreement shall be fixed by the terms of
said agreement. (iii) The amended
power purchase agreement shall require that the costs of
the project shall be certified by the
developer. An independent third-party acceptable to the
division of public utilities and carriers
shall within thirty (30) days of this certification by the
developer, verify the accuracy of such
costs at the completion of the construction of the project.
The reasonable costs of this
verification, shall be paid for by the developer. Upon receipt of
such third-party verification, the
division shall notify the Narragansett Electric Company of the
final costs. The public utilities
commission shall reduce the expense to ratepayers consistent
with a verified reduction in the
project costs.
(b)(f) The
solicitation shall require that each proposal include provisions for project
shall
include a transmission cable between the Town of
The electric distribution company, at its option, may elect
propose to own, operate, or otherwise
participate in such transmission cable project, subject to
commission approval. The electric
distribution company, however, has the option to decline to own,
operate, or otherwise participate
in the transmission cable project, even if the
commission approves such arrangements. The
electric distribution company may elect to purchase the
transmission cable and related facilities
from the developer or an affiliate of the developer,
pursuant to the terms of a transmission
facilities purchase agreement negotiated between the electric
distribution company and the
developer or its affiliate, an unexecuted copy of which shall
be provided to the division of public
utilities and carriers for the division’s consent to execution.
The division shall have twenty (20)
days to review the agreement. If the division
independently determines that the terms and pricing
of the agreement are reasonable, taking into account the
intention of the legislature to advance the
project as a policy-making matter, the division shall provide
its written consent to the execution
of the transmission facilities purchase agreement. Once
written consent is provided, the electric
distribution company and its transmission affiliate are authorized
to make a filing with the federal
energy regulatory commission to put into effect transmission
rates to recover all of the costs
associated with the purchase of the transmission cable and
related facilities and the annual
operation and maintenance. The revenue requirement for the
annual cable costs shall be
calculated in the same manner that the revenue requirement is
calculated for other transmission
facilities in
regulatory commission. The division shall be authorized to
represent the State of
those proceedings before the federal energy regulatory
commission, including the authority to
enter into any settlement agreements on behalf of the state
to implement the intention of this
section. The division shall support transmission rates and
conditions that allow for the costs
related to the transmission cable and related facilities to
be charged in transmission rates in a
manner that socializes the costs throughout
company own, operate, and maintain the cable, the annual
costs incurred by the electric
distribution company directly or through transmission charges
shall be recovered annually
through a fully reconciling rate adjustment from customers of
the electric distribution company
and/or from the Block Island Power Company or its successor,
subject to any federal approvals
that may be required by law; provided, however, the
parties shall use all reasonable efforts to
obtain socialization of the costs of the cable in
the ISO New England, to the extent permitted. The allocation of the costs related to the
transmission cable through transmission rates or otherwise
shall be structured so that the
estimated impact on the typical residential customer bill for
such transmission costs for customers
in the Town of
customer bill for customers on the mainland of the electric
distribution company. This higher
charge for the customers in the Town of
actual cable costs based on the annual peak demands of the Block
Island Power Company and the
electric distribution company, and these resultant costs
recovered in the per kWh charges of each
company. In any event, the difference in the individual
charge per kWh or per customer/month
shall not exceed the ratio of average demand to peak demand
for Block Island Power Company
relative to the electric distribution company, currently at
1.8 to 1.0 respectively. To the extent that
any state tariffs or rates must be put into effect in
order to implement the intention of this section,
the public utilities commission shall accept filings of
the same and shall approve them. costs shall
be determined by the commission and assure that
individual customers in the Town of
Shoreham pay higher charges related to the cable on
their individual bills than any charges for the
same project that may be included in individual bills of
customers of the electric distribution
company.
(c)(g) Any
charges incurred by the Block Island Power Company or its successor
pursuant to this section or other costs incurred by the
Block Island Power Company in
implementing this section, including the cost of participation in
regulatory proceedings in the
state or at the federal energy regulatory commission shall be recovered annually in rates through a
fully reconciling rate adjustment, subject to approval by
the commission. If the electric
distribution company owns, operates, or otherwise participates in
the transmission cable project,
pursuant to subsection 39-26.1-7(b) the provisions of section
39-26.1-4 shall not apply to the
cable cost portion of the Town of
(d)(h) Any
contract entered into pursuant to this section shall count as part of the
minimum long-term contract capacity.
(i)
If the electric distribution company elects not to own the transmission cable,
the
developer may elect to do so directly, through an affiliate, or
a third-party and the power purchase
agreement pricing shall be adjusted to allow the developer, an
affiliate or a third-party, to recover
the costs (including financing costs) of the transmission
facilities, subject to complying with the
terms as set forth in the power purchase agreement between
the developer and the electric
distribution company.
SECTION 2. This act shall take effect upon passage.
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LC02483/SUB A/3
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