June 2007: Connecticut Revises Its Renewable Portfolio Standard

About The Author:

Robert A. Olson is a partner in the law firm of Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law, public utility law and related commercial transactions.

He can be reached at:

Brown, Olson & Gould, PC
2 Delta Drive
Suite 301
Concord, NH 03301
rolson@bowlaw.com
(603) 225-9716

June 2007

CONNECTICUT REVISES ITS RENEWABLE PORTFOLIO STANDARD

By Robert A. Olson, Esq. and Maria Reinemann, Esq. -- Brown, Olson and Gould, P.C.
(originally published by PMA OnLine Magazine: 2008/01/19)

On June 5, 2007, Connecticut Governor Jodi Rell signed portions of HB 7432 into law. House Bill 7432 contains several revisions to Connecticut’s Renewable Portfolio Standard (“RPS”). The revisions include an increase in the RPS percentage requirements, an increase in “Project 100” requirements, permission for utilities to enter into long-term contracts for renewable energy certificates (RECs), an expansion of Class III eligibility, and mandatory municipal tax exemptions for certain renewable generating facilities.

Section 40 of House Bill 7432 increases the percentage requirements for energy from Class I resources. Class I resources include solar power, wind power, fuel cells, methane gas from landfills, ocean thermal power, and wave or tidal power. The current RPS requires utilities to obtain 3.5% of their power from Class I renewable resources in 2007, 5% in 2008, 6% in 2009, and 7% in 2010 and subsequent years. The new measure, effective October 1, 2007, increases the RPS for Class I resources to 8% in 2011, 9% in 2012, 10% in 2013, 11% in 2014, 12.5% in 2015, 14% in 2016, 15.5% in 2017, 17% in 2018, 19.5% in 2019, and 20% in 2020 and thereafter. In addition, each year utilities must continue to acquire an additional 3% of their power from Class I or Class II resources (e.g., trash-to-energy facilities, certain biomass facilities, and certain run-of-the-river hydropower facilities). Under the bill, companies and suppliers are also permitted to meet the RPS requirements by buying power and associated attributes from residential net-metering customers.

Section 71 of the bill allows electric companies to meet the RPS by procuring renewable energy certificates under long-term contracts starting January 1, 2008. The bill allows electric companies to enter into contracts of up to 15 years duration.

Section 124 modifies “Project 100” by requiring companies to enter into contracts for 125 rather than 100 megawatts of Class I energy between October 1, 2007 and October 1, 2008. This amount is increased to 150 megawatts starting October 1, 2008. Resources must have received funding from the clean energy fund and individual projects must be at least one megawatt in size.

Sections 42, 43 and 44 make changes to Class III requirements. Currently, Class III resources include (1) electricity produced by systems that produce heat and power developed at commercial and industrial facilities and (2) electricity savings from conservation and load management programs at these facilities that began on or after January 1, 2006. House Bill 7432 expands Class III resources to include (1) systems that recover waste heat or pressure from commercial and industrial processes installed on or after April 1, 2007 and (2) electricity savings from all conservation programs started on or after April 1, 2006. Customers who implement energy conservation or begin operation of distributed resources on or after January 1, 2008, are entitled to Class III credits equal to at least one cent per kilowatt hour. To be eligible for Class III credits, the customer must (1) certify that applicable installation and metering requirements have been met, (2) provide a detailed energy savings or output calculation for a period specified by the Department of Public Utility Control (DPUC), and (3) include any other information requested by the DPUC. The bill excludes projects that violate the state’s water quality standards.

Sections 46 and 47 of the bill require municipalities to exempt certain renewable energy systems from property taxes and expand the scope of the systems that are eligible for the exemption. Under current law, municipalities are permitted exempt Class I renewable resources and hydropower facilities in one- to four-unit residential buildings. House Bill 7432 now requires municipalities to exempt these resources. Additionally, the bill requires municipalities to exempt any passive or active solar, water, or space heating system or geothermal energy resource in any building.

Sections 108 and 109 require the DPUC to establish a grant program for Class I distributed generation projects in businesses and state buildings. The grant program funding is $25 million for fuel cell projects and $25 million for other projects.

The legislation seeks to create a long term energy policy for Connecticut and hence contains a number of provisions unrelated to RPS requirements. Other provisions of the bill allow certain customers with on-site generation to be paid for excess electrical production at avoided wholesale cost, require electric companies to submit plans for the construction of peaking generation, require electric companies to waive demand charges for fuel cell operators in certain circumstances, and provide funding for municipal renewable and efficiency grant programs.