2008 -- H 7809 SUBSTITUTE A AS AMENDED

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LC02003/SUB A

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2008

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A N A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- RENEWABLE ENERGY

STANDARD

     Introduced By: Representatives Segal, Rice, Lewiss, Kennedy, and Gallison

     Date Introduced: February 26, 2008

     Referred To: House Environment and Natural Resources

It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 39-26-2 and 39-26-6 of the General Laws in Chapter 39-26

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entitled "Renewable Energy Standard" are hereby amended to read as follows:

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     39-26-2. Definitions. -- When used in this chapter:

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      (1) "Alternative compliance payment" means a payment to the Renewable Energy

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Development Fund of fifty dollars ($50.00) per megawatt-hour of renewable energy obligation, in

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2003 dollars, adjusted annually up or down by the consumer price index, which may be made in

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lieu of standard means of compliance with this statute;

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      (2) "Commission" means the Rhode Island public utilities commission;

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      (3) "Compliance year" means a calendar year beginning January 1 and ending December

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31, for which an obligated entity must demonstrate that it has met the requirements of this statute;

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      (4) "Customer-sited generation facility" means a generation unit that is interconnected on

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the end-use customer's side of the retail electricity meter in such a manner that it displaces all or

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part of the metered consumption of the end-use customer;

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     (5) "Educational institution" means any public school, approved private non-profit

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school, or institution of higher education as defined in 20 USC Chapter 28, Subchapter 1, Part A

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section 1001 (a).

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     (5) (6) "Electrical energy product" means an electrical energy offering, including, but not

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limited to, last resort and standard offer service, that can be distinguished by its generation

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attributes or other characteristics, and that is offered for sale by an obligated entity to end-use

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customers;

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      (6) (7) "Eligible biomass fuel" means fuel sources including brush, stumps, lumber ends

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and trimmings, wood pallets, bark, wood chips, shavings, slash and other clean wood that is not

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mixed with other solid wastes; agricultural waste, food and vegetative material; energy crops;

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landfill methane; biogas; or neat bio-diesel and other neat liquid fuels that are derived from such

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fuel sources;

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      (7) (8) "Eligible renewable energy resource" means resources as defined in section 39-

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26-4 39-26-5;

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      (8) (9) "End-use customer" means a person or entity in Rhode Island that purchases

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electrical energy at retail from an obligated entity;

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      (9) (10) "Existing renewable energy resources" means generation units using eligible

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renewable energy resources and first going into commercial operation before December 31, 1997;

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     (11) "Farm" shall be defined in accordance with section 44-27-2, except that all buildings

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associated with the farm shall be eligible for net metering credits as long as: (i) the buildings are

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owned by the same entity operating the farm or persons associated with operating the farm; and

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(ii) the buildings are on the same farmland as the renewable generation on either a tract of land

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contiguous with such farmland or across a public way from such farmland.

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      (10) (12) "Generation attributes" means the nonprice characteristics of the electrical

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energy output of a generation unit including, but not limited to, the unit's fuel type, emissions,

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vintage and policy eligibility;

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      (11) (13) "Generation unit" means a facility that converts a fuel or an energy resource

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into electrical energy;

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      (12) (14) "NE-GIS" means the generation information system operated by NEPOOL, its

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designee or successor entity, which includes a generation information database and certificate

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system, and that accounts for the generation attributes of electrical energy consumed within

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NEPOOL;

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      (13) (15) "NE-GIS certificate" means an electronic record produced by the NE-GIS that

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identifies the relevant generation attributes of each megawatt-hour accounted for in the NE-GIS;

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      (14) (16) "NEPOOL" means the New England Power Pool or its successor;

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     (17) "Net metering" means the process of measuring the difference between electricity

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delivered by an electrical distribution company and electricity generated by a solar-net-metering

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facility or wind-net-metering facility, and fed back to the distribution company;

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      (15) (18) "New renewable energy resources" means generation units using eligible

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renewable energy resources and first going into commercial operation after December 31, 1997;

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or the incremental output of generation units using eligible renewable energy resources that have

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demonstrably increased generation in excess of ten percent (10%) using eligible renewable

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energy resources through capital investments made after December 31, 1997; but in no case

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involve any new impoundment or diversion of water with an average salinity of twenty (20) parts

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per thousand or less;

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     (19) "Non-profit affordable housing" shall mean a housing development or housing

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project as defined by section 42-55-3 undertaken by a non-profit entity where the residential units

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taking electric service are either in the same building in close proximity to the renewable energy

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source or, if not within the same building, are within one-half (1/2) of a mile radius from the

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renewable energy source; provided, however, that the application has been filed with and

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reviewed by the division of public utilities and carriers and the division has certified the

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development or project as eligible. The division shall promulgate regulations setting forth an

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application process and eligibility criteria to assure that the net metering allowed will benefit low

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income residential electric customers only.

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      (16) (20) "Obligated entity" means a person or entity that sells electrical energy to end-

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use customers in Rhode Island, including, but not limited to: nonregulated power producers and

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electric utility distribution companies, as defined in section 39-1-2, supplying standard offer

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service, last resort service, or any successor service to end-use customers; including Narragansett

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Electric, but not to include Block Island Power Company as described in section 39-26-7 or

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Pascoag Utility District;

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      (17) (21) "Off-grid generation facility" means a generation unit that is not connected to a

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utility transmission or distribution system;

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     (22) "Renewable generation credit" means credit equal to the excess kWhs by the time of

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use billing period (if applicable) multiplied by the sum of the distribution company's:

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     (i) standard offer service kWh charge for the rate class applicable to the net metering

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customer;

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     (ii) distribution kWh charge;

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     (iii) transmission kWh charge; and

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     (iv) transition kWh charge. This does not include any charges relating to conservation

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and load management, demand side management, and renewable energy.

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      (18) (23) "Reserved certificate" means a NE-GIS certificate sold independent of a

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transaction involving electrical energy, pursuant to Rule 3.4 or a successor rule of the operating

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rules of the NE-GIS;

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      (19) (24) "Reserved certificate account" means a specially designated account

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established by an obligated entity, pursuant to Rule 3.4 or a successor rule of the operating rules

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of the NE-GIS, for transfer and retirement of reserved certificated from the NE-GIS;

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      (20) (25) "Self-generator" means an end-use customer in Rhode Island that displaces all

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or part of its retail electricity consumption, as metered by the distribution utility to which it

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interconnects, through the use of a customer-sited generation facility;

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      (21) (26) "Small hydro facility" means a facility employing one or more hydroelectric

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turbine generators and with an aggregate capacity not exceeding thirty (30) megawatts. For

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purposes of this definition, "facility" shall be defined in a manner consistent with Title 18 of the

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Code of Federal Regulations, section 92.201 et seq.; provided, however, that the size of the

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facility is limited to thirty (30) megawatts, rather than eighty (80) megawatts.

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     39-26-6. Duties of the commission. -- The commission shall:

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      (a) Develop and adopt regulations on or before December 31, 2005, for implementing a

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renewable energy standard, which regulations shall include, but be limited to, provisions for:

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      (1) Verifying the eligibility of renewable energy generators and the production of energy

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from such generators, including requirements to notify the commission in the event of a change in

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a generator's eligibility status.

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      (2) Standards for contracts and procurement plans for renewable energy resources, to

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achieve the purposes of this chapter.

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      (3) Flexibility mechanisms for the purposes of easing compliance burdens, facilitating

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bringing new renewable resources on-line, and avoiding and/or mitigating conflicts with state

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level source disclosure requirements and green marketing claims throughout the region; which

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flexibility mechanisms shall allow obligated entities to: (i) demonstrate compliance over a

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compliance year; (ii) bank excess compliance for two (2) subsequent compliance years, capped at

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thirty percent (30%) of the current year's obligation; and (iii) allow renewable energy generated

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during 2006 to be banked by an obligated entity as early compliance, usable towards meeting an

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obligated entity's 2007 requirement. Generation used for early compliance must result in the

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retirement of NE-GIS certificate in a reserved certificate account designated for such purposes.

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      (4) Annual compliance filings to be made by all obligated entities within one month after

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NE-GIS reports are available for the fourth (4th) quarter of each calendar year. All electric utility

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distribution companies shall cooperate with the commission in providing data necessary to assess

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the magnitude of obligation and verify the compliance of all obligated entities.

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      (b) Authorize rate recovery by electric utility distribution companies of all prudent

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incremental costs arising from the implementation of this chapter, including, without limitation,

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the purchase of NE-GIS certificates, the payment of alternative compliance payments, required

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payments to support the NE-GIS, assessments made pursuant to section 39-26-7(c) and the

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incremental costs of complying with energy source disclosure requirements.

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      (c) Certify eligible renewable energy resources by issuing statements of qualification

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within ninety (90) days of application. The commission shall provide prospective reviews for

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applicants seeking to determine whether a facility would be eligible.

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      (d) Determine, on or before January 1, 2010, the adequacy, or potential adequacy, of

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renewable energy supplies to meet the increase in the percentage requirement of energy from

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renewable energy resources to go into effect in 2011 and determine on or before January 1, 2014,

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the adequacy or potential adequacy, of renewable energy supplies to meet the increase in the

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percentage requirement of energy from renewable energy resources to go into effect in 2015. In

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making such determinations the commission shall consider among other factors the historical use

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of alternative compliance payments in Rhode Island and other states in the NEPOOL region. In

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the event that the commission determines an inadequacy or potential inadequacy of supplies for

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scheduled percentage increases, the commission shall delay the implementation of the scheduled

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percentage increase for a period of one year or recommend to the general assembly a revised

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schedule of percentage increases, if any, to achieve the purposes of this chapter.

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      (e) Establish sanctions for those obligated entities that after investigation have been

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found to fail to reasonably comply with the commission's regulations. No sanction or penalty

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shall relieve or diminish an obligated entity from liability for fulfilling any shortfall in its

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compliance obligation; provided, however, that no sanction shall be imposed if compliance is

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achieved through alternative compliance payments. The commission may suspend or revoke the

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certification of generation units, certified in accordance with subsection (c) above, that are found

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to provide false information, or that fail to notify the commission in the event of a change in

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eligibility status or otherwise comply with its rules. Financial penalties resulting from sanctions

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from obligated entities shall not be recoverable in rates.

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      (f) Report, by February 15, 2006, and by February 15 each year thereafter, to the

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governor, the speaker of the house and the president of the senate on the status of the

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implementation of the renewable energy standards in Rhode Island and other states, and which

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report shall include in 2009, and each year thereafter, the level of use of renewable energy

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certificates by eligible renewable energy resources and the portion of renewable energy standards

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met through alternative compliance payments, and the amount of rate increases authorized

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pursuant to subsection (b) above.

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      (g) Implement the following changes regarding distributed generation from renewable

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energy systems by January 1, 2008 and until January 1, 2010 2009.

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      (1) Increase the maximum allowable distributed generation capacity for eligible net-

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metered energy systems to one 1.65 megawatts (MW); except that for eligible net-metered

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renewable energy systems developed but not owned by cities and towns, located on city or town

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owned land, and providing power solely to the city or town that the project is located in, increase

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said maximum to 2.25 megawatts; and except that for eligible net-metered renewable energy

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systems owned by cities and towns of Rhode Island and the Narragansett Bay Commission,

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increase said maximum to 1.65 MW 3.5 megawatts (MW).

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      (2) Increase the aggregate amount of net metering to a minimum maximum of five (5)

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megawatts two percent (2%) of peak load, provided that at least one megawatt is reserved for

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projects less than twenty-five (25) kW.

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     (3) If the electricity generated by the renewable generation facility during a billing period

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exceeds the customer's kilowatt-hour usage during the billing period, the customer shall be billed

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for zero kilowatt-hour usage and the excess renewable generation credits shall be credited to the

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customer's account for the following billing period. Any Rhode Island city or town, educational

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institution, farm, or the Narragansett Bay Commission may elect to apply any such credits earned

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to another account owned by it. Non-profit affordable housing may elect to apply any such credits

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earned to other accounts within the eligible affordable housing development.

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     (4) If the customer's kilowatt-hour usage exceeds the electricity generated by the

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renewable generation facility during the billing period, the customer shall be billed for the net

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kilowatt-hour usage at the applicable rate. Any excess credits may be carried forward month to

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month for twelve (12) month periods as established by the commission. At the end of the

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applicable twelve (12) month period, if there are unused excess credits on the net metering

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customer accounts, such credits shall be transferred to the renewable energy low income fund set

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forth in subsection 39-26-6(j).

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      (h) The distribution portion of any small or large renewable credits and the distribution

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portion of any distribution company delivery charges displaced by renewable energy systems

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subject to subsection (g) above Any prudent and reasonable costs incurred by the electric

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distribution company pursuant to achieving compliance with subsection (g) and the annual

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amount of the distribution component of any renewable generation credits provided to net

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metering customers shall be aggregated by the distribution company and billed to all customers

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on an annual basis through either a uniform per kilowatt-hour surcharge embedded in the

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distribution component of the rates reflected on customer bills or surcharges .

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     (i) Report, by July 1, 2010 to the governor, the speaker of the house and the president of

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the senate on the status of the implementation of subsection (g) above and (h), including if said

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provisions are optimally cost-effective, reliable, prudent and environmentally responsible.

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     (j) The commission shall establish a renewable energy low income fund to which unused

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excess renewable credits shall be transferred, as provided in subdivision 39-26-6(g)(4). The

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commission shall direct the electrical distribution utility to apply the credits to reduce the electric

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bills of customers in the low income rate class, by such method as determined by the commission.

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The electric distribution company shall file an annual report disclosing the amount of unused

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credits and propose a method of allocating the credits to the low income rate class. The

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commission shall, after conducting a public hearing, retain discretion to accept the proposal,

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modify it, or direct a different method of allocating the credits to the low income rate class.

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     (k) Consistent with the public policy objective of developing renewable generation as an

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option in Rhode Island, the electric distribution company is authorized to propose and implement

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pilot programs to own and operate no more than fifteen megawatts (15MW) of renewable

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generation demonstration projects in Rhode Island and include the costs and benefits in rates to

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distribution customers. At least two (2) demonstration projects shall include renewable generation

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installed at or in the vicinity of nonprofit affordable housing projects where energy savings

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benefits are provided to reduce electric bills of the customers at the nonprofit affordable housing

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projects. Any renewable generation proposals shall be subject to the review and approval of the

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commission. The commission shall annually make an adjustment to the minimum amounts

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required under the renewable energy standard under chapter 39-26 in an amount equal to the

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kilowatt hours generated by such units owned by the electric distribution company. The electric

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and gas distribution company shall also be authorized to propose and implement smart metering

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and smart grid demonstration projects in Rhode Island, subject to the review and approval of the

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commission, in order to determine the effectiveness of such new technologies for reducing and

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managing energy consumption, and include the costs of such demonstration projects in

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distribution rates to electric customers to the extent the project pertains to electricity usage and in

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distribution rates to gas customers to the extent the project pertains to gas usage.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- RENEWABLE ENERGY

STANDARD

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     This act would establish net metering to measure the difference between electricity

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delivered by an electrical distribution company and electricity generated by a solar or wind net

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metering facility. It would also establish renewable generation energy credits whereby if the

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electricity so generated exceeds the customer's usage during the billing period, the customer may

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receive billing credits or donate it to a renewable energy low-income fund. The act would also

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allow the electric distribution company to propose and implement pilot programs to own and

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operate no more than fifteen megawatts (15MW) of renewable generation demonstration projects

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in Rhode Island.

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     This act would take effect upon passage.

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