2015 -- H 6363

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LC002976

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS - PUBLIC UTILITIES COMMISSION

     

     Introduced By: Representative Brian P. Kennedy

     Date Introduced: June 25, 2015

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

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     SECTION 1. Section 39-1-27.7.1 of the General Laws in Chapter 39-1 entitled "Public

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Utilities Commission" is hereby amended to read as follows:

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     39-1-27.7.1. Revenue decoupling. -- (a) The general assembly finds and declares that

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electricity and gas revenues shall be fully decoupled from sales pursuant to the provisions of this

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chapter and further finds and declares that any decoupling proposal submitted by an electric

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distribution company as defined in subdivision 39-1-2(12) or gas distribution company included

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as a public utility in subdivision 39-1-2(20) that has greater than one hundred thousand (100,000)

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customers, shall be for the following purposes:

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      (1) Increasing efficiency in the operations and management of the electric and gas

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distribution system;

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      (2) Achieving the goals established in the electric distribution company's plan for system

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reliability and energy efficiency and conservation procurement as required pursuant to subsection

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39-1-27.7(c);

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      (3) Increasing investment in least-cost resources that will reduce long-term electricity

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demand;

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      (4) Reducing risks for both customers and the distribution company including, but not

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limited to, societal risks, weather risks and economic risks;

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      (5) Increasing investment in end-use energy efficiency;

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      (6) Eliminating disincentives to support energy efficiency programs;

 

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      (7) Facilitating and encouraging investment in utility infrastructure, safety, and

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reliability; and

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      (8) Considering the reduction of fixed, recurring customer charges and transition to

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increased unit charges that more accurately reflect the long-term costs of energy production and

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delivery.

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      (b) Each electric distribution company as defined by subdivision 39-1-2(12) and gas

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distribution company included as a public utility in subdivision 39-1-2(20) having greater than

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one hundred thousand (100,000) customers shall file proposals at the commission to implement

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the policy set forth in subsection (a) herein. The commission shall approve such proposals,

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provided they contain the features and components set forth in subsection (c) herein, and that they

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are consistent with the intent and objectives contained in subsection (a) herein. The existence of

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any of the ratemaking mechanisms set forth in this section shall not be relied upon or cited for the

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purpose of making any adjustments in the determination of the distribution company's cost of

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capital. Actions taken by the commission in the exercise of its ratemaking authority for electric

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and gas rate cases shall be within the norm of industry standards and recognize the need to

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maintain the financial health of the distribution company as a stand-alone entity in Rhode Island.

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      (c) The proposals shall contain the following features and components:

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      (1) A revenue decoupling reconciliation mechanism that reconciles annually the revenue

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requirement allowed in the company's base distribution rate case to revenues actually received for

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the applicable twelve (12) month period, provided that the mechanism for gas distribution shall

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be determined on a revenue per-customer basis, in a manner typically employed for gas

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distribution companies in the industry. Any revenues over-recovered or under-recovered shall be

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credited to or recovered from customers, as applicable; and

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      (2) An annual infrastructure, safety and reliability spending plan for each fiscal year and

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an annual rate reconciliation mechanism that includes a reconcilable allowance for the anticipated

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capital investments and other spending pursuant to the annual pre-approved budget as developed

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in accordance with subsection (d) herein.

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      (d) Prior to the beginning of each fiscal year, gas and electric distribution companies

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shall consult with the division of public utilities and carriers regarding its infrastructure, safety,

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and reliability spending plan for the following fiscal year, addressing the following categories:

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      (1) Capital spending on utility infrastructure;

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      (2) For electric distribution companies, operation and maintenance expenses on

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vegetation management;

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      (3) For electric distribution companies, operation and maintenance expenses on system

 

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inspection, including expenses from expected resulting repairs; and

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      (4) Any other costs relating to maintaining safety and reliability that are mutually agreed

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upon by the division and the company.

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      The distribution company shall submit a plan to the division and the division shall

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cooperate in good faith to reach an agreement on a proposed plan for these categories of costs for

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the prospective fiscal year within sixty (60) days. To the extent that the company and the division

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mutually agree on a plan, such plan shall be filed with the commission for review and approval

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within ninety (90) days. If the company and the division cannot agree on a plan, the company

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shall file a proposed plan with the commission and the commission shall review and, if the

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investments and spending are found to be reasonably needed to maintain safe and reliable

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distribution service over the short and long-term, approve the plan within ninety (90) days.

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      (e) The commission shall have the following duties and powers in addition to its existing

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authorities established in title 39 of the general laws:

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      (1) To maintain reasonable and adequate service quality standards, after decoupling, that

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are in effect at the time of the proposal and were established pursuant to ยง 39-3-7.

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      (2) The commission may exclude the low income rate class from the revenue decoupling

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reconciliation rate mechanism for either electric or gas distribution. The commission also may

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exclude customers in the large commercial and industrial rate class from the gas distribution

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mechanism.

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      (3) The commission may adopt performance incentives for the electric distribution

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company that provides a shared savings mechanism whereby the company would receive a

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percentage of savings realized as a result of achieving the purposes of this section while the

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remaining savings are credited to customers.

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      (4) The commission shall review and approve with any necessary amendments

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performance-based energy savings targets developed and submitted by the Rhode Island energy

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efficiency and resources management council. Said performance-based targets shall also be used

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as a consideration in any shared savings mechanism established by the commission pursuant to

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subdivision (3) herein.

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      (f) The Rhode Island energy efficiency and resources management council shall propose

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performance-based energy savings targets to the commission no later than September 1, 2010.

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The targets shall include, but not be limited to, specific energy kilowatt hour savings overall and

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peak demand savings for both summer and winter peak periods expressed in total megawatts as

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well as appropriate targets recommended in the opportunities report filed with the commission

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pursuant to subdivision 39-2-27.7(c)(3). The council shall revise as necessary these targets on an

 

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annual basis prior to the reconciliation process established pursuant to subsection (c) of this

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section and submit its revisions to the commission for approval.

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      (g) Reporting. - Every electric distribution company as defined in subsection (a) herein

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shall report to the governor, general assembly, division of public utilities and public utilities

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commission on or before September 1, 2012. Said report shall include, but not be limited to, the

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following elements:

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      (1) A comparison of revenues from traditional rate regulation and how the revenues have

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differed as part of an approved decoupling structure;

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      (2) A summary of how the company is achieving the performance-based targets that may

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have been adopted pursuant to subdivision (e)(4);

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      (3) A summary of any shared savings the company may have received pursuant to the

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performance incentives authorized in subdivision (e)(3);

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      (4) A summary of how the company is achieving the service quality standards required

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in subdivision (e)(1);

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      (5) An overview of how decoupling is impacting revenue stabilization goals that have

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resulted from decoupling; and

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      (6) A summary of any customer education programs provided.

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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 - PUBLIC UTILITIES COMMISSION

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     This act would remove the restriction on electric distribution companies from utilizing

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certain ratemaking mechanisms set forth in the general laws, and would permit such companies to

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rely on and cite those provisions for the purpose of making any adjustments in the determination

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of the company's cost of capital.

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     This act would take effect upon passage.

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