2021 -- H 5357

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LC000997

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2021

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A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- LONG-TERM CONTRACTING

STANDARD FOR RENEWABLE ENERGY

     Introduced By: Representative Blake Anthony Filippi

     Date Introduced: February 05, 2021

     Referred To: House Environment and Natural Resources

     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 Block Island,

including an undersea transmission cable that interconnects Block Island to the mainland in order

to: position the state to take advantage of the 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

New Shoreham with an electrical connection to the mainland. To effectuate these goals, and

notwithstanding any other provisions of the general or public laws to the contrary, the town of New

Shoreham project, its associated power 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 (e) of this section, 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. The demonstration project subject to the amended power purchase agreement shall

include up to (but not exceeding) eight (8) wind turbines with aggregate nameplate capacity of no

more than thirty megawatts (30 MW), even if the actual capacity factor of the project results in the

project technically exceeding ten megawatts (10 MW).

     (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

Rhode Island waters, while, at the same time, interconnecting Block Island to the mainland. The

commission shall review the amended power purchase agreement and shall approve it if:

     (1) The amended agreement contains terms and conditions that are commercially

reasonable;

     (2) 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 (e) of this section;

     (3) The amended agreement is likely to provide economic development benefits, including:

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facilitating new and existing business expansion and the creation of new renewable energy jobs;

the further development of Quonset Business Park; and, increasing the training and preparedness

of the Rhode Island workforce to support renewable energy projects; and

     (4) 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 subsection (c)(3) shall be provided by the Rhode Island economic development

corporation and an advisory opinion on the environmental benefits set forth in subsection (c)(4)

shall be filed by the Rhode Island department of environmental management. The advisory

opinions shall be filed with the commission within twenty (20) days of the 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).

     (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 this title,

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. The

provisions of § 39-26.1-4 and the provisions of subsections (b), (c), (d), and (f) of § 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. 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

(a) of this section 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

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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 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.

     (f) The project shall include a transmission cable between the town of New Shoreham and

the mainland of the state. The electric distribution company, at its option, may elect to own, operate,

or otherwise participate in such transmission cable project. The electric distribution company,

however, has the option to decline to own, operate, or otherwise participate in the transmission

cable project. 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 facility's 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

Rhode Island for local network service under the jurisdiction of the Federal Energy Regulatory

Commission. The division shall be authorized to represent the state of Rhode Island in 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 Rhode Island. All interconnection and standby transformer costs

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which have been and may be incurred by National Grid or by the electric distribution company or

by the Block Island Power Company or its successor shall also be charged in transmissions rates in

a manner that socializes the costs throughout Rhode Island. National Grid or the electric distribution

company shall reimburse the Block Island Power Company or its successor for any and all funds

expended by the Block Island Power Company or its successor in connection with the

interconnection and standby transformer costs and National Grid shall socialize all costs of this

reimbursement throughout Rhode Island as set forth herein. The amendment to this section shall be

retroactive to June 15, 2010. Should the electric distribution 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. 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 transmission costs for customers in

the town of New Shoreham shall be higher than the estimated impact on the typical residential

customer bill for customers on the mainland of the electric distribution company. This higher

charge for the customers in the town of New Shoreham shall be developed by allocating the 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.

     (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 (f) of

this section, the provisions of § 39-26.1-4 shall not apply to the cable cost portion of the town of

New Shoreham project.

     (h) Any contract entered into pursuant to this section shall count as part of the minimum

long-term contract capacity.

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     (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 and shall be retroactive to June 15,

2010.

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LC000997

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- LONG-TERM CONTRACTING

STANDARD FOR RENEWABLE ENERGY

***

     This act would clarify that all interconnection and standby transformer costs are to be

socialized by National Grid throughout the state of Rhode Island, retroactive to June 15, 2010. It

would further provide that National Grid or the electric distribution company shall reimburse the

Block Island Power Company or its successor for any and all funds expended by the Block Island

Power Company or its successor in connection with all interconnection and standby transformer

costs.

     This act would take effect upon passage.

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