Chapter 119

2007 -- S 0943 SUBSTITUTE B

Enacted 06/27/07

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT

Introduced By: Senators Algiere, J Montalbano, Walaska, Sosnowski, and Bates

Date Introduced: April 26, 2007

It is enacted by the General Assembly as follows:

     SECTION 1. Title 23 of the General Laws entitled "HEALTH AND SAFETY" is hereby

amended by adding thereto the following chapter:

CHAPTER 82

IMPLEMENTATION OF THE REGIONAL GREENHOUSE GAS INITIATIVE ACT

23-82-1. Short title. -- This chapter shall be known and may be cited as the

"Implementation of the Regional Greenhouse Gas Initiative Act."

23-82-2. Legislative findings. -- It is hereby found and declared by the general assembly

as follows:

(1) Scientific findings indicate that the increase in greenhouse gas emissions, including

carbon dioxide, is accelerating the natural greenhouse effect resulting in changes in the Earth's

climate;

(2) Climate changes pose serious health risks to humans, as well as danger to ecosystems

worldwide;

(3) This act creates a strong incentive for the creation, development, and deployment of

more efficient technologies and processes, energy efficiency and renewable energy supplies

which will lead to less dependence on the import of fossil fuels.

(4) Rhode Island's implementation of the Regional Greenhouse Gas Initiative,

(hereinafter referred to as "RGGI"), should be managed to maximize the state's contribution to

lowering carbon emissions while minimizing impacts on electric system reliability and costs to

Rhode Island power consumers over the long term. Adoption and use of cost-effective energy-

efficient products and programs and the strategic use of low and zero carbon generation are the

best means to achieve these goals.

(5) It is the intent of the general assembly in enacting this chapter that the state of Rhode

Island shall fulfill the mutual understandings and commitments of the regional greenhouse gas

initiative so that the state may fully participate in that initiative and all sales or auctions and other

proceedings as may be established under that initiative.

23-82-3. Definitions. -- As used in this chapter:

(1) "Allowance" means an authorization to emit a fixed amount of carbon dioxide;

(2) "Department" means department of environmental management;

(3) "Regional greenhouse gas initiative" or "RGGI" means the memorandum of

understanding (MOU) dated December 20, 2005, as may be amended, and corresponding model

rule, as may be amended, that establishes an electric power sector carbon emissions cap and trade

program.

(4) "Office" means the office of energy resources; and

(5) "Council" means the energy efficiency and resources management council.

23-82-4. Regional greenhouse gas initiative implementation. -- (a) The department

shall, in consultation with the public utilities commission, the office and the council, through

rules and regulations, establish the state's rules for participation in RGGI.

(b) The department's rules and regulations for participation in a carbon cap and trade

program shall be designed to meet the mutual understandings and commitments for participation

in RGGI, and permit the holders of carbon allowances to trade them in a regional market to be

established through the RGGI.

(c) The department's rules and regulations shall ensure that the carbon allowances under

this program and the revenues associated with their sale are used exclusively for the purposes

contained in this legislation.

(d) The responsibilities created by implementing RGGI shall be in addition to all other

responsibilities imposed by any other general or special law or rule or regulation and shall not

diminish or reduce any power or authority of the department, including the authority to adopt

standards and regulations necessary for the state to join and fully participate in any multi-state

program, at any stage in the development and implementation of such a program, intended to

control emissions of carbon dioxide and/or other substances that are determined by the

department to be damaging and/or altering the climate.

23-82-5. Sale of allowances. -- (a) The department shall provide in its regulations that

one hundred percent (100%) of all allowances issued under the program in the state of Rhode

Island shall be sold. A de minimus portion of allowances may be set aside to support the

voluntary renewable energy provisions of the regional greenhouse gas initiative model rule.

(b) The department's regulations shall specify the mechanism for sale of allowances,

including authorizing the state to make use of any voluntary regional organizations, structures or

mechanisms available to states implementing a program of this type, provided that any sale of

allowances must be public, competitive and open to all who wish to participate.

(c) The department may engage an independent contractor, consumer trustee or other

entity experienced in sale or auction design and management, including a regional entity engaged

by multiple states to conduct regional sales or auctions, who is determined by the department, in

consultation with the office, to be qualified to conduct auctions or sales in a manner that assures

the efficiency of the auctions or sales. The selection of any independent contractor, consumer

trustee or other entity shall be done in accordance with applicable procedures of the division of

purchases.

(d) The department shall annually convey one hundred percent (100%) of all carbon

allowances established pursuant to this section to the selected independent contractor, consumer

trustee or other entity who shall be authorized to receive, hold and sell allowances for the long-

term benefit of consumers. The selected independent contractor, consumer trustee or other entity

shall conduct the auction or sale, collect the auction proceeds and shall, without further

appropriation, distribute the proceeds of the auction or sale in accordance with section 23-82-6,

under the oversight of the department.

(e) The department shall require an annual report from the independent contractor,

consumer trustee or other entity conducting the auction or sale describing the auction or sale and

its results. The report shall be made public and shall also be submitted to the general assembly.

23-82-6. Use of auction or sale proceeds. -- (a) The proceeds from the auction or sale of

the allowances shall be used for the benefit of energy consumers through investment in the most

cost-effective available projects that can reduce long-term consumer energy demands and costs.

Such proceeds may be used only for the following purposes, in a proportion to be determined

annually by the office in consultation with the council and the department:

(1) promotion cost-effective energy efficiency and conservation;

(2) promotion of cost-effective renewable non-carbon emitting energy technologies as

defined in Rhode Island general law section 39-26-5.

(3) cost-effective direct rate relief for consumers;

(4) direct rate relief for low-income consumers;

(5) reasonable compensation to an entity selected to administer the auction or sale; and

(6) reasonable costs of the department and office in administering this program, which

shall not in any year exceed three hundred thousand dollars ($300,000) or five percent (5%) of

the proceeds from sale or auction of the allowances, whichever is less.

(b) Any interest earned on the funds so generated must be credited to the fund. Funds not

spent in any fiscal year shall remain in the fund to be used for future energy efficiency and carbon

reduction programs.

(c) Annually, the office, in consultation with the department and the council, shall

prepare a draft proposal on how the proceeds from the allowances shall be allocated. The draft

proposal shall be designed to augment and coordinate with existing energy efficiency and

renewable energy low-income programs, and shall not propose use of auction proceeds for

projects already funded under other programs. The proposal for allocation of proceeds in

subsections 23-82-6(1)(2) and (3) shall be one that best achieves the purposes of the law, namely,

lowering carbon emissions and minimizing costs to consumers over the long term. The office

shall hold a public hearing and accept public comment on the draft proposal in accordance with

chapter 42-35 (the "Administrative Procedure Act"). Once the proposal is final, the department

shall authorize the disbursement of funds in accordance with the final plan.

(d) The office shall prepare, in consultation with the department and the council, a report

by January 1st of each year describing the implementation and operation of RGGI, the revenues

collected and the expenditures made under this section, the statewide energy efficiency and

carbon reduction programs, and any recommendations for changes to law relating to the state's

energy conservation or carbon reduction efforts. The report shall be made public and shall also be

submitted to the general assembly.

23-82-7. Exemption from taxation. -- Notwithstanding any provisions of the general or

public laws or regulation to the contrary, the division of taxation shall grant a permanent

exemption from any and all applicable charges or assessments made against the proceeds from

the auction of allowances pursuant to this chapter.

     SECTION 2. This act shall take effect upon passage.

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LC02855/SUB B

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