Chapter 051
2009 -- H 5002 SUBSTITUTE A AS AMENDED
Enacted 06/26/09
A N A C T
RELATING TO
PUBLIC UTILITIES AND CARRIERS
Introduced By: Representative Gordon D. Fox
Date Introduced: January 06, 2009
It is enacted by the General
Assembly as follows:
SECTION
1. Title 39 of the General Laws entitled "PUBLIC UTILITIES AND
CARRIERS" is hereby
amended by adding thereto the following chapter:
CHAPTER
26.1
LONG-TERM
CONTRACTING STANDARD FOR RENEWABLE ENERGY
39-26.1-1.
Purpose. – The purpose of this chapter is to encourage and
facilitate the
creation of commercially reasonable long-term
contracts between electric distribution companies
and developers or sponsors of newly developed
renewable energy resources with the goals of
stabilizing long-term energy prices, enhancing
environmental quality, creating jobs in Rhode
Island in the renewable energy sector, and
facilitating the financing of renewable energy
generation within the jurisdictional boundaries of the
state or adjacent state or federal waters or
providing direct economic benefit to the state.
39-26.1-2.
Definitions. – Terms not defined in this chapter shall have the same
meaning
as contained in chapter 26 of title 39 of the general laws.
When used in this chapter:
(1)
"Commercially reasonable" means terms and pricing that are reasonably
consistent
with what an experienced power market analyst would
expect to see in transactions involving
newly developed renewable energy resources.
Commercially reasonable shall include having a
credible project operation date, as determined by the
commission, but a project need not have
completed the requisite permitting process to be
considered commercially reasonable. If there is
a dispute about whether any terms or pricing are
commercially reasonable, the commission shall
make the final determination after evidentiary
hearings;
(2)
"Commission" means the
(3) "Electric
distribution company" means a company defined in subsection 39-1-2(12),
supplying standard offer service, last resort service,
or any successor service to end-use
customers, but not including the Block Island Power
Company or the Pascoag Utility District;
(4) "Eligible
renewable energy resource" means resources as defined in section 39-26-5
and any references therein;
(5) "Long-term
contract" means a contract of not less than ten (10) years;
(6) "Newly
developed renewable energy resources" means electrical generation units
that
use exclusively an eligible renewable energy resource,
and that have neither begun operation, nor
have the developers of the units implemented
investment or lending agreements necessary to
finance the construction of the unit; provided,
however, that any projects using eligible renewable
energy resources and located within the state of
or after January 1, 2009, shall qualify as newly
developed renewable energy resources for
purposes of the first solicitation under this chapter;
(7) "Minimum
long-term contract capacity" means ninety (90) megawatts of which three
(3) megawatts must be solar or photovoltaic projects
located in the state of
determining whether the minimum long-term contract
capacity has been reached, the capacity
under contract shall be adjusted by the capacity
factor of each renewable generator as determined
by the ISO-NE rules, as they may change from time to
time. By way of example, a contract with
a one hundred (100) megawatt facility with a thirty
percent (30%) capacity factor would be
counted as providing thirty (30) megawatts to the
minimum long-term contract capacity
requirement.
39-26.1-3. Long-term contract standard. – (a) Beginning on or before July 1, 2010,
each electric distribution company shall be required to annually solicit proposals from renewable
energy developers and, provided commercially reasonable proposals have been received, enter
into long-term contracts with terms of up to fifteen (15) years for the purchase of capacity, energy
and attributes from newly developed renewable energy resources. Subject to commission
approval, the electric distribution company may enter into contracts for term lengths longer than
fifteen (15) years. Notwithstanding any other provisions of this chapter, on or before August 15,
2009, the electric distribution company shall solicit proposals for one newly developed renewable
energy resources project as required in section 39-26.1-7. Proposals for the sale of output from an
offshore wind project received under the provisions of this section shall be diligently and fully
considered without prejudice, regardless of the status of any proceedings under sections 39-26.1-7
or 39-26.1-8.
(b) The timetable and
method for solicitation and execution of such contracts shall be
proposed by the electric distribution company, and
shall be subject to review and approval by the
commission prior to issuance by the company; provided
that the timetable is reasonably designed
to result in the electric distribution company having
the minimum long-term contract capacity
under contract within four (4) years of the date of
the first solicitation; it is not necessary that the
projects associated with these contracts be
operational within these four (4) years, as the
operational dates shall be specified in the contract.
The electric distribution company shall,
subject to review and approval of the commission,
select a reasonable method of soliciting
proposals from renewable energy developers, which
shall include, at a minimum, an annual
public solicitation, but may also include individual
negotiations. The solicitation process shall
permit a reasonable amount of negotiating discretion
for the parties to engage in commercially
reasonable arms-length negotiations over final
contract terms. Each long-term contract entered
into pursuant to this section shall contain a
condition that it shall not be effective without
commission review and approval. The electric
distribution company shall file such contract,
along with a justification for its decision, within a
reasonable time after it has executed the
contract following a solicitation or negotiation. The
commission shall hold public hearings to
review the contract within forty-five (45) days of the
filing and issue a written order approving or
rejecting the contract within sixty (60) days of the
filing; in rejecting a contract the commission
may advise the parties of the reason for the contract
being rejected and direct the parties to
attempt to address the reasons for rejection in a
revised contract within a specified period not to
exceed ninety (90) days. The commission shall approve
the contract if it determines that: (1) the
contract is commercially reasonable; (2) the
requirements for the annual solicitation have been
met; and (3) the contract is consistent with the purposes
of this chapter. A report on each
solicitation shall be filed with the commission each
year within a reasonable time after decisions
are made by the electric distribution company
regarding the solicitation results, even if no
contracts are executed following the solicitation.
(c)(1) No electric
distribution company shall be obligated to enter into long-term
contracts for newly developed renewable energy
resources on terms which the electric
distribution company reasonably believes to be commercially
unreasonable; provided, however, if
there is a dispute about whether these terms are
commercially unreasonable, the commission shall
make the final determination after an evidentiary
hearing. The electric distribution company shall
not be obligated to enter into long-term contracts
pursuant to this section that would, in the
aggregate, exceed the minimum long-term contract
capacity, but may do so voluntarily subject to
commission approval. As long as the electric
distribution company has entered into long-term
contracts in compliance with this section, the
electric distribution company shall not be required
by regulation or order to enter into power purchase
contracts with renewable generation projects
for power, renewable energy certificates, or any other
attributes with terms of more than three (3)
years in meeting its applicable annual renewable
portfolio standard requirements set forth in
section 39-26-4 or pursuant to any other provision of
the law.
(2) Except as
provided in section 39-26.1-7 and 39-26.1-8, an electric distribution
company shall not be required to enter into long-term
contracts for newly developed renewable
energy resources that exceed the following four (4)
year phased schedule:
By December 30, 2010:
Twenty-five percent (25%) of the minimum long-term contract capacity;
By December 30, 2011:
Fifty percent (50%) of the minimum long-term contract capacity;
By December 30, 2012:
Seventy-five percent (75%) of the minimum long-term contract capacity;
By December 30, 2013:
One hundred percent (100%) of the minimum long-term contract
capacity; but may do so earlier voluntarily, subject
to commission approval.
(d) Compliance with
the long-term contract standard shall be demonstrated through
procurement pursuant to the provisions of a long-term
contract of energy, capacity and attributes
reflected in NE-GIS certificates relating to
generating units certified by the commission as using
newly developed renewable energy resources, as
evidenced by reports issued by the NE-GIS
administrator and the terms of the contract; provided,
however, that the NE-GIS certificates were
procured pursuant to the provisions of a long-term
contract. The electric distribution company
also may purchase other attributes from the generator
as part of the long-term contract.
(e) After the adoption of the rules and regulations promulgated by the commission
pursuant to this chapter, an electric distribution company may, at its sole election, immediately
and from time to time, procure additional commercially reasonable long-term contracts for newly
developed renewable energy resources on an earlier timetable or above the minimum long-term
contract capacity, subject to commission approval.
39-26.1-4. Financial
remuneration and incentives. – In order to achieve the purposes
of this chapter, electric distribution companies shall
be entitled to financial remuneration and
incentives for long-term contracts for newly developed
renewable energy resources, which are
over and above the base rate revenue requirement
established in its cost of service for distribution
ratemaking. Such remuneration and incentives shall
compensate the electric distribution company
for accepting the financial obligation of the
long-term contracts. The financial remuneration and
incentives described in this subsection shall apply
only to long-term contracts for newly
developed renewable energy resources. The financial
remuneration and incentives shall be in the
form of annual compensation, equal to two and
three-quarters percent (2.75%) of the actual
annual payments made under the contracts for those
projects that are commercially operating.
39-26.1-5.
Commission approvals and regulations. – (a) Electric distribution
companies shall submit to the commission for review
and approval all long-term contracts for
newly developed renewable energy resources proposed to
be entered into in accordance with this
chapter.
(b) Unless the
commission approves otherwise, all energy and capacity purchased by an
electric distribution company pursuant to this chapter
shall be immediately sold by the electric
distribution company into the wholesale spot market;
provided, however, that all such sales shall
be made through arms-length transactions.
(c) Unless the
commission approves otherwise, any attributes including NE-GIS
certificates purchased by an electric distribution
company pursuant to this chapter shall be sold
through a competitive bidding process in a
commercially reasonable manner.
(d) Notwithstanding
any term or provision to the contrary contained in subsection (b) or
(c) hereof, subject to commission approval, electric
distribution companies shall be permitted, but
shall not be required: (1) to use the energy, capacity
and other attributes purchased for resale to
customers; and/or (2) to use the NE-GIS certificates
for purposes of meeting the obligations set
forth in chapter 26 of title 39; provided, however,
that the commission finds that such sales would
not have a detrimental impact on energy markets, on
the market for NE-GIS certificates, and is
otherwise in the interest of utility customers.
(e) The commission
shall promulgate regulations by April 1, 2010, that shall, as a
condition of contract approval, require all approved
projects, regardless of their location, to
provide other direct economic benefits to
tax revenues or other similar revenues, deemed substantial
by the commission.
(f) The electric
distribution company shall file tariffs with the commission for
commission review and approval that net the cost of
payments made to projects under the long-
term contracts against the proceeds obtained from the
sale of energy, capacity, RECs or other
attributes. The difference shall be credited or
charged to all distribution customers through a
uniform fully reconciling annual factor in
distribution rates, subject to review and approval of the
commission. The reconciliation shall be designed so
that customers are credited with any net
savings resulting from the long-term contracts and the
electric distribution company recovers all
costs incurred under such contracts, as well as, recovery
of the financial remuneration and
incentives specified in section 39-26.1-4.
39-26.1-6.
Interaction with other laws. – The long-term contract standard set
forth in
this chapter shall be separate and distinct from the
renewable energy standard set forth in chapter
26 of title 39.
39-26.1-7. Town of
New Shoreham Project.-- (a) On or before August 15, 2009, the
electric distribution company shall solicit proposals
for one newly developed renewable energy
resources project of ten (10) megawatts or less that
includes a proposal to enhance the electric
reliability and environmental quality of the Town of
company shall select a project for negotiating a
contract that shall be conditioned upon approval
by the commission. Negotiations shall proceed in good
faith to achieve a commercially
reasonable contract. Should the distribution company
and the selected party agree to a contract,
the contract shall be filed with the commission no
later than October 15, 2009 for commission
approval. The commission shall review the contract and
issue an order approving or disapproving
the contract on or before December 31, 2009. If the
parties are unable to reach agreement on a
contract prior to October 15, 2009, an unsigned copy
shall be filed by the electric distribution
company prior to that same date, and the commission
shall have the discretion to order the parties
to arbitrate the dispute on an expedited basis. Upon
approval of the contract, the provisions of
section 39-26.1-4 and the provisions of paragraphs
(a), (b), (c), (d), and (f) of section 39-26.1-5
shall apply, and all costs incurred in the
negotiation, administration, enforcement, and
implementation of the agreement shall be recovered
annually by the electric distribution company
in electric distribution rates. To the extent that
there are benefits for customers of the
Power Company or its successor, the commission shall
determine an allocation of cost
responsibility between customers of the electric
distribution company and customers of Block
Island Power Company or its successor after the cost
estimates are filed with the commission, but
the commission need not determine the final cost
allocation at the time the commission considers
and/or approves the contract between the electric
distribution company and the project developer.
The allocation of costs shall assure that individual
customers in the Town of
higher charges related to the project on their
individual bills than any charges for the same project
that may be included in individual bills of customers
of the electric distribution company. The
commission shall provide for an appropriate rate
design and billing method between the electric
distribution company and Block Island Power Company at
the appropriate time.
(b) The solicitation
shall require that each proposal include provisions for a transmission
cable between the Town of
company, at its option, may propose to own, operate,
or otherwise participate in such
transmission cable project, subject to commission
approval. The electric distribution company,
however, has the option to decline to own, operate, or
otherwise participate in the transmission
cable project, even if the commission approves such
arrangements. Should the electric
distribution company own, operate, and maintain the
cable, the annual costs incurred by the
electric distribution company shall be recovered
annually through a fully reconciling rate
adjustment from customers of the electric distribution
company and/or from the
Power Company or its successor, subject to any federal
approvals that may be required by law;
provided, however, the parties shall use all
reasonable efforts to obtain socialization of the costs
of the cable in New England transmission rates
administered by the ISO
extent permitted. The allocation of the cable costs
shall be determined by the commission and
assure that individual customers in the Town of
cable on their individual bills than any charges for
the same project that may be included in
individual bills of customers of the electric
distribution company.
(c) Any charges
incurred by the Block Island Power Company or its successor pursuant
to this section 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 39-26.1-7(b) the
provisions of section 39-26.1-4 shall not apply to the
cable cost portion of the Town of
Shoreham Project.
(d) Any
contract entered into pursuant to this section shall count as part of the
minimum long-term contract capacity.
39-26.1-8.
Utility-Scale Offshore Wind Project – Separate Proceedings.-- (a)
Upon
certification by the department of administration
identifying the developer selected by the state to
develop a utility-scale offshore wind farm, such
developer may file an application under this
section within one hundred eighty (180) days of such
certification by the department. For the
purposes of this section, “utility-scale offshore wind
farm” shall mean a wind power project
located offshore in the waters of
(100) megawatts but not more than one hundred fifty
(150) megawatts. The purpose of the
application shall be for the applicant to request that
the commission require a long term contract
with the electric distribution company. Should the
commission approve a contract pursuant to this
section 39-26.1-8, it shall not be counted towards the
minimum long-term contract capacity
specified in section 39-26.1-2(7).
(b) The commission
shall hold proceedings to review the proposal contained in the
application. In reviewing the application, the
commission shall determine whether the proposal is
in the best interests of electric distribution
customers in
determination, the commission shall consider the
following factors: (i) The economic impact and
potential risks, if any, of the proposal on rates to
be charged by the electric distribution company;
(ii) The potential benefits of stabilizing long-term
energy prices; (iii) Any other factor the
commission determines necessary to be in the best
interest of the rate payers.
(c) The application
will contain the following information:
(i)
A complete description of the proposed project,
(ii) A description of
the legal entity that will enter into a long term contract,
(iii) A time line for
permitting, licensing, and construction,
(iv) Pricing
projected under the long term contract being sought, including prices for all
market products that would be sold under the proposed
long term contract, subject to any contract
negotiations between the applicant and the electric
distribution company,
(v) Projected
electrical energy production profiles,
(vi) The proposed
term for the long term contract,
(vii) Economic justification
for the proposal, including projection of market prices,
(viii) A description
of the economic benefits to
jobs in
(ix) All filings with
state and federal regulatory agencies related to the proposal,
(x) All
interconnection filings related to the proposal,
(xi)
A proposed initial term sheet for a long-term contract between the applicant
and the
electric distribution company.
The information
submitted in the application shall be subject to modification as a result
of any negotiation of a contract ordered by the
commission.
(d) The commission
shall promulgate rules and regulations governing the proceedings
outlined in this section by April 30, 2010.
(e) The applicant
must serve copies of the application to the electric distribution company
with whom the applicant is seeking a long term
contract, the division of public utilities and
carriers, the office of energy resources, the
department of administration, the economic
development corporation and the attorney general.
Prior to the filing of any information, the
applicant may seek a protective order to protect the
confidentiality of information for good cause
shown, to the extent that such information is
proprietary or confidential business information, but
unredacted copies of the entire filing must be provided to the
parties identified in this paragraph,
who shall be bound by any protective order that may be
issued regarding further disclosure.
(f) The electric
distribution company, the division of public utilities and carriers and the
office of energy resources shall be mandatory parties
to the proceeding. The applicant must pay
for the reasonable costs of consultants or counsel
that may be hired by the commission and the
division for the proceeding, but in no case shall the
applicant be liable for the costs in excess of
$100,000 for the division and $100,000 for the
commission, respectively.
(g) The commission
shall issue a final order in the proceedings required by section 39-
26.1-8(b) within eight (8) months of the filing of the
application. If the commission determines
that the proposal meets the standard outlined in
section 39-26.1- 8 (b), the commission shall
require the electric distribution company to negotiate
a long-term contract with the applicant. The
applicant, however, may decline to continue with the
project for any reason at any time during the
process outlined in this section. The commission may require
changes to the applicant’s proposal
as a condition to a long-term contract, as the
commission determines are just and reasonable. The
contract shall contain terms that are commercially
reasonable. The contract also shall require that
the electric distribution company purchase all of the
output of the entire project, unless otherwise
authorized by the commission. The parties shall
present a proposed contract for review by the
commission within three (3) months of the order
requiring negotiations. If the parties are unable
to reach agreement on a contract within three (3)
months of the order requiring negotiations the
commission shall have the discretion to order the
parties to arbitrate the dispute on an expedited
basis. Once the contract terms are finalized by
negotiation or arbitration, the contract shall be
filed with the commission for review and approval. The
commission shall approve the contract
upon a finding that the contract is consistent with
the purposes of this chapter and the standards
set forth in section 39-26.1-1.8(b). The commission
shall issue its final decision on the proposed
contract within sixty (60) days of receiving the
proposed contract. Upon execution of the contract,
the provisions of sections 39-26.1-4 and 39-26.1-5
shall apply, and all costs incurred in the
negotiation, administration, enforcement, and
implementation of the agreement shall be recovered
annually by the electric distribution company in
electric distribution rates. To the extent the
application cites significant economic benefits to
the applicant outside of the long term contract to
achieve such benefits, and those economic
benefits are ultimately relied upon by the commission
in authorizing a long term contract to be
negotiated, the commission may require that
appropriate legally binding commitments be made
by the applicant as a condition to a long term
contract, unless the commission finds that such
commitments are not necessary.
(h) Notwithstanding
any other provision of this section, the application process does not
convey a legal entitlement to the applicant to a long
term contract. Rather, the purpose of the
proceeding is to leave the final decision as to
whether a long term contract should be required to
the discretion of the commission, subject to the
standards outlined in this section and the purposes
of this chapter.
(i)
An applicant under this section shall not be permitted to submit a proposal
under the
solicitations required in section 39-26.1-3, except
that such applicant shall be permitted to submit
a proposal under section 39-26.1-7.
(j) Should a
proceeding pursuant to this section result in the commission not ordering the
distribution company to enter into a long-term
contract for a utility-scale offshore wind project, or
should the certified developer fail to file an
application with the commission within one hundred
eighty (180) days of certification, the certification shall
be deemed void. In such case, if the
commission determines it is in the interest of
electric distribution customers to have another
utility-scale project considered for a long term
contract, the commission has the discretion to
request the department of administration to certify a
different developer to make another proposal
for a utility-scale offshore wind project per this
section, provided that the commission makes such
request within ninety (90) days of the certification
becoming void. If the commission makes such
request, the department of administration may, but is
not required to, certify another project and
shall have ninety days to submit another
certification. If such certification is not made within the
time allowed, no further action shall be taken by the
commission pursuant to this section. Under
no circumstances is a distribution company required to
enter into more than one contract under
this section 39-26.1-8.
(k) Approval of a
contract under this section shall not be interpreted to prevent, hinder or
diminish the ability of any offshore wind project or
developer to pursue, finance, seek the
development of, or secure permits or electrical
interconnection for offshore wind projects in or
adjacent to the state, or whose output may be utilized
in the state.
SECTION
2. This act shall take effect upon passage.
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LC00102/SUB A/2
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