Chapter 017
2010 -- H 8082 SUBSTITUTE A
Enacted 05/27/10
A N A C T
RELATING TO
PUBLIC UTILITIES AND CARRIERS -- REVENUE DECOUPLING
Introduced By: Representative D Caprio
Date Introduced: May 05, 2010
It is enacted by the
General Assembly as follows:
SECTION 1. Chapter 39-1 of the General Laws entitled
"Public Utilities Commission" is
hereby amended by adding thereto the following section:
39-1-27.7.1.
Revenue decoupling.-- (a) The general
assembly finds and declares that
electricity and gas revenues shall be fully decoupled from sales
pursuant to the provisions of this
chapter and further finds and declares that any decoupling
proposal submitted by an electric
distribution company as defined in subdivision 39-1-2(12) or gas
distribution company included
as a public utility in subdivision 39-1-2(20) that has
greater than one hundred thousand (100,000)
customers, shall be for the following purposes:
(1) Increasing
efficiency in the operations and management of the electric and gas
distribution system;
(2) Achieving the
goals established in the electric distribution company’s plan for system
reliability and energy efficiency and conservation procurement as
required pursuant to subsection
39-1-27.7(c);
(3) Increasing
investment in least-cost resources that will reduce long-term electricity
demand;
(4) Reducing risks
for both customers and the distribution company including, but not
limited to, societal risks, weather risks and economic risks;
(5) Increasing
investment in end-use energy efficiency;
(6) Eliminating
disincentives to support energy efficiency programs;
(7) Facilitating and
encouraging investment in utility infrastructure, safety, and
reliability; and
(8) Considering the
reduction of fixed, recurring customer charges and transition to
increased unit charges that more accurately reflect the
long-term costs of energy production and
delivery.
(b) Each electric
distribution company as defined by subdivision 39-1-2(12) and gas
distribution company included as a public utility in subdivision
39-1-2(20) having greater than
one hundred thousand (100,000) customers shall file
proposals at the commission to implement
the policy set forth in subsection (a) herein. The
commission shall approve such proposals,
provided they contain the features and components set forth in
subsection (c) herein, and that they
are consistent with the intent and objectives contained
in subsection (a) herein. The existence of
any of the ratemaking mechanisms set forth in this
section shall not be relied upon or cited for the
purpose of making any adjustments in the determination of the
distribution company’s cost of
capital. Actions taken by the commission in the exercise of
its ratemaking authority for electric
and gas rate cases shall be within the norm of industry
standards and recognize the need to
maintain the financial health of the distribution company as a
stand-alone entity in
(c) The proposals
shall contain the following features and components:
(1)
A revenue decoupling reconciliation mechanism that reconciles
annually the revenue
requirement allowed in the company’s base distribution rate case
to revenues actually received
for the applicable twelve (12) month period, provided
that the mechanism for gas distribution
shall be determined on a revenue per-customer basis, in a
manner typically employed for gas
distribution companies in the industry. Any revenues
over-recovered or under-recovered shall be
credited to or recovered from customers, as applicable; and
(2) An annual
infrastructure, safety and reliability spending plan for each fiscal year and
an annual rate reconciliation mechanism that includes a
reconcilable allowance for the anticipated
capital investments and other spending pursuant to the annual
pre-approved budget as developed
in accordance with subsection (d) herein.
(d) Prior to the
beginning of each fiscal year, gas and electric distribution companies shall
consult with the division of public utilities and carriers
regarding its infrastructure, safety, and
reliability spending plan for the following fiscal year,
addressing the following categories:
(1) Capital spending
on utility infrastructure;
(2) For electric
distribution companies, operation and maintenance expenses on
vegetation management;
(3) For electric
distribution companies, operation and maintenance expenses on system
inspection, including expenses from expected resulting repairs;
and
(4) Any other costs
relating to maintaining safety and reliability that are mutually agreed
upon by the division and the company.
The distribution
company shall submit a plan to the division and the division shall
cooperate in good faith to reach an agreement on a proposed
plan for these categories of costs for
the prospective fiscal year within sixty (60) days. To
the extent that the company and the division
mutually agree on a plan, such plan shall be filed with the
commission for review and approval
within ninety (90) days. If the company and the division
cannot agree on a plan, the company
shall file a proposed plan with the commission and the
commission shall review and, if the
investments and spending are found to be reasonably needed to
maintain safe and reliable
distribution service over the short and long-term, approve the
plan within ninety (90) days.
(e) The commission
shall have the following duties and powers in addition to its existing
authorities established in title 39 of the general laws:
(1) To maintain
reasonable and adequate service quality standards, after decoupling, that
are in effect at the time of the proposal and were
established pursuant to section 39-3-7.
(2) The commission
may exclude the low income rate class from the revenue decoupling
reconciliation rate mechanism for either electric or gas
distribution. The commission also may
exclude customers in the large commercial and industrial rate
class from the gas distribution
mechanism.
(3) The commission
may adopt performance incentives for the electric distribution
company that provides a shared savings mechanism whereby the
company would receive a
percentage of savings realized as a result of achieving the
purposes of this section while the
remaining savings are credited to customers.
(4) The commission
shall review and approve with any necessary amendments
performance-based energy savings targets developed and submitted by the
efficiency and resources management council. Said performance-based
targets shall also be used
as a consideration in any shared savings mechanism
established by the commission pursuant to
subdivision (3) herein.
(f) The
performance-based energy savings targets to the commission no later
than September 1, 2010.
The targets shall include, but not be limited to,
specific energy kilowatt hour savings overall and
peak demand savings for both summer and winter peak
periods expressed in total megawatts as
well as appropriate targets recommended in the
opportunities report filed with the commission
pursuant to subdivision 39-2-27.7(c)(3). The council shall
revise as necessary these targets on an
annual basis prior to the reconciliation process established
pursuant to subsection (c) of this
section and submit its revisions to the commission for
approval.
(g) Reporting. Every
electric distribution company as defined in subsection (a) herein
shall report to the governor, general assembly, division of
public utilities and public utilities
commission on or before September 1, 2012. Said report shall
include, but not be limited to, the
following elements:
(1) A comparison of
revenues from traditional rate regulation and how the revenues have
differed as part of an approved decoupling structure;
(2) A summary of how
the company is achieving the performance-based targets that may
have been adopted pursuant to subdivision (e)(4);
(3) A summary of any
shared savings the company may have received pursuant to the
performance incentives authorized in subdivision (e)(3);
(4) A summary of how
the company is achieving the service quality standards required in
subdivision (e)(1);
(5) An overview of
how decoupling is impacting revenue stabilization goals that have
resulted from decoupling; and
(6) A summary of any
customer education programs provided.
SECTION 2. Section 39-1-27.7 of the General Laws in Chapter
39-1 entitled "Public
Utilities Commission"
is hereby amended to read as follows:
39-1-27.7.
System reliability and least-cost procurement. --
Least-cost procurement
shall comprise system reliability and energy efficiency and
conservation procurement as provided
for in this section and supply procurement as provided
for in section 39-1-27.8, as complementary
but distinct activities that have as common purpose
meeting electrical and natural gas energy
needs in
environmentally responsible.
(a) The commission
shall establish not later than June 1, 2008, standards for system
reliability and energy efficiency and conservation procurement,
which shall include standards and
guidelines for:
(1) System reliability
procurement, including but not limited to:
(i)
Procurement of energy supply from diverse sources, including, but not limited
to,
renewable energy resources as defined in chapter 26 of this
title;
(ii) Distributed
generation, including, but not limited to, renewable energy resources and
thermally leading combined heat and power systems, which is
reliable and is cost-effective, with
measurable, net system benefits;
(iii) Demand response,
including, but not limited to, distributed generation, back-up
generation and on-demand usage reduction, which shall be
designed to facilitate electric customer
participation in regional demand response programs, including those
administered by the
independent service operator of
system reliability benefits through load control or using
on-site generating capability;
(iv)
To effectuate the purposes of this division, the commission may
establish standards
and/or rates: (A) for qualifying distributed
generation, demand response, and renewable energy
resources, ;
(B) for net-metering, ; (C) for back-up power and/or standby
rates that reasonably
facilitate the development of distributed generation, ;
and (D) for such other matters as the
commission may find necessary or appropriate.
(2) Least-cost
procurement, which shall include procurement of energy efficiency and
energy conservation measures that are prudent and reliable
and when such measures are lower
cost than acquisition of additional supply, including
supply for periods of high demand.
(b) The standards and
guidelines provided for by subsection (a) shall be subject to
periodic review and as appropriate amendment by the
commission, which review will be
conducted not less frequently than every three (3) years after
the adoption of the standards and
guidelines.
(c) To implement the
provisions of this section:
(1) The commissioner of
the office of energy resources and the energy efficiency and
resources management council, either or jointly or separately,
shall provide the commission
findings and recommendations with regard to system reliability
and energy efficiency and
conservation procurement on or before March 1, 2008, and
triennially on or before March 1,
thereafter through March 1, 2017.
(2) The commission
shall issue standards not later than June 1, 2008, with regard to
plans for system reliability and energy efficiency and
conservation procurement, which standards
may be amended or revised by the commission as necessary
and/or appropriate.
(3) The energy
efficiency and resources management council shall prepare by July 15,
2008, a reliability and efficiency procurement
opportunity report which shall identify
opportunities to procure efficiency, distributed generation, demand
response and renewables,
which report shall be submitted to the electrical
distribution company, the commission, the office
of energy resources and the joint committee on energy.
(4) Each electrical and
natural gas distribution company shall submit to the commission
on or before September 1, 2008, and triennially on or
before September 1, thereafter through
September 1, 2017, a plan for system reliability and
energy efficiency and conservation
procurement. In developing the plan, the distribution company may
seek the advice of the
commissioner and the council. The plan shall include measurable
goals and target percentages for
each energy resource, pursuant to standards established by
the commission, including efficiency,
distributed generation, demand response, combined heat and power,
and renewables.
(5) The commission
shall issue an order with regard to the plan from the electrical
distribution company not greater than sixty (60) days after it is
filed with the commission. The
commission shall issue an order approving all energy efficiency
measures that are cost effective
and lower cost than acquisition of additional supply,
with regard to the plan from the electrical
and natural gas distribution company, and reviewed and
approved by the energy efficiency and
resources management council, and any related annual plans, and
shall approve a fully
reconciling funding mechanism to fund investments in all
efficiency measures that are cost
effective and lower cost than acquisition of additional supply,
not greater than sixty (60) days
after it is filed with the commission.
(6) Each electrical and
natural gas distribution company shall provide a status report,
which shall be public, on the implementation of least cost
procurement on or before December
15, 2008, and on or before February 1, 2009, to the
commission, the division, the commissioner
of the office of energy resources and the energy
efficiency and resources management council
which may provide the distribution company recommendations
with regard to effective
implementation of least cost procurement. The report shall include
the targets for each energy
resource included in the order approving the plan and the
achieved percentage for energy
resource, including the achieved percentages for efficiency,
distributed generation, demand
response, combined heat and power, and renewables.
(d) If the commission
shall determine that the implementation of system reliability and
energy efficiency and conservation procurement has caused or
is likely to cause under or over-
recovery of overhead and fixed costs of the company
implementing said procurement, the
commission may establish a mandatory rate adjustment clause for
the company so affected in
order to provide for full recovery of reasonable and
prudent overhead and fixed costs.
(e) The commission
shall conduct a contested case proceeding to establish a performance
based incentive plan which allows for additional
compensation for each electric distribution
company and each company providing gas to end-users and/or
retail customers based on the level
of its success in mitigating the cost and variability of
electric and gas services through
procurement portfolios.
SECTION
3. This act shall take effect upon
passage.
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LC02525/SUB A
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