Chapter 143
2011 -- S 0723 SUBSTITUTE A AS AMENDED
Enacted 06/29/11
A N A C T
RELATING TO
PUBLIC UTILITIES AND CARRIERS - DISTRIBUTED RENEWABLE ENERGY
Introduced By: Senator Joshua Miller
Date Introduced: March 23, 2011
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
26.2
DISTRIBUTED
GENERATION STANDARD CONTRACTS
39-26.2-1. Short
title. – This chapter shall be known as and may be cited as “The
Distributed Generation Standard Contracts Act."
39-26.2-2.
Purpose. – The purpose of this chapter is to facilitate and promote
installation
of grid-connected generation of renewable energy;
support and encourage development of
distributed renewable energy generation systems;
reduce environmental impacts; reduce carbon
emissions that contribute to climate change by
encouraging the local siting of renewable energy
projects; diversify the state’s energy generation
sources; stimulate economic development;
improve distribution system resilience and
reliability; and reduce distribution system costs.
39-26.2-3.
Definitions. – When used in this chapter, the following terms shall
have the
following meanings:
(1) “Annual target”
means the target for total renewable energy nameplate capacity of
new distributed generation standard contracts set out
in section 39-26.2-3.
(2) “Commission”
means the
(3) “Board” shall
mean the distributed generation standard contract board established
pursuant to the provisions of chapter 39-26.2-9, or
the office of energy resources. Until such time
as the board is duly constituted, the office of energy
resources shall serve as the board with the
same powers and duties pursuant to this chapter.
(4) “Distributed
generation contract capacity” means ten percent (10%) of an electric
distribution company’s minimum long-term contract
capacity under the long-term contracting
standard for renewable energy in section 39-26.1-2,
inclusive of solar capacity. The distributed
generation contract capacity shall be reserved for
acquisition by the electric distribution company
through standard contracts pursuant to the provisions
of this chapter.
(5) “Distributed
generation facility” means an electrical generation facility that is a newly
developed renewable energy resource as defined in
section 39-26.1-2, located in the electric
distribution company’s load zone with a nameplate
capacity no greater than five megawatts (5
MW), using eligible renewable energy resources as
defined by section 39-26-5, including biogas
created as a result of anaerobic digestion, but,
specifically excluding all other listed eligible
biomass fuels, and connected to an electrical power
system owned, controlled, or operated by the
electric distribution company.
(6) “Distributed
generation project” means a distinct installation of a distributed
generation facility. An installation will be
considered distinct if it is installed in a different
geographical location and at a different time, or if
it involves a different type of renewable energy
class.
(7) "Electric
distribution company" means a company defined in subdivision 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.
(8) “Large
distributed generation project” means a distributed generation project that has
a nameplate capacity that exceeds the size of a small
distributed generation project in a given
year, but is no greater than five megawatts (5 MW)
nameplate capacity.
(9) “Program year” means
a calendar year beginning January 1 and ending December 31.
(10) “Renewable
energy classes” means categories for different renewable energy
technologies using eligible renewable energy resources
as defined by section 39-26-5. For each
program year, the board shall determine the renewable
energy classes as are reasonably feasible
for use in meeting distributed generation objectives
from renewable energy resources and are
consistent with the goal of meeting the annual target
for the program year. For the program year
ending December 31, 2012, there shall be at least four
(4) technology classes and at least two (2)
shall be for solar generation technology, and at least
one shall be for wind. The board may add,
eliminate, or adjust renewable energy classes for each
program year with public notice given at
least sixty (60) days previous to any renewable energy
class change becoming effective. For each
program year, the board shall set renewable energy
class targets for each class established. Class
targets are the total program-year target amounts of
nameplate capacity reserved for standard
contracts for each renewable energy class. The sum of
all the class targets shall equal the annual
target.
(11) “Renewable
energy credit” means a
renewable energy certificate as defined in subdivision
39-26-2(15);
(12) “Small
distributed generation project” means a distributed generation project that
has a nameplate capacity no larger than the following:
Solar: five hundred kilowatts (500 KW);
Wind: one and one-half megawatts (1.5 MW). For
technologies other than solar and wind, the
board shall set the nameplate capacity size limits,
but such limits may not exceed one megawatt.
The board may lower the nameplate capacity from year
to year for any of these categories, but
may not increase the capacity beyond what is specified
in this definition. In no case may a
project developer be allowed to segment a distributed
generation project into smaller sized
projects in order to fall under this definition.
(13) “Standard
contract” means a contract with a term of fifteen (15) years at a fixed rate
for the purchase of all capacity, energy, and
attributes generated by a distributed generation
facility. A contract may have a different term if it
is mutually agreed to by the seller and the
electric distribution company and it is approved by
the commission. The terms of the standard
contract for each program year and for each renewable
energy class shall be set pursuant to the
provisions of this chapter.
(14) “Standard
contract ceiling price” means the standard contract price for the output of
a distributed generation facility which price is
approved annually for each renewable energy class
pursuant to the procedure established in this chapter,
for the purchase of energy, capacity,
renewable energy certificates, and all other
environmental attributes and market products that are
available or may become available from the distributed
generation facility.
39-26.2-4.
Standard contracts – Annual targets. – (a) To the extent eligible
projects are
available and submit conforming applications, an
electric distribution company shall enter into
standard contracts for an aggregate nameplate capacity
of at least forty megawatts (40 MW) of
distributed generation projects by the end of 2014,
unless such schedule is extended by the board.
The contracting shall be spread over four (4) years,
based on the annual targets, aggregated to
reflect annual targets from prior program years,
contained in the following four (4) year phased
schedule, unless such schedule is adjusted by the
board in any given year:
(1) By December 30,
2011: a minimum of five megawatts (5 MW) nameplate;
(2) By December 30,
2012: a minimum aggregate of twenty megawatts (20 MW)
nameplate;
(3) By December 30,
2013: a minimum aggregate of thirty megawatts (30 MW)
nameplate;
(4) By December 30, 2014:
a minimum aggregate of forty megawatts (40 MW)
nameplate.
(b) By October 15,
2011 and each calendar year following until October 15, 2013, the
board may recommend to the commission that the annual
target for the following program year
be adjusted upward to reflect any shortfalls in
meeting the previous program year’s annual target
or to reflect any standard contracts entered into
during prior program years that are voided. The
board may also recommend to the commission that the
annual target for the following program
year be adjusted downward by any amounts that the
previous program year’s annual targets were
exceeded by the standard contracts entered into during
that program year.
(c) The board may,
based on market data and other information available to it including
pricing for standard contracts received during
previous program years, recommend a reduction of
the annual target for the upcoming program year where
the board determines that market
conditions would be likely to produce unfavorably high
target pricing for standard contracts
during that upcoming program year. In considering such
issues, the board may take into account
the reasonableness of current pricing and its impact
on all electric distribution customers who will
be paying for the output for up to twenty (20) years
at such prices. The board may also
recommend an extension of time to achieve the forty
megawatt (40 MW) target, to allow for
contracting to occur after 2014, if necessary.
(d) The electric
distribution company must contract for at least forty megawatts (40
MW) of nameplate capacity distributed generation
projects by the end of 2014, unless such
schedule is extended by the board. The electric
distribution company may not be required to
contract for more than forty megawatts (40 MW) or the
distributed generation contract capacity,
but may do so voluntarily, subject to commission
approval.
(e) Each year, the
board shall file its recommendations relating to the schedule, along
with its report and recommendations regarding ceiling
prices, for the commission’s review and
approval as specified in subsection 39-26.2-5(b).
(f) Nothing in this
chapter shall derogate from the statutory authority of the commission
or the division, including, but not limited to, the
authority to protect ratepayers from unreasonable
rates.
39-26.2-5.
Standard contract ceiling price. – (a) Within a period of time
sufficient to
accomplish the purposes of this section, but not longer
than ninety (90) days after the effective
date of this chapter, the board shall set ceiling
prices and annual targets for each renewable
energy class of distributed generation for the 2011
program year and make a filing with the
commission pursuant to this chapter recommending such
prices and targets. Thereafter annually
by no later than October 15 of each year, the board
shall make filings with the commission to
recommend the standard contract ceiling prices and
annual targets for each renewable energy
class of distributed generation facility. The ceiling
price for each technology should be a price
that would allow a private owner to invest in a given
project at a reasonable rate of return, based
on recent reported and forecast information on the
cost of capital, and the cost of generation
equipment. The calculation of the reasonable rate of
return for a project shall include where
applicable any state or federal incentives including
but not limited to tax incentives. In setting the
ceiling prices, the board also may consider: (1)
Transactions for newly developed renewable
energy resources, by technology and size, in the
ISO-NE region and the northeast corridor; (2)
Pricing for standard contracts received during the
previous program year; (3) Environmental
benefits, including, but not limited to, reducing
carbon emissions, and system benefits; and (4)
Cost effectiveness. The board shall in performing this
assessment involve representation from its
advisory council, if applicable, and from the office
of energy resources, the electric distribution
company, and the energy efficiency and resources
management council. The board shall hold,
with at least ten (10) business days notice, a public
community review meeting. The board shall
issue a report of its findings from the assessment
process recommending standard contract ceiling
prices for the upcoming program year. Such report
shall be filed with the commission, along with
a recommendation for the approval of the ceiling
prices for the program year.
(b) The commission
shall open a docket to consider for approval ceiling prices proposed
by the board. In reviewing the recommended ceiling
prices the commission shall give due
consideration to the recommendations and report of the
board and the standards set forth in
subsection (a) of this section. The commission shall
issue a decision within sixty (60) days after
said recommendations and report are filed with the
commission establishing the ceiling prices to
be used by electric distribution companies in standard
contracts applicable to each renewable
energy class in order to effectuate the purposes and
provisions of this chapter.
(c) During any
program year, the board may on its own initiative, elect to revisit the
ceiling prices if the board determines that the prices
are either too low or too high. In such case, it
may make a filing with the commission to seek a
modification to the program for that year, which
shall be acted upon by the commission within sixty
(60) days. While such request is pending, the
electric distribution company may suspend executing
standard contracts until a decision is
reached on the request.
39-26.2-6.
Standard contract enrollment program. – (a) Each electric
distribution
company shall conduct at least three (3) standard
contract enrollments during each program year;
however, during 2011 the electric distribution company
need only conduct one enrollment. Each
enrollment shall be open for a two (2) week period
during which the electric distribution
company is required to receive standard short-form
applications requesting standard contracts for
distributed generation energy projects. The short-form
applications shall require the applicant to
provide the project owner’s identity and the project’s
proposed location, nameplate capacity, and
renewable energy class and allow for additional
information relative to the permitting, financial
feasibility, ability to build, and timing for
deployment of the proposed projects. For small
distributed generation projects, the applicant must
submit an affidavit confirming that the project
is not a segment of a larger project being planned for
enlargement over time. For large
distributed generation projects, the short-form
application shall also require the applicant to bid a
bundled price for the sale of the energy, capacity,
renewable energy certificates, and all other
environmental attributes and market products that are
available or may become available from the
distributed generation facility, on a per
kilowatt-hour basis for the output of the project. Subject
to the provisions of subsections (b) and (c) below,
the electric distribution company shall not be
required to enter into standard contracts in excess of
the annual target for the applicable program
year and shall not be required to enter into standard
contracts in excess of any limit set by the
board and approved by the commission for a given enrollment.
However, the electric distribution
company may voluntarily exceed an enrollment period
limit as long as it does not exceed an
annual target for the applicable program year.
(b) For small
distributed generation projects, the electric distribution company on a first-
come, first-served basis, shall enter into standard
contracts at the applicable standard contract
ceiling price with any distributed generation project
which meets the requirements of all
applicable tariffs and regulations, and meets the
criteria of a renewable energy class in effect,
until the class target is met. Enrollment periods will
be governed by a solicitation and enrollment
process rules that shall be filed with the commission
each October 15 by the electric distribution
company, and approved by the commission within sixty
(60) days of such filing.
(c) For large
distributed generation projects, the electric distribution company shall select
projects for standard contracts based on the lowest
proposed prices received, but not to exceed the
applicable standard contract ceiling price, provided,
that the selected projects meet the
requirements of all applicable tariffs and regulations
and meet the criteria of a renewable energy
class in effect until the class target is met. Except
for 2011, no enrollment period shall seek to
enroll more than one-third (1/3) of the annual goal
for the distribution company for large
distributed generation projects.
(d) If there are more
projects than what is specified for a class target at the same price,
the electric distribution company shall review the
applications submitted and select first those
projects that appear to be the furthest along in
development and likely to be deployed. Those
projects that are likely to be deployed on the
earliest timelines shall be selected. To the extent the
electric distribution company is unable to make a
clear distinction on this basis, the electric
company shall report the results to the board and not
enter into contracts with those projects that
are tied on pricing. In such case, the board may take
such action as it deems appropriate for the
selection of projects, including seeking more
information from the projects. Alternatively, the
board may consider adjustments to the ceiling price
and a rebid, or simply wait until the next
enrollment.
(e) Should an
electric distribution company determine that it has entered into sufficient
standard contracts to achieve a program-year class
target, it shall immediately report this to the
board, the office of energy resources, and the
commission, and cease entering into standard
contracts for that renewable energy class for the
remainder of the program year. An electric
distribution company may exceed the renewable energy
class target if the last standard contract
entered into may cause the total purchased to exceed
the target.
(f) The electric
distribution company is authorized to enter into standard contracts up to
the applicable ceiling price. As long as the terms of
the standard contract are materially the same
as the standard contract terms approved by the
commission and the pricing is no higher than the
applicable ceiling price, such contracts shall be
deemed prudent and approved by the commission
for purposes of recovering the costs in rates.
(g) A distributed
generation project that also is being employed by a customer for net
metering purposes may submit an application to sell
the excess output from its distributed
generation project. In such case, however, at the
election of the self-generator all of the renewable
energy certificates and environmental attributes
pertaining to the energy consumed on site may be
sold to the electric distribution company on a month-to-month
basis outside of the terms of the
standard contract. In such case, the portion of the
renewable energy certificates that pertain to the
energy consumed on site during the net metering
billing period shall be priced at the average
market price of renewable energy certificates, which
may be determined by using the price of
renewable energy certificates purchased or sold by the
electric distribution company.
39-26.2-7.
Standard contract – Form and provisions. – The following process shall
be
implemented to establish the non-price terms and
conditions of the standard contract:
(1) A working group
(“contract working group”) shall be established and supervised by
the board, consisting of the following members: (i) The director of the office of energy resources;
(ii) A designee from the division of public utilities
and carriers; (iii) Two (2) designees of the
electric distribution company; (iv) Two (2)
individuals designated by the office of energy
resources who are experienced developers of renewable
generation projects; (v) One individual
designated by the office of energy resources who
represents a customer of the electric distribution
company; and (vi) A lawyer designated by the office of
energy resources who has at least three
(3) years of experience in negotiating and/or
developing power purchase agreements. With
respect to the lawyer designated in (vi) above, the
electric distribution company shall enter into a
cost reimbursement agreement with such lawyer, to compensate
the lawyer for the time spent
serving in the contract working group at the
reasonable hourly rate negotiated by the office of
energy resources. The costs incurred by the electric
distribution company under the
reimbursement agreement shall be recovered in rates by
the electric distribution company in the
year incurred or the year following incurrence through
an appropriate filing with the commission.
The contract working group shall be an advisory group
that is not to be considered to be an
agency for purposes of the administrative procedures
act or any other laws pertaining to public
bodies.
(2) The contract
working group shall work in good faith to develop standard contracts
that would be applicable for various technologies for
both small and large distributed generation
projects. The standard contracts should balance the
need for the project to obtain financing
against the need for the distribution company to
protect itself and its distribution customers
against unreasonable risks. The standard contract
should be developed from contracting terms
typically utilized in the wholesale power industry,
taking into account the size of each project and
the technology. The standard contracts shall provide
for the purchase of energy, capacity,
renewable energy certificates, and all other
environmental attributes and market products that are
available or may become available from the distributed
generation facility. However, the electric
distribution company shall retain the right to separate
out pricing for each market product under
the contracts for administrative and accounting
purposes to avoid any detrimental accounting
effects or for administrative convenience, provided
that such accounting as specified in the
contract does not affect the price and financial
benefits to the seller as a seller of a bundled
product. The standard contract also shall:
(i)
Hold the distributed generation facility owner liable for the cost of
interconnection
from the distributed generation facility to the
interconnect point with the distribution system, and
for any upgrades to the existing distributed
generation system that may be required by the electric
distribution company. However, a distributed
generation facility owner may appeal to the
commission to reduce any required system upgrade costs
to the extent such upgrades can be
shown to benefit other customers of the electric
distribution company and the balance of such
costs shall be included in rates by the electric distribution
company for recovery in the year
incurred or the year following incurrence;
(ii) Require the
distributed generation facility owner to make a performance guarantee
deposit to the electric distribution company of
fifteen dollars ($15.00) for small distributed
generation projects or twenty-five dollars ($25.00)
for large distributed generation projects for
every renewable energy certificate estimated to be
generated per year under the contract, but at
least five hundred dollars ($500) and not more than
seventy-five thousand dollars ($75,000), paid
at the time of contract execution;
(iii) Require the
electric distribution company to refund the performance guarantee
deposit on a pro-rated basis of renewable energy
credits actually delivered by the distributed
generation facility over the course of the first year
of the project’s operation, paid quarterly;
(iv) Provide that if
the distributed generation facility has not generated the output
proposed in its enrollment application within eighteen
(18) months after execution of the contract,
the contract is automatically voided and the
performance guarantee is forfeited. Any forfeited
performance guarantee deposits shall be credited to
all distribution customers in rates and not
retained by the electric distribution company;
(v) Provide for
flexible payment schedules that may be negotiated between the buyer and
seller, but shall be no longer than quarterly if an
agreement cannot be reached;
(vi) Require that an
electric meter which conforms with standard industry norms be
installed to measure the electrical energy output of
the distributed generation facility, and require
a system or procedure by which the distributed
generation facility owner shall demonstrate
creation of renewable energy credits, in a manner
recognized and accounted for by the GIS; such
demonstration of renewable energy credit creation to
be at the distributed generation facility
owner’s expense. The electric distribution company
may, at its discretion, offer to provide such a
renewable energy credit measurement and accounting
system or procedure to the distributed
generation facility owner, and the distributed
generation facility owner may, at its discretion, use
the electric distribution company’s program, or use
that of an independent third party, approved
by the commission, and the costs of such measurement
and accounting are paid for by the
distributed generation facility owner.
(3) If the contract working
group reaches agreement on the terms of standard contracts,
the board shall file the contracts with the commission
for approval. If there are any
disagreements, they shall be identified to the
commission. The commission shall review the
standard contracts for conformance with the standards
set forth in subsection (2). Should there be
any disputes, the commission shall issue an order
resolving them. To the extent the commission
needs expert assistance to resolve any disagreements
noted in the filing, the commission is
authorized to hire a consultant to assist it in the
proceedings, the costs of which shall be recovered
from electric distribution customers pursuant to a
uniform factor established by the commission
in rates for recovery by the electric distribution
company in the year incurred or the year
following incurrence, as requested through a filing by
the electric distribution company. The
commission shall issue an order approving standard
forms of contract within sixty (60) days of
the filing.
39-26.2-8.
Standard contract - Reporting. – (a) After each enrollment during a
program
year the electric distribution companies shall provide
a report to the board, office of energy
resources, and the commission of the aggregate amount
of project nameplate capacity that was
the subject of standard contracts entered into during
that enrollment and the prices under each of
the standard contracts that were executed.
(b) Each quarter of a
program year, the electric distribution company shall provide an
accounting to office of energy resource, the board,
and the commission of the total amount paid to
distributed generation facilities under standard
contracts during that quarter, until the forty
megawatt (40 MW) target is met;
(c) Until the forty
megawatt (40 MW) target is met, the electric distribution company
shall submit preliminary reports to office of energy
resources, the board, and the commission
indicating the number of standard contracts and total
estimated annual generation, price, class,
and any other relevant information for the purposes of
better specifying classes, targets, or
standard contract prices so as to achieve the purposes
set forth in this chapter. Such reports shall
be submitted no later than sixty (60) days prior to
the end of the calendar year.
39-26.2-9.
Interaction with other statutory provisions. – Except as expressly
differentiated in this chapter, standard contracts
entered into pursuant to this chapter shall be
treated for all purposes as long-term contracts
entered into under the provisions of the long-term
contracting standards for renewable energy found in
chapter 26.1 of title 39 of the general laws,
and all such provisions shall apply to such contracts.
39-26.2-10.
Establishment of board -- Purposes. – (a) There is hereby
authorized,
created and established a board to be known as
"The Distributed Generation Standard Contract
Board" with the powers and duties set forth in
this chapter.
(b) The purposes
of this board are to:
(1) Evaluate and
make recommendations to the commission regarding ceiling prices and
annual contracting targets, the make-up of renewable
energy classes, and the terms of standard
contracts under the provisions of this chapter;
(2) Provide
consistent, comprehensive, informed and publicly accountable involvement
by representatives of groups impacted by, involved in,
and knowledgeable regarding the
development of distributed generation projects that
are eligible to enter into standard contracts;
and
(3) Monitor and
evaluate the effectiveness of the distributed generation standard
contracting program for the purchase of the energy
output of distributed renewable generation
projects.
39-26.2-11.
Composition and appointment. – (a) The board shall consist of
ten (10)
members appointed by the governor with the advice and
consent of the senate; seven (7) members
shall be voting members, and the governor shall give
due consideration to appointing persons
with knowledge of: (1) Energy regulation and law; (2)
Large commercial/industrial users; (3)
Small commercial/industrial users; (4) Residential
users; (5) Low income users; (6)
Environmental issues pertaining to energy; and (7)
Construction of renewable generation. Three
(3) members shall be ex officio, non-voting members,
one representing an electric distribution
company, one representing the commissioner of the
office of energy resources and one
representing the economic development corporation.
From the seven (7) voting members, the
governor shall appoint one person to be chairperson of
the board and one person to be vice
chairperson of the board; the commissioner of the
office of energy resources shall be the
executive secretary and executive director of the
board.
(b) With the
exception of the representative of the commissioner of the office of energy
resources, and the representative of the economic
development corporation, the initial
appointments of the other ex officio, non-voting
member shall be appointed for a term of two (2)
years, to be thereafter reappointed or replaced by a
nonvoting member with terms of two (2)
years. Of the initial appointments of voting members,
three (3) voting members shall be
appointed for a term of two (2) years, to be
thereafter reappointed or replaced by three (3) voting
members with a term of two (2) years, and four (4)
voting members shall be appointed for a term
of one year, to be thereafter reappointed or replaced
for each of the following three (3) years by
four (4) voting members with a term of one year.
(c) A simple
majority of the total number of voting members shall constitute a quorum.
(d) A vacancy
other than by expiration shall be filled in the manner of the original
appointment but only for the unexpired portion of the
term. The appointing authority shall have
the power to remove its appointee only for just cause.
(e) The members
of the council shall not be compensated for their service but shall be
reimbursed for their actual expenses necessarily
incurred in the performance of their duties. The
provisions of this subdivision shall not apply to the
executive secretary/executive director.
39-26.2-12. Powers
and duties. – The board shall have the power to:
(1) Develop and
recommend to the public utilities commission for review and approval
ceiling prices for standard contracts under the
distributed generation standard contracts;
(2) Develop and
recommend to the commission adjustments up or down to the annual
target for standard contracts for the following
program year;
(3) Monitor and
evaluate performance under the distributed generation standard contracts
act, including an assessment of ratepayer impact, to
be submitted annually in a report to the
governor and the general assembly.
(4) Participate
in proceedings of the public utilities commission that pertain to the
purposes of the board.
(5) In order to provide
funding for the purposes of engaging consultants and professional
services as necessary and appropriate for the board to
fulfill its duties and purposes, an allocation
of no less than fifty thousand dollars ($50,000) from
unused portions of Regional Greenhouse
Gas Initiative (“RGGI”) auction proceeds not dedicated
to efficiency measures but to overhead
expenses shall be transmitted from the office of
energy resources to the board.
39-26.2-13.
Liberal construction of chapter required. – This chapter shall be
construed
liberally in aid of its declared purposes.
39-26.2-14.
Severability. – If any provision of this chapter or the application
thereof to
any person or circumstances is held invalid, such
invalidity shall not affect other provisions or
applications of the chapter, which can be given effect
without the invalid provision or application,
and to this end the provisions of this chapter are
declared to be severable.
SECTION
2. This act shall take effect upon passage.
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LC02162/SUB A/2
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