2021 -- S 0634

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LC001726

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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 -- PUBLIC UTILITIES COMMISSION

     Introduced By: Senator V. Susan Sosnowski

     Date Introduced: March 18, 2021

     Referred To: Senate Commerce

     It is enacted by the General Assembly as follows:

     SECTION 1. 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.

     (a) 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 § 39-1-27.8, as complementary but distinct activities that have as common purpose meeting

electrical and natural gas energy needs in Rhode Island, in a manner that is optimally cost-effective,

reliable, prudent, and environmentally responsible.

     (b) The commission shall establish not later than June 1, 2008, standards for system

reliability and energy efficiency and conservation procurement that 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, that 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, that shall be designed to facilitate electric customer

participation in regional demand response programs, including those administered by the

independent service operator of New England ("ISO-NE"), and/or are designed to provide local

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.

     (c) The standards and guidelines provided for by subsection (b) 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.

     (d) 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 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, 2024 March 1, 2036. The report shall be made public and be posted electronically on the

website of the office of energy resources.

     (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 that shall identify opportunities

to procure efficiency, distributed generation, demand response, and renewables and that 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, 2024 September 1, 2036, 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

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each energy resource, pursuant to standards established by the commission, including efficiency,

distributed generation, demand response, combined heat and power, and renewables. The plan shall

be made public and be posted electronically on the website of the office of energy resources, and

shall also be submitted to the general assembly.

     (5) 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)(i) 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, as well as the current funding allocations for each eligible energy resource

and the businesses and vendors in Rhode Island participating in the programs. The report shall be

posted electronically on the website of the office of energy resources.

     (ii) Beginning on November 1, 2012, or before, each electric distribution company shall

support the installation and investment in clean and efficient combined heat and power installations

at commercial, institutional, municipal, and industrial facilities. This support shall be documented

annually in the electric distribution company's energy-efficiency program plans. In order to

effectuate this provision, the energy efficiency and resource management council shall seek input

from the public, the gas and electric distribution company, the commerce corporation, and

commercial and industrial users, and make recommendations regarding services to support the

development of combined heat and power installations in the electric distribution company's annual

and triennial energy-efficiency program plans.

     (iii) The energy-efficiency annual plan shall include, but not be limited to, a plan for

identifying and recruiting qualified combined heat and power projects, incentive levels, contract

terms and guidelines, and achievable megawatt targets for investments in combined heat and power

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systems. In the development of the plan, the energy efficiency and resource management council

and the electric distribution company shall factor into the combined heat and power plan and

program, the following criteria: (A) Economic development benefits in Rhode Island, including

direct and indirect job creation and retention from investments in combined heat and power

systems; (B) Energy and cost savings for customers; (C) Energy supply costs; (D) Greenhouse gas

emissions standards and air quality benefits; and (E) System reliability benefits.

     (iv) The energy efficiency and resource management council shall conduct at least one

public review meeting annually, to discuss and review the combined heat and power program, with

at least seven (7) business days' notice, prior to the electric and gas distribution utility submitting

the plan to the commission. The commission shall evaluate the submitted combined heat and power

program as part of the annual energy-efficiency plan. The commission shall issue an order

approving the energy-efficiency plan and programs within sixty (60) days of the filing.

     (e) 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 the 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.

     (f) The commission shall conduct a contested case proceeding to establish a performance-

based incentive plan that 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.

     (g)(1) The office of energy resources shall conduct a study and analysis of the electric and

gas distribution company's state energy efficiency programs that will examine implemented

program and planned conservation measures and review and confirm the claimed energy savings.

In carrying out this study, the office shall utilize a representative sample of different customer

classes and measures that have and/or will be participating in the state energy efficiency programs.

At a minimum, the study performed by the office of energy resources shall include the following

in its scope of work:

     (i) Independently review and summarize the electric and gas distribution company process

for incorporating results from completed evaluation studies into ongoing energy efficiency program

reporting and implementation.

     (ii) Conduct an independent review of gas and electricity efficiency programs, which may

include billing analysis techniques. The scope and subjects of this analysis will be decided by the

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working group with input and advice from an independent consultant. The analysis will be

conducted by a qualified independent consultant using industry accepted methods.

     (iii) Review the data-collection practices, including metering equipment used; sampling

frequency; sample sizes; and data validation procedures, and the methods for data analysis

employed, as deemed appropriate by the independent evaluator.

     (iv) Study results and recommendations will be presented to the public utilities commission

and the energy efficiency and resource management council.

     (2) The office of energy resources shall consult with the working group in development of

the request for proposals (RFP), and during the course of the study, including the preliminary study

results. The working group shall be comprised of one representative from each of the following

groups chosen by the office of energy resources:

     (i) Large commercial and industrial energy users;

     (ii) Small business energy users;

     (iii) Residential energy users;

     (iv) Municipal and state energy users;

     (v) Low-income energy users;

     (vi) Electric and gas distribution company; and

     (vii) Energy efficiency and resource management council.

     (3) The office of energy resources, in consultation with the electric and gas distribution

company and representatives referenced in subsection (g)(2), shall be authorized to hire an energy

consulting company or firm to carry out the energy efficiency verification study. The costs

associated with this study, including, but not limited to, those associated with the consultant or firm

contract and reasonable administrative costs incurred by the office in the execution of subsection

(g) of this section, shall be recoverable through the system benefit charge subject to commission

approval. Funding shall be transferred from the electric and gas distribution utility to the office of

energy resources upon request by the office.

     (4) The office of energy resources shall submit this report on or before October 30, 2019,

to the governor, the president of the senate, and the speaker of the house. The office and its selected

energy consulting company or firm shall host two (2) public presentations on the preliminary and

final results of the study.

     SECTION 2. Section 39-2-1.2 of the General Laws in Chapter 39-2 entitled "Duties of

Utilities and Carriers" is hereby amended to read as follows:

     39-2-1.2. Utility base rate -- Advertising, demand-side management, and renewables.

     (a) In addition to costs prohibited in § 39-1-27.4(b), no public utility distributing or

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providing heat, electricity, or water to or for the public shall include as part of its base rate any

expenses for advertising, either direct or indirect, that promotes the use of its product or service, or

is designed to promote the public image of the industry. No public utility may furnish support of

any kind, direct or indirect, to any subsidiary, group, association, or individual for advertising and

include the expense as part of its base rate. Nothing contained in this section shall be deemed as

prohibiting the inclusion in the base rate of expenses incurred for advertising, informational or

educational in nature, that is designed to promote public safety conservation of the public utility's

product or service. The public utilities commission shall promulgate such rules and regulations as

are necessary to require public disclosure of all advertising expenses of any kind, direct or indirect,

and to otherwise effectuate the provisions of this section.

     (b) Effective as of January 1, 2008, and for a period of fifteen (15) twenty-eight (28) years

thereafter, each electric distribution company shall include a charge per kilowatt-hour delivered to

fund demand-side management programs. The 0.3 mills per kilowatt-hour delivered to fund

renewable energy programs shall remain in effect until December 31, 2022 2035. The electric

distribution company shall establish and, after July 1, 2007, maintain, two (2) separate accounts,

one for demand-side management programs (the "demand-side account"), which shall be funded

by the electric demand-side charge and administered and implemented by the distribution company,

subject to the regulatory reviewing authority of the commission, and one for renewable energy

programs, which shall be administered by the Rhode Island commerce corporation pursuant to §

42-64-13.2 and shall be held and disbursed by the distribution company as directed by the Rhode

Island commerce corporation for the purposes of developing, promoting, and supporting renewable

energy programs. During the time periods established in this subsection, the commission may, in

its discretion, after notice and public hearing, increase the sums for demand-side management and

renewable resources. In addition, the commission shall, after notice and public hearing, determine

the appropriate charge for these programs. The office of energy resources, and/or the administrator

of the renewable energy programs, may seek to secure for the state an equitable and reasonable

portion of renewable energy credits or certificates created by private projects funded through those

programs. As used in this section, "renewable energy resources" shall mean: (1) Power generation

technologies, as defined in § 39-26-5, "eligible renewable energy resources," including off-grid and

on-grid generating technologies located in Rhode Island, as a priority; (2) Research and

development activities in Rhode Island pertaining to eligible renewable energy resources and to

other renewable energy technologies for electrical generation; or (3) Projects and activities directly

related to implementing eligible renewable energy resources projects in Rhode Island.

Technologies for converting solar energy for space heating or generating domestic hot water may

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also be funded through the renewable energy programs. Fuel cells may be considered an energy

efficiency technology to be included in demand-side management programs. Special rates for low-

income customers in effect as of August 7, 1996, shall be continued, and the costs of all of these

discounts shall be included in the distribution rates charged to all other customers. Nothing in this

section shall be construed as prohibiting an electric distribution company from offering any special

rates or programs for low-income customers which are not in effect as of August 7, 1996, subject

to the approval by the commission.

     (1) The renewable energy investment programs shall be administered pursuant to rules

established by the Rhode Island commerce corporation. Said rules shall provide transparent criteria

to rank qualified renewable energy projects, giving consideration to:

     (i) The feasibility of project completion;

     (ii) The anticipated amount of renewable energy the project will produce;

     (iii) The potential of the project to mitigate energy costs over the life of the project; and

     (iv) The estimated cost per kilowatt-hour (KWh) of the energy produced from the project.

     (c) [Deleted by P.L. 2012, ch. 241, art. 4, § 14.]

     (d) The chief executive officer of the commerce corporation is authorized and may enter

into a contract with a contractor for the cost-effective administration of the renewable energy

programs funded by this section. A competitive bid and contract award for administration of the

renewable energy programs may occur every three (3) years and shall include, as a condition, that

after July 1, 2008, the account for the renewable energy programs shall be maintained and

administered by the commerce corporation as provided for in subsection (b) of this section.

     (e) Effective January 1, 2007, and for a period of sixteen (16) twenty-eight (28) years

thereafter, each gas distribution company shall include, with the approval of the commission, a

charge per deca therm delivered to fund demand-side management programs (the "gas demand-

side charge"), including, but not limited to, programs for cost-effective energy efficiency, energy

conservation, combined heat and power systems, and weatherization services for low-income

households.

     (f) Each gas company shall establish a separate account for demand-side management

programs (the "gas demand-side account") that shall be funded by the gas demand-side charge and

administered and implemented by the distribution company, subject to the regulatory reviewing

authority of the commission. The commission may establish administrative mechanisms and

procedures that are similar to those for electric demand-side management programs administered

under the jurisdiction of the commission and that are designed to achieve cost-effectiveness and

high, life-time savings of efficiency measures supported by the program.

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     (g) The commission may, if reasonable and feasible, except from this demand-side

management charge:

     (1) Gas used for distribution generation; and

     (2) Gas used for the manufacturing processes, where the customer has established a self-

directed program to invest in and achieve best-effective energy efficiency in accordance with a plan

approved by the commission and subject to periodic review and approval by the commission, which

plan shall require annual reporting of the amount invested and the return on investments in terms

of gas savings.

     (h) The commission may provide for the coordinated and/or integrated administration of

electric and gas demand-side management programs in order to enhance the effectiveness of the

programs. Such coordinated and/or integrated administration may after March 1, 2009, upon the

recommendation of the office of energy resources, be through one or more third-party entities

designated by the commission pursuant to a competitive selection process.

     (i) Effective January 1, 2007, the commission shall allocate from demand-side management

gas and electric funds authorized pursuant to this section, an amount not to exceed two percent

(2%) of such funds on an annual basis for the retention of expert consultants, and reasonable

administration costs of the energy efficiency and resources management council associated with

planning, management, and evaluation of energy-efficiency programs, renewable energy programs,

system reliability least-cost procurement, and with regulatory proceedings, contested cases, and

other actions pertaining to the purposes, powers, and duties of the council, which allocation may

by mutual agreement, be used in coordination with the office of energy resources to support such

activities.

     (j) Effective January 1, 2016, the commission shall annually allocate from the

administrative funding amount allocated in subsection (i) from the demand-side management

program as described in subsection (i) as follows: fifty percent (50%) for the purposes identified in

subsection (i) and fifty percent (50%) annually to the office of energy resources for activities

associated with planning, management, and evaluation of energy-efficiency programs, renewable

energy programs, system reliability, least-cost procurement, and with regulatory proceedings,

contested cases, and other actions pertaining to the purposes, powers, and duties of the office of

energy resources.

     (k) On April 15, of each year, the office and the council shall submit to the governor, the

president of the senate, and the speaker of the house of representatives, separate financial and

performance reports regarding the demand-side management programs, including the specific level

of funds that were contributed by the residential, municipal, and commercial and industrial sectors

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to the overall programs; the businesses, vendors, and institutions that received funding from

demand-side management gas and electric funds used for the purposes in this section; and the

businesses, vendors, and institutions that received the administrative funds for the purposes in

subsections (i) and (j). These reports shall be posted electronically on the websites of the office of

energy resources and the energy efficiency and resources management council.

     (l) On or after August 1, 2015, at the request of the Rhode Island infrastructure bank, each

electric distribution company, except for the Pascoag Utility District and Block Island Power

Company, shall remit two percent (2%) of the amount of the 2014 electric demand-side charge

collections to the Rhode Island infrastructure bank.

     (m) On or after August 1, 2015, at the request of the Rhode Island infrastructure bank, each

gas distribution company shall remit two percent (2%) of the amount of the 2014 gas demand-side

charge collections to the Rhode Island infrastructure bank.

     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- PUBLIC UTILITIES COMMISSION

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     This act would extend from March 1, 2024, to March 1, 2036, the obligation of the

commissioner of the office of energy resources and the energy efficiency and resource management

council to provide triennial commission findings and recommendations, with regards to system

reliability, energy efficiency and conservation procurement. It also extends until January 1, 2036,

the obligation of electric distribution companies to include a charge per kilowatt-hour delivered to

fund demand-side management programs.

     This act would take effect upon passage.

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