On June 5, Governor Dannel P. Malloy signed into law significant energy legislation. This legislation modifies the state's renewable portfolio standard ("RPS"), which requires the state's electric suppliers and electric distribution companies ("EDCs") to obtain a portion of their power from renewable resources. Most significantly, the legislation expands and modifies the scope of the largest group of qualifying renewable energy sources which are defined as Class I renewable energy sources. The largest and perhaps most controversial change will allow large-scale hydropower from outside the region to count toward the state's RPS requirement in certain circumstances. The House passed Senate Bill No. 1138, An Act Concerning Connecticut's Clean Energy Goals, as amended, on May 28, 2013, by a vote of 112-33, and the Senate passed the bill on June 4, 2013, by a vote of 26-6. Proponents of the Act maintain it will benefit the state by providing cleaner, more reliable energy to consumers at lower costs. Opponents of the Act are concerned that permitting large-scale hydropower to satisfy the RPS would flood the market and reduce the value of new clean, renewable power in the state.
To access the energy legislation, please see http://www.cga.ct.gov/2013/FC/pdf/2013SB-01138-R000879-FC.pdf.
Summary of Significant Provisions
The legislation makes several modifications to the state's RPS, including five significant changes, each of which are described further below:
Changing the Definition of Class I Renewable Energy Sources. The legislation changes the scope of Class I renewable energy sources by expanding the definition to encompass new energy sources and by modifying certain existing requirements.
Using Large-Scale Hydropower to Meet the RPS. The legislation permits the use of large-scale hydropower for RPS compliance in certain circumstances when the RPS could not otherwise be met by Class I renewable energy sources within the state. Large-scale hydropower will include facilities with a generating capacity of more than 30 MW that began operation on or after January 1, 2003, and are located in or adjacent to the New England Power Pool geographic region (which would include the New York, Quebec and Maritimes electric control areas) and in certain electric control areas to the north of that region (e.g., in Newfoundland and Labrador).
For each calendar year beginning on January 1, 2014, large-scale hydropower will be eligible to meet the RPS only if and when four triggering events occurred:
If all four triggering events occur and the DEEP Commissioner is unable to obtain the proposals necessary to ensure an adequate supply of Class I renewable energy sources through an RFP, then the commissioner, beginning on January 1, 2016, may allow large-scale hydropower to meet limited portions of the RPS. Large-scale hydropower will be permitted to meet not more than one percentage point of the RPS by December 31, 2016. That limit will increase by an additional percentage point each year that the commissioner takes action to use large-scale hydropower to meet the RPS and is not allowed to exceed a total of five percentage points of the RPS by December 31, 2020. Large-scale hydropower selected through this process will be prohibited from trading in the New England REC market.
Reducing the Value of Biomass RECs. The Act directs the DEEP Commissioner to establish a schedule to gradually reduce the value of Class I RECs in Connecticut to all biomass or landfill methane gas facilities. Three types of biomass and landfill methane gas facilities will be excluded from this reduction:
Soliciting Proposals from Class I Renewable Energy Sources and Large-Scale Hydropower Facilities. The legislation allows the DEEP Commissioner the option of soliciting three types of proposals (either individually or in conjunction with other New England states in a regional procurement):
Any PPA will be subject to review and approval by the Public Utilities Regulatory Authority, which review would occur on an accelerated timeline of 30 to 60 days. The EDCs will be required to sell the RECs obtained in those PPAs to another EDC or electric supplier to be used to satisfy the Connecticut RPS.
Alternative Compliance Payments. The legislation directs ACPs to be used to offset the costs to all EDC customers of the contracts entered into through certain renewable energy programs instead of to fund the development of Class I renewable energy sources through the Connecticut Clean Energy Finance and Investment Authority.
The changes created by this legislation could impact companies serving load in New England as well as those producing energy from renewable energy resources. For further information about this legislation, please contact any of the attorneys listed in this alert.
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