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NO. 69.  AN ACT RELATING TO PROMOTION OF ENERGY EFFICIENCY AND RENEWABLE ELECTRIC GENERATION.

(S.57)

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  30 V.S.A. chapter 89 is added to read:

CHAPTER 89.  RENEWABLE ENERGY PROGRAMS

§ 8001.  Renewable energy goals

(a)  The renewable energy programs authorized under this chapter shall be designed and implemented to achieve the following goals:

(1)  Air and water quality shall be protected and promoted in renewable energy programs.

(2)  The continued acquisition of cost-effective end-use energy efficiency measures shall be preserved and enhanced in renewable energy programs.

(3)  Programs shall, to the extent practicable, support development of renewable energy and energy efficiency industries and infrastructure in Vermont, while still sustaining existing renewable energy infrastructure.

(4)  Programs shall, to the extent practicable, be designed and implemented in a manner that balances program benefits and costs, and rates.

(b)  The public service board shall provide, by order or rule, the regulations and procedures that are necessary to allow the board and the department of public service to implement and supervise programs pursuant to this chapter.

§ 8002.  DEFINITIONS

For purposes of this chapter:

(1)(A)  “Renewable pricing” shall mean an optional service provided or contracted for by an electric company:

(i)  under which the company’s customers may voluntarily either:

(I)  purchase all or part of their electric energy from renewable sources as defined in this chapter; or

(II)  cause the purchase and retirement of tradeable renewable energy credits on the participating customer’s behalf; and

(ii)  which increases the company’s reliance on renewable sources of energy beyond those the electric company would otherwise be required to provide under section 218c of this title.

(B)  Renewable pricing programs may include, but are not limited to:

(i)  contribution‑based programs in which participating customers can determine the amount of a contribution, monthly or otherwise, that will be deposited in a board‑approved fund for new renewable energy project development;

(ii)  energy‑based programs in which customers may choose all or a discrete portion of their electric energy use to be supplied from renewable resources;

(iii)  facility‑based programs in which customers may subscribe to a share of the capacity or energy from specific new renewable energy resources.

(2)  “Renewable energy” means energy produced using a technology that relies on a resource that is being consumed at a harvest rate at or below its natural regeneration rate.

(A)  For purposes of this subdivision (2), methane gas and other flammable gases produced by the decay of sewage treatment plant wastes or landfill wastes and anaerobic digestion of agricultural products, byproducts, or wastes shall be considered renewable energy resources, but no form of solid waste, other than agricultural or silvicultural waste, shall be considered renewable.

(B)  For purposes of this subdivision (2), no form of nuclear fuel shall be considered renewable.

(C)  For purposes of this chapter, the only energy produced by a hydroelectric facility to be considered renewable shall be from a hydroelectric facility with a generating capacity of 80 megawatts or less.

 (3)  “Tradeable renewable energy credits” means all of the environmental attributes associated with a single unit of energy generated by a renewable energy source where:

(A)  those attributes are transferred or recorded separately from that unit of energy;

(B)  the party claiming ownership of the tradeable renewable energy credits has acquired the exclusive legal ownership of all, and not less than all, the environmental attributes associated with that unit of energy; and

(C)  exclusive legal ownership can be verified through an auditable contract path or pursuant to the system established or authorized by the public service board or any program for tracking and verification of the ownership of environmental attributes of energy legally recognized in any state and approved by the board.

§ 8003.  RENEWABLE PRICING

(a)  Upon petition of an electric company subject to this title, upon request of the department of public service, or on its own initiative, the public service board may approve one or more renewable pricing programs for one or more electric utilities; provided, however, in the case of a municipal plant or department formed under local charter or chapter 79 of this title, or an electric cooperative formed under chapter 81 of this title, any renewable pricing program approved by the board shall also be approved by a majority of the voters of a municipality or cooperative voting upon the question at a duly warned annual or special meeting held for that purpose.  Such programs may include, but are not limited to, tariffs, standard special contracts, or other arrangements whose purpose is to increase the company’s reliance on, or the customer’s support of, renewable sources of energy or the type and quantity of renewable energy resources available.

(b)  A standard special contract for renewable pricing that has been approved as to form and substance by the board under this section shall not require further approval by the board under section 229 of this title as to individual customers who choose to execute that contract.

(c)  Renewable pricing programs may be priced in the form of a premium relative to the tariff that would otherwise apply; provided the premium shall be cost‑based, shall reasonably reflect the difference between acquiring the renewable energy and the utility’s alternative cost of power, including administrative costs, and shall be adjusted via such periodic adjustment mechanisms, including adjustment clauses, as the board shall approve as part of a renewable pricing program.  Any renewable pricing program shall require that any costs of power in excess of the company’s alternative cost of power shall be borne solely by those customers who elect to participate in the renewable pricing program.

(d)  Tradeable renewable energy credits (with or without other features), tradeable emissions credits, emission offsets, or other market instruments created or obtained by energy resources acquired pursuant to or as part of a renewable pricing program approved under this section shall be permanently retired by or on behalf of the program’s subscribers, and shall not be sold or otherwise disposed of.  However, if a program is not fully subscribed, any such instruments created or obtained by the unsubscribed portion of the program may be sold or disposed of at no less than market value if the net proceeds of such sale or disposal are used to reduce the cost paid under the renewable pricing program. 

(e)  The board shall ensure that disclosures and representations made regarding renewable pricing programs are accurate, are reasonably supported by objective data, disclose the types of technologies used, whether the energy is Vermont‑based or not, and clearly distinguish between energy or tradeable energy credits provided from renewable and nonrenewable sources, and existing and new sources.

(f)  Renewable pricing programs offered by a company shall be available to such customer classes as the board may determine.

(g)  The board shall consider the following factors in deciding whether to approve a proposed renewable pricing program:

(1)  minimization of marketing and administrative expenses;

(2)  auditing or certification of sources of energy or tradeable renewable energy credits;

(3)  marketing and promotion plans;

(4)  effectiveness of the program in meeting the goals of promoting renewable energy generation and public understanding of renewable energy sources in Vermont;

(5)  retention by the program of renewable energy production incentives, tax incentives and other incentives earned or otherwise obtained by energy resources acquired pursuant to or as part of a renewable pricing program approved under this section to reduce the cost of any premiums paid under this section; and

(6)  costs imposed on nonparticipating customers arising on account of the implementation of the voluntary renewable pricing program.

§ 8004.  RENEWABLE PORTFOLIO STANDARDS FOR SALES OF

              ELECTRIC ENERGY

(a)  The public service board shall design a proposed renewable portfolio standard in the form of draft legislation.  The standard shall be developed with the aid of a renewable portfolio standard collaborative.  The renewable portfolio standard collaborative, composed of representatives from the electric utilities, industry, renewable energy industry, ratepayers, environmental and consumer groups, the department of public service, and other stakeholders identified by the board, shall aid in the development of a renewable portfolio standard for renewable energy resources, as well as requirements for implementation of and compliance with that standard.  The proposed renewable portfolio standard shall be applicable to all providers of electricity to retail consumers in this state.  The proposed renewable portfolio standard developed by the board will be presented to the house committee on commerce, the house and senate committees on natural resources and energy, and the senate committee on finance in the form of draft legislation for consideration in January 2004.

(b)  In developing the renewable portfolio standard, the board shall consider the following goals, which shall be afforded equal weight in formulating the standard:

(1)  increase the use of renewable energy in Vermont in order to capture the benefits of renewable energy generation for Vermont ratepayers and citizens.

(2)  maintain or reduce the rates of electricity being paid by Vermont ratepayers and lessen the price risk and volatility for future ratepayers.

Sec. 2.  30 V.S.A. § 218d is added to read:

§ 218d.  ALTERNATIVE REGULATION OF ELECTRIC AND NATURAL

               GAS COMPANIES

(a)  Notwithstanding section 218 and sections 225 - 227 of this title, upon petition of an electric or natural gas company, the public service board may, after opportunity for hearing, approve alternative forms of regulation for an electric or natural gas company; provided, however, in the case of a municipal plant or department formed under local charter or chapter 79 of this title or an electric cooperative formed under chapter 81 of this title, any alternative forms of regulation approved by the board shall also be approved by a majority of the voters of a municipality or cooperative voting upon the question at a duly warned annual or special meeting held for that purpose.  Before doing so, the board shall find that the proposed form of alternative regulation will:

(1)  establish a system of regulation in which such companies have clear incentives to provide least-cost energy service to their customers;

(2)  provide just and reasonable rates for service to all classes of customers;

(3)  deliver safe and reliable service;

(4)  offer incentives for innovations and improved performance that advance state energy policy such as increased reliance on Vermont-based renewable energy;

(5)  promote improved quality of service, reliability, and service choices;

(6)  encourage innovation in the provision of service;

(7)  establish a reasonably balanced system of risks and rewards that encourages the company to operate as efficiently as possible using sound management practices; and

(8)  provide a reasonable opportunity, under sound and economical management, to earn a fair rate of return, provided such opportunity must be consistent with flexible design of alternative regulation and with the inclusion of effective financial incentives in such alternatives.

(b)  If savings result from alternative regulation, the savings shall be shared with ratepayers as determined by the board.

(c)  In the case of a municipal plant or department formed under local charter or chapter 79 of this title or an electric cooperative formed under chapter 81 of this title, alternative regulation may include authority for local elected officials to set and revise rates.

(d)  Alternative regulation may include such changes or additions to, waivers of, or alternatives to, traditional rate-making procedures, standards, and mechanisms, including substantive changes to rate base‑rate of return rate setting, as the board finds will promote the public good and will support the required findings in subsection (a) of this section.

(e)  The public service board may establish, by rule or order, requirements governing the filing of a petition to approve an alternative regulation plan.

(f)  The board shall act on the petition within 12 months of the filing of a petition that complies with the board’s rules.

(g)  An alternative regulation plan shall take effect not sooner than 30 days following its approval by the board.

(h)  The board may establish, by rule or order, and may amend from time to time standards and procedures by which the effectiveness of the alternative form of regulation can be determined.

(i)  The board, on its own motion or the motion of the department of public service or a company operating under an alternative regulation plan pursuant to this section, may investigate any alternative regulation plan that is in effect.  Following notice and an opportunity for hearing, the board may terminate or modify the alternative regulation plan upon a finding of good cause.  Where the board revokes prior approval, the board shall determine whether the company’s current rates are just and reasonable, and, if not, shall establish new rates that are just and reasonable.

(j)  Notwithstanding any provision of this section, a company may file for rates determined under and in accordance with sections 218, 225, 226, and 227 of this title to be effective at the time of the termination of any approved alternative regulation plan.

(k)  In the case of a municipal utility, the board shall approve an alternative regulation plan only if the board finds that the plan will:

(1)  permit the municipal plant or department to fulfill all of its obligations, including its obligations to the holders of bonds issued under local charter or state law;

(2)  not violate existing covenants in outstanding municipal bonds or in contracts securing bonds issued by the Vermont public power supply authority;

(3)  not impair the municipality’s access to capital, including that in the municipal bond market.  The board will consider the opinion of the utility’s bond counsel in making this decision; and

(4)  not impair the municipal utility’s ability to participate in future bond issues by the authority as contemplated by chapter 84 of this title.  The board will consider the opinion of the Vermont public power supply authority in making this decision.

(l)  In the case of an electric cooperative, the board shall approve an alternative regulation plan only if the board finds the plan will not violate covenants in existing mortgages or impair the cooperative’s access to capital.

(m)  In the case of an investor‑owned company, the board shall approve an alternative regulation plan, only if the board finds the plan will:

(1)  not have an adverse impact on the electric company’s eligibility for rate‑regulated accounting in accordance with generally accepted accounting standards if applicable; and

(2)  reasonably preserve the availability of equity and debt capital resources to the company on favorable terms and conditions.

Sec. 3.  PROMOTION OF RENEWABLE ENERGY; APPROPRIATION

(a)  There is appropriated from the petroleum violation escrow fund the sum of $250,000.00 to the Vermont renewable power supply acquisition authority for its work regarding the purchase of all or part of the Connecticut River hydroelectric system.  Should the Vermont renewable power supply acquisition authority not be established by the legislature in 2003, this appropriation shall revert to the petroleum violation escrow fund.

(b)  The sum of $626,000.00 and any unappropriated balance are appropriated from the petroleum violation escrow fund for use by the department of public service, in consultation with the department of economic development and the Vermont renewable energy industry.

(c)  The departments of public service and of economic development shall establish a program of incentive payments to promote the installation of small scale renewable energy systems in Vermont residences and businesses.  This program shall promote residential or nonresidential energy systems that meet the requirements of 30 V.S.A. § 219a(a)(3)(A), (C), (D), and (E); or that are hot water heating systems that convert solar energy into thermal energy used to heat water, but limited to that property directly necessary for and used to capture, convert, or store solar energy for this purpose.

(d)  The department shall report to the general assembly by January 30, 2004 on the results of this program, and on the potential for an ongoing renewable energy incentive program to strengthen the Vermont renewable energy market, increase the renewable energy installation infrastructure, and stimulate the development of renewable energy businesses in Vermont.

Sec. 4.  LEGISLATIVE FINDINGS

(a)  The department of public service is charged with planning for proper utility service and representing the public interest in proceedings to set electric rates.

     (b)  The department’s planning function includes creation of an electrical energy plan pursuant to 30 V.S.A. § 202, which looks out over a 20-year planning horizon.

(c)  Achieving and maintaining the lowest possible electric rates that provide safe, efficient, and reliable service while maintaining a financially stable electric utility industry, is integral to the department’s planning function and to the electrical energy plan in order to maintain and promote Vermont’s economic well-being and growth in all regions and for all electric customers.

(d)  The department of public service, as the state’s ratepayer representative and the state’s electrical energy planning agency, is the appropriate agency to study and make recommendations on how or the extent to which, among the other factors studied in the electrical energy plan, rates can be reduced from present levels in the short term and reduced or controlled throughout the

20-year planning horizon.

Sec. 5.  30 V.S.A. § 202 is amended to read:

§ 202.  ELECTRICAL ENERGY PLANNING

* * *

(b)  The department, through the director, shall prepare an electrical energy plan for the state.  The plan shall be for a twenty-year 20-year period and shall serve as a basis for state electrical energy policy.  The electric energy plan shall be based on the principles of “least cost integrated planning” set out in and developed under section 218c of this title.  The plan shall include at a minimum:

* * *

(2)  an assessment of the all energy resources available to the state for electrical generation or to supply electrical power, including among others, fossil fuels, nuclear, hydro-electric, wood biomass, wind, fuel cells, and solar energy and strategies for minimizing the economic and environmental costs of energy supply, including the production of pollutants, by means of efficiency and emission improvements, fuel shifting, and other appropriate means;

(3)  estimates of the projected level of electrical energy demand;

(4)  a detailed exposition, including capital requirements and the estimated cost to consumers, of how such demand shall be met based on the assumptions made in subdivision (b)(1) (1) of this section subsection and the policies set out in subsection (c) of this section; and

(5)  specific strategies for reducing electric rates to the greatest extent possible in Vermont over the most immediate five‑year period, for the next succeeding five‑year period, and long-term sustainable strategies for achieving and maintaining the lowest possible electric rates over the full 20‑year planning horizon consistent with the goal of maintaining a financially stable electric utility industry in Vermont.

(c)  In developing the plan, the department shall take into account the protection of public health and safety; preservation of environmental quality; the potential for reduction of rates paid by all retail electricity customers; the potential for reduction of electrical demand through conservation, including alternative utility rate structures; use of load management technologies; efficiency of electrical usage; utilization of waste heat from generation; and utility assistance to consumers in energy conservation.

(d)  In establishing plans, public hearings shall be held and the director shall:

(1)  consult Consult with members of the public, the legislative energy committees, representatives of electric utilities, energy providers and other interested state agencies, whose views shall be considered in preparation of the plan:

(A)  the public;

(B)  Vermont municipal utilities;

(C)  Vermont cooperative utilities;

(D)  Vermont investor-owned utilities;

(E)  Vermont electric transmission companies;

(F)  environmental and residential consumer advocacy groups active in electricity issues;

(G)  industrial customer representatives;

(H)  commercial customer representatives;

(I)  the public service board;

(J)  an entity designated to meet the public’s need for energy efficiency services under subdivision 218c(a)(2) of this title;

(K)  other interested state agencies; and

(L)  other energy providers.

(2)  To the extent necessary, the director shall include in the plan, surveys to determine needed and desirable plant improvements and extensions and coordination between utility systems, joint construction of facilities by two or more utilities, methods of operations, and any change that will produce better service or reduce costs.  To this end, the director may require the submission of data by each company subject to supervision, of its anticipated electrical demand, including load fluctuation, supplies, costs, and its plan to meet that demand and such other information as the director deems desirable.

(e)  Before adopting a plan, the department shall conduct public hearings on a final draft.  The department shall then accept the plan or modify it in accordance with conduct public hearings on the final draft and shall consider the evidence presented at such hearings in preparing the final plan.  The plan shall be adopted by April 1, 1983 no later than January 1, 2004, and shall be submitted to the general assembly.

* * *

(g)  The director shall annually review that portion of a plan which extends extending over the next five years.  The department, through the director, shall annually extend the plan by one additional year; and from time to time, but in no event less than every five years, institute proceedings to review a plan and make revisions, where necessary.  The five-year review and any interim revisions shall be made according to the procedures established in this section for initial adoption of the plan.

* * *

 

Sec. 6.  STUDY; RECOMMENDATION

The department of public service shall study whether waste-to-energy which is part of an integrated waste management system should or should not be designated as a renewable energy source. The department shall present a report with recommendations to the House Committee on Commerce, the House Committee on Natural Resources and Energy and the Senate Committee on Finance on or before January 1, 2004.

Sec. 7.  EFFECTIVE DATE

This act shall take effect upon passage.

Approved:  June 17, 2003



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us