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SENATE BILL NO. 101
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-THIRD LEGISLATURE - FIRST SESSION
BY SENATORS TOBIN, Gray-Jackson, Kawasaki
Introduced: 3/15/23
Referred: Labor & Commerce, Finance
A BILL
FOR AN ACT ENTITLED
"An Act relating to a renewable portfolio standard; relating to electrical energy 1
transmission; relating to distributed energy systems; relating to power cost equalization; 2
relating to the Alaska Energy Authority; and providing for an effective date." 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 4
* Section 1. The uncodified law of the State of Alaska is amended by adding a new section 5
to read: 6
PURPOSE. The purpose of this Act is to establish a renewable portfolio standard that 7
requires certain electric utilities to derive increasing percentages of the utility's net electricity 8
sales from renewable energy resources. Nothing in this Act is intended to constitute 9
implementation by the Regulatory Commission of Alaska of the federal Public Utility 10
Regulatory Policies Act of 1978 (16 U.S.C. 2705). 11
* Sec. 2. AS 42.05.391(a) is amended to read: 12
(a) Except as provided in AS 42.05.306, a public utility may not, as to rates, 13
grant an unreasonable preference or advantage to any of its customers or subject a 14 33-LS0365\R
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customer to an unreasonable prejudice or disadvantage. A public utility may not 1
establish or maintain an unreasonable difference as to rates, either as between 2
localities or between classes of service. A public utility offering net metering for 3
customers who install distributed energy systems is not engaging in rate 4
discrimination solely because some customers receive net metering. A municipally 5
owned utility may offer uniform or identical rates for a public utility service to 6
customers located in different areas within its certificated service area who receive the 7
same class of service. Any uniform or identical rate shall, upon complaint, be subject 8
to review by the commission and may be set aside if shown to be unreasonable. In this 9
subsection, "distributed energy system" has the meaning given in AS 42.05.930. 10
* Sec. 3. AS 42.05.780(a) is amended to read: 11
(a) An electric reliability organization shall file with the commission in a 12
petition for approval an integrated resource plan for meeting the reliability 13
requirements of all customers within its interconnected electric energy transmission 14
network in a manner that provides the greatest value, consistent with the load-serving 15
entities' obligations. An integrated resource plan must contain an evaluation of the full 16
range of cost-effective means for load-serving entities to meet the service 17
requirements of all customers, including additional generation, transmission, battery 18
storage, and conservation or similar improvements in efficiency. An integrated 19
resource plan must include options to meet customers' collective needs in a manner 20
that provides the greatest value, consistent with the public interest, regardless of the 21
location or ownership of new facilities or conservation activities. An integrated 22
resource plan must include options by which each load-serving entity may satisfy 23
the renewable portfolio standard under AS 42.05.900. 24
* Sec. 4. AS 42.05.785(a) is amended to read: 25
(a) A public utility, including a public utility that is exempt from other 26
regulation under AS 42.05.711 or another provision of this chapter, that is 27
interconnected with an interconnected electric energy transmission network served by 28
an electric reliability organization certificated by the commission may not construct a 29
large energy facility unless the commission determines that the facility 30
(1) is necessary to the interconnected electric energy transmission 31 33-LS0365\R
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network with which it would be interconnected; 1
(2) complies with reliability standards; [AND] 2
(3) would, in a cost-effective manner, meet the needs of a load-serving 3
entity that is substantially served by the facility; and 4
(4) is not detrimental to a load-serving entity's ability to meet the 5
renewable portfolio standard under AS 42.05.900. 6
* Sec. 5. AS 42.05 is amended by adding new sections to read: 7
Article 11A. Renewable Portfolio Standard. 8
Sec. 42.05.900. Renewable portfolio standard. (a) A load-serving entity that 9
is subject to the standards of an electric reliability organization under AS 42.05.760 10
shall comply with the renewable portfolio standard established in this section. Under 11
the renewable portfolio standard, a load-serving entity's portfolio shall include sales 12
from renewable energy resources in the following percentages: 13
(1) 25 percent by December 31, 2027; 14
(2) 55 percent by December 31, 2035; 15
(3) 80 percent by December 31, 2040. 16
(b) A purchase power agreement entered into between a load-serving entity 17
and a renewable electrical energy producer will be considered to satisfy all or part of 18
the percentages required under (a) of this section if 19
(1) the effective date of the purchase power agreement is before the 20
end of the compliance period; 21
(2) the purchase power agreement guarantees that the renewable 22
electrical energy producer will deliver the renewable electrical energy to the load-23
serving entity not later than two years after the compliance period; and 24
(3) the purchase power agreement is approved by the commission in 25
accordance with AS 42.05.381 and 42.05.431(a) and (b) before the end of the 26
compliance period; if the purchase power agreement is not approved by the 27
commission, the load-serving entity may be subject to a noncompliance fine under 28
AS 42.05.915. 29
(c) To qualify as part of a load-serving entity's portfolio, renewable energy 30
resources used by a load-serving entity must be located within the load-serving entity's 31 33-LS0365\R
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service area, connected to the same interconnected electric energy transmission 1
network that serves the load-serving entity's customers, or located within the service 2
area of an electric utility whose customers receive power cost equalization under 3
AS 42.45.100 - 42.45.150. 4
(d) A load-serving entity may satisfy the renewable portfolio standard through 5
energy produced by distributed energy systems, regardless of whether the energy is 6
acquired by the load-serving entity or used by the customer. 7
(e) A load-serving entity's compliance with the renewable portfolio standard 8
shall be based on historical data, collected in a manner consistent with industry 9
standards and commission regulations. 10
(f) A load-serving entity shall design and implement an accounting system to 11
verify compliance with the renewable portfolio standard to ensure that renewable 12
electrical energy is counted only once for the purpose of meeting the renewable 13
portfolio standard. 14
(g) The commission shall, by regulation, develop a proxy for the ratio of net 15
energy acquired by a load-serving entity at metered intervals to total energy produced 16
from distributed energy systems. Using the proxy, the commission shall determine an 17
estimate of total energy produced by distributed energy systems available to satisfy a 18
load-serving entity's renewable portfolio standard. The commission shall update the 19
proxy developed under this subsection not less than once every five years. 20
(h) A load-serving entity may also satisfy the renewable portfolio standard 21
through renewable energy credits that qualify as part of the load-serving entity's 22
portfolio under AS 42.05.910. 23
(i) A load-serving entity may also satisfy the renewable portfolio standard 24
with energy consumption displaced because of energy efficiency investments made in 25
whole or part with payments under AS 42.05.915(g), if the displaced consumption is 26
documented under a program established by the state. 27
Sec. 42.05.905. Reporting. (a) Beginning March 1, 2025, a load-serving entity 28
subject to the renewable portfolio standard shall submit an annual report to the 29
commission that documents the load-serving entity's progress toward satisfying the 30
renewable portfolio standard under AS 42.05.900 in the preceding calendar year. The 31 33-LS0365\R
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annual report must document the entity's total production from distributed energy 1
systems and net electricity sales from renewable energy resources for the applicable 2
calendar year, document the entity's satisfaction of penalties imposed under 3
AS 42.05.915, and include the information required by the commission. 4
(b) The commission shall adopt regulations governing the reporting 5
requirements under (a) of this section to document compliance and minimize the 6
administrative costs and burden on a load-serving entity. 7
(c) The commission may investigate a load-serving entity's compliance with a 8
renewable portfolio standard and collect any information necessary to verify and audit 9
the information provided to the commission by the load-serving entity. 10
Sec. 42.05.910. Renewable energy credits. (a) To qualify as part of a load-11
serving entity's portfolio, renewable energy credits must be bundled renewable energy 12
credits from generation located within a load-serving entity's service area or connected 13
to the same interconnected electric energy transmission network that serves the load-14
serving entity's customers or must be purchased from generation located within the 15
service area of an electric utility that serves customers who receive power cost 16
equalization under AS 42.45.100 - 42.45.150. 17
(b) A renewable energy credit may be used only once and then must be 18
retired. 19
(c) Each load-serving entity is responsible for tracking and demonstrating that 20
a renewable energy credit used to comply with the renewable portfolio standard is 21
derived from a renewable energy resource, that the load-serving entity has not 22
previously used, traded, sold, or otherwise transferred the renewable energy credit, and 23
that the renewable energy credit is retired upon its use. 24
(d) A renewable energy credit may be traded, sold, or otherwise transferred for 25
value. 26
(e) Revenue received by a load-serving entity for the trade, sale, or transfer of 27
a renewable energy credit shall be credited to the load-serving entity's cost of power 28
adjustment to the benefit of the load-serving entity's customers. 29
Sec. 42.05.915. Noncompliance fine; waiver. (a) If the commission 30
determines that a load-serving entity failed to meet the renewable portfolio standard 31 33-LS0365\R
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under AS 42.05.900, after notice and an opportunity for hearing, the entity is, each 1
year that the entity fails to meet the renewable portfolio standard, subject to a fine of 2
$20 for every megawatt hour that the entity is below the renewable portfolio standard. 3
(b) The commission may waive the noncompliance fine in whole or in part 4
upon determination that a load-serving entity is unable to meet the renewable portfolio 5
standard because of reasons outside the reasonable control of the load-serving entity as 6
set out in (c) of this section or the entity establishes a good cause for noncompliance 7
as set out in (d) of this section. 8
(c) The following events or circumstances are outside of a load-serving 9
entity's reasonable control: 10
(1) weather-related damage; 11
(2) natural disasters; 12
(3) failure of renewable electrical energy producers to meet contractual 13
obligations to the load-serving entity; 14
(4) transmission network constraint that prevents the load-serving 15
entity from partially or fully using renewable electrical energy for net electricity sales; 16
(5) global pandemics; and 17
(6) acts of war. 18
(d) The following factors may establish good cause for noncompliance: 19
(1) the actions taken by the load-serving entity to procure the 20
renewable electrical energy; 21
(2) the extent of good faith efforts by the load-serving entity to 22
comply; 23
(3) the lack of past failures to comply; 24
(4) the likelihood and amount of future renewable electrical energy to 25
be procured by the load-serving entity; 26
(5) the effect of the noncompliance fine on the load-serving entity 27
considering the size or ownership of the load-serving entity; 28
(6) the good faith effort by the load-serving entity to meet the 29
renewable portfolio standard after an event or circumstance enumerated in (c) of this 30
section. 31 33-LS0365\R
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(e) If the commission waives all or part of a noncompliance fine, the 1
commission may require additional reporting from a load-serving entity to 2
demonstrate the entity is taking all reasonable actions under its control to satisfy the 3
renewable portfolio standard. 4
(f) A fine paid by a load-serving entity under this section may not be included 5
or recovered in rates, but the load-serving entity may recover a payment made to a 6
customer under (g) of this section. 7
(g) A load-serving entity may, within one year after the commission imposes a 8
noncompliance fine, satisfy the fine by paying a customer all or a portion of the 9
customer's costs of installing a distributed energy system or energy efficiency 10
technologies. When paying customer costs of installing a distributed energy system, 11
the load-serving entity shall, if total requests for costs exceed the amount of the 12
noncompliance fine, prioritize customers with mean household annual incomes at or 13
below 80 percent of the median census district income where the load-serving entity of 14
the customer is located. 15
Sec. 42.05.920. Exemptions. (a) A load-serving entity is exempt from 16
compliance with the renewable portfolio standard under AS 42.05.900 if the aggregate 17
net electricity sales for all load-serving entities on the interconnected electric energy 18
transmission network meets or exceeds the aggregate renewable portfolio standard for 19
all load-serving entities on the interconnected electric energy transmission network. 20
(b) If an exemption under (a) of this section does not apply, a load-serving 21
entity is exempt from its first noncompliance with a renewable portfolio standard. An 22
exemption under this subsection does not apply for the compliance period ending 23
December 31, 2040. 24
Sec. 42.05.925. Net metering. (a) A load-serving entity subject to the 25
renewable portfolio standard under AS 42.05.900 shall monthly credit in a tariff the 26
account of a retail customer for the number of kilowatt-hours, at the full retail rate per 27
kilowatt-hour, of electric energy supplied by the customer's distributed energy system 28
to the load-serving entity. The tariff may not limit the aggregate capacity that 29
customers may install unless the commission, after a hearing, finds that capacity 30
limitation is necessary to protect system reliability. 31 33-LS0365\R
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(b) For up to seven years after a customer's distributed energy system is 1
connected to the load-serving entity and generates power, a credit under (a) of this 2
section that exceeds the customer's monthly bill for service will roll over to the 3
following month and continue to roll over until used. Unused credits expire on 4
March 31 of each year. 5
(c) The credits under (b) of this section are not available for a distributed 6
energy system installed before July 1, 2023. 7
Sec. 42.05.930. Definitions. In AS 42.05.900 - 42.05.930, 8
(1) "bundled renewable energy credits" means renewable energy 9
credits that are sold or used together with their associated energy; 10
(2) "compliance period" means each period identified in 11
AS 42.05.900(a); 12
(3) "distributed energy system" means a renewable energy resource 13
that is located on any property owned or leased by a customer within the service 14
territory of the load-serving entity that is interconnected on the customer's side of the 15
utility meter; 16
(4) "interconnected electric energy transmission network" has the 17
meaning given in AS 42.05.790; 18
(5) "load-serving entity" has the meaning given in AS 42.05.790; 19
(6) "megawatt hour" means 1,000,000 watts of electricity being used in 20
one hour and includes the steam equivalent of a megawatt hour; 21
(7) "renewable electrical energy" means electricity or energy generated 22
from renewable energy resources; 23
(8) "renewable energy credit" means one credit equal to the generation 24
attributes of one megawatt hour that is derived from a renewable energy resource 25
located within the load-serving entity's service area or within the interconnected 26
electric energy transmission network where a load-serving entity's service area is 27
located, or purchased from generation located within the service area of an electric 28
utility that serves customers who receive power cost equalization under AS 42.45.100 29
- 42.45.150; where fossil and renewable fuels are co-fired in the same generating unit, 30
the unit is considered to generate renewable electrical energy in direct proportion to 31 33-LS0365\R
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the percentage of the total heat input value represented by the heat input value of the 1
renewable fuels; 2
(9) "renewable energy resource" means a resource, other than 3
petroleum, nuclear, natural gas, or coal, that naturally replenishes over a human, not a 4
geological, time frame, is ultimately derived from solar power, water power, or wind 5
power, comes from the sun or from thermal inertia of the earth, and minimizes the 6
output of toxic material in the conversion of the energy; in this paragraph, "resource" 7
includes 8
(A) solar and solar thermal energy, wind energy, and kinetic 9
energy of moving water, including 10
(i) waves, tides, or currents; 11
(ii) run-of-river hydropower, in-river hydrokinetic; 12
(iii) conventional hydropower, lake tap hydropower; 13
(iv) water released through a dam; and 14
(v) geothermal energy; 15
(B) waste to energy systems, including 16
(i) wood; 17
(ii) landfill gas produced by municipal solid waste or 18
fuel that has been manufactured in whole or significant part from 19
waste; 20
(iii) biofuels produced in the state; and 21
(iv) thermal energy produced from a geothermal heat 22
pump using municipal solid waste, including biogenic and 23
anthropogenic factions; 24
(10) "renewable portfolio standard" means the required percentage of a 25
load-serving entity's net electrical energy sales to customers in the entity's service area 26
that is represented by renewable electrical energy as required under AS 42.05.900(a); 27
(11) "transmission network constraint" means a lack of transmission 28
line capacity to deliver electricity without exceeding thermal, voltage, and stability 29
limits designed to ensure reliability of the interconnected electric energy transmission 30
network. 31 33-LS0365\R
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* Sec. 6. AS 42.45.110(a) is amended to read: 1
(a) The costs used to calculate the amount of power cost equalization for all 2
electric utilities eligible under AS 42.45.100 - 42.45.150 include all allowable costs, 3
except return on equity, used by the commission to determine the revenue requirement 4
for electric utilities subject to rate regulation under AS 42.05. The costs used in 5
determining the power cost equalization per kilowatt-hour shall exclude any other type 6
of assistance that reduces the customer's costs of power on a kilowatt-hour basis and 7
that is provided to the electric utility within 60 days before the commission determines 8
the power cost equalization per kilowatt-hour of the electric utility. In calculating 9
power cost equalization, the commission may not consider validated costs or kilowatt-10
hour sales associated with a United States Department of Defense facility, revenue 11
from the sale of recovered heat, or revenue from the sale of renewable energy 12
credits acquired under AS 42.05.910. 13
* Sec. 7. AS 44.83.940 is amended by adding a new subsection to read: 14
(b) Not later than the first day of the first regular session of each legislature, 15
the authority shall submit a report to the senate secretary and chief clerk of the house 16
of representatives and notify the legislature that the report is available. The report 17
must identify the authority's progress in developing renewable energy resources in 18
rural regions of the state, evaluate renewable energy resource development in rural 19
regions, identify infrastructure necessary for rural renewable energy projects, and 20
evaluate the feasibility and cost of rural renewable energy projects. 21
* Sec. 8. This Act takes effect July 1, 2023. 22