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General Assembly Raised Bill No. 5350
February Session, 2020
LCO No. 2199
Referred to Committee on ENERGY AND TECHNOLOGY
Introduced by:
(ET)
AN ACT CONCERNING NA TURAL GAS INFRASTRUC TURE.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective October 1, 2020) (a) For purposes of this 1
section, "anaerobic digestion facility" means a facility that obtained a 2
permit pursuant to section 22a-208a of the general statutes and produces 3
by-products that provide biogas derived from the decomposition of 4
farm-generated organic waste or source-separated organic material. 5
(b) The Commissioner of Energy and Environmental Protection, in 6
consultation with the Office of Consumer Counsel, and the Attorney 7
General, may solicit proposals, in one solicitation or multiple 8
solicitations, from anaerobic digestion facilities that will make biogas of 9
a quality suitable for injection into the natural gas distribution system 10
in the state. The commissioner may select proposals from such 11
anaerobic digestion facilities that do not exceed by-product that is 12
generated by three hundred thousand tons of organic waste annually. 13
(c) In making a selection of such proposals, the commissioner shall 14
consider factors including, but not limited to, (1) whether the proposal 15 Raised Bill No. 5350
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is in the best interest of natural gas ratepayers; (2) whether the proposal 16
promotes the policy goals outlined in the state-wide solid waste 17
management plan developed pursuant to section 22a-241a of the general 18
statutes; (3) any positive impacts on the state's economic development, 19
including any positive impacts on the state's agricultural industry; (4) 20
whether the proposal is consistent with the requirements to reduce 21
greenhouse gas emissions in accordance with section 22a-200a of the 22
general statutes; (5) the characteristics of a relevant facility that produces 23
renewable natural gas, including whether the proposed gas 24
conditioning system or systems and the biogas complies with the 25
interconnection standards developed in accordance with section 18 of 26
public act 19-35; and (6) whether the proposal promotes natural gas 27
distribution system benefits. 28
(d) The commissioner may direct the gas companies, as defined in 29
section 16-1 of the general statutes, to enter into gas purchase 30
agreements for biogas suppliers selected pursuant to this section for 31
periods of not more than twenty years on behalf of all customers of the 32
state's gas companies. 33
(e) Any gas purchase agreement entered into pursuant to this section 34
shall be subject to review and approval by the Public Utilities 35
Regulatory Authority. Such review shall be completed not later than one 36
hundred twenty days after the date such agreement is filed with the 37
authority. The authority shall review and approve such gas purchase 38
agreement if it meets the solicitation proposal criteria pursuant to this 39
section. 40
(f) (1) The reasonable costs incurred by the gas companies in 41
negotiating and executing such gas purchase agreements and the net 42
costs for the supply of biogas under any such gas purchase agreement 43
shall be recovered from all customers of such company through the 44
purchased gas adjustment clause pursuant to section 16-19b of the 45
general statutes. Any net revenue from the sale of products purchased 46
in accordance with the gas purchase agreement entered into pursuant 47
to this section shall be credited to customers through the same fully 48 Raised Bill No. 5350
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reconciling rate component for all customers of the contracting gas 49
company. Any such net costs or net revenues, as applicable, of any such 50
gas purchase agreement shall be apportioned in proportion to the 51
revenues of each contracting gas company as reported to the authority 52
pursuant to section 16-49 of the general statutes for the most recent fiscal 53
year. 54
(2) The gas companies shall recover any costs incurred related to 55
constructing, operating and maintaining the infrastructure arising from 56
such gas purchase agreement from the biogas supplier through a 57
contribution in aid of construction, or other provision, of the gas 58
purchase agreement. Any incurred costs not recoverable from the 59
biogas supplier shall be identified and approved by the authority at the 60
time the authority approves any such gas purchase agreement. Such 61
incurred costs shall be recovered in any existing rate tracking 62
mechanism for the recovery of natural gas infrastructure investments, 63
or, if no mechanism currently exists, a newly established rate tracking 64
mechanism established by the authority. 65
(g) A gas company may elect to (1) use any renewable natural gas 66
procured under this section to meet the needs of its customers, or (2) sell 67
any such renewable natural gas into applicable markets or through 68
bilateral contracts with third parties with the net benefits or costs 69
reflected in the purchased gas adjustment clause pursuant to section 16-70
19b of the general statutes. 71
(h) The commissioner may retain consultants to assist in 72
implementing this section, including, but not limited to, the evaluation 73
of proposals submitted pursuant to this section. All reasonable costs 74
associated with the commissioner's solicitation and review of proposals 75
pursuant to this section shall be recoverable through the same fully 76
reconciling rate component for all customers of the gas companies. Such 77
costs shall be recoverable even if the commissioner does not select any 78
solicitation proposals pursuant to this section. 79
(i) (1) Any dispute arising from a contract that is approved by the 80 Raised Bill No. 5350
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authority pursuant to this section shall be brought to the authority. A 81
party may petition the authority for a declaratory ruling or make an 82
application for review pursuant to this subsection. Notwithstanding 83
subsection (a) of section 4-176 of the general statutes, the authority may 84
not on its own motion initiate a proceeding to review a contract entered 85
into pursuant to this subsection. 86
(2) The authority shall review any contract dispute brought pursuant 87
to subdivision (1) of this subsection. The authority shall decide any such 88
contract dispute by issuing a declaratory ruling or a final decision in a 89
contested case proceeding, and may order legal and equitable remedies. 90
Any party to the contract shall have the right to appeal to the Superior 91
Court from any such declaratory ruling or final decision issued 92
pursuant to this section. 93
Sec. 2. Section 16-34a of the general statutes is amended by adding 94
subsections (c) and (d) as follows (Effective October 1, 2020): 95
(NEW) (c) On or before January 1, 2021, the Public Utilities 96
Regulatory Authority shall reopen or initiate a docket for the sole 97
purpose of evaluating whether a gas company should accelerate its 98
existing schedule for the repair and replacement of aging infrastructure 99
in order to mitigate, among other things, methane emissions and issue 100
orders consistent with such evaluation. All costs a gas company 101
prudently incurs to comply with any such order shall be timely 102
recovered from all customers of such gas company through the existing 103
Distribution Integrity Management Program cost recovery and 104
reconciliation mechanisms, or through the successor program. 105
(NEW) (d) In reviewing the natural gas infrastructure expansion plan 106
pursuant to subsection (c) of this section, in order to protect the interests 107
of ratepayers and ensure revenue recovery for gas companies, and 108
consistent with the recommendations of the Comprehensive Energy 109
Strategy, the authority shall, in accordance with section 16-19oo, (1) 110
establish a hurdle rate utilizing up to a twenty-five-year payback period 111
to compare the revenue requirement of connecting new customers to the 112 Raised Bill No. 5350
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gas distribution system to determine the level of new business capital 113
expenditures that will be recoverable through rates, provided the 114
authority shall develop a methodology that reasonably accounts for 115
revenues that would be collected from new customers who signaled an 116
intention to switch to natural gas over a period of at least three years 117
within a common geographic location, (2) establish a new rate for new 118
customers added pursuant to the natural gas infrastructure expansion 119
plan to offset incremental costs of expanding natural gas infrastructure 120
pursuant to such plan, (3) establish a rate mechanism for the gas 121
companies to recover prudent investments made pursuant to the 122
approved natural gas infrastructure expansion plan in a timely manner 123
outside of a rate proceeding, provided such mechanism shall take into 124
consideration the additional revenues that gas companies will generate 125
through the implementation of such plan, and (4) notwithstanding the 126
provisions of section 16-19b, effective for the period of the natural gas 127
expansion plan, (A) assign at least half of the nonfirm margin credit to 128
offset the rate base of the gas companies, and (B) assign the lesser of (i) 129
an amount equal to half of the nonfirm margin credit, or (ii) an amount 130
equal to fifteen million dollars from the nonfirm margin credit annually 131
for all gas companies in the aggregate, apportioned to each gas company 132
in proportion to revenues of the existing and new capacity contracted 133
for by each gas company, to offset expansion costs, including, but not 134
limited to, the costs of adding new state, municipal, commercial and 135
industrial customers. 136
Sec. 3. (NEW) (Effective October 1, 2020) (a) On and after the effective 137
date of each gas company's first rate case, in which a final decision is 138
issued by the Public Utilities Regulatory Authority after July 1, 2021, for 139
each new contract executed between a construction contractor and a gas 140
company in which the construction contractor agrees to engage in the 141
replacement of the gas company's natural gas distribution infrastructure 142
within the state pursuant to the gas company's Distribution Integrity 143
Management Program, as required pursuant to 49 CFR 192.1015 and as 144
approved by the authority, the construction contractor shall pay not less 145
than the prevailing rate of wage, as described in section 31-53 of the 146 Raised Bill No. 5350
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general statutes, to individuals who perform construction activities with 147
respect to such replacement. 148
(b) (1) Not later than fifteen months after the effective date described 149
in subsection (a) of this section, each gas company shall file a report with 150
the authority detailing the impact that the prevailing wage provisions 151
of subsection (a) of this section have on: 152
(A) The cost of the replacement of gas companies' natural gas 153
distribution infrastructure in the state; 154
(B) The forecasted or actual rates charged to customers of gas 155
companies in the state; 156
(C) The number of qualified individuals available to perform the 157
replacement of gas companies' natural gas distribution infrastructure in 158
the state, including any shortage of the availability of such qualified 159
individuals and any impact on the scheduling or timing for the 160
performance of such replacement; and 161
(D) The quality, reliability and safety of the replacement of gas 162
companies' natural gas distribution infrastructure in the state. 163
(2) Such report shall be based on data from the twelve-month period 164
after the effective date described in subsection (a) of this section and 165
shall include recommendations concerning whether the requirements in 166
subsection (a) of this section that construction contractors pay not less 167
than the prevailing rate of wage should be amended, and, if so, the 168
report shall include a description of any such amendments. 169
Sec. 4. Subsection (d) of section 16a-3j of the general statutes is 170
repealed and the following is substituted in lieu thereof (Effective October 171
1, 2020): 172
(d) In any solicitation for natural gas resources issued pursuant to this 173
subsection, the commissioner shall seek proposals for (1) [interstate 174
natural gas transportation capacity, (2)] liquefied natural gas, [(3)] (2) 175
liquefied natural gas storage, and [(4)] (3) natural gas storage, or a 176 Raised Bill No. 5350
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combination of any such resources, provided such proposals provide 177
incremental capacity, gas, or storage that has a firm delivery capability 178
to transport natural gas to natural gas-fired generating facilities located 179
in the control area of the regional independent system operator. 180
Proposals under this subsection shall not have a contract term exceeding 181
a period of twenty years. 182
Sec. 5. Subsections (g) and (h) of section 16a-3j of the general statutes 183
are repealed and the following is substituted in lieu thereof (Effective 184
October 1, 2020): 185
(g) If the commissioner finds proposals received pursuant to this 186
section to be in the best interest of electric ratepayers, in accordance with 187
the provisions of subsection (e) of this section, the commissioner may 188
select any such proposal or proposals, provided the total capacity of the 189
resources selected under all solicitations issued pursuant to this section 190
in the aggregate do not exceed three hundred seventy-five million cubic 191
feet per day of natural gas capacity, or the equivalent megawatts of 192
electricity, electric demand reduction or combination thereof. Any 193
proposals selected pursuant to subsections (b) and (c) of this section 194
shall not, in the aggregate, exceed ten per cent of the load distributed by 195
the state's electric distribution companies. The commissioner may, on 196
behalf of all customers of electric distribution companies, direct the 197
electric distribution companies to enter into long-term contracts for 198
passive demand response measures, electricity, electric capacity, 199
environmental attributes, energy storage, [interstate natural gas 200
transportation capacity,] liquefied natural gas, liquefied natural gas 201
storage, and natural gas storage, or any combination thereof, from 202
proposals submitted pursuant to this section, provided the benefits of 203
such contracts to customers of electric distribution companies outweigh 204
the costs to such companies' customers. 205
(h) Any agreement entered into pursuant to this section shall be 206
subject to review and approval by the Public Utilities Regulatory 207
Authority. The electric distribution company shall file an application for 208
the approval of any such agreement with the authority. The authority 209 Raised Bill No. 5350
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shall approve such agreement if it is cost effective and in the best interest 210
of electric ratepayers. The authority shall issue a decision not later than 211
ninety days after such filing. If the authority does not issue a decision 212
within ninety days after such filing, the agreement shall be deemed 213
approved. The net costs of any such agreement, including costs incurred 214
by the electric distribution company under the agreement and 215
reasonable costs incurred by the electric distribution company in 216
connection with the agreement, shall be recovered on a timely basis 217
through a fully reconciling component of electric rates for all customers 218
of the electric distribution company. Any net revenues from the sale of 219
products purchased in accordance with long-term contracts entered into 220
pursuant to this section shall be credited to customers through the same 221
fully reconciling rate component for all customers of the contracting 222
electric distribution company. For any contract for [interstate natural 223
gas transportation capacity,] liquefied natural gas, liquefied natural gas 224
storage or natural gas storage entered into pursuant to this section, the 225
electric distribution company may contract with a gas supply manager 226
to sell such [interstate natural gas transportation capacity,] liquefied 227
natural gas, liquefied natural gas storage or natural gas storage, or a 228
combination thereof, into the wholesale markets at the best available 229
price in a manner that meets all applicable requirements pursuant to all 230
applicable regulations of the Federal Energy Regulatory Commission. 231
This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2020 New section
Sec. 2 October 1, 2020 16-34a
Sec. 3 October 1, 2020 New section
Sec. 4 October 1, 2020 16a-3j(d)
Sec. 5 October 1, 2020 16a-3j(g) and (h)
Statement of Purpose:
To (1) allow the Commissioner of Energy and Environmental Protection
to solicit proposals for the supply of biogas for injection into the natural
gas distribution system in the state, (2) require the Public Utilities
Regulatory Authority to reopen or initiate dockets for the sole purpose
of evaluating whether a gas company should accelerate its existing Raised Bill No. 5350
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schedule for the repair and replacement of aging infrastructure, (3)
allow the Public Utilities Regulatory Authority to set rates to protect the
interests of ratepayers and ensure revenue recovery for gas companies,
and (4) require construction contractors to pay not less than the
prevailing rate of wage to individuals who perform construction
activities with respect to the replacement of a gas company's natural gas
distribution infrastructure.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]