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OLR Bill Analysis
HB 6524 (as amended by House "A")*
AN ACT CONCERNING THE SOLICITATION OF NEW FUEL CELL
ELECTRICITY GENERATION PROJECTS.
SUMMARY
This bill requires each electric distribution company (EDC; i.e.,
Eversource and United Illuminating) to (1) solicit proposals to acquire
new fuel cell electricity generation projects that begin operation on or
after July 1, 2021, (2) select project proposals from those solicitations,
and (3) submit their selected proposals to the Public Utilities
Regulatory Authority (PURA). Under the bill, PURA must evaluate the
proposals and may approve them for certain purposes, such as
enhancing distribution system reliability.
The bill limits the size of project facilities the EDCs may acquire to
30 megawatts of capacity in the aggregate apportioned to each EDC
based on its distribution load. Under the bill, costs prudently incurred
by an EDC must be recovered from all its customers through a fully
reconciling component of its electric rates until the company’s next rate
case, when the company may recover its costs and investments for
newly owned fuel cell generation through its base distribution rates, as
determined by PURA.
Additionally, the bill eliminates a similar provision in current law
authorizing, but not requiring, the EDCs to submit plans to PURA to
acquire new fuel cell electricity generation facilities that began
operation on or after July 1, 2017.
*House Amendment “A” (1) removes a provision in the underlying
bill requiring EDCs to give preference to products that meet in-state
manufacturing requirements and are on landfills or brownfields and
instead requires preferences for projects that meet either requirement,
(2) provides that the in-state manufacturing requirement applies to 2021HB-06524-R01-BA.DOCX
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projects that use equipment manufactured in the state, rather than
projects manufactured in the state, and (3) broadens PURA’s ability to
approve projects to provide back-up power to commercial and
industrial customers beyond projects that provide on-site generation.
EFFECTIVE DATE: July 1, 2021
SOLICITATION PROCESS AND PROPOSAL SUBMISS IONS
The bill requires the EDCs to use a competitive solicitation process
and give preference to projects (1) that use equipment manufactured in
the state or (2) sited on landfills or brownfields (see BACKGROUND)
when selecting new fuel cell electricity generation projects from the
proposals they receive. Presumably, before soliciting for project
proposals, however, the EDCs must, by August 1, 2021, jointly file
with PURA a proposed tariff (generally, rates, terms, and conditions)
to use in their solicitations, subject to PURA’s approval. The bill does
not specify a timeline for PURA to review and approve the tariff. The
bill requires each EDC to submit selected project proposals and
associated tariffs to PURA by January 1, 2022.
Under the bill, submitted proposals must (1) include the EDC’s full
projected costs and (2) demonstrate to PURA that a project’s facility is
not supported in any form of cross subsidization by affiliated entities,
except that gas companies may recover costs associated with benefits a
proposed project confers on the natural gas system, as determined by
PURA. Gas companies may recover these costs from all gas customers
through the statutory purchased gas adjustment clause in proportion
to their revenue as reported to PURA for the most recent fiscal year.
PROJECT EVALUATION A ND APPROVAL
The bill requires PURA to evaluate submitted project proposals in a
manner consistent with ratemaking principles established in state law
(see BACKGROUND). It authorizes PURA to approve any projects for
the following purposes:
1. to give commercial or industrial electric or gas customers on-site
generation that (a) increases power quality or resilience or (b) 2021HB-06524-R01-BA.DOCX
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reduces their energy costs;
2. to provide emergency service facilities or commercial or
industrial electric or gas customers with back-up power; or
3. to enhance distribution system reliability, including making
electric voltage or frequency improvements, supporting
microgrids, or taking other measures that support electric or gas
system resiliency.
By law, “resilience” is the ability to prepare for and adapt to
changing conditions and withstand and recover rapidly from
deliberate attacks, accidents, or naturally occurring threats or
incidents, such as those associated with climate change.
USE OF ENERGY PRODUC TS
The bill allows the EDCs to use any energy products, capacity, and
environmental attributes (e.g., renewable energy certificates (RECs))
produced by a project’s facility to meet the needs of their standard
service customers (i.e., customers who do not select a retail energy
supplier), and as may otherwise be determined by PURA. The bill
explicitly does not preclude companies from reselling or otherwise
disposing of energy products, capacity, and environmental attributes
they purchase under the bill if PURA orders them to do so.
The state’s renewable portfolio standard (RPS) generally requires
that a portion of the power provided by the EDCs and retail electric
suppliers come from renewable resources. Companies may meet their
RPS requirement through purchasing RECs. By law, the EDCs must
contract with their wholesale suppliers to comply with the RPS. The
bill supersedes this law and allows the EDCs to retain Class I RECs
issued by the New England Power Pool Generation Information
System for fuel cells acquired under the bill to meet their RPS
requirements, as determined by PURA.
BACKGROUND
Brownfields
By law, a brownfield is any abandoned or underused site where 2021HB-06524-R01-BA.DOCX
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redevelopment, reuse, or expansion has not occurred due to the
presence or potential presence of pollution in the buildings, soil, or
groundwater that requires investigation or remediation before or in
conjunction with the property’s redevelopment, reuse, or expansion
(CGS § 32-760(2)).
Ratemaking Principles
By law, PURA must generally investigate whether proposed rates
by public service companies (including the EDCs and gas companies)
conform to the following ratemaking principles established in law:
1. there must be a clear public need for the service being proposed
or provided;
2. the public service company must be fully competent to provide
efficient and adequate service (i.e., it is technically, financially,
and managerially expert and efficient);
3. PURA and all public service companies must perform their
respective public responsibilities with economy, efficiency, and
care for public safety and energy security, as well as promote
economic development within the state with consideration for
conservation, energy efficiency, development and use of
renewable energy, and prudent management of the natural
environment;
4. the rate level and structure must be sufficient, but no more than
sufficient, to allow companies to cover their operating costs,
including appropriate staffing levels, and capital costs, to attract
needed capital and to maintain financial integrity, and yet
provide appropriate protection to relevant public interests;
5. the level and structure of rates charged to customers must
reflect prudent and efficient management of the operation; and
6. company rates, charges, conditions of service, and categories of
service must not discriminate against customers using
renewable energy sources or co-generation technology to meet a 2021HB-06524-R01-BA.DOCX
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portion of their energy requirements (CGS § 16-19e).
COMMITTEE ACTION
Energy and Technology Committee
Joint Favorable
Yea 25 Nay 0 (03/11/2021)