O F F I C E O F L E G I S L A T I V E R E S E A R C H
P U B L I C A C T S U M M A R Y
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PA 21-162—HB 6524
Energy and Technology Committee
AN ACT CONCERNING TH E SOLICITATION OF NE W FUEL CELL
ELECTRICITY GENERATI ON PROJECTS
SUMMARY: This act 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 act,
PURA must evaluate the proposals and may approve them for certain purposes,
including enhancing distribution system reliability.
The act 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 act, 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 act eliminates a similar provision in prior law that
authorized, but did not require, the EDCs to submit plans to PURA to acquire new
fuel cell electricity generation facilities that began operation on or after July 1,
2017.
EFFECTIVE DATE: July 1, 2021
SOLICITATION PROCESS AND PROPOSAL SUBMISS IONS
The act 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. Under the act, 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 act does not specify a timeline for PURA to review and
approve the tariff.) The act requires each EDC to submit selected project
proposals and associated tariffs to PURA by January 1, 2022.
Under the act, 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 O L R P U B L I C A C T S U M M A R Y
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proportion to their revenue as reported to PURA for the most recent fiscal year.
PROJECT EVALUATION AND APPROVAL
The act 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) 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 (CGS § 16-243y).
USE OF ENERGY PRODUC TS
The act 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 act also explicitly does not prevent companies from
reselling or otherwise disposing of energy products, capacity, and environmental
attributes they purchase under the act 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 comes
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 act 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 act to meet their RPS
requirements, as determined by PURA.
BACKGROUND
Brownfields
By law, a brownfield is any abandoned or underused site where
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 O L R P U B L I C A C T S U M M A R Y
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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
ratemaking principles established in law, including that (1) there must be a clear
public need for the service being proposed or provided and (2) 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 (CGS § 16-19e).