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OLR Bill Analysis
HB 5118
AN ACT CONCERNING WASTE MANAGEMENT AND ANAEROBIC
DIGESTION.
SUMMARY
In general, the state’s Renewable Portfolio Standard (RPS) requires a
portion of the power supplied to electric ratepayers to come from certain
renewable energy sources. Starting on January 1, 2023, this bill limits the
Class II RPS requirement to only Class II renewable energy sources (i.e.,
trash to energy facilities). Under current law, both Class I (e.g., wind and
solar) and Class II renewables may be used to meet the Class II
requirement.
Starting on that same date, the bill also requires that the alternative
compliance payments for failing to meet the Class II requirement be
deposited into a sustainable materials management account established
by the bill, rather than be refunded to ratepayers as current law requires.
It requires the Department of Energy and Environmental Protection
(DEEP) commissioner to establish and administer a sustainable
materials management program to support solid waste reduction in the
state using funds from the account.
The bill also allows the DEEP commissioner, in consultation with
certain other officials, to solicit proposals for certain anaerobic digestion
facilities to supply biogas for injection into the state’s natural gas
distribution systems. The commissioner may select proposals that meet
certain criteria (e.g., are in ratepayers’ best interests) and direct natural
gas utility companies to enter into long-term agreements to purchase a
selected facility’s biogas. The Public Utilities Regulatory Authority
(PURA) must review and approve these agreements, and any dispute
arising from them must be brought to PURA.
The bill requires that the gas companies recover their (1) net costs for 2022HB-05118-R000323-BA.DOCX
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purchasing the biogas from their ratepayers and (2) related
infrastructure costs from the biogas supplier. It also requires that
DEEP’s reasonable costs associated with the solicitations be recoverable
from gas company ratepayers.
Lastly, the bill makes a technical change to fix an incorrect statutory
reference (§ 4).
EFFECTIVE DATE: October 1, 2022
§§ 1-4 — CLASS II RENEWABLE PORTFOLIO STANDARD
Under the state’s current RPS law, electric distribution companies
(EDCs, i.e., Eversource and United Illuminating) and electric suppliers
must get 4% of their energy from either Class I or Class II renewable
energy sources. Beginning January 1, 2023, the bill requires the EDCs
and suppliers to meet this 4% requirement with only Class II energy
sources.
By law, unchanged by the bill, the 4% requirement is in addition to
the Class I RPS requirement. The Class I RPS is 24% in 2022 and
increases annually until it reaches 40% in 2030.
Alternative Compliance Payments
By law, if an EDC or electric supplier fails to meet the Class II RPS
requirement, it must make a 2.5 cent per kilowatt hour alternative
compliance payment (ACP) for the shortfall. Current law requires that
the ACP be refunded to ratepayers, but starting January 1, 2023, the bill
instead requires that it be deposited in the sustainable materials
management account created by the bill.
§ 5 — SUSTAINABLE MATERIALS MANAGEMENT ACCOUNT &
PROGRAM
The bill establishes the sustainable materials management account as
separate, nonlapsing account in the General Fund. The account must
contain money collected by the Class II ACP, as described above, and
the DEEP commissioner must spend it for the Sustainable Materials
Management Program’s purposes. 2022HB-05118-R000323-BA.DOCX
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Starting January 1, 2023, the bill requires the DEEP commissioner to
establish and administer the Sustainable Materials Management
Program to support solid waste reduction in the state. It must do so by
providing funding from the account for programs and projects that
promote affordable, sustainable, and self-sufficient waste management
in the state by reducing solid waste generation or diverting it from
disposal, consistent with the state’s solid waste management plan. The
funding may be used for grants, revolving loans, technical assistance,
consulting services, and waste characterization studies that support
those programs and projects implemented by entities that include
municipalities, nonprofits, and regional waste authorities.
The bill requires DEEP, starting by January 1, 2024, to annually
submit a report to the Environment and Energy and Technology
committees. The report must detail the expenditures of any funds
disbursed from the account and the outcomes associated with those
expenditures.
§ 6 — BIOGAS SOLICITATION
The bill allows the DEEP commissioner, in consultation with the
Office of Consumer General and attorney general, to solicit proposals to
supply biogas for injection into the state’s natural gas distribution
systems. The proposals must be from anaerobic digestion facilities that
have a solid waste facility permit and produce biogas derived from the
decomposition of farm-generated organic waste or source separated
organic material. The commissioner may issue one or multiple
solicitations, but she cannot select proposals from anaerobic digestion
facilities that annually produce biogas from more than 300,000 tons of
organic waste.
When selecting proposals, the bill requires the commissioner to at
least consider whether the proposal (1) is in natural gas ratepayers’ best
interests, (2) promotes the statewide solid waste management plan’s
policy goals, (3) is consistent with the state’s requirement to reduce
greenhouse gas emissions, and (4) promotes natural gas distribution
system benefits. 2022HB-05118-R000323-BA.DOCX
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She must also consider (1) any positive impacts on the state’s
economic development, including those on the agricultural industry,
and (2) the relevant facility’s characteristics, including whether the
proposed gas conditioning system and biogas comply with state
interconnection standards for biogas.
Gas Purchasing Agreements
The bill allows the commissioner to direct gas utility companies, on
behalf of the state’s gas companies’ customers, to enter into an
agreement to purchase biogas and associated attributes from a selected
proposal’s biogas supplier.
The agreements may have a term of up to 20 years, and PURA must
review and approve them. The bill requires PURA to finish the review
within 120 days after the agreement is filed. It must approve the
agreement if it is in ratepayers’ best interest and meets the solicitation
proposal criteria described above.
Gas Company Cost Recovery
The bill requires that a gas company’s reasonable costs incurred in
negotiating and executing an agreement, and the net costs for the biogas
supplied under it, be recovered from all the company’s customers
through the purchased gas adjustment clause on gas bills. Any net
revenue from selling products purchased under the agreement must be
credited to customers through the same fully reconciling rate
component for all the company’s customers. Any of these net costs or
revenues must be apportioned proportionally to each contracting gas
company’s annual revenues as reported to PURA for the most recent
fiscal year.
The bill also requires that a gas company’s costs related to building,
operating, and maintaining the infrastructure arising from the
agreement be recovered from the biogas supplier through a contribution
in aid of construction charge or other provision of the agreement. When
PURA approves the gas purchasing agreement, it must identify and
approve any costs not recoverable from the biogas supplier. These
prudently incurred costs must be recovered through an existing rate 2022HB-05118-R000323-BA.DOCX
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tracking mechanism for recovering natural gas infrastructure
investments or, if no mechanism currently exists, through a new rate
tracking mechanism that PURA establishes.
Under the bill, a gas company can choose to (1) use the renewable
natural gas it procured through an agreement to meet its customers’
needs or (2) sell it into applicable markets or through bilateral contracts
with third parties, reflecting the net benefits or costs in the purchased
gas adjustment clause on their customers’ bills.
DEEP Cost Recovery
The bill allows the DEEP commissioner to retain consultants to help
implement its provisions, including evaluating the proposals. It requires
that all reasonable costs associated with a solicitation and review be
recoverable from ratepayers through the same fully reconciling rate
component for all customers of the gas companies. These costs must be
recoverable even if the commissioner does not select any proposals.
Contract Disputes
The bill requires that parties bring to PURA contract disputes for
contracts approved under the bill’s provisions. A party may petition
PURA for a declaratory ruling or apply for review. The bill prohibits
PURA from initiating a contract review proceeding on its own.
Under the bill, PURA must review any of these contract disputes and
may decide it by issuing a declaratory ruling or a final decision in a
contested case proceeding, including ordering legal and equitable
remedies. A party to the contract may appeal the declaratory ruling or
final decision to the Superior Court.
COMMITTEE ACTION
Energy and Technology Committee
Joint Favorable
Yea 20 Nay 6 (03/22/2022)