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OLR Bill Analysis
sHB 5356
AN ACT CONCERNING MODIFICATIONS TO THE RENEWABLE
PORTFOLIO STANDARD.
SUMMARY
This bill expands the type of projects considered Class I renewable
energy sources to include certain fuel cell, hydropower, and nuclear
facilities. By reclassifying these facilities as Class I, the bill allows electric
distribution companies (EDCs, i.e., Eversource and United Illuminating)
and electric suppliers to use the renewable energy certificates (RECs)
generated by these technologies to meet their Class I renewable portfolio
standard (RPS) requirements. It also allows these technologies to (1)
participate in certain power procurements administered by the
Department of Energy and Environmental Protection (DEEP); (2)
qualify for certain property tax exemptions (except for nuclear facilities);
and (3) when applicable, be exempt from municipal building permit fees
(see BACKGROUND).
Existing law requires EDCs, for their standard service procurement,
and suppliers to obtain at least 5% of their total output from Class III
sources (e.g., certain combined heat and power systems and waste heat
recovery systems, see BACKGROUND). Under current law, this
requirement sunsets on December 31, 2024. The bill removes this sunset
date, allowing the requirement to continue in perpetuity.
Lastly, the bill requires the DEEP commissioner to study the state’s
natural gas capacity and report her findings and recommendations to
the Energy and Technology Committee by January 1, 2025. The study
must evaluate the state’s natural gas capacity and examine ways to
expand it, including any needed regulatory or legislative changes.
EFFECTIVE DATE: October 1, 2024, except the natural gas study
requirement takes effect upon passage. 2024HB-05356-R000363-BA.DOCX
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CLASS I EXPANSION
Fuel Cells
By law, fuel cells are Class I energy sources. The bill specifies that
these include a fuel cell power plant that is an integrated system
comprised of a fuel cell stack assembly, and associated balance of plant
components that converts fuel into electricity using electrochemical or
electromechanical means (42 U.S.C. § 48(c)(1)(C)).
Hydropower Facilities
Under current law, a hydropower facility is a Class I renewable
energy source if it is a run-of-the-river hydropower facility that (1) is not
based on a new dam or a dam that DEEP identifies as a candidate for
removal and (2) meets applicable state and federal requirements,
including state dam safety requirements and applicable site-specific
standards for water quality and fish passage. Under current law, to be a
Class I energy source, these facilities must also either be a facility that:
1. began operating after July 1, 2003, and has a generating capacity
of up to 60 megawatts; or
2. received a new license after January 1, 2018, under Federal
Energy Regulatory Commission (FERC) rules.
The bill instead makes all hydropower facilities Class I renewable
energy sources.
(By law, for purposes of RPS compliance, no more than 2.5% of a
supplier’s or EDC’s output may be generated from a Class I hydropower
facility that received a new license under FERC rules (CGS § 16-
245a(b)(2)). The bill retains this provision but deletes the category of
hydropower to which it applies.)
Nuclear Facilities
Under current law, nuclear facilities constructed on or after October
1, 2023, are Class I renewable energy sources. The bill makes all nuclear
facilities Class I renewable energy sources, regardless of when they were
constructed. While certain Class I renewable energy sources are eligible 2024HB-05356-R000363-BA.DOCX
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for property tax exemptions, existing law, unchanged by the bill,
excludes Class I nuclear facilities from this exemption.
BACKGROUND
Related Bill
sSB 385, favorably reported by the Energy and Technology
Committee, allows the EDCs to request authorization to use energy or
related products purchased under the zero-carbon procurement
authorized under PA 17-3, June Special Session, (e.g., nuclear energy
produced by the Millstone Power Station) to provide standard service.
DEEP Procurements
The law requires the DEEP commissioner, under certain conditions,
to solicit proposals from Class I renewable energy sources built on or
after January 1, 2013. It also allows her, under certain conditions, to
solicit proposals from (1) Class I resources built before January 1, 2013,
or large-scale hydropower and (2) Class I run-of-the-river hydropower.
It additionally requires her to solicit proposals from operational Class I
providers if she finds that a material shortage of Class I resources caused
an EDC or electric supplier to fail to meet its RPS obligations (CGS §§
16a-3f, -3g, -3h & -3i).
By law, if the commissioner finds that any of the above solicited
proposals meet certain criteria, she may (or, in the case of an RPS-related
shortage, must) direct the EDCs to enter into agreements with the
providers to purchase energy, generating capacity, and RECs, subject to
the Public Utilities Regulatory Authority’s approval.
Property Tax Exemption
The law exempts from the property tax any Class I renewable energy
sources, other than a nuclear power generating facility, installed for
generation or displacement of energy if it (1) is installed on or after
January 1, 2014; (2) is for commercial or industrial purposes; and (3) has
a nameplate capacity that does not exceed its location’s load or, if it is a
virtual net metering facility, the aggregated load of its beneficial
accounts (CGS § 12-81(57)). 2024HB-05356-R000363-BA.DOCX
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Municipal Building Permit Fees
By law, a municipality may, by ordinance adopted by its legislative
body, exempt Class I renewable energy source projects from paying
municipally imposed building permit fees (CGS § 29-263).
Class III Sources
By law, the following energy sources are Class III sources:
1. the electricity output from combined heat and power systems
with an operating efficiency level of at least 50% that are part of
the customer-side distributed resources developed at commercial
and industrial facilities in the state on and after January 1, 2006;
2. a waste heat recovery system installed on or after April 1, 2007,
that produces electrical or thermal energy by capturing
preexisting waste heat and pressure from industrial or
commercial processes; or
3. electricity savings created in this state from conservation and
load management programs begun on or after January 1, 2006,
excluding ratepayer-supported programs, except that a demand-
side management project awarded a contract in a procurement to
reduce federally mandated congestion charges is eligible for the
contract’s term (CGS § 16-1(a)(38)).
COMMITTEE ACTION
Energy and Technology Committee
Joint Favorable Substitute
Yea 20 Nay 0 (03/21/2024)