Revision: April 23, 2018, 11:26 a.m.
SB 365 - AS AMENDED BY THE SENATE
03/21/2018 1084s
2018 SESSION
18-2720
10/08
SENATE BILL 365
AN ACT relative to the use of renewable generation in default service.
SPONSORS: Sen. Innis, Dist 24; Sen. Avard, Dist 12; Sen. Bradley, Dist 3; Sen. Fuller Clark, Dist 21; Sen. Sanborn, Dist 9; Sen. Giuda, Dist 2; Sen. Ward, Dist 8; Sen. Kahn, Dist 10; Sen. Feltes, Dist 15; Rep. Shepardson, Ches. 10; Rep. Backus, Hills. 19
COMMITTEE: Energy and Natural Resources
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AMENDED ANALYSIS
This bill requires the solicitation of default electricity service by the state’s electric distribution companies to include certain renewable electricity generation supply.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/21/2018 1084s 18-2720
10/08
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eighteen
AN ACT relative to the use of renewable generation in default service.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Findings. New Hampshire and New England electricity supply is heavily dependent upon natural gas-fired generation, which is subject to pricing volatility. The effect of natural gas pricing volatility on energy prices can result in the closure of New Hampshire renewable generators and the loss of jobs and other statewide economic benefits derived from using indigenous renewable fuels. The general court finds that: the continued operation of the state’s 6 independent biomass-fired electric generating plants and other indigenous-fueled renewable generating plants, such as small hydroelectric generation, are at-risk due to energy pricing volatility. These plants (i) are important to the state’s economy and jobs, and, in particular, the 6 biomass-fired generators are vital to the state’s sawmill and other forest products industries and employment in those industries, and (ii) these indigenous-fueled renewable generating plants are also important to state policies because they provide generating fuel diversity and environmental benefits. The general court finds that the use of these indigenous renewable resources as part of electric default service will promote the continued operation of, and the preservation of employment associated with, the 6 biomass-fired power plants and the other sources of indigenous-fueled renewables and, therefore, is in the public interest.
2 New Chapter; The Use of Renewable Generation in Default Service. Amend RSA by inserting after chapter 362-G the following new chapter:
CHAPTER 362-H
THE USE OF RENEWABLE GENERATION IN DEFAULT SERVICE
362-H:1 Definitions. In this chapter:
I. “Adjusted energy rate” means 80 percent of the rate, expressed in dollars per megawatt-hour, resulting from the default energy rate minus, if applicable, the rate component for compliance with the renewable energy portfolio standards law, RSA 362-F, if that rate component is included in the approved default energy rate.
II. "Biomass'' means plant-derived fuel including clean and untreated wood such as brush stumps, lumber ends and trimmings, wood pallets, bark, wood chips or pellets, shavings, sawdust and slash, agricultural crops, biogas, or liquid biofuels, but shall exclude any materials derived in whole or in part from construction and demolition debris.
III. “Commission” means the public utilities commission.
IV. “Default energy rate” means the default service energy rate applicable to residential class customers, expressed in dollars per megawatt-hour, as approved by the commission from time to time, and which is available to retail electric customers who are otherwise without an electricity supplier.
V. “Default service provider” means the entity or entities approved by the commission, from time to time, to provide default service to the residential class of electric customers for each electric distribution company which is subject to commission approval of default service procurement.
VI.(a) “Eligible facility” means any facility which produces electricity for sale by the use, as a primary energy source, of biomass, municipal solid waste, solar, or hydroelectric resources or any combination thereof; provided that: (1) the facility’s power production capacity is not greater than 5 megawatts, excluding station service needs if the facility is a hydroelectric facility, and the facility’s power production capacity is not greater than 25 megawatts, excluding station service needs for all other facilities; (2) the facility is interconnected with an electric distribution or transmission system located in New Hampshire; and (3) the facility began operation prior to January 1, 2006, or if the facility ceased operation and then later returned to service after that date, then prior to January 1, 2006 the facility operated for at least 5 years.
(b) "Eligible facility" shall not include: (1) any facility’s kilowatt hours actually sold or used in a net energy metering project under RSA 362-A or any similar law; (2) any facility, while selling its electrical output at long-term rates established before January 1, 2007 by orders of the commission under RSA 362-A:4; (3) any municipal solid waste facility less than 10 megawatts in size and which was not in operation on January 1, 2018; and (4) any hydroelectric facility that is the subject of divestiture in commission docket DE 17-124.
VII. “Primary energy source'' means a fuel or fuels, or energy resource either singly or in combination, that comprises at least 90 percent of the total energy input into a generating unit. A fuel or energy source other than the primary fuel or energy source may be used only for start-up, maintenance, or other required internal needs of the facility.
362-H:2 Default Service Short-Term Purchased Power Agreements. Each electric distribution company that is subject to the commission’s approval regarding procurement of default service shall include as a condition in each default service procurement for the residential electric customer class, the requirement that the selected default service provider agrees to offer to purchase, for use as part of its default energy supply, the net energy output of any eligible facility located in the electric distribution company’s service territory in accordance with the following:
I.(a) Prior to each solicitation of its default service supply, each such electric distribution company shall solicit proposals, in one solicitation or multiple solicitations, from eligible facilities. The electric distribution company’s solicitation to eligible facilities shall inform eligible facilities of the opportunity to submit a proposal to enter into a power purchase agreement with the electric distribution company’s selected default service provider, as approved by the commission, to sell an amount of energy to the default service provider for use in the provision of default service for a period that is coterminous with the time period used in the default service supply solicitation. The solicitation shall provide that sales of energy from the eligible facility shall be priced at the adjusted energy rate derived from the default service rates approved by the commission in each applicable default service supply solicitation and resulting rates proceeding.
(b) The solicitation shall also inform the eligible facility that: (1) the output of the eligible facility shall be delivered to the default service provider at the eligible facility’s interconnection point with the electric distribution company; (2) the eligible facility’s contract generation must be from the eligible facility’s net electrical output and the eligible facility shall not replace its output with that of another unit; and (3) the eligible facility must agree to deliver all of its net electrical output to the selected default service provider, to the extent electrical output is not committed for use in a net metering program.
II. Each eligible facility’s proposal in response to such solicitation shall provide a proposed schedule of hourly net output amounts during the term stated over a mutually agreeable period, whether daily or over the 6-month term and such other information as needed for the eligible facility to submit and the electric distribution company to evaluate the proposal.
III. As part of its periodic residential electric customer default service supply solicitation the electric distribution company shall inform potential default service providers of the requirements of this chapter and provide each with the results of the applicable eligible facility solicitation. As a result of such solicitations, and as a condition of commission approval of the default service provider’s contract with the electric distribution company for default service, the default service provider shall select all proposals from eligible facilities that conform to the requirements of this section and enter into power purchase agreements for an internal bilateral transaction for market energy pursuant to the independent system operator of New England (ISO-NE) market rules with the selected eligible facilities for unit contingent energy for periods coterminous with the period of time used in the default service supply solicitation. The form of power purchase agreement to be used shall be the EEI Master Power Purchase and Sale Agreement, version 2.1. The default service provider shall act as the lead market participant for any selected eligible facility that is not a member of ISO-NE and requests such service. The eligible facility agrees to pay a reasonable fee for such service.
IV. Any such power purchase agreement shall be subject to review and approval by the commission in the same proceeding in which it undertakes the review and approval of the electric distribution company’s periodic default service solicitation and resulting rates. The commission shall issue a decision on such agreements at the same time it issues a decision on the default service solicitation and resulting rates.
V. The costs incurred pursuant to purchases under this section shall be recovered by the electric distribution company in the same manner as recovery of default service charges. Such costs may include reasonable costs incurred by electric distribution companies pursuant to this section.
3 Effective Date. This act shall take effect 60 days after its passage.
18-2720
Amended 4/23/18
SB 365- FISCAL NOTE
AS AMENDED BY THE SENATE (AMENDMENT #2018-1084s)
AN ACT relative to the use of renewable generation in default service.
FISCAL IMPACT: [ X ] State [ ] County [ X ] Local [ ] None
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STATE: | FY 2019 | FY 2020 | FY 2021 | FY 2022 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | $0 | $0 | $0 | $0 |
Expenditures | Indeterminable | Indeterminable | Indeterminable | Indeterminable |
Funding Source: | [ X ] General [ ] Education [ X ] Highway [ X ] Other - Various Governmental funds | |||
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LOCAL: |
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Revenue | $0 | $0 | $0 | $0 |
Expenditures | Indeterminable | Indeterminable | Indeterminable | Indeterminable |
METHODOLOGY:
The Public Utilities Commission (PUC) indicates this bill would establish an obligation for the three regulated electric distribution utilities in New Hampshire to purchase net energy output from any eligible renewable electric generating facility located in their respective utility service territories. The energy output purchased would be used to supply default service to residential retail electric customers who choose to remain with their distribution utility for electricity supply. The cost of purchasing the renewable energy supply would be included in the default service rates charged to residential customers. None of the renewable supply costs would be included in the commercial and industrial customer classes for companies remaining on default electric service. The cost of this additional renewable power would be priced separately for each utility and set at 80% of the utility's default service rate. Based on discussions with suppliers currently bidding in the default service market, and years of experience with default service procurements for Liberty and Unitil, the PUC has determined that purchase of this additional renewable electric supply would likely increase residential customer default service prices for several reasons:
It is not possible to determine the magnitude of cost increases, but this bill would increase residential customer default service rates. To the extent that the State, County or Local government units have residential electric accounts on default service, this bill would increase costs for those governmental accounts by an indeterminate amount.
The Department of Administrative Services determined based on the Fiscal Year 2017 data from the Enterprise Energy Management System, that there are roughly 27 state-owned residential accounts. The estimated total KWH for the 27 accounts is 403,279 and estimated total annual cost is $69,090.
The New Hampshire Municipal Association states it is fairly common for a municipality to own a very small number of residential properties, typically because the municipality has taken the property by tax deed. The municipality may, and frequently does, rent the property until it disposes of it. This could also happen, although less frequently, if a municipality has taken a property by eminent domain for a future development project. The Association assumes, overall, there probably are quite a few municipally owned residential accounts around the state, although it would be a tiny number on a percentage basis. In addition, several municipalities have housing authorities that own housing units for rental to low-income residents. A housing authority is a separate entity from the municipality, but is still considered a local government entity. Electric service provided to these properties may also be considered “residential accounts.”
The New Hampshire Association of Counties contacted all 10 counties and no county has residential electric accounts on default service. The Association believe this bill would have no impact on county revenues or expenditures.
AGENCIES CONTACTED:
New Hampshire Public Utilities Commission, Department of Administrative Services, New Hampshire Municipal Association and New Hampshire Association of Counties