Revision: May 16, 2018, 8:36 a.m.
SB 365 - VERSION ADOPTED BY BOTH BODIES
03/21/2018 1084s
3May2018... 1701h
2018 SESSION
18-2720
10/08
SENATE BILL 365
AN ACT relative to the use of renewable generation to provide fuel diversity.
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 electric distribution companies subject to the public utilities commission’s approval regarding procurement of default service to offer to purchase the net energy output of eligible biomass and waste-to-energy facilities located in its service territory.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.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
3May2018... 1701h 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 to provide fuel diversity.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Findings. New Hampshire's and New England's electricity supply is heavily dependent upon natural gas-fired generation, which is subject to pricing volatility and risks of fuel availability. In its 2018 Operational Fuel-Security Analysis, the independent system operator of New England (ISO-NE) expressed concerns regarding the need for fuel diversity in the regional generation mix, given the amount of natural gas-fired generation in the mix, and noted that renewables can help lessen the fuel-security risk. The effect of natural gas pricing volatility on energy prices can be the closure of New Hampshire renewable generators and the loss of jobs and other statewide economic benefits, as well as the loss of fuel diversity 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 the state’s single renewable waste-to-energy generating plant 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, which protect the health and safety of the state’s citizens and the physical environment of the state. The general court finds that it is in the public interest to promote the continued operation of, and the preservation of employment and environmental benefits associated with these sources of indigenous-fueled renewables, and thereby promote fuel diversity as part of the state’s overall energy policy.
2 New Chapter; The Use of Renewable Generation to Provide Fuel Diversity. Amend RSA by inserting after chapter 362-G the following new chapter:
CHAPTER 362-H
THE PRESERVATION AND USE OF RENEWABLE GENERATION
TO PROVIDE FUEL DIVERSITY
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.(a) “Eligible facility” means any facility which produces electricity for sale by the use, as a primary energy source, of biomass, or municipal solid waste; provided that: (1) the facility’s power production capacity is not greater than 25 megawatts excluding station service needs; (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 regardless of the current operational status of the facility.
(b) "Eligible facility" shall not include: (1) 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; and, (2) any municipal solid waste facility less than 10 megawatts in size and which was not in operation on January 1, 2018.
VI. “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 Purchased Power Agreements. To retain and provide for generator fuel diversity, each electric distribution company that is subject to the commission’s approval regarding procurement of default service shall offer to purchase the net energy output of any eligible facility located in its service territory in accordance with the following:
I.(a) Prior to each of its next 6 sequential solicitations of its default service supply after the effective date of this chapter, 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 under which the electric distribution company would purchase an amount of energy from the eligible facility for a period that is coterminous with the time period used in the default service supply solicitation. The solicitation shall provide that the electric distribution company’s purchases 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 electric distribution company’s purchase from the eligible facility shall be at the eligible facility’s interconnection point with the electric distribution company; (2) the purchase shall be from the eligible facility’s net electrical output and not from the output of another unit; and (3) the electric distribution company’s purchase would be for 100 percent of the eligible facility’s net electrical output.
II. Each eligible facility’s proposal in response to such solicitation shall provide a non-binding proposed schedule of hourly net output amounts during the term stated over a mutually agreeable period, whether daily, monthly, or over the term used in the default service supply solicitation for the applicable default energy rate and such other information as needed for the eligible facility to submit and the electric distribution company to evaluate the proposal.
III. With each eligible facility solicitation, the electric distribution company shall select all proposals from eligible facilities that conform to the requirements of this section. The electric distribution company shall submit all eligible facility agreements to the commission as part of its submission for periodic approval of its residential electric customer default service supply solicitation.
IV. All such eligible facility agreements shall be subject to review by the commission for conformity with this chapter in the same proceeding in which it undertakes the review of the electric distribution company’s periodic default service solicitation and resulting rates.
V. The electric distribution company shall recover the difference between its energy purchase costs and the market energy clearing price through a non-bypassable delivery services charge applicable to all customers in the utility’s service territory. The non-bypassable charge may include recovery of reasonable costs incurred by electric distribution companies pursuant to this section. The recovery of the non-bypassable charge shall be allocated among Eversource’s customer classes using the allocation percentages approved by the commission in its docket DE 14-238 order 25,920 approving the 2015 Public Service Company of New Hampshire Restructuring and Rate Stabilization Agreement. In the first filing proceeding at the commission under this chapter applicable to each other electric distribution company, the commission shall determine and apply an allocation based on the foregoing allocations for any other electric distribution company subject to this chapter, but reasonably adjusted to account for differing customer classes if any from those of Eversource.
3 Effective Date. This act shall take effect upon its passage.
18-2720
Amended 5/15/18
SB 365- FISCAL NOTE
AS AMENDED BY THE HOUSE (AMENDMENT #2018-1701h)
AN ACT relative to the use of renewable generation to provide fuel diversity.
FISCAL IMPACT: [ X ] State [ X ] 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 Government Funds | |||
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COUNTY: |
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Revenue | $0 | $0 | $0 | $0 |
Expenditures | Indeterminable | Indeterminable | Indeterminable | Indeterminable |
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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 each regulated electric distribution utility, subject to the PUC's approval to solicit proposals, to solicit and procure default service for purchase power agreements from eligible facilities as defined in RSA 362-H:1. Each eligible facility would have to be interconnected with the electric distribution utility to submit a proposal to that electric distribution utility. The solicitations would occur prior to the normal default service solicitation of the electric distribution utility; however, the purchase of power from an eligible facility would run for a period that is coterminous with the default service period. The bill would authorize a total of six sequential solicitations by the electric distribution utility. The solicitation shall indicate that the electric distribution company will purchase 100% of the net energy output from the eligible facility at the adjusted energy rate derived from the default energy service solicitation. The proposals would be submitted to the PUC for review and approval. Each solicitation will specify that the electric distribution utility will purchase the output from each eligible facility at the adjusted energy rate as defined in RSA 362-H:1. The adjusted energy rate is 80% of the default service rate minus, if applicable, the rate component of default service that is intended to satisfy the applicable renewable energy portfolio standards law, RSA 362-F, if that rate is included in the default service rate approved by the Commission.
The Commission estimates the six eligible biomass facilities located in Eversource' s service territory could produce approximately 780,000 MWh per year. That level of output could result in approximately $15,000,000 to $20,000,000 in over wholesale market costs per year which would be recovered from Eversource customers through its stranded cost recovery charge using the rate design approved by the Commission and specified in the 2015 Public Service Company of New Hampshire Restructuring and Rate Stabilization Agreement. The Agreement specifies that the largest class of Eversource customers will pay 5.75% of stranded costs, the GV class will pay 20%, the General Service class, Rate G, will pay 25%, the Residential class, Rate R, will pay 48.75% and the Outdoor Lighting class the remaining 0.50%. Electricity costs to the State, county and local government units would likely increase based on their proportion of the increase in stranded costs for the Rate G class which includes the majority of State, Local and Municipal accounts. Rate G customers could see their bills increase by approximately $0.00273 per kWh. An average, Rate G customer would see an increase of $5.15 per month.
The bill also includes facilities that produce electricity using municipal solid waste as a primary energy source. The output from the waste-to-energy facility located in Concord could produce approximately 100,000 MWh per year which could increase stranded costs to the customers of Unitil, the interconnected utility, of $2,700,000 per year. If spread evenly over Unitil's customers, the stranded cost charge would increase by approximately 2.25 mills per kWh. A typical small commercial customer using 2,800 kWh per month would see their monthly electric bill increase by $6.30.
The PUC assumes that the average default service rate will be $0.08 per kWh ($80 per MWh) per year after the adjustment for RPS and that the adjusted energy rate will therefore be $0.064 per kWh ($64 per MWh). The difference between the wholesale market rate and the adjusted energy rate is assumed to be $24 per MWh. That difference results in $18.7 million of additional stranded costs for Eversource and $2.7 million for Unitil. For Eversource, Rate G class costs would increase $4,680,000 per year. The Eversource Rate G class makes up approximately 22% of total Eversource sales. The average annual usage of an Eversource Rate G customer is 1,900 kWh per month. The increased stranded costs for Unitil are assumed to be spread evenly on a per kWh basis across all customer classes. A typical Unitil small commercial customer uses 2,800 kWh per month.
AGENCIES CONTACTED:
Public Utilities Commission