Revision: Nov. 28, 2023, 10:27 a.m.
2024 SESSION
24-2931.0
10/06
SENATE BILL [bill number]
AN ACT establishing an energy innovation planning group in the department of energy.
SPONSORS: [sponsors]
COMMITTEE: [committee]
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ANALYSIS
This bill establishes an energy innovation planning group in the department of energy.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
24-2931.0
10/06
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Four
AN ACT establishing an energy innovation planning group in the department of energy.
Be it Enacted by the Senate and House of Representatives in General Court convened:
I. New Hampshire energy regulation will benefit ratepayers by planning for alternatives in rate-setting mechanisms, virtual power plants that can aggregate distributed energy sources to balance electricity demand and alternative grid services, and incentive programs to ensure renewable energy supplies, in combination with storage capacity, can contribute to reductions in peak demand pricing. Planning can determine the costs and benefits of such innovations for New Hampshire ratepayers and their practicality for New Hampshire utilities and their regulation. Planning can determine incentives, beneficial rate-setting and cost recovery proposals to encourage utility and distributed energy providers to participate in New Hampshire energy supply and distribution capacity, particularly with the increasing availability of renewable energy resources.
II. Cost of service utility regulation is a traditional approach used by regulatory authorities to determine electric and gas rates. Under this model, utilities are allowed to recover their operating expenses and capital investments from their customers. While this system has benefits, such as providing stable revenue for utilities and contributing to consistent service, it can and does also contribute to higher and/or volatile electric and gas rates. To address these challenges, regulatory authorities and utilities worldwide and in several states are exploring alternative rate-setting mechanisms, such as performance-based regulation. The goal of these alternative regulatory mechanisms is to incentivize utilities to improve their operational efficiency, customer service, and overall performance, while also aligning their incentives with the broader goals of society. Unlike traditional cost of service regulation, where utilities are reimbursed for their costs and guaranteed a return on investments, performance-based regulation focuses on outcomes and encourages utilities to achieve specific targets and metrics. This approach can lead to improved service quality, cost savings, innovation, and a more sustainable and resilient energy sector.
III. Between 2023 and 2030, the U.S. grid will likely need to add enough new capacity to supply over 200 GW of electricity demand during peak hours. To accommodate regional and New Hampshire capacity, virtual power plants (VPP) can be a mechanism to ensure this capacity results in increased resilience and lower costs for ratepayers. VPPs are aggregations of distributed energy resources (DER) that can balance electricity demand and supply and provide utility-scale and utility-grade grid services as an alternative or supplement to centralized resources. By using DERs such as water heaters, EV chargers, behind-the-meter batteries and rooftop solar in different ways, VPPs can expand the grid’s capacity to serve rising peak demand at a low cost. Equally as important as their financial benefits, VPPs in various forms can increase resilience, reduce greenhouse gas emissions and air pollution, reduce transmission and distribution system congestion, give consumers greater freedom over their electricity supply and cost, create and retain good jobs, and be adapted over time to meet evolving grid needs. Cost of service utility regulation is a traditional approach used by regulatory authorities to determine electric and gas ates. Under this model, utilities are allowed to recover their operating expenses and capital investments from their customers. While this system has benefits, such as providing stable revenue for utilities and contributing to consistent service, it can and does also contribute to higher and/or volatile electric and gas rates.
IV. To address these challenges, New Hampshire utilities alternative rate-setting mechanisms, such as performance-based regulation. The goal of these alternative regulatory mechanisms is to incentivize utilities to improve their operational efficiency, customer service, and overall performance, while also aligning their incentives with the broader goals of society. Unlike traditional cost of service regulation, where utilities are reimbursed for their costs and guaranteed a return on investments, performance-based regulation focuses on outcomes and encourages utilities to achieve specific targets and metrics. This approach can lead to improved service quality, cost savings, innovation, and a more sustainable and resilient energy sector.
V. To ensure that renewable energy resources reliably can contribute to reducing peak load demand and reduces costs for New Hampshire ratepayers, utilities and regulators can provide incentives and requirements for such energy sources, with associated storage capacity, to be a required part of the state energy supply.
2 New Section; Energy Innovation Planning Group. Amend RSA 374-G by inserting after section 1 the following new section:
374-G:1-a Energy Innovation Planning Group Established. There is established an energy and innovation planning group in the department of energy.
I. The energy and innovation planning group shall consist of the following members:
(a) The commissioner of the department of energy, or designee, who shall serve as chair.
(b) A representative of Eversource, appointed by the utility.
(c) A representative of Unitil, appointed by the utility.
(d) A representative of Liberty Utilities, appointed by the utility.
(e) A representative of New Hampshire Electric Cooperative, appointed by the utility.
(f) The chair of the Board of Community Power Coalition of New Hampshire.
(g) The New Hampshire consumer advocate.
II. The energy and innovation planning group is authorized to contract for staff or consultants as necessary. Costs incurred by the department of energy related to the energy innovation planning group are a recoverable cost. The planning group shall at least quarterly meet in public session.
III. The energy and innovation planning group shall:
(a) Study the costs and benefits of performance based incentive mechanisms and make recommendations concerning legislation and regulation that may tie electric and gas utility revenues to achievement on performance metrics, including considerations of:
(1) Electric rate affordability and volatility risk;
(2) Optimization of utility asset utilization rates;
(3) Maintenance and improvement of service reliability and safety;
(4) Peak load reduction attributable to demand response programs;
(5) Rapid integration of distributed energy resources;
(6) Timely execution of competitive procurement and third-party interconnection;
(7) Adoption of time-of-use rates and other demand flexibility strategies;
(8) A multi-year rate plan that includes performance incentives;
(9) Customer engagement and satisfaction;
(10) Public access to utility system information, including, but not limited to public access to electric system planning data and aggregated customer energy usage data, and individual access to granular information about one's own energy usage data; and
(11) Fair compensation for utility employees.
(b) Study the costs and benefits for New Hampshire utilities and ratepayers of virtual power plants, with consideration of the United States Department of Energy’s report, Pathways to Commercial Liftoff: Virtual Power Plants, other reports, and legislation enacted in other states. The study shall consider the full range of distributed energy resources, as aggregated in VPPs, including demand, generation, and storage, with respect to the following concepts:
(1) Expansion of DER adoption with equitable benefits for underserved communities and lower-income ratepayers.
(2) Operating principles for VPP enrollments, on consultation with utilities, DER manufacturers, VPP platforms, consumer advocates, and regulators; and recommendations for standardization and coordination of VPP operations and contracting, including recommendations on standardization in VPP operations, such as interconnection and data standards, and cybersecurity.
(3) Integration of VPPs into utility planning and incentives to promote cost-effective DER adoption and VPP deployment while accounting for potential necessary grid upgrades;
(4) Integration into wholesale markets, such as the integration of VPPs into system planning and marketplaces as outlined in FERC Order 2222.
(c) Study renewable energy peak ratepayer savings; including programs to require utilities to provide a minimum percentage of kilowatt-hour sales to end-use customers from clean peak resources, with recommended criteria and definitions for determining how clean energy resources, with associated storage capacity, can be certified as reliably available during the seasonal peak load hours to establish a baseline minimum percentage of kilowatt-hours sales to end-use customers that can be provided by such resources. The study shall consider how such resources may be included in the renewable portfolio standards in RSA 362-F. The study shall consider the advisability of creating a renewable clean energy peak standards certificate and its value so that electric distribution companies can competitively procure clean peak certificates from clean peak resources and enter into long-term contracts.
IV. The energy innovation planning group shall report by December 1, 2024 and by December 31, 2025 to the governor, the public utilities commission, the senate president, the speaker of the house of representatives, and chairs of the senate energy and natural resources committee and the house science, technology, and energy committee.
3 Repeal; 2025. RSA 374-G:1-a, relative to the energy and innovation planning group, is repealed.
I. Section 3 of this act shall take effect December 31, 2025.
II. The remainder of this act shall take effect upon its passage.