Connecticut Passes Clean Energy Package

Connecticut recently passed legislation that is expected to bolster the development of renewable energy and distributed generation (DG) in the state.

HB 7501, signed into law July 21, 2005, requires electric companies and competitive suppliers to acquire 1% of their supply from DG in 2007, increasing to 4% by 2010. If a company, supplier or wholesaler does not meet the standard, it must pay $0.055 for each kWh of its shortfall. The Connecticut Department of Public Utility Control (DPUC) must complete a contested case by February 1, 2006, to specify the administrative process and specifications for this requirement. In addition, the DPUC will establish a program by January 1, 2006, to provide one-time capital subsidies, generally ranging from $200 to $500 per kW, to customers who install customer-side generation. The bill also requires the DPUC to establish a program to provide incentives to electric companies to educate, assist and promote investment in DG. A one-time payment will be disbursed when a DG system begins operation, according to the following schedule: $200 per kW for systems developed by January 1, 2008; $150 per kW for resources developed by January 1, 2009; $100 per kW for resources developed by January 1, 2010; and $50 per kW for resources developed on or after January 1, 2010. DG resources are renamed “grid side distributed resources” in the new law, which expands the definition to include conservation and load management, including peaking reducing and demand-response systems. Distributed resources may not exceed 65 MW in capacity and must be connected to the transmission or distribution grid. The new law requires the DPUC to choose, by competitive bid, one or more entities to provide long-term financing for DG systems, and advanced power monitoring and metering equipment. (Electric companies are prohibited from bidding.) The commission must implement a mechanism that reduces the interest rate to no more than the prime rate for customers receiving financing. The DPUC will solicit bids to identify measures that would reduce congestion costs from 2006 to 2010. Eligible measures include DG, larger generating plants and contractual rights to the generating capacity of power plants. Electric companies may submit bids, but will be permitted to build only 250 MW of generation capacity statewide. When a proposal from an entity other than an electric company is selected, then the electric company serving the area where the project will be located will receive a payment for investments necessary for improvements to its transmission and distribution system to accommodate the project. The bill also includes a provision for expedited siting of DG resources, and exempts new customer-side distributed resources from backup charges if a system’s capacity is less than peak load, and if the resources are available to the system during peak periods. Courtesy of IREC USA

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