Bill Text: NH SB204 | 2019 | Regular Session | Amended


Bill Title: Relative to encouraging the development of electrical energy storage by both private market participants and regulated electric utility companies.

Spectrum: Partisan Bill (Democrat 7-0)

Status: (Engrossed) 2019-06-05 - Lay on Table (Rep. Carson): Motion Adopted Voice Vote 06/05/2019 House Journal 17 P. 80 [SB204 Detail]

Download: New_Hampshire-2019-SB204-Amended.html

SB 204 - AS AMENDED BY THE HOUSE

 

03/27/2019   1178s

8May2019... 1750h

2019 SESSION

19-0886

10/03

 

SENATE BILL 204

 

AN ACT relative to encouraging the development of electrical energy storage by both private market participants and regulated electric utility companies.

 

SPONSORS: Sen. Watters, Dist 4; Sen. Feltes, Dist 15; Sen. Fuller Clark, Dist 21; Sen. Morgan, Dist 23; Sen. Hennessey, Dist 5; Rep. Oxenham, Sull. 1; Rep. Somssich, Rock. 27

 

COMMITTEE: Energy and Natural Resources

 

-----------------------------------------------------------------

 

AMENDED ANALYSIS

 

This bill provides for incentives, target, and goals for electric energy storage projects by private market participants and electric utilities.  The bill also enables municipalities to adopt a property tax exemption for electric energy storage systems.

 

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

 

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03/27/2019   1178s

8May2019... 1750h 19-0886

10/03

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Nineteen

 

AN ACT relative to encouraging the development of electrical energy storage by both private market participants and regulated electric utility companies.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  Findings.  The general court finds that:

I.  Innovative energy storage technology has the potential to reduce retail electric rates, increase the utilization of renewable energy in New Hampshire, improve the state’s fuel diversity portfolio and public health, reduce electricity generators' dependence on natural gas, and minimize ratepayer exposure to volatile natural gas prices.

II.  Modern energy storage technology holds the promise of reducing retail electric rates by breaking the tight nexus between supply and demand by eliminating the grid administrator’s need to balance the demand and supply of electric energy at millions of points on the grid at any given time, thus allowing for the widespread adoption of more flexible and lower-cost time-of-use rates.

III.  Energy storage at utility scale can also serve as back-up for the greater use of intermittent renewable energy resources, reducing air pollution from the burning of fossil fuels, including both toxic chemicals and particulate matter, and negative impacts on both public health and environmental quality.

IV.  Innovative energy storage technologies can stimulate investment and employment in the state, thereby making a positive contribution to New Hampshire’s economy.

V.  Energy storage also has the potential to significantly reduce New Hampshire’s effective peak demand for electricity.  Reducing peak electricity demand is in the public interest because such demand disproportionately drives New Hampshire families’ and businesses’ energy cost burden.  Absent energy storage at scale, electric system reliability requires the transmission and distribution system to be built out to meet peak demand, with the result that ratepayers must pay for system expansions and upgrades that lie idle for most the year.  Furthermore, the generation units that grid administrators call on to meet peak demand are generally the most inefficient, most expensive, and most polluting units.

VI.  Development and deployment of energy storage resources should not be artificially constrained by arguments over whether or not storage should be considered either generation or transmission and distribution under the restructuring statute, RSA 374-F.  It is neither necessary nor appropriate to apply the restructuring principle of unbundling to energy storage, because on the one hand, storage is not a natural monopoly like transmission and distribution and therefore unregulated market participants should be allowed to participate fully in its development; and on the other hand, there is no public policy reason to prohibit the participation of utility companies in such development, so long as the financial risks associated with the development, construction, and operation of utility-scale front-of-meter storage units is not shifted to retail electric ratepayers and the concentrated economic power of traditional utilities is not used to monopolize the development of storage technology at the expense of private market participants.  For all these reasons, the general court finds it is in the public interest to stimulate the development and deployment of innovative energy storage technologies by both private market participants and regulated electric utility companies in New Hampshire.

2  New Chapter; Energy Storage.  Amend RSA by inserting after chapter 374-G the following new chapter:

CHAPTER 374-H

ENERGY STORAGE

374-H:1  Purpose.  Innovative energy storage technologies can reduce retail electric rates by encouraging the development and adoption of time-of-use rates, decrease electric generators’ dependence on natural gas and ratepayers’ exposure to volatile natural gas prices, support the development and integration of renewable energy sources into the regional electric system, and improve the state’s fuel diversity portfolio, environment, and public health.  It is therefore in the public interest to encourage investment in and development and deployment of innovative energy storage technologies by both private market participants and regulated electric utilities as provided in this chapter.

374-H:2  Definitions.  In this chapter:

I.  "Commission" means the public utilities commission.

II.  “Behind-the-meter storage” means an energy storage project that is installed on a retail electricity customer's premises and is electrically connected to the customer's side of the electric utility meter.

III.  “Bring your own device” means a program for encouraging non-utility owned, and especially retail-customer owned, behind-the-meter energy storage to provide the greatest value possible to the electricity system, particularly in terms of peak reduction and avoided transmission and distribution costs.  Such a program shall compensate participating behind-the-meter energy storage for a fair share, as determined by the commission, of the value it provides to the electricity system.

IV.  "Energy storage" means batteries, flywheels, compressed air energy systems, sensible heat storage or any other technology, system, or device capable of taking electric energy, storing it in some form of usable energy, and converting it back into electricity either for immediate on-site consumption or discharge back onto the grid so as to meet demand for electrical supply at a later time.  Such term shall include standalone technologies, systems, and devices, as well as those co-located with or incorporated into a renewable energy source.  Energy storage shall not be considered electric generation within the meaning of the restructuring statute, RSA 374-F, for purposes of this chapter and RSA 374-G.

V.  "Energy storage project" means an individual energy storage system or an aggregation of multiple energy storage systems.

VI.  “Front-of-meter storage” means any energy storage that is not behind-the-meter storage.

VII.  "ISO-New England" means the Independent System Operator New England or any successor entity responsible for administration of the New England regional electric grid.

VIII.  "Local network service" means the term as defined in ISO-New England's transmission, markets, and services tariff, section II.

IX.  "Non-utility" means any entity that is not a regulated utility that develops, builds, owns, operates, or assists in the operation of one or more energy storage projects, including retail customers that buy behind-the-meter storage installed on their property.

X.  "Peak demand" means the total combined annual coincident peak energy demand of all utility service territories in New Hampshire.

XI.  "Regional network service" means the term as defined in ISO-New England's transmission, markets, and services tariff, section II.

XII.  "Renewable energy source" means a Class I, Class II, or Class IV renewable energy source as defined in RSA 362-F:4.

XIII.  "Utility" means any regulated entity that distributes electricity to retail customers in New Hampshire.

XIV.  "Wholesale electricity markets" means any energy, capacity, or ancillary service market that ISO-New England administers.

374-H:3  Energy Storage Pilots and Targets.

I.  No later than December 31, 2019, the commission shall initiate a proceeding with the goal, if practicable, of ensuring that by December 31, 2021, each regulated utility subject to its jurisdiction shall have initiated and completed at least 2 pilot energy storage projects, one of which offers a meaningful opportunity for non-utilities to develop and own the energy storage systems and one of which that is intended to promote the development of front-of-meter utility-owned energy storage.  As part of any non-utility pilot programs, the commission shall create special tariffs or other mechanisms, including but not necessarily limited to time-of-use rates, to ensure that utilities compensate such programs for a fair share, as determined by the commission, of their peak demand reduction value and avoided transmission and distribution costs, among other such cost savings.

II.  Either in the same or a separate docket, by December 31, 2019, the commission shall initiate a proceeding to determine if an energy storage target or goal of reducing the state’s peak demand by a specific percentage of up to 15 percent when discharging coincidentally would provide net financial benefits to ratepayers.  The commission shall complete the target proceeding under this paragraph no later than December 31, 2022.  This proceeding shall consider:

(a)  Energy costs that energy storage projects might avoid, including but not limited to potential reductions in ISO-New England energy and capacity market clearing prices.

(b)  Transmission and distribution costs that energy storage projects might avoid, including but not limited to deferring or avoiding the need for new transmission or distribution infrastructure as well as reducing regional and local network service charges.

(c)  Any potential ability energy storage projects might have to reduce electricity price volatility.

(d)  Any potential grid reliability and resiliency benefits energy storage projects might provide.

(e)  Any environmental or renewable portfolio standard compliance costs energy storage might help to avoid or reduce through such means as enabling more cost-effective renewable energy integration, reducing emissions from less efficient peaking power plants, and reduced cycling at thermal power plants.

(f)  The potential cost to ratepayers, if any, of reaching a target or goal of reducing the state’s peak demand by up to 15 percent when discharging coincidentally, and whether a higher or lower target or goal would be more likely to be of greater overall benefit to ratepayers.

(g)  Any other benefit the commission deems relevant.

III.  If the commission, in the target proceeding under paragraph II, finds that a specific energy storage target or goal would provide net financial benefits to ratepayers, it shall set a target or goal designed to encourage the deployment of sufficient energy storage capacity on the state’s electricity system to reduce New Hampshire’s peak demand by up to 15 percent when discharging coincidentally.  The commission shall measure this reduction by using the state’s 2018 peak demand as a baseline.

(a)  The commission shall establish a timeline designed to reach the target or goal by December 31, 2030.  The timeline shall also specify that enough energy storage capacity to reduce peak demand is built each year following December 31, 2022, until the full target or goal is met.

(b)  If the commission finds that meeting such an energy storage target would provide net financial benefits to ratepayers, the commission may by rule or ratemaking approve tariffs, tariff riders, or other appropriate cost-recovery programs for energy storage investments funded by ratepayers, provided that the commission shall not put ratepayers at risk for utility investments in utility-scale front-of-meter energy storage projects.  Any such investment by utilities shall either be made by their unregulated for-profit affiliates, or the commission shall find, after application by the utility and an adjudicative proceeding under RSA 541-A, that such investment poses no risk of stranded costs to ratepayers.

(c)  The commission shall determine the amount of megawatts and megawatt-hours of energy storage capacity needed to reduce peak demand by the amount any target or goal adopted under this section requires.

IV.  Subject to paragraph VI, the commission's regulations or orders shall ensure non-utilities develop and own at least 1/2 of the energy storage capacity required under any RSA 374-H:3 target or goal.  The commission's regulations or orders applicable to non-utilities shall establish a preference for non-utility energy storage projects that avoid or reduce transmission and distribution costs.  Such avoided or reduced costs shall include, but are not limited to, deferring the need for new distribution and transmission infrastructure or reducing the utility's regional and local network charges.

V.  The commission shall ensure that any utility-proposed behind-the-meter energy storage project or program shall incorporate a meaningful opportunity for non-utilities to develop and own a significant portion of the energy storage systems that comprise the project or that will be developed as part of the program.

VI.  If the commission finds that non-utilities can prudently and safely develop more than 1/2 of the energy storage capacity required to meet a target under RSA 374-H:3, the commission shall give a preference to such non-utility energy storage projects over utility energy storage projects.

VII.  If the commission finds that non-utilities cannot prudently and safely develop enough energy storage capacity to meet a target set under RSA 374-H:3, the commission shall allow one or more utilities to develop and own whatever additional number of energy storage projects are needed to meet such target.

VIII.  Notwithstanding any provision of RSA 374-F or RSA 374-G, the commission’s regulations or orders may require a utility to compensate a non-utility for a fair share, as determined by the commission, of the value of any transmission or distribution costs the utility is likely to avoid because of the non-utility energy storage project, to the extent practicable based on determinable cost components.

(a)  For behind-the-meter storage, the regulations or orders shall accomplish this by creating a bring-your-own-device peak reduction program.  As part of such a program, the commission shall create special tariffs or other mechanisms, including but not necessarily limited to time-of-use rates, that ensure utilities compensate such projects for a fair share, as determined by the commission, of their peak reduction value, as well as the value of all transmission or distribution costs the utility will likely avoid because of such projects.

(b)  For front-of-meter storage, the regulations or orders may accomplish this through any mechanism the commission deems just and reasonable.

(c)  Notwithstanding any provision of RSA 374-F or RSA 374-G, if a non-utility energy storage project is not eligible or chooses not to participate in wholesale electricity markets, the commission's regulations or orders shall enable the non-utility to be compensated for the fair share, as determined by the commission, of any energy costs avoided because of the energy storage project.

(d)  If the non-utility energy storage project avoids the need for a new distribution or transmission project the utility could have added to its rate base, the commission may allow the utility to include all or part of the value of the corresponding portion of its payment to the non-utility in its rates if it finds doing so is just and reasonable and will still provide ratepayers with savings relative to a scenario in which no non-utility energy storage project had been built and the utility built a new distribution or transmission project instead.

IX.  Notwithstanding any provision of RSA 374-F or RSA 374-G, the commission's regulations or orders shall also provide that a utility may develop and own front-of-meter energy storage projects that reduce transmission or distribution costs.

(a)  A utility may contractually sell the right to bid such utility-owned energy storage projects that serve a transmission or distribution purpose into wholesale electricity markets to a non-utility.  Any such contract shall provide that any compensation the non-utility pays to the utility for this right shall in no way depend upon the energy storage project’s performance in wholesale electricity markets, such that the non-utility bears all risk of project underperformance in the wholesale market.  The utility shall use all compensation a non-utility pays the utility for the contractual right under this subparagraph to reduce transmission and distribution charges for all ratepayers.

(b)  Alternatively, a regulated utility may sell or otherwise transfer the right to develop one or more front-of-meter projects to an unregulated for-profit affiliate of the utility.

X.  Nothing in this section shall give a utility any new right to bid any energy storage project it owns into wholesale electricity markets itself, or to otherwise directly participate in wholesale electricity markets.

XI.  The provisions of RSA 374-H:3, V through IX shall remain in effect after the pilots in RSA 374-H:3, I are completed and any targets in RSA 374-H:3, II through IV are met.

374-H:4  Customer Energy Storage Systems.

I.  The commission shall adopt rules allowing the installation, interconnection, and use of energy storage systems by customers of utilities, and shall incorporate the following principles into the rules:

(a)  It is in the public interest to limit barriers to the installation, interconnection, and use of customer-sited energy storage systems in New Hampshire;

(b)  New Hampshire's consumers of electricity have a right to install, interconnect, and use energy storage systems on their property, subject to appropriate size and safety requirements established by the commission, without the burden of unnecessary restrictions or regulations and without unduly discriminatory rates or fees;

(c)  Utility approval processes and any required interconnection reviews of energy storage systems shall be simple, streamlined, and affordable for customers; and

(d)  Utilities shall not require the installation of customer-sited meters in addition to a single net energy meter for the purposes of monitoring energy storage systems; except that the commission may authorize the requirement of metering for certain large energy storage systems, as determined by the commission.

II.  Nothing in this section alters or supersedes either:

(a)  The principles of net energy metering under RSA 362-A:9; or

(b)  Any existing electrical permit requirements or any licensing or certification requirements for installers, manufacturers, or equipment.

3  New Subparagraph; Distributed Energy Resources; Definition.  Amend RSA 374-G:2, I by inserting after subparagraph (b) the following new subparagraph:

(c)  "Energy storage" shall have the same meaning as "energy storage" as defined in RSA 374-H:2, IV.

4  Distributed Energy Resources; Electric Generation Equipment Funded by Public Utility.  Amend RSA 374-G:3, III to read as follows:

III.  The energy produced by electric generation equipment utilizing a renewable fuel source that is owned by a customer, or sited on the consumer's premises shall be used to displace the customers own use[; however, if energy is occasionally generated in excess of the customer's energy requirements, it may be credited to the customer's account in a subsequent period] in the first instance; energy generated in excess of the customer’s own requirements, if any, shall be treated as net metered energy subject to the provisions of RSA 362-A:9.

5  Procedure for Adoption of Property Tax Exemption.  Amend the introductory paragraph of RSA 72:27-a, I, to read as follows.

I.  Any town or city may adopt the provisions of RSA 72:28, RSA 72:28-b, RSA 72:29-a, RSA 72:35, RSA 72:37, RSA 72:37-b, RSA 72:38-b, RSA 72:39-a, RSA 72:62, RSA 72:66, RSA 72:70, RSA 72:76, [or] RSA 72:82, or RSA 72:85 in the following manner:

6  New Subdivision; Electric Energy Storage Systems Exemption.  Amend RSA 72 by inserting after section 83 the following new subdivision:

Electric Energy Storage Systems Exemption

72:84  Definition of Electric Energy Storage System.  In this subdivision "electric energy storage system" means a facility located behind a retail meter that stores electrical energy that is otherwise produced by an electricity generator or uses electricity to concentrate and store thermal energy, by electrical, chemical, mechanical, or thermal means, for discharge or use at a later time, whether in the form of thermal energy to meet space or process heating or cooling loads or electricity, which can be used to reduce peak loads, compensate for variability in renewable energy production, or provide other grid services.  An electric energy storage system shall not include conventional electric resistance or gas domestic hot water heaters.

72:85  Exemption for Electric Energy Storage Systems.  Each city and town may adopt under RSA 72:27-a an exemption from the assessed value, for property tax purposes, for persons owning real property which is equipped with an electrical energy storage system.

72:86  Application for Exemption.  Applications for exemptions under RSA 72:85 shall be governed by the provisions of RSA 72:33, RSA 72:34, and RSA 72:34-a.

7  Department of Revenue Administration; Equalization; Reference Added.  Amend RSA 21-J:3, XIII to read as follows:

XIII.  Equalize annually by May 1 the valuation of the property as assessed in the several towns, cities, and unincorporated places in the state including the value of property exempt pursuant to RSA 72:37, 72:37-b, 72:39-a, 72:62, 72:66, [and] 72:70, and 72:85, property which is subject to tax relief under RSA 79-E:4, and property which is subject to tax relief under RSA 79-E:4-a, by adding to or deducting from the aggregate valuation of the property in towns, cities, and unincorporated places such sums as will bring such valuations to the true and market value of the property, and by making such adjustments in the value of other property from which the towns, cities, and unincorporated places receive taxes or payments in lieu of taxes, including renewable generation facility property subject to a payment in lieu of taxes agreement under RSA 72:74, as may be equitable and just, so that any public taxes that may be apportioned among them shall be equal and just.  In carrying out the duty to equalize the valuation of property, the commissioner shall follow the procedures set forth in RSA 21-J:9-a.

8  Department of Revenue Administration; Rules; Reference Added.  Amend RSA 72:36, I to read as follows:

I.  The commissioner's interpretation of RSA 72:28, 72:28-b, 72:28-c, 72:29, 72:29-a, 72:30, 72:31, 72:32, 72:33, 72:34, 72:34-a, 72:35, 72:36-a, 72:37, 72:37-a, 72:37-b, 72:38-a, 72:38-b, 72:39-a, 72:39-b, 72:41, 72:62, 72:66, [and] 72:70, and 72:85; and

9  Effective Date.  This act shall take effect 60 days after its passage.

feedback