Bill Text: NH SB365 | 2018 | Regular Session | Amended
Bill Title: Relative to the use of renewable generation to provide fuel diversity.
Spectrum: Bipartisan Bill
Status: (Passed) 2018-09-17 - Veto Overriden 09/13/2018; Chapter 0379; Effective 09/03/2018 [SB365 Detail]
Download: New_Hampshire-2018-SB365-Amended.html
SB 365 - AS AMENDED BY THE HOUSE
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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.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 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:
- The added supply would not be load-following or scheduled, and therefore suppliers would not know ahead of time when the power would be available. The electric distribution utility would not know ahead of time how much power would participate in the default service solicitation process and the amount and type of renewable power could vary dramatically from one solicitation to another. The uncertainty would be a risk factor that would be incorporated into rates paid by default service customers.
- The power inserted into the market by this bill, which would be priced at 80% of retail electric service rates, could be difficult for some suppliers to hedge or incorporate into their supply portfolios. It would also be 3-4 cents per kWh higher than average wholesale rates in the New England region. Adding costs and reducing the suppliers' ability to hedge increases the risk of higher cost supplies. That uncertainty would likely result in higher default service bid prices.
- Analyzing the renewable offerings and including them in the default service bids would add days to the bidding process. Delay adds risk and cost to bidding suppliers.
- Increasing the actual bid price for residential default service would increase the risk of customer migration, which adds additional load risk and costs.
- Fifth, the risk factors outlined above may cause some suppliers not to bid on default service supply making the bidding less competitive which, in the worst case, could result in a failed solicitation.
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
