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January 28, 2013

CT to help building owners sell power

Contributed photo The fuel cell at 360 State St. in New Haven has been the point of much contention for developer Bruce Becker, state regulators, and electric utility United Illuminating.
Contributed photo Developer Bruce Becker wants to charge the tenants of 360 State St. in New Haven individually for the power they use, but regulators, consumer advocates, and United Illuminating have opposed the request.

Residential and commercial developers planning on installing renewable energy at their properties have hit a roadblock erected by Connecticut's regulators and utilities seeking to prevent landlords from becoming mini-utilities unto themselves.

Bruce Becker, developer of the 360 State St. multi-unit residential building in New Haven – the state's only residential building to obtain platinum status from the Leadership in Energy & Environmental Design, or LEED, program – said his experience in trying to sell the power from the fuel cell in that building has turned him off to making similar attempts at other Connecticut properties.

In particular, Becker is leaning against using an environmentally friendly design when redeveloping the former Bank of America building at 777 Main St. in Hartford.

“We haven't decided how we are going to develop that yet,” Becker said. “Our experience with 360 State St. says we should develop it conventionally.”

The issue at the heart of the matter is submetering. Connecticut regulators haven't allowed it, but Gov. Dannel Malloy hopes the legislature will force a change.

In submetering, owners and/or landlords of multi-use residential and commercial buildings meter and charge each of their tenants individually for the power they use. This concept is the opposite of master metering, where the owner receives one large utility bill and splits the cost evenly among all the tenants, regardless of how much power they use.

By submetering, landlords can pay for the installation of fuel cells, solar panels, combined heat and power generation, or other onsite power by charging the tenants directly for the cost of producing electricity. Submeters also can be used in facilities without renewable generation, as a way to make tenants individually responsible for the power they consume.

“There are a lot of projects in Connecticut that could use fuel cells and solar if you could submeter,” said Paul Michaud, president of the Hartford trade group Renewable Energy & Efficiency Business Association. “There is a whole pent-up demand for that.”

While common in places such as New York State, especially in instances to encourage renewable energy installations, submetering isn't allowed in Connecticut. The Public Utilities Regulatory Authority has taken a strict interpretation of the state law and not authorized submetering of electricity. State utilities Connecticut Light & Power and United Illuminating also have opposed submetering requests, as has the state Office of Consumer Counsel.

“It equated to reselling electricity, which isn't allowed in Connecticut,” UI spokesman Michael West said.

Consumer Counsel opposes submetering because it would allow property owners to provide a regulated service (electricity distribution) without being subject to PURA's regulation or consumer protection, said Joe Rosenthal, principal attorney at the Office of Consumer Counsel.

“We are open to giving it a try, but only if there are robust protections in place,” Rosenthal said. “We want customers to be able to communicate with landlords about any issues they have … and be able to go to PURA if they are being dealt with dismissively.”

The Office of Consumer Counsel is embroiled in two court cases over submetering of apartment buildings in Hartford and New Haven. None of those buildings has renewable energy installations.

The only submetering case dealing with renewable energy is Becker's case for 360 State St., which is pending before PURA.

When Becker installed a 400-kilowatt fuel cell from South Windsor manufacturer UTC Power at 360 State St., he wanted to submeter the tenants to achieve full output.

United Illuminating fought the proposal when Becker first made it in 2008, saying the utility would lose at least $90,000 annually as 360 State St. would become a mini-utility charging UI's rates while having no relationship to UI.

“I guess you can't blame them because they are looking out for their stockholders,” Becker said.

The two sides have debated for the past five years, which included Becker trying to set up a separate electric cooperative.

“Our main issue in the submetering of power is safety,” West said. “It has to be done in the proper way.”

The two sides proposed a settlement still pending before PURA where UI would buy the power from the fuel cell, sell it onto the grid at a profit, and keep the 360 State St. residents as UI customers with no submeters.

“We had to spend $400,000 in legal fees to do what in New York would have been done in a day,” Becker said.

On top of those costs, 360 State St. was supposed to receive $3 million in energy efficiency incentives from UI for the other environmentally friendly aspects of the building, such as the lighting and the windows. Since the submetering case has been pending, PURA has held up payment of that money, forcing Becker to borrow from a lender.

“It is a bit of a disaster,” Becker said.

Submetering would be a great way to proliferate onsite renewable generation in high population areas such as Hartford, New Haven, Stratford, and other cities, said Michaud.

“I know a lot of companies that would jump on this, and several commercial property owners that would take advantage,” Michaud said.

In Gov. Malloy's comprehensive energy strategy proposal, he and the state Department of Energy & Environmental Protection call on PURA to allow submetering, not only to encourage renewable generation but promote conservation.

“When people pay for electricity, they will be more carefully about how they use it,” said Jessie Stratton, DEEP policy director, who helped write the comprehensive energy strategy.

Connecticut law says PURA can allow submeters on campgrounds, marinas, and other facilities. DEEP and Malloy interpret this as saying submeters are allowed at multi-use commercial and residential buildings, but PURA has never allowed one. “PURA has always played it safe, sticking with the strictest interpretation of the law,” Stratton said.

PURA officials declined to comment for this story. CL&P officials also declined, saying they wouldn't discuss the matter while a submetering case was pending before regulators.

In the draft comprehensive energy strategy, Malloy and DEEP call on the General Assembly to change the submetering law specifically to allow for commercial and residential multi-unit buildings.

State Sen. Bob Duff (D-Norwalk), co-chair of the legislature's Energy & Technology Committee, said he is waiting to see the final version of the comprehensive energy strategy when it comes out in early February before proceeding with any legislation.

“We will be taking a comprehensive look at the governor's comprehensive energy strategy,” Duff said.

Becker said Connecticut can't change soon enough, as installing onsite power would make fiscal and environmental sense for the state's property owners. A co-generation facility that produced electricity and captured the waste heat to provide heating and cooling for the building would decrease energy use 40 percent while reducing greenhouse gas emissions 40 percent.

“If you can't sell your electricity to the tenants in your building, then investing in combined heat and power and fuel cells is not economical,” Becker said.g

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