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May 6, 2013 Watered Down

Senate passes renewable energy changes

Photo | Pablo Robles After some debate, the Connecticut Senate passed legislation changing the definition of renewable power. The House still must pass the measure.
Photo | Pablo Robles Lt. Gov. Nancy Wyman presides over the Senate debate over chaning the definition of renewable power. The measure passed 26-6.

Legislation to change Connecticut's definition of renewable power to include large-scale hydro-generated electricity from Canada appears headed for approval, although the change will have less of an impact in keeping electricity bills in check than backers had hoped.

"I see it as a pretty significant dilution of the previous bill," said Eric Brown, director of energy and environmental policy for the Connecticut Business & Industry Association. "We certainly prefer the original bill."

The bill passed the Senate 26-6 Senate on Wednesday and allows Connecticut to include Canadian hydro in its renewable portfolio standard if those RPS requirements aren't met by Class I renewables, such as solar, fuel cells, and wind.

The bill requires the state's electricity suppliers to prove they couldn't meet the RPS with Class I, then get special approval from the Department of Energy & Environmental Protection to use hydro starting in 2016. If DEEP awards that exemption, the electric suppliers only can use large-scale hydro for 1 percent of their RPS requirements. The suppliers can ask for the provision up to five times, so hydro could account for 5 percent of the RPS by 2020.

The original proposal created a special RPS class where hydro could be used for up to 7.5 percent of the requirements without any special approvals.

"We've gone from 7 percent Canadian hydro … to now you got to jump over three hoops," Brown said. "Even if the commissioners decide to use their discretion, it can only be 1 percent."

The RPS changes, which were first proposed in Gov. Dannel Malloy's comprehensive energy strategy proposal, were designed to hold electricity prices in check and keep RPS credit money in the state as Connecticut steadily marched toward its goal of having 20 percent of its electricity come from Class I renewables by 2020.

As the state's electricity suppliers have to meet increasing annual percentages of renewables, the price of power is expected to increase, since the cost of that renewable power is higher that grid power. The suppliers also have to pay a penalty when they don't meet the requirements, further inflating costs. Penalties are expected this year as the region doesn't have enough renewable generation.

By including Canadian hydro in the mix, the supplier could tap into a more plentiful resource that generally is lower in price than Class I renewables.

By modifying the original bill, the legislature gave the electric suppliers less of a window to keep costs in check, Brown said.

"Our first priority has to be to make the state competitive for all businesses, and that means eliminating our status as having among the highest electricity rates in the country," Brown said.

The bill's authors decided to change the original bill after several groups and people spoke out during the initial public hearings, said State Sen. Bob Duff (D-Norwalk), co-chair on the Energy & Technology Committee, who was a main author on the legislation.

"We listened to people that testified at the public hearing and what their concerns were," Duff said. "We wanted to bring on as many people as possible in the bill."

The original legislation was opposed by environmental groups who saw the inclusion of hydro as a rollback of Connecticut's RPS; by renewable energy companies, such as fuel cell manufacturers and solar installers, who believe the hydro provision would decrease the amount of credits available for their technologies; and power plant operators who were wary of a large influx of hydro into the New England power market.

"Nowhere in the country is large-scale hydro considered this kind of renewable resource that is given this kind of subsidy," said Dan Dolan, president of the New England Power Generators Association.

The original and modified versions of the bill do not give state incentives to Canadian hydro but allows for a long-term contract with hydro plants, which NEPGA sees as a subsidy.

NEPGA and the environmental groups still oppose the modified version of the legislation, saying it provides for a long-term contract to a single company, Hydro-Quebec.

"All they have really done is dressed it up a bit," Dolan said. "They haven't addressed any of the policy issues."

CBIA's Brown said the only way to satisfy the environmental groups would have been to keep the RPS as is and let the cost of electricity rise.

"Here we have this treasure of clean, renewable energy, but they don't want us to use it," Brown said. "Until we are all on windmills and solar panels, they are not going to be happy."

Despite the criticisms, Duff said the bill helps move Connecticut toward cleaner, more in-state renewables, as 89 percent of the state's current RPS comes from out of the state and 87 percent comes from biomass plants and landfill gas.

The law gradually transitions the RPS away from biomass and landfill gas, includes food waste as a renewable, and extends support for combined heat and power projects. The law also refunds to ratepayers the penalties electric suppliers must pay if they don't meet the RPS, so non-compliance doesn't cause electric rates to rise.

"It definitely shows where the state wants to go, which is cleaner, cheaper, more reliable energy," Duff said.

After the bill's success in the Senate, Duff anticipates the House of Representatives will approve it as well in the coming weeks.

"It will pass," Duff said.

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