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S.158
Introduced by Senator Ready of Addison County and Senator Rivers of
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Windsor County
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Referred to Committee on
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Date:
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Subject: Electric energy; public service; conservation; renewable energy;
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environmental impact; electric industry transition safeguards
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Statement of purpose: This bill proposes to establish safeguards to be
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implemented by the public service board, to protect the interests of the people
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of the state during any transition in the state’s electric power industry. The bill
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proposes to enable and require the public service board to take appropriate
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steps regarding the costs of electricity, the affordability of electricity for low
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income Vermonters, the development and usage of renewable forms of energy,
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and the continued improvement of the environmental effects of the generation
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of electricity. The bill proposes to establish provisions to allow for intervenor
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funding on proceedings relating to the issues listed in the bill. The bill
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proposes to identify four types of industry restructuring that will trigger board
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review with respect to a series of principles that are stated in the bill. Those
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triggering events are specified acquisitions, consolidations, entry into financial
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obligations, or proposals to open service territory to retail competition.
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AN ACT RELATING TO ENACTING SAFEGUARDS TO APPLY IN
ANY MAJOR TRANSITION OF THE ELECTRIC INDUSTRY
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It is hereby enacted by the General Assembly of the State of Vermont:
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Sec. 1. 30 V.S.A. chapter 89 is added to read:
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CHAPTER 89. ELECTRIC INDUSTRY TRANSITION SAFEGUARDS
§ 8001. FINDINGS
The general assembly finds that:
(1) Vermont utilities now face a period of substantially increasing power
costs while the other states in our region are expecting declining electricity
prices.
(2) Investment in renewable energy technologies, which over the past 15
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years, when considered together with investments in energy efficiency
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measures, has enabled Vermont to meet all of its growth in electric demand, is
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declining. In recent years, new investment has declined precipitously to the
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detriment of the system's long-term price-stability, reliability, and the
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environment.
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(3) Existing and new environmental challenges, from emissions of
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mercury and harmful small particulates to global warming, to the management
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of nuclear waste, and to the adverse ecological and societal effects of other
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forms of electrical generation should be addressed by a system which moves
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toward the sustainable, environmentally-sound production of electricity and
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which encourages acquisition of cost-effective, end-use efficiency resources
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consistent with the principles of least cost integrated planning and state energy
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policy. The pressures to reduce internalized, short-term costs have improved
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the economic efficiency of certain utilities, but they also threaten to increase
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reliance on energy resources that may appear less costly, in the short term, or
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to the immediate user of the energy, but which are more environmentally
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damaging over time and which may have greater overall societal costs.
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(4) Currently, some of the state's large commercial and industrial
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customers enjoy significant flexibility in electric services and rates from their
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local franchise utility. Special contracts for interruptible and other services
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provide them with flexibility and lower prices and offer benefits for the system
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as a whole. However, such alternative arrangements are not now available to
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smaller commercial and residential customers. Thus, it is incumbent upon the
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state to assure some degree of uniformity in the ability of Vermonters to
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benefit from the system as a whole, and to improve the well-being of
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residential electric customers, and minimize the risk of harm to low income
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customers, by lowering electricity costs and by implementing measures to
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ensure that low income customers can afford and manage their electricity
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usage.
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(5) Economic forces within and beyond the state’s borders may lead to a
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structural transition in the power industry which could develop in a number of
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ways that cannot be anticipated. In order to assure the overall well-being of
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the people of the state, the public service board and department shall be
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required to enhance the affordability of service for all classes of consumers of
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the state, while assuring the preservation and enhancement of the essential
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benefits of the existing system, with its environmental protections, its
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encouragement of the development of sustainable, renewable energy supplies,
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and its emphasis upon the efficient use of energy resources and cost-effective,
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demand-side management. This outcome shall be the most attainable if there
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is in place a clear system of public accountability and public participation.
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§ 8002. IMPLEMENTATION OF SYSTEM TRANSITION SAFEGUARDS
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The board shall adopt by rule or order standards and procedures necessary
to assure the implementation of this chapter.
(1) The board shall establish and may revise from time to time one or
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more rate targets, together with methods to prevent the targets from being
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exceeded. These methods may include:
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(A) The creation of incentive regulations.
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(B) The establishment of rate ceilings which may only be exceeded,
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upon a finding that extreme circumstances justify allowing the rates to exceed
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a target.
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(2) The board may establish an electric energy affordability program
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designed to promote the affordability of essential electricity service for low
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income Vermonters, and to encourage cost-effective energy conservation. The
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board may establish a wires charge to support the activities authorized by this
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subdivision. The commissioner of taxes shall provide any necessary
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information and shall carry out any administrative functions necessary to
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design, implement, and monitor the electric energy affordability program. The
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commissioner may adopt such rules as are necessary to carry out the purposes
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of the program. Any person receiving information from the commissioner of
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taxes under rules of the board or commissioner of taxes in connection with the
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low income assistance program shall treat such information as confidential,
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and shall be considered an agent of the commissioner of taxes for purposes of
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section 3012 of Title 32. The board may direct that a portion of the wires
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charge authorized by this subdivision be deposited into the electric energy
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affordability special fund administered by the board, disbursements from
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which may be used to support the administrative costs of the department of
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taxes relating to the electric energy affordability program.
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(3)(A) The board shall develop and require the implementation of
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measures designed to promote the development and use of renewable and
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sustainable energy technologies in order, at a minimum, to maintain the
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existing degree of reliance upon renewable and sustainable sources of
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electrical energy. To accomplish this, the board may take either or both of the
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following actions:
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(i) The board may require the implementation of a renewable
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energy portfolio requirement for all retail providers of electricity to Vermont
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retail customers, or may require implementation of other appropriate methods,
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or both.
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(ii) The board may approve the implementation by the department
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of a renewable and sustainable technology research, development, and
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demonstration program.
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(B) The board may establish a wires charge to support the activities
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authorized by this subdivision. The board may direct that a portion of this
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wires charge shall be deposited into the renewable and sustainable energy
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special fund, to be administered by the board, disbursements from which shall
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be used to support the activities of the department authorized by this
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subdivision (3).
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(4) The board shall establish environmental impact requirements
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relating to the generation of electricity sold in Vermont, including portfolio or
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other requirements for retail and generation companies, if the board determines
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such requirements will promote the public good of the state. Standards shall
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be set for environmental effects that cause or have the potential to cause
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material harm to human health, the environment, or the economy in Vermont,
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and shall be set so as to maintain, at a minimum, current levels of overall
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environmental quality and to move at a reasonable pace to improve overall
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environmental quality as it pertains to the production and delivery of
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electricity.
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(5) With respect to the implementation of this chapter, the board may, if
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it determines that an issue will not otherwise be adequately presented,
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compensate a party who has been permitted to intervene, other than a company
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as defined in section 201 or subdivision 501(3) of this title, for some or all of
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the reasonable costs of its participation in that proceeding, pursuant to sections
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20 and 21 of this title.
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(A) Within 30 days after a prehearing conference is held, or at any
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other time established by the board, any party seeking compensation shall state
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the party’s intention to seek compensation and shall demonstrate how the party
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will meet the requirements of subdivision (3) of this section. Before awarding
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compensation, the board shall find that:
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(i) this participation is necessary to provide an adequate
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presentation of a significant position on issues affecting the public interest, and
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that an adequate presentation of that position would not be possible without a
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reasonable expectation of an award of compensation; and
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(ii) this participation has provided a significant contribution to the
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resolution of issues significant to the public interest and would impose a
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significant financial hardship on the participant, absent a compensation award.
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(B) In the case of a group or organization, “significant financial
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hardship” means that the economic interests of the individual members of the
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group or organization are small in comparison to the costs of effective
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participation in the proceeding.
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(C) The board may, in the interest of judicial economy, require
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intervenors participating under this subdivision (5) to consolidate their
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representation on issues in particular proceedings.
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(D) The board rules or orders adopted to implement this chapter shall
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define procedures under which interested parties may seek preliminary rulings
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as to the likelihood that the criteria of this subdivision will be met.
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§ 8003. REVIEW OF SIGNIFICANT ELECTRIC UTILITY
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RESTRUCTURING
(a) The provisions of this section shall apply to one or more of the
following examples of electrical utility restructuring:
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(1) any acquisition, pertaining to an electric company, that is subject to
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board review under section 107 of this title, if the acquisition involves electric
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service provided to 5,000 Vermont customers or more;
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(2) any consolidation or merger, pertaining to two or more electric
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companies, that is subject to board review under section 311 of this title, if two
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or more of the companies consolidating or merging each serve more than 10
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percent of the state’s customers;
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(3) any mortgage or pledge of corporate property, or issue of stocks,
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bonds, notes or other evidence of indebtedness, or any combination or
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cumulative incidence of the activities in this section, that are subject to board
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review under section 108 of this title, if it involves a total of $ 100,000,000.00,
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or more;
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(4) any review under section 249 of this title of one or more proposals to
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open service territory to the competitive provision of retail service, if that
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proposal, or those proposals considered cumulatively, would apply to 15,000
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customers or more.
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(b) With respect to any board review to which this section applies, the
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board shall assure the preservation and promotion of the following principles:
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(1) High-quality, reliable electric service must be maintained. The state
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shall maintain a level of system integrity sufficient to accommodate a full
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range of customer reliability and power quality choices.
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(2) Public health and safety must be assured.
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(3) Efficiencies in the production, delivery, and use of electric services
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must continue to be increased, where possible.
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(4) Nondiscriminatory open access to the electric system for wholesale
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transactions must be promoted. Comparability must be assured for generators
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competing with affiliate interests of bottleneck service providers, meaning
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transmission and distribution services.
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(5) Environmental protection is a priority; any restructured industry
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system must ensure a high level of environmental quality and reduced
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environmental cost. There must be in place precise and realistic mechanisms
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to secure attainment of this principle.
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(6) A restructured industry must preserve key public benefits of the
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current system, including cost-effective end-use efficiency, research, and
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development, and the development, commercialization, and use of renewable
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resources. There must be in place precise and realistic mechanisms to secure
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attainment of this principle.
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(7) Electric service is a basic necessity. Any restructuring of the electric
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utility industry must address the needs of consumers in general and, in
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particular, low income consumers. Reform proposals must specifically
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empower all consumers with the necessary resources to assume responsibility
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and accountability for their electrical services. There must be in place precise
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and realistic mechanisms to secure attainment of this principle.
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(8) The benefits of restructuring must extend equitably and
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contemporaneously to all classes of consumers. The benefits of restructuring
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must not be achieved through shifting of costs among customer classes.
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(9) There must be a clear system of public accountability and public
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participation in any restructured system. The implications of a new utility
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structure must be thoroughly understood before being implemented.
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(10) Vermont’s policy must enhance the ongoing competitiveness of its
businesses and economy.
(11) Universal access to safe, efficient, and reliable electric distribution
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service must be assured in a restructured industry. Electric distribution service
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must be available to all customers. Restructuring of any other aspect of the
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electric industry must not harm or reduce customer access, customer service, or
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customer protections in regard to electric distribution service.
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(12) Universal access to reliable, reasonably-priced electric service must
be assured in a restructured industry. Electric service must be available to all
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consumers, and no consumers should be denied continuing or new service
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because they are deemed to be undesirable in a competitive environment.
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Achieving this end may require designation of a provider of last resort (which
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may be the local distribution company or some other entity), or it may be
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achieved through requirements placed on some or all retail electric service
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providers.
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(13) Restructuring must maintain and improve upon customer service
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safeguards and protections, including line extensions, service connections,
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deposits, bill payment options, budget billing, disconnection notices and
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limitations, reconnection, metering, due process and appeal, and liability. If
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necessary, additional customer service requirements and customer protections
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shall be developed in response to restructuring.
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(c) With respect to any review to which this section applies, the board shall
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request the appearance of the attorney general or shall appoint a member of the
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Vermont bar to represent the interests of the public or the state in any hearings
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before the board. In such a situation, the department shall provide sufficient
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funds to the attorney general or person so appointed to cover legal costs and to
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engage necessary engineering or other technical advice.