SP0726, LD 1896, item 2, ‘An Act To Create an Electric Rate Design To Lower Maine's Energy Costs and Carbon Dioxide Emissions’

Amend the bill by striking out the title and substituting the following:

‘An Act To Create an Electric Rate Design To Lower Maine's Energy Costs and Carbon Dioxide Emissions’

Amend the bill by striking out everything after the enacting clause and before the summary and inserting the following:

‘Sec. 1. 35-A MRSA §3152, sub-§1, as amended by PL 2013, c. 369, Pt. F, §§2 to 4, is further amended to read:

1. Increased efficiency. The Legislature declares and finds that improvements in transmission and distribution utility rate design and related regulatory programs have great potential for reducing the cost of electric utility services to consumers, for encouraging energy conservation and efficient use of existing facilities and for minimizing the need for expensive new electric transmission capacity. It is the purpose of this chapter to:

A. Require the commission to relate transmission and distribution rates more closely to the costs of providing transmission and distribution service , including consideration of fixed customer charges to the extent practicable and economically efficient;

C. Require the commission to consider the ability of low-income residential customers to pay in full for electric services as transmission and distribution rates are redesigned consistent with these policies; and

D. Require the commission to set rates , including transmission and distribution rates that vary by time of day and season and by other relevant cost drivers, to the extent practicable to achieve economic efficiency.

Sec. 2. 35-A MRSA §3153-A, sub-§1, as corrected by RR 2009, c. 2, §103, is amended to read:

1. Proposals and programs developed. The commission , as it determines appropriate, shall may order investor-owned transmission and distribution utilities to develop and submit specific rate design proposals and related programs for implementing energy conservation and energy efficiency techniques and innovations , either in conjunction with or independent of any rate-making proceeding pending before the commission. The proposals, as the commission determines, must be designed to encourage energy conservation, minimize the need for new transmission and distribution capacity, minimize costs of transmission and distribution service to consumers improve equity among customers, minimize transmission and distribution rates over the long term or short term and take into account the needs of low-income customers. In approving a proposal under this section, the commission shall give equivalent consideration to the goals of minimizing costs and minimizing transmission and distribution rates to consumers. Proposals must include, but are not limited to, proposals that provide for the development and implementation of:

A. Load management techniques;

B. Rates that reflect marginal costs of services at different voltages, times of day or , seasons of the year or other relevant cost drivers, including short-run and long-run marginal costs associated with the construction of new transmission and distribution facilities;

D. Rates or other regulatory policies that encourage maintain transmission and distribution utility system reliability;

E. Transmission and distribution utility financing or subsidization of capital improvements undertaken by ratepayers to conserve optimize electricity used usage by the ratepayers in the future. This paragraph applies to future programs for utility financing of energy conservation or load management as long as the goal of such programs is to economically defer or eliminate the need for transmission and distribution plant upgrades. In addition to programs undertaken pursuant to this paragraph, programs may be undertaken pursuant to section 10110 to achieve goals other than that identified in this paragraph;

F. As defined by the commission by rule, cost-effective conversions of electric space heat systems to systems relying on other fuels and other techniques for enabling homeowners and tenants to replace on-peak, winter period electric usage with less expensive sources of heat;

G. Rates or bill payment assistance programs for residential customers who have been certified eligible for state or federal fuel assistance that take into account the difficulty these customers have paying in full for electric service or that target assistance to these customers in the most efficient manner, taking into account the necessity of maintaining electric service; and

H. Rates or programs that allow encourage incremental use or maintenance of existing use when those rates uses serve to minimize rate levels for all transmission and distribution customers. In approving any proposal for rates or programs that allow encourage incremental use or maintenance of existing use, the commission shall seek to ensure that rates for all customer classes will be lower than they would have been had the commission not approved the proposal.

Sec. 3. 35-A MRSA §3154, sub-§1, as amended by PL 1999, c. 398, Pt. A, §59 and affected by §§104 and 105, is further amended to read:

1. Rate design and conservation improvements. The commission shall mandate, after notice and hearing on the proposed schedule, a scheduled phasing-in of the improvements in transmission and distribution utility rate design and related regulatory programs submitted and approved under section 3153-A and is authorized to order utilities to implement transmission and distribution utility rate design improvements approved by the commission on a temporary, pilot and experimental basis, affecting either a portion or all of any class of consumers of any utility as the commission may determine is appropriate to carry out the purposes of this subchapter, and order other energy conservation techniques, programs and innovations relating to transmission and distribution utility service that, in the commission's judgment, are practicable, just and reasonably related to fulfilling the purposes of this chapter. In ordering any rate design improvements or any other programs for implementing energy conservation efficiency techniques and innovations referred to in section 3153-A, the commission shall consider rate design stability and shall ensure the revenue requirements of the utility.

Sec. 4. 35-A MRSA §3209, sub-§5 is enacted to read:

5. Supply rates. To the extent cost effective and practicable, the commission shall implement policies and practices to encourage competitive electricity providers to offer residential and commercial customers electricity supply pricing reflective of real-time market price variations.

Sec. 5. 35-A MRSA §10110, sub-§10, as amended by PL 2013, c. 369, Pt. A, §24, is further amended to read:

10. Funds held in trust. All funds collected from electricity consumers pursuant to this section are collected under the authority and for the purposes of this section and are deemed to be held in trust for the purposes of benefiting electricity consumers. In the event funds are not expended or contracted for expenditure within 2 years of being collected from consumers, the commission shall ensure that the value of those funds is returned to consumers , except that funds targeted for low-income residential transmission and distribution consumers pursuant to subsection 2, paragraph B, subparagraph (1) that are not expended or contracted for expenditure within 2 years must be returned to low-income residential transmission and distribution consumers.

Sec. 6. Rate design proposals. Notwithstanding the Maine Revised Statutes, Title 35-A, section 3153-A, subsection 1, the Public Utilities Commission shall order investor-owned transmission and distribution utilities to develop and submit specific rate design proposals and programs for implementing energy efficiency techniques and innovations in accordance with section 3153-A by January 1, 2019.

Sec. 7. Stakeholder group to evaluate options and prepare recommendations. The Office of the Public Advocate shall convene a stakeholder group to discuss and frame for legislative consideration options and recommendations for the efficient and effective functioning of a single, independent smart grid coordinator. The group shall, at a minimum, address issues raised in the order dated December 15, 2017 and the examiners' report issued in the Public Utilities Commission's proceeding Docket No. 2016-00049 including, but not limited to:

1. The qualifications an entity should possess in order to qualify as a smart grid coordinator and the criteria the Public Utilities Commission should use in selecting a smart grid coordinator;

2. The approach to be employed regarding costs and incentives related to implementing the provisions of the Maine Revised Statutes, Title 35-A, section 3143 and considering nonwires alternatives in proposals made pursuant to Title 35-A, sections 3132 and 3132-A, including:

A. Addressing financial disincentives for transmission and distribution utilities to promote smart grid functions, including recovering the costs of contracted nonwires alternatives and the limitations, if any, on utilities owning generation assets as nonwires alternatives under Title 35-A, section 3204, subsection 6; and

B. The financial incentives appropriate for the smart grid coordinator and how operating costs of the smart grid coordinator should be recovered;

3. The roles of the Office of the Public Advocate, the Public Utilities Commission, the Efficiency Maine Trust, as established in Title 5, section 12004-G, subsection 10-C, and transmission and distribution utilities in meeting the goals of Title 35-A, section 3143 while:

A. Ensuring independence in the analysis, procurement and dispatch of nonwires alternatives; and

B. Minimizing redundancy in the functions of these parties and in the uses of systems and operations that are paid for by ratepayers;

4. The specific process to ensure the efficient, timely review and approval of traditional transmission and distribution projects and nonwires alternatives and the process and approach to be employed in order for the Public Utilities Commission to retain the appropriate authority over the procurement and operation of nonwires alternatives and utility investment decisions; and

5. The additional legislative authority or directives needed to ensure the efficient and effective establishment of any smart grid coordinator, promotion of the goals under Title 35-A, section 3143 and development of nonwires alternatives to achieve grid reliability at the lowest cost to ratepayers.

The stakeholder group must be open to all interested parties. Reasonable costs to facilitate the group must be determined by the Office of the Public Advocate and may be paid from revenues received pursuant to Title 35-A, section 10109 by the Efficiency Maine Trust.

The Office of the Public Advocate shall submit by February 1, 2019 a report that summarizes the discussions and recommendations from the stakeholder group to the joint standing committee of the Legislature having jurisdiction over energy and utility matters. The committee may report out a bill based on the recommendations in the report to the First Regular Session of the 129th Legislature.

Sec. 8. Public Utilities Commission consideration of rate proposals. Until 90 days after adjournment of the First Regular Session of the 129th Legislature, the Public Utilities Commission may not implement any final decisions related to any rate proposals received from any transmission and distribution utility pursuant to the commission's order of December 15, 2017, in the Public Utilities Commission's Docket No. 2016-00049, that puts wires and nonwires solutions on equal footing for rate-making incentive purposes.

Sec. 9. Stakeholder group to consider expanding Efficiency Maine Trust expenditures of electricity conservation funds. The Public Utilities Commission shall convene a stakeholder group to discuss and frame for legislative consideration options and recommendations related to the possibility of expanding the Maine Revised Statutes, Title 35-A, section 10110 to allow the Efficiency Maine Trust to use funds for electricity conservation programs for low-income residential consumers to promote the placement of high-efficiency ductless heat pumps into qualified low-income homes by allowing the trust in its cost-effectiveness test to account for all energy savings derived from a high-efficiency ductless heat pump, including nonelectric savings.

The stakeholder group must be open to all interested parties.

The Public Utilities Commission shall submit by February 1, 2019 a report that summarizes the discussions and recommendations from the stakeholder group to the joint standing committee of the Legislature having jurisdiction over energy and utility matters. The committee may report out a bill based on the recommendations in the report to the First Regular Session of the 129th Legislature.’

summary

This amendment, which is the minority report of the committee and replaces the bill, specifies that the purposes of the law regarding rate design are to require the Public Utilities Commission to consider fixed customer charges, to the extent practicable and economically efficient, and to set transmission and distribution rates that vary by time of day and season or other relevant cost drivers, to the extent practicable, to achieve economic efficiency. Like the bill, the amendment does the following:

1. It requires investor-owned transmission and distribution utilities to submit specific rate design proposals to the commission by January 1, 2019;

2. It removes the requirement that transmission and distribution utilities' proposals include cost-effective conversions of electric space heat systems;

3. It removes the requirement that rate design changes implemented pursuant to the Maine Revised Statutes, Title 35-A, section 3153-A be implemented on a temporary, pilot or experimental basis and requires the commission to implement policies and practices to encourage competitive electricity providers to offer residential and commercial customers supply prices reflective of real-time market price variations; and

4. It provides that Efficiency Maine Trust funds targeted to low-income residential transmission and distribution consumers that are uncommitted 2 years after having been collected must be returned to those consumers.

The amendment also directs the Office of the Public Advocate to convene a stakeholder group to evaluate options and prepare recommendations for certain issues related to the efficient and effective implementation of smart grid policy, including addressing costs and financial incentives of transmission and distribution utilities and the smart grid coordinator and describing roles for the Public Advocate, Public Utilities Commission, Efficiency Maine Trust and transmission and distribution utilities with regard to nonwires alternatives and other smart grid functions. It also prohibits the Public Utilities Commission from implementing any final decisions related to rate proposals received pursuant to the commission's order of December 15, 2017 in the Public Utilities Commission's Docket No. 2016-00049 from any transmission and distribution utility until 90 days after adjournment of the First Regular Session of the 129th Legislature.

Lastly, it requires the Public Utilities Commission to convene a stakeholder group to discuss allowing the Efficiency Maine Trust to use funds for electricity conservation programs for low-income residential consumers to promote the placement of high-efficiency ductless heat pumps into qualified low-income homes by allowing the trust in its cost-effectiveness test to account for all energy savings derived from a high-efficiency ductless heat pump, including nonelectric savings.

FISCAL NOTE REQUIRED

(See attached)

SP0726 LD 1896	Session - 128th Maine Legislature C "A", Filing Number S-465, Sponsored by		LR 2966 Item 2
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