CONNECTICUT STATUTES AND CODES
Sec. 16-243m. Measures to reduce federally mandated congestion charges.
Sec. 16-243m. Measures to reduce federally mandated congestion charges. (a)
The Department of Public Utility Control shall, on or before November 1, 2005, identify
those measures that can reduce federally mandated congestion charges, as defined in
section 16-1, and that can be implemented, in whole or in part, on or before January 1,
2006. Such measures may include, but shall not be limited to, demand response programs, other distributed resources, and contracts between an electric distribution company, as defined in said section 16-1, and an owner of generation resources for the
capacity of such resources. The department shall order each electric distribution company to implement, in whole or in part, on or before January 1, 2006, such measures as
the department considers appropriate. The company's costs associated with complying
with the provisions of this section shall be recoverable through federally mandated
congestion charges.
(b) The department shall conduct a contested case, in accordance with chapter 54,
to establish the principles and standards to be used in developing and issuing a request
for proposals under this section. The department shall complete such contested case on
or before January 1, 2006.
(c) On or before February 1, 2006, the department shall conduct a proceeding to
develop and issue a request for proposals to solicit the development of long-term projects
designed to reduce federally mandated congestion charges for the period commencing
on May 1, 2006, and ending on December 31, 2010, or such later date specified by
the department. For purposes of this section, projects shall include (1) customer-side
distributed resources, (2) grid-side distributed resources, (3) new generation facilities,
including expanded or repowered generation, and (4) contracts for a term of no more
than fifteen years between a person and an electric distribution company for the purchase
of electric capacity rights. Such request for proposals shall encourage responses from
a variety of resource types and encourage diversity in the fuel mix used in generation.
An electric distribution company may submit proposals pursuant to this subsection on
the same basis as other respondents to the solicitation. A proposal submitted by an
electric distribution company shall include its full projected costs such that any project
costs recovered from or defrayed by ratepayers are included in the projected costs. An
electric distribution company submitting a bid under this subsection shall demonstrate
to the satisfaction of the department that its bid is not supported in any form of cross
subsidization by affiliated entities. If such electric distribution company's proposal is
approved pursuant to subsection (g) of this section, the costs and revenues of such
proposal shall not be included in calculating such company's earning for purposes of,
or in determining whether its rates are just and reasonable under, sections 16-19, 16-19a and 16-19e. Electric distribution companies may under no circumstances recover
more than the full costs identified in the proposals, as approved under subsection (g) of
this section and consistent with subsection (h) of this section. Affiliates of the electric
distribution company may submit proposals consistent with section 16-244h, regulations adopted under section 16-244h and other requirements the department may impose.
The department may request from a person submitting a proposal further information
that the department determines to be in the public interest to be used in evaluating the
proposal. The department shall determine whether costs associated with subsection (l)
of this section shall be considered in the evaluation or selection of bids.
(d) The department shall publish such request for proposals in one or more newspapers or periodicals, as selected by the department, and shall post such request for proposals on its web site. The department may retain the services of a third-party entity with
expertise in the area of energy procurement to oversee the development of the request
for proposals and to assist the department in its approval of proposals pursuant to this
section. The reasonable and proper expenses for retaining such third-party entity shall
be recoverable through federally mandated congestion charges, as defined in section
16-1, which charges the department shall allocate to electric distribution companies in
proportion to their revenue.
(e) Any person, other than an electric distribution company, submitting a proposal
pursuant to subdivision (2), (3) or (4) of subsection (c) of this section shall include with
its proposal a draft of a contract that includes the transfer to the electric distribution
company of all the rights to the installed capacity, including, but not limited to, forward
reserve capacity, locational forward reserve capacity and similar rights associated with
such proposal, provided such rights shall not include energy. No such draft of a contract
shall have a term exceeding fifteen years. Such draft contract shall include such provisions as the Department of Public Utility Control directs.
(f) Each person submitting a proposal pursuant to this section shall agree to forgo
or credit reliability must run payments, locational installed capacity payments or payments for similar purposes for any project approved pursuant to subsection (g) of this
section.
(g) The department shall, on or before May 1, 2006, evaluate such proposals received pursuant to subsection (c) of this section and may approve one or more of such
proposals. The department shall give preference to proposals that (1) result in the greatest
aggregate reduction of federally mandated congestion charges for the period commencing on May 1, 2006, and ending on December 31, 2010, or such later date specified by
the department, (2) make efficient use of existing sites and supply infrastructure, and
(3) serve the long-term interests of ratepayers. Projects proposed by persons other than
electric distribution companies approved pursuant to this subsection may enter into long-term contracts pursuant to subsection (i) of this section. Projects approved pursuant to
this subsection are eligible for expedited siting pursuant to subsection (a) of section 16-50k. Customer-side distributed resource projects approved pursuant to this subsection
shall be eligible for the incentives provided pursuant to sections 16-243j, 16-243l, and
16-243o and this section, but shall not be eligible for the programs described in section
16-243i.
(h) If a proposal from an electric distribution company is approved pursuant to
subsection (g) of this section, such company may develop, own and operate such resource, provided such company shall, not later than five years after such resource begins
commercial operation, (1) sell such resource in accordance with section 16-43, or (2)
auction the power or capacity, or both, associated with such resource pursuant to a plan
approved by the department. The department shall, after notice and hearing, waive the
requirements of subdivisions (1) and (2) of this subsection if it determines that compliance with such requirements would be detrimental to retail customers. Such electric
distribution company shall recover, as federally mandated congestion charges, the unrecovered portions of the full projected costs in its proposal made under subsection (c) of
this section.
(i) An electric distribution company shall negotiate in good faith the final terms of
the draft contract, submitted under subsection (e) of this section and included in a proposal approved under subsection (g) of this section, and shall apply to the department
for approval of each such contract. After thirty days, either party may request the assistance of the department to resolve any outstanding issues. No such contract may become
effective without approval of the department. The department shall hold a hearing that
shall be conducted as a contested case, in accordance with the provisions of chapter 54,
to approve, reject or modify an application for approval of a capacity purchase contract.
No contract shall be approved unless the department finds that approval of such contract
would (1) result in the lowest reasonable cost of such products and services, (2) increase
reliability, and (3) minimize federally mandated congestion charges to the state over
the life of the contract. Such a contract shall contain terms that mitigate the long-term
risk assumed by ratepayers. No contract approved by the department shall have a term
exceeding fifteen years. As determined by the department, the electric distribution company shall either sell into the capacity markets all or a portion of capacity rights transferred pursuant to this section and use all proceeds from such sales to offset federally
mandated congestion charges incurred by all customers, or shall retain such capacity
rights to offset electric capacity charges associated with transitional standard offer, standard service or service as supplier of last resort under section 16-244c. The costs associated with long-term electric capacity contracts shall be recovered through federally
mandated congestion charges.
(j) The provisions of section 16a-7c shall not apply to projects approved pursuant
to this section.
(k) The department may order an electric distribution company to submit a proposal
pursuant to the provisions of this section and may approve such a proposal under this
section. Nothing in sections 16-1, 16-19ss, 16-32f, 16-50i, 16-50k, 16-50x, 16-243i to
16-243q, inclusive, 16-244c, 16-244e, 16-245d, 16-245m, 16-245n and 16-245z and
section 21 of public act 05-1 of the June special session* shall limit the department's
ability to conduct requests for proposals, in addition to that in subsection (c) of this
section, to reduce federally mandated congestion charges and to approve such proposals
or otherwise to meet its responsibility under this title.
(l) The department shall hold a hearing that shall be conducted as a contested case,
in accordance with the provisions of chapter 54, to investigate any impact on the financial
condition of electric distribution companies of long-term contracts entered into pursuant
to this section and to establish, before issuing a request for proposals in accordance with
subsection (c) of this section, the methodology for compensating the companies for such
impacts. The methodology for addressing such impacts shall be included in the request
for proposals under subsection (c) of this section, if appropriate. If the department determines that entering into such long-term contracts results in increased costs incurred by
the electric distribution companies, the department, annually, shall allow such costs to
be recovered through rates or in such manner as the department considers appropriate.
The department shall determine whether such costs shall be considered in the evaluation
or selection of bids under this section.
(m) An electric distribution company may not submit a proposal under this section
on or after February 1, 2011. On or before January 1, 2010, the department shall submit
a report, in accordance with section 11-4a, to the joint standing committee of the General
Assembly having cognizance of matters relating to energy with a recommendation as
to whether the period during which such company may submit proposals under this
section should be extended.
(n) For purposes of subdivision (1) of subsection (c) of section 16-50p, there shall
be a rebuttable presumption that there is a public benefit in building a facility, as defined
in subdivision (1) of subsection (a) of section 16-50i, that has been approved by the
Department of Public Utility Control pursuant to this section.
(o) The aggregate electric generating capacity for all approved proposals by electric
distribution companies pursuant to subsections (g) and (k) of this section may not exceed
two hundred fifty megawatts of generating capacity state-wide. The department shall
give guiding preference in approving the amount of generation capacity in proposals
from electric distribution companies to the approximate proportion of each company's
service area load.
(p) When the department selects a bid pursuant to subdivisions (2) and (3) of subsection (c) of this section from a person other than an electric distribution company, the
department shall grant the electric distribution company that serves the area in which
the subject grid-side distributed resource or new generation facility is to be located a one-time, nonrecurring award, for investments necessary to improve the electric distribution
company's transmission and distribution system to accommodate such facilities, in accordance with the following: For a grid-side distributed resource or new generation
facility that is operational (1) on or before January 1, 2010, twenty-five dollars per
kilowatt, (2) on or before January 1, 2011, fifteen dollars per kilowatt, and (3) on or
before January 1, 2012, five dollars per kilowatt. The cost of the award shall be recoverable from federally mandated congestion charges. No such award may be made unless
the projected reduction in federally mandated congestion charges attributed to the investment is greater than the amount of the award. Revenues from such award shall not be
included in calculating the electric distribution company's earnings for the purpose of
determining whether its rates are just and reasonable under sections 16-19, 16-19a and
16-19e.
(q) Sixty days after the Department of Public Utility Control issues a final decision
approving long-term contracts pursuant to this section, the department shall direct an
electric distribution company to negotiate, in good faith, long-term contracts for the
electric energy output of each of the generation projects selected and approved by the
department to provide capacity pursuant to this section, provided the rates paid for such
electric energy output when added to the payments made pursuant to such capacity
contracts shall be the project's cost of service plus a reasonable rate of return. The
electric distribution company shall apply to the department for approval of any such
energy output contract. No such contract shall be effective unless approved by the department. The department may approve only such contracts it finds would reduce and stabilize the cost of electricity to Connecticut ratepayers. Such contract may not exceed the
term of the capacity contract for such generation project.
(June Sp. Sess. P.A. 05-1, S. 12; P.A. 06-196, S. 232; P.A. 07-242, S. 86.)
*Note: Section 21 of public act 05-1 of the June special session is special in nature and therefore has not been codified
but remains in full force and effect according to its terms.
History: June Sp. Sess. P.A. 05-1 effective July 21, 2005; P.A. 06-196 made technical changes in Subsec. (c), effective
June 7, 2006; P.A. 07-242 established requirements re long-term contracts for electric energy output that were added
editorially by the Revisors as Subsec. (q), effective June 4, 2007.