Connecticut 2015 Legislative Summary (Murtha Cullina LLP)

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Copyright © 2015 Murtha Cullina LLP. This alert is one of a series of publications by Murtha Cullina LLP and should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult your own lawyer concerning your own situation and any specific legal questions you may have.

INDUSTRY INSIGHT

REGULATORY DEPARTMENT NEWS August 2015

If you have any questions about the issues addressed here, or any other matters involving Commu-nications Law, please feel free to contact:

Burt Cohen [email protected] 203.772.7714

Paul R. Michaud [email protected] 860.240.6131

Paul R. [email protected]

Graham T. [email protected]

2015 SUMMARY OF CONNECTICUT LEGISLATIONThe Connecticut General Assembly recently concluded the 2015 legislative session. In addition, the legislature held a June 29th special session to address items not covered in the full session. Among the hundreds of public acts signed into law by the Governor are several new acts, and amendments to existing acts, concerning the regulation of Connecticut public utilities, cable and telecommunications services providers.

GENERALPURA Commissioners Exempt from Various Requirements of the Freedom of Information Act (Public Act 15-05, § 475)This law addresses the ability of the three Commissioners of the Public Utilities Regulatory Authority (“PURA”) to meet privately to discuss PURA and other matters without formal requirements otherwise required of public agencies under the Connecticut Freedom of Information Act (“FOIA”) for public meetings. This law, passed in the June Special Session, exempts PURA Commissioners from the FOIA requirements that are invoked whenever a quorum of the Commissioners would occur. Specifically, the law states that PURA Commissioners may privately confer and discuss any matter before PURA without complying with the FOIA requirements.

Effective date: from passage.Signed by Governor: June 30, 2015.

ENERGY BILLSAn Act Concerning Anaerobic Digestion (Public Act 15-152)This Act amends an existing law which required the Clean Energy Finance and Investment Authority (“CEFIA”) to establish a three-year pilot program for promoting the development of new combined heat and power projects in Connecticut that are below five megawatts in size. The existing law required CEFIA to establish loan and grant amounts for these projects in order to minimize costs for ratepayers. It also required CEFIA to allocate $4 million annually from the Clean Energy Fund: $2 million for heat and power projects and $2 million for anaerobic digestion projects.

This new Act substitutes the Connecticut Green Bank (“CGB”) for CEFIA. Now, the Connecticut Green Bank assumes all the prior responsibilities and rights that had been conferred to the CEFIA. In addition, the Act extends the year term of the pilot program from three to five years. Lastly, it requires the Connecticut Green Bank to report on or before January 1, 2018, to the Joint Standing Committee of the General Assembly as to whether the pilot program should continue.

Effective date: from passage.Signed by Governor: July 2, 2015.


An Act Concerning the Encouragement of Local Economic Development and Access to Residential Renewable Energy (Public Act 15-194)

This Act enlarges the residential solar investment program that is administered by the CGB. This program, by law, offers financial incentives for purchasing certain residential solar systems. The Act establishes clearer guidelines regarding the permitting process for installing these residential solar photovoltaic systems.

In particular, the Act amends existing law—which provided that a minimum of thirty megawatts of new residential solar systems be installed in the state. This bill replaced the minimum requirement with a new ceiling. Under the Act, the CGB may install “up to” 300 megawatts of new residential solar photovoltaic installations by the end of 2022. The law used to require that the residential solar investment program end by December 31, 2022. This bill amends that end date to be either (1) December 31, 2022 or (2) when the CGB installs up to 300 megawatts, whichever comes sooner. The existing law requires the CGB to offer direct financial incentives in the form of performance-based incentives or expected performance-based buydowns for the purchase of solar systems. The Act places a time limit on these financial incentives by only requiring the CGB to offer them until (1) December 31, 2022 or (2) they deploy 300 megawatts of solar installation, whichever comes sooner.

The Act also creates solar home renewable energy credits (“SHRECs”). A SHREC, by definition, is a Class I renewable energy credit that is created by producing one megawatt hour of electricity generated by one or more qualifying residential solar photovoltaic systems. These SHRECs are owned by the CGB until transferred to an electric distribution company such as United Illuminating or Eversource. The bill requires that the price of SHRECs must decline over time.

The Act also provides that not later than 180 days after July 1, 2015, each electric distribution company shall negotiate and develop a master purchase agreement with the CGB. These purchase agreements must last 15 years and they require electric distribution companies to buy SHRECs from the CGB. The Act gives PURA jurisdiction over resolving any disputes should the CGB and an electric distribution company have trouble coming to an agreement. Per the Act, proceeds from sales of SHRECs will fund the solar investment program. This creates an entirely new source of funding that the program did not previously enjoy. Moreover, the Act allows the electric distribution companies to recover the costs of purchasing SHRECs through an adjustable component of their rates, which is to be determined by PURA. It also allows these companies to use SHRECs to satisfy their requirements of purchasing a certain percentage of their energy from renewable sources under certain circumstances.

The Act also impacts municipalities. By January 1, 2016, any town, city, borough, consolidated town and city, or consolidated town and borough, must incorporate residential solar photovoltaic systems in its building permit application process. The CGB must provide 5 training seminars for municipal officials, no later than December 1, 2015, designed to guide those officials in developing this new permitting process. Under this new permitting process, municipalities must inform an applicant within 30 days whether their application has been approved. Municipalities must post this permit application process on their websites, allow applicants to apply online, and exempt the solar systems from municipal permit fees. The Act provides that no homes or structures in historic districts should be altered by such systems.

Effective date: Upon passage, except for the provisions on municipal permitting which become effective October 1, 2015.Signed by Governor: July 2, 2015.

An Act Concerning the Commercial Property Assessed Clean Energy Program (Public Act 15-21)

Currently under the law, the CGB participates in a commercial sustainable energy program called the Commercial Property Assessed Clean Energy (“C-PACE”) program. Under the C-PACE program, the CGB provides financing for energy efficient or renewable energy improvements on certain commercial properties in certain municipalities.

Prior to this new law, only the CGB could provide financing under the C-PACE program. This bill changes that by now allowing any “third-party capital provider” to also provide financing. The Act defines a “third party capital provider” as an entity, other than a bank, that provides loans directly to benefited property owners for energy improvements. The CGB ia also authorized to explicitly encourage property owners to acquire financing through a third party capital provider instead of the CGB. Naturally, third party capital providers are now subject to all the requirements under Connecticut General Statute § 16a-40g that used to only apply to the CGB. However, the bill does not subject third party capital providers to a provision that requires the CGB to set its interest rates at particular levels. Lastly, the Act allows, but does not mandate, the CGB to establish credit enhancement programs for C-PACE participating properties.

Simply put, any commercial property owners that plan to participate—or already participate—in the C-PACE program, should be aware that they


can now obtain financing from entities other than the CGB.

Effective date: upon passage.Signed by Governor: June 4, 2015.

An Act Concerning Variable Electric Rates (Public Act 15-90)

This Act places restrictions on retail electric suppliers. Under current law, electric suppliers may charge residential customers month-to-month variable rates after their contract expires if the company adequately notifies its customers.

15-90 prohibits electric suppliers from entering into a contract to charge a residential customer a variable rate for electric generation services. It also prohibits suppliers from automatically renewing a contract with one of its residential customers and, pursuant to such contract, charging said customer a variable rate for electric generation services. Under the Act, a “residential customer” is defined as a customer who contracts with an electric supplier for generation services at residential premises for domestic purposes only. These new prohibitions take effect October 1, 2015.


An Act Concerning Electric Rate Transparency (Public Act 15-135)

Under preexisting law, PURA was required to hold a minimum of one meeting in a town when changes were made to rates and charges of an electric distribution company. The meeting was to be held in a town that was affected by such company’s rate changes. This bill increases the amount of hearings PURA is required to hold with respect to rate changes made by electric distribution companies (i.e., United Illuminating and Eversource).

Now, for an electric distribution company that services 17 or fewer towns, PURA must hold hearings in at least two—instead of one—towns. If the company serves more than 17 towns, PURA is now required to hold hearings in at least 3 towns. PURA is allowed to choose the town where the hearings will take place. For any other public service company, the requirement is still the same: PURA must hold a hearing in at least one town.

Effective date: October 1, 2015.Signed by Governor: June 23, 2015.

An Act Establishing A Shared Clean Energy Facility Pilot Program (Public Act 15-113)

This Act requires the Department of Energy and Environmental Protection (“DEEP”), in conjunction with electric distribution companies, to establish a two-year pilot program to support the development of shared clean energy facilities. The Act defines a “shared clean energy facility” as a Class I renewable energy source, as defined in section 16-1 of the statutes, that is (1) served by an electric distribution company, (2) within the same electric distribution company service territory as the individual billing meters for subscriptions, (3) has a nameplate capacity rating of four megawatts or less, and (4) has at least two subscribers.

By January 1, 2016, DEEP must issue a request for proposals from subscriber organizations that are seeking to develop a shared clean energy facility. Under the Act, a “subscriber organization” is “any for-profit or not-for-profit entity permitted by Connecticut law that (A) owns or operates one or more shared clean energy facilities for the benefit of the subscribers, or (B) contracts with a third-party entity to build, own or operate one or more shared clean energy facilities.”

The Act also creates a selection process for the DEEP to abide by. The process differentiates between service areas of 17 towns or less and those with more than 17 towns. It also distinguishes between projects that will exceed a nameplate capacity rating of two megawatts in the aggregate.

If selected by DEEP as a shared clean energy facility, recipients must submit, no later than 1 year after being selected, a report in accordance with section 11-4a of the General Statutes to the joint standing committee of the General Assembly having cognizance of matters relating to energy and to the DEEP.

On or before January 1, 2018, DEEP must file a similar report to the General Assembly assessing the success of the shared clean energy program,


identifying and analyzing the success of programs in other states, and recommending whether a permanent program should be established in this state.


An Act Concerning Affordable and Reliable Energy (Public Act 15-107)

Public Act 15-107 bill transfers certain authority from PURA to DEEP. Under preexisting law, PURA had the authority to issue requests for proposals related to the Integrated Resource Plan (“IRP”). The purpose of the IRP is to procure efficient and reliable energy sources for the state. Now, per this bill, DEEP—not PURA—has the authority to issue requests for proposals related to the IRP.

15-107 also changes the requirements to be considered when deciding whether or not to issue a request for proposal. The proposals selected by DEEP are subject to PURA’s approval. The bill also allows DEEP to solicit proposals from certain providers of natural resources.

Beginning July 1, 2015, this Act allows electric companies to seek to recover the costs of purchasing new natural gas capacity incurred when these electric companies are procuring contracts as required by DEEP, in relation to a long term contract agreement under the IRP. The Act empowers the DEEP Commissioner, in consultation with other states, to issue multiple solicitations for long-term contracts for interstate natural gas transportation capacity, liquefied natural gas, liquefied natural gas storage, natural gas storage, or any combination of these. The Act also allows the DEEP Commissioner to hire consultants to assist with evaluating proposals. If the Commissioner finds proposals in the ratepayers’ best interests, the Commissioner may select one or more such proposals and direct the electric companies to enter into long-term contracts. Agreements entered into as a result of solicitations authorized under this new lawremain subject to PURA approval. Finally, 15-107 limits all contract terms to 20 years.


Pilot Programs for Energy Efficiency (Public Act 15-05, § 476)

Under current law, the DEEP Commissioner, at his/her discretion, may direct state agencies to implement certain technology that does or might promote energy conservation. This new law makes this implementation mandatory. Beginning October 1, 2015, the DEEP Commissioner will begin administering pilot test programs at Connecticut state agencies. The purpose of these programs is to evaluate the efficiency and effectiveness of certain technologies aimed at reducing energy costs.

In addition, this law allows state agencies to apply with the Commissioner if interested in participating in one of these pilot programs. Moreover, the Commissioner may direct a state agency to use any technology, or participate in a pilot program or testing. Any such agency must comply with one of these directives as ordered by the Commissioner.

If, during a pilot program, a state agency discovers that one of the implemented technologies is accomplishing its purpose of reducing energy costs, reducing fossil fuel usage, or reducing greenhouse gas emissions, that agency may formally request that said technology be implemented within any or all state agencies.


Some Utility Companies May Defer Tax Expenses (Public Act 15-05, § 477)

A new law passed by the legislature during its June Special Session permits state-regulated utilities to defer their recovery of increased tax expenses not currently authorized in such companies’ rates, until any such company’s next general rate case.

Effective date: July 1, 2015.Signed by Governor: June 30, 2015.

Grid-Side Enhancements Pilot Program (Public Act 15-05, §§ 102–103)

This law requires electric distribution companies (i.e., United Illuminating and Eversource) to submit proposals to DEEP to implement a pilot


program which would build and install grid-side system enhancements. The law defines a “grid-side system enhancement” as an investment in distribution system infrastructure, technology, and systems designed to enable the deployment of distributed energy resources and allow for grid management and system balancing. The law lists, as several examples of this infrastructure: energy storage systems, distribution system automation and controls, and intelligent field systems, among others.

Upon submission of a proposal, DEEP will evaluate the company’s proposal and choose whether to approve it for a pilot program based upon several factors. Any approved proposal must be subsequently approved by PURA.

Notably, this law allows companies to enter into private agreements with other companies in order to carry out its obligations under the law. In the same vein, electric distribution companies may recover the costs they incur from customers through electric rates. DEEP must submit a report to the General Assembly by no later than January 1, 2017, outlining its approved proposals.


Class I Renewable Energy Source Property Tax Abatement (Public Act 15-05, § 104)

Current law allows the DEEP Commissioner, under certain circumstances, to force an electric distribution company to enter into a PURA-approved power purchase agreement with a Class I renewable energy source facility that was built on or after January 1, 2013.

This law allows municipalities to reduce the amount of property taxes due from one of these facilities that is subject to a power purchase agreement. In fact, the law gives municipalities wide latitude to abate these taxes up to 100% for assessment years starting October 1, 2015. However, the abatement cannot be for longer than the power purchase agreement’s terms. Additionally, the abatement must be approved by vote of the municipality.


PURA May Limit What Certain Utility Companies Charge Customers (Public Act 15-05, § 105)

Electric distribution companies (“EDCs”) are required to file with PURA a request to amend any rates. Under this new law, when an EDC does this, PURA must adjust the company’s residential fixed charge to only recover the fixed costs, operation, and maintenance expenses related to certain services. The law, however, prohibits PURA from shifting costs in any rate classes other than residential fixed charges.


Studies & Recommendations Regarding Energy (Public Act 15-05, §§ 107–108)

Several new laws require state agencies to undergo studies and to provide recommendations regarding issues surrounding the state’s energy situation. For example, a new law requires the Low-Income Energy Advisory Board (“LIEAB”) to recommend ways to improve access to heating assistance programs. The Board must report these recommendations by January 1, 2016.

Similarly, another law makes minor changes regarding what PURA is required make recommendations about. Now, per this law, PURA must issue guidance and recommendations regarding what changes, if any, certain customers may experience due to rate increases.

Effective dates: October 1, 2015 for LIEAB and upon passage for PURA.Signed by Governor: June 30, 2015

SB 1501, An Act Authorizing And Adjusting Bonds Of The State For Capital Improvements, Transportation and Other Purposes

This Act authorizes monies not to exceed $15 million for energy microgrids to support critical municipal infrastructure in FY 17. It reduces $10 million of the $15 million authorized for microgrids in the 2013 bond package. Increases from $50 million to $100 Million, the amount of bonds the


Green Bank may issue that are backed by a special capital reserve fund (SCRF). The Act reduces a previously authorized allocation to the Green Bank from $18 million to $8 million. These are monies used by the Green Bank to finance renewable energy and energy efficiency.

Effective Date: July 1, 2015.

WATER BILLS

An Act Concerning Service Pipes of Water Companies (Public Act 15-180)

Public Act 15-180 relates to the placement of certain underground water pipes. Under existing law, property owners may apply to have a water pipe cross intervening properties to connect to their building. This application process is governed, and ultimately decided, by PURA, whichdecides whether or not to approve these applications by applying a set of requirements: (i) proper easements are in place; (ii) the construction of the pipe complies with applicable rules and regulations; (iii) there is adequate water pressure to serve the property; and (iv) the pipe will only serve one premises.

This Act simply gives water companies the authority to decide these applications. Prior to this bill, only PURA could do this. Thus, this bill places water companies in the shoes of PURA for purposes of approving the installation of certain property-crossing water pipes. If a water company approves a property owner’s application, however, it must notify PURA as to the location of the property.

Effective date: October 1, 2015.Signed by Governor: July 2, 2015.

An Act Concerning Small Community Water Systems (Public Act 15-89)

Public Act 15-89 introduces a brand new provision that affects “small community water systems,” which are water companies that serve fewer than 1,000 people or 250 buildings. In particular, the Act authorizes PURA, on its own initiative and in conjunction with the Department of Health, to investigate small community water systems to determine whether these systems are providing adequate and economically viable services to their customers. Following investigation, PURA may issue orders prescribing the appropriate rates to be charged by the investigated water system. If the rate increase that PURA decides upon is 100% or more, such increase shall be phased in over the course of a two-year period. At any time during one of these investigations, any party may request a hearing with PURA.

Any water company that serves fewer than 1,000 people or 250 buildings must be advised that PURA may is authorized to investigate such company’s business operations and order a change in service rates.


An Act Concerning Allowable Costs for the Installation of Oversized Water Mains (Public Act 865)

This Act affects certain municipalities. Under current law, the DEEP may require municipalities to provide long-term potable water to areas where the water is contaminated. If this happens, municipalities that are not responsible for the contamination may apply for a grant with the DEEP. This grant is used for the design and construction of the new facilities that are going to provide the water.

Under this new Act, DEEP may not reduce the grants for construction projects that are consistent with an adopted conservation and development plan. DEEP also may not reduce grants for projects where another funding source pays the costs associated with fixing the contaminated water supply.

Municipalities should be aware of their rights under this law, given that it could save them thousands of dollars.



TELECOMMUNICATIONS BILLS

An Act Concerning Technical Revisions to Energy and Technology Statutes (Public Act 15-12)

Public Act 15-12 makes a minor revision to the definition of a “public utility” in Connecticut General Statute § 16-345. Specifically, it removes the archaic term “telegraph” from the definition. Therefore, a “public utility” no longer includes an owner or operator of underground facilities for furnishing telegraph signals.

The law to which this definition applies forbids any “public utility” from excavating or discharging explosives at or near an underground facility, and from demolishing structures near a public utility facility, without first ascertaining the location of all underground facilities.

Effective date: October 1, 2015.Signed by Governor: May 26, 2015.

An Act Concerning Public Information Meetings Regarding Telecommunication Towers (Public Act 15-186)

Public Act 15-186 was the only proposal concerning the Connecticut Siting Council that was enacted this past session. This law affects municipalities as well as developers and builders of telecommunications towers. Current law allows municipalities to hold public information meetings on the proposed construction of a telecommunication tower. A municipality may do this if (1) it is the municipality where the proposed tower is going to be built, or (2) it is an adjoining municipality within 2,500 feet of the tower.

This bill now requires the applicant of a proposed telecommunications tower to pay “all administrative expenses associated” with one of these public information meetings. Thus, municipalities should be aware that, as of October 1st, they may demand applicants to pay for these costs. Likewise, builders and developers of telecommunications towers should be aware that they must pay these expenses if a public information meeting is held.

Effective date: October 1, 2015.Signed by Governor: July 2, 2015.

Creation of the Office of State Broadband (Public Act 15-05, § 429)

The legislature, during its June Special Session, passed a provision which creates an Office of State Broadband (“OSB”). The OSB is to be a part of the Office of Consumer Counsel

The stated purpose of the OSB is to facilitate broadband access to each and every single Connecticut resident. The OSB is expected to advocate to increase access to ultra-high-speed broadband networks. Importantly, the provision passed gives the Office of Consumer Counsel the authority to provide grants to public and nonprofit entities, municipalities, local authorities, and private corporations for the purpose of achieving the above goals. The OSB includes a Broadband Policy Coordinator and other staff deemed necessary by the Office of Consumer Counsel.


If you have any questions about any of the issues discussed here, please contact Burt Cohen at [email protected] or 203.772.7714, Paul R. Michaud at [email protected] or 860.240.6131, Paul R. McCary at [email protected] or 860.240.6037 orGraham T. Coates at [email protected] or 860.240.6137.

Connecticut 2015 Legislative Summary (Murtha Cullina LLP)

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