Renewable Portfolio Standards - Energy Efficiency Component

Note: Connecticut Public Act 13-298 requires investor-owned electric and gas utilities to decouple their revenues from their sales. On December 1, 2014, the Connecticut Public Utility Regulatory Authority (PURA) issued a Draft Decision approving the recent rate request of Connecticut Power and Light (CL&P). The Draft Decision approves the use of a full revenue decoupling mechanism identical to the one in place for the United Illuminating Company, Connecticut's other major investor-owned electric distribution utility. The decision is subject to final approval by PURA later in December 2014, but the requirements of Public Act 13-298 ensure that CL&P will operate under such a mechanism upon final approval.

Origin

Established in 1998 and subsequently revised several times, Connecticut's renewables portfolio standard (RPS) requires each electric supplier and each electric distribution company wholesale supplier to obtain at least 23% of its retail load by using renewable energy by January 1, 2020. Specific to energy efficiency, the RPS creates a "carve-out" that requires each electric supplier and each electric distribution company wholesale supplier to obtain at least 4% of its retail load by using combined heat and power (CHP) systems and energy efficiency by 2010.

Electric Demand and Energy Reduction Standard

Within the renewable portfolio standard, separate portfolio standards are required for energy resources classified as "Class I," "Class II," or "Class III." Class III resources eligible for the energy efficiency carve-out include: (1) customer-sited CHP systems, with a minimum operating efficiency of 50%, installed at commercial or industrial facilities in Connecticut on or after January 1, 2006; (2) electricity savings from conservation and load management programs that started on or after January 1, 2006, provided that on or after January 1, 2014, no such programs supported by ratepayers shall be eligible; and (3) systems that recover waste heat or pressure from commercial and industrial processes installed on or after April 1, 2007. The revenue from these credits must be divided between the customer and the state Conservation and Load Management Fund, depending on when the Class III systems are installed, whether the owner is residential or nonresidential, and whether the resources received state support.

Electric providers must meet the standard with at least 4% Class III sources by 2010, and thereafter, according to the following schedule:

Energy efficiency and demand-side management programs that provide compliance with the standard are managed by Connecticut's electric utilities. The Connecticut Energy Efficiency Board, appointed by the Connecticut Public Utility Regulatory Authority (PURA) oversees the Connecticut Energy Efficiency Fund, which provides funding for the utilities and other providers' programs.

Cost-Effectiveness and Program Evaluation

To evaluate the cost effectiveness of its efficiency and demand reduction activities, Connecticut law specifies the use of the Utility Cost Test (UCT), which is one of the five "California tests" from the California Standard Practice Manual as its primary test for measuring the cost-effectiveness of energy efficiency programs. Connecticut also uses the Total Resource Cost test (TRC). 

Utility Cost Recovery Provisions

Pursuant to Public Act 13-298, Connecticut's investor-owned electric and gas utilities must submit plans in their next rate cases to decouple their revenues from their sales. Currently, only the United Illuminating Company (UIL) currently operates under a full revenue decoupling mechanism, in which CL&P customers are due a repayment with interest if CL&P over-collects revenue through its decoupling adjustment to customer bills, and can increase CL&P customer rates if the mechanism under-collects revenue relative to CL&P's overall revenue target. 

Special Provisions (Class III REC Banking)

In its most recent Conservation and Load Management Plan, the Connecticut Department of Energy and Environmental Protection authorized the development of a Business and Energy Sustainability (BES) Program that allowed customers to self-direct program funds to projects of their own choosing. For more information, please visit energizect.com.