While the general framework for electric restructuring is relatively set in most states with retail choice, legislative action continues as interest groups from generators to consumers to suppliers attempt to enhance the market structure. Following is a list of selected proposed legislation dealing with electric restructuring in California, Maryland, Michigan, New York, Pennsylvania, and Texas.
California
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Assembly Bill 122 (As Amended): Requires the California Energy Commission (CEC) to create a financing program for energy efficiency improvements in nonresidential buildings. Specifically, the bill facilitates private financing investment in clean energy improvements, renewable energy, and conservation. The bill incentivizes private equity managers to invest in clean energy improvements, integrate the smart energy economy, and to stimulate the state economy by directly creating jobs.
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Assembly Bill 1350 (As Amended): Would require the CA Public Utility Commission to adopt a second phase-in for direct access starting no later than July 1, 2014. The increases for the Investor Owned Utilities are 3,946 gigawatt hours for Pacific Gas and Electric and Southern California Edison, and 462 gigawatt hours for San Diego Gas and Electric. A gigawatt hour equals 1,000 megawatt hours.
Maryland (2013 Legislative Session concluded)
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House Bill 1248: Requires the Maryland Department of Environment from issuing a permit for fracking until a study has been completed regarding the potential impact of the new well on public health and safety (this bill was reportedly unfavorably out of Committee and failed to pass).
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House Bill 226: Creates a carve-out to encourage off-shore wind development on lands leased from the U.S. Department of the Interior. Starting in 2017, meeting the Maryland Renewable Portfolio Standards Requirement will require use of off-shore wind renewable energy credits not to exceed 2.5% of total retail sales. Finally, the impact on a customer’s bill from the off-shore renewable energy project cannot exceed $1.50/month for a residential customer or 1.5% of the total bill for a non-residential customer based on 2012 dollars (becomes law on June 1, 2013).
Michigan
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Senate Bill 166: Would increase the total amount of load eligible for customer choice to the greater of 10% of the weather adjusted load or current load being served by an alternative energy supplier, plus the amount of load requested to be served by an alternative energy supplier during the preceding calendar year.
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House Bill 4315: Would preclude a utility from compelling the use of a smart meter at a residential premise and provide for a customer to opt out of smart meter installation. Smart meters include those capable of demand reduction functions.
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House Bill 4611: Requires that energy efficiency programs implemented by electricity providers achieve a reduction of 1.25% of total megawatt hours in 2013, increasing by 0.25% each year until a 2.0% reduction is reached in 2017 and continues the reduction at that level thereafter.
New York
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Senate Bill 1642: Designed to encourage the deployment of smart meters at the residential level, so that customers can use power at off-peak times when it is cheaper rather than during higher priced peak demand periods. This bill has been passed out of the Energy and Telecommunications Committee.
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Senate Bill 2153: Allows farmers to install on-site generation and prohibits electric providers for charging fees for the installation of such generation. The bill caps participation at 0.1% of the demand for each utility’s service territory or until September 1, 2017.
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Assembly Bill 761: Creates a small business tax credit for electricity usage equal to $0.02/kwh provided that the business has no more than 19 employees in the State of New York.
Pennsylvania
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House Bill 428: Allows for municipalities to create either opt-in or opt-out municipal aggregations for consumers within the city’s geographic boundaries.
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House Bill 568: Creates the Lake Erie Large Scale Energy System Development Fund which allows leasing of submerged properties greater than 25 acres in Erie County for the development of wind, solar or kinetic energy.
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Senate Bill 459: Creates an Emergency Drinking Water Support Fund by imposing a $10 fee on all permits for wells in the Marcellus Shale. The money in the fund shall be used for the testing of well water and purchasing of clean water for residents and businesses that have reason to believe their well water is contaminated from either an accidental spill of fracking water or chemicals, seepage of chemicals and fracking water or seepage of natural gas dislodged by the fracking process.
Texas
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NPRR 520: Was approved and should be in place by summer 2013. This change addresses over-mitigation of offer capacity curve.
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Committee Substitute to House Bill 2446: Provides that the developer of a clean energy project can receive a franchise tax credit equal to franchise taxes imposed. In addition, an advanced clean energy project is redefined to include natural gas as a potential fuel source for an advanced clean energy project.
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Senate Bill 1239: Provides that when a customer’s on-site renewable generation exceeds their consumption, the customer’s retail electric provider must buy the excess power at fair market value and be compensated similar to a traditional generator.
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Committee Substitute to Senate Bill 1280: Directs the Electric Reliability Council of Texas (ERCOT) to develop effective demand response programs to meet peak capacity needs in the future.
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Interim Solution B+ and Operating Reserve Demand Curve. ERCOT staff presented to Stakeholders, and it could be implemented by summer 2014. This is a concept of Harvard’s professor Hogan, that would determine an adder to the Locational Marginal Price (LMP), as operating reserves begin to reach scarce supply.
Conclusion
While the major market structure components are not being debated by legislatures in 2013, there are important changes possible through the current legislative sessions. For end use consumers attempting to manage their energy procurement and energy risk exposure, the legislative package is a mixed bag. The increased attention to demand response provides customers with an opportunity to convert their energy usage from a pure cost center to a potential revenue stream, which could have the effect of lowering overall costs. However, the focus on renewable energy, regardless of whether it is cost competitive, will put upward pressure on power prices.
