00 CS FOR HOUSE BILL NO. 301(ENE) 01 "An Act relating to the establishment of a clean energy standard for regulated electric 02 utilities; relating to the Alaska Energy Authority, clean energy, and clean energy 03 projects; and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 06 to read: 07 PURPOSE. The purpose of this Act is to establish a clean energy standard that 08 requires certain regulated electric utilities to derive increasing percentages of the utility's net 09 electricity sales from clean energy resources in order to minimize costs to consumers, increase 10 stability for economic development, maximize grid resiliency, and minimize the state's carbon 11 emissions. Nothing in this Act is intended to constitute implementation by the Regulatory 12 Commission of Alaska of the federal Public Utility Regulatory Policies Act of 1978 (16 13 U.S.C. 2705). 14 * Sec. 2. AS 42.05.381 is amended by adding a new subsection to read: 01 (p) The rate for transmission of clean energy to comply with a clean energy 02 standard under AS 42.05.900 shall be a uniform transmission services rate, developed 03 by an electric reliability organization, subject to review and approval by the 04 commission. A load-serving entity may not charge more than the electric reliability 05 organization uniform transmission services rate for energy transmitted to comply with 06 a clean energy standard under AS 42.05.900. 07 * Sec. 3. AS 42.05.770 is amended to read: 08 Sec. 42.05.770. Regulations. The commission shall adopt regulations 09 governing electric reliability organizations, reliability standards, and modifications to 10 reliability standards consistent with this section. Regulations under AS 42.05.760 - 11 42.05.790 must 12 (1) require that an electric reliability organization's tariff include 13 (A) standards for nondiscriminatory open access transmission 14 and interconnection; 15 (B) cost-based standards for the purchase and sale of 16 ancillary services that are priced and administered in a nondiscriminatory 17 manner and consistent with open access principles; and 18 (C) standards for transmission system cost recovery; 19 (2) provide a process to identify and resolve conflicts between a 20 reliability standard and a function, rule, tariff, rate schedule, or agreement that has 21 been accepted, approved, adopted, or ordered by the commission; 22 (3) allow an electric reliability organization to recover its costs through 23 surcharges added to the rate for each participating load-serving entity. 24 * Sec. 4. AS 42.05.780(a) is amended to read: 25 (a) An electric reliability organization shall file with the commission in a 26 petition for approval an integrated resource plan for meeting the reliability 27 requirements of all customers within its interconnected electric energy transmission 28 network in a manner that provides the greatest value, consistent with the load-serving 29 entities' obligations. An integrated resource plan must contain an evaluation of the full 30 range of cost-effective means for load-serving entities to meet the service 31 requirements of all customers, including additional generation, transmission, battery 01 storage, and conservation or similar improvements in efficiency. An integrated 02 resource plan must include options to meet customers' collective needs in a manner 03 that provides the greatest value, consistent with the public interest, regardless of the 04 location or ownership of new facilities or conservation activities. An integrated 05 resource plan must include options to meet the clean energy standard under 06 AS 42.05.900 and an evaluation of each option. 07 * Sec. 5. AS 42.05.785(a) is amended to read: 08 (a) A public utility, including a public utility that is exempt from other 09 regulation under AS 42.05.711 or another provision of this chapter, that is 10 interconnected with an interconnected electric energy transmission network served by 11 an electric reliability organization certificated by the commission may not construct a 12 large energy facility unless the commission determines that the facility 13 (1) is necessary to the interconnected electric energy transmission 14 network with which it would be interconnected; 15 (2) complies with reliability standards; [AND] 16 (3) would, in a cost-effective manner, meet the needs of a load-serving 17 entity that is substantially served by the facility; and 18 (4) is not detrimental to a load-serving entity's ability to meet the 19 clean energy standard under AS 42.05.900. 20 * Sec. 6. AS 42.05 is amended by adding new sections to read: 21 Article 11A. Clean Energy Standard. 22 Sec. 42.05.900. Clean energy standard. (a) A load-serving entity that is 23 subject to the standards of an electric reliability organization under AS 42.05.760 shall 24 comply with the clean energy standard established in this subsection. Under the clean 25 energy standard, a load-serving entity's net electricity sales shall include sales from 26 clean energy resources in the following percentages: 27 (1) 25 percent by December 31, 2030; 28 (2) 55 percent by December 31, 2040. 29 (b) The load-serving entities subject to the standards of an electric reliability 30 organization under AS 42.05.760 shall jointly comply with the clean energy standard 31 established in this subsection. Under the clean energy standard, the aggregate net 01 electricity sales for all load-serving entities on the interconnected electric energy 02 transmission network shall include 80 percent of sales from clean energy resources by 03 December 31, 2050. 04 (c) A purchase power agreement entered into between a load-serving entity or 05 entities and a clean electrical energy producer will satisfy all or part of the percentages 06 required under (a) or (b) of this section for a compliance period if 07 (1) the effective date of the purchase power agreement is on or before 08 the end of the compliance period; 09 (2) the purchase power agreement guarantees that the clean electrical 10 energy producer will deliver the clean electrical energy to the load-serving entity or 11 entities not later than two years after the end of the compliance period; and 12 (3) the purchase power agreement is approved by the commission in 13 accordance with AS 42.05.381 and 42.05.431(a) and (b); the time period required for 14 the commission to consider the purchase power agreement may not be a factor in 15 determining whether a load-serving entity has complied with (a) or (b) of this section, 16 but if the purchase power agreement is not approved by the commission, the load- 17 serving entity may be subject to a noncompliance fine under AS 42.05.915. 18 (d) Construction of clean electrical energy generation capacity that began 19 before the end of a compliance period will satisfy all or part of the percentages 20 required under (a) or (b) of this section for the compliance period if the capacity will 21 begin providing the clean electrical energy to the load-serving entity not later than 22 (1) two years after the end of the compliance period; or 23 (2) the end of a period determined by the commission. 24 (e) A load-serving entity may satisfy the clean energy standard through 25 electricity derived from the entity's clean electrical energy from distributive energy 26 systems. 27 (f) A load-serving entity's compliance with the clean energy standard shall be 28 based on historical data, collected in a manner consistent with industry standards and 29 commission regulations. 30 (g) A load-serving entity shall design and implement an accounting system to 31 verify compliance with the clean energy standard to ensure that clean electrical energy 01 is counted only once for the purpose of meeting the clean energy standard. 02 (h) A load-serving entity may satisfy the clean energy standard through clean 03 energy credits obtained under AS 42.05.910. 04 (i) A project located wholly or partially in the state that is constructed to meet 05 the clean energy standard is exempt from all state lease fees. 06 Sec. 42.05.905. Reporting. (a) Beginning March 1, 2025, a load-serving entity 07 subject to the clean energy standard shall submit an annual report to the commission 08 that documents the load-serving entity's progress toward satisfying the clean energy 09 standard under AS 42.05.900 in the preceding calendar year. The annual report must 10 demonstrate the entity's compliance with the clean energy standard, document the 11 entity's net electricity sales from clean energy resources for the applicable calendar 12 year, and include any other information required by the commission. 13 (b) The commission shall adopt regulations governing the reporting 14 requirements under (a) of this section to document compliance and minimize the 15 administrative costs and burden on a load-serving entity. 16 (c) The commission may investigate a load-serving entity's compliance with 17 the clean energy standard and (a) of this section and collect any information necessary 18 to verify and audit the information provided to the commission by the load-serving 19 entity. 20 (d) The commission shall monitor the effect of the clean energy standard on 21 rates and reliability and determine whether the effect is consistent with the public 22 interest. 23 Sec. 42.05.910. Clean energy credits. (a) A load-serving entity may trade, 24 sell, or otherwise transfer clean energy credits. 25 (b) A clean energy credit may be used only once. A load-serving entity may 26 use a clean energy credit to comply with the clean energy standard under 27 AS 42.05.900 without purchasing or using the electrical generation from which the 28 credit is derived. 29 (c) Each load-serving entity is responsible for tracking and demonstrating that 30 a clean energy credit used to comply with the clean energy standard under 31 AS 42.05.900 is derived from a clean energy resource in the state and that a load- 01 serving entity has not previously used the clean energy credit. 02 (d) Revenue received by a load-serving entity for the trade, sale, or transfer of 03 a clean energy credit shall be credited to the load-serving entity's cost of power 04 adjustment to the benefit of the load-serving entity's customers. 05 Sec. 42.05.915. Noncompliance fine; waiver. (a) If the commission 06 determines that a load-serving entity failed to meet the clean energy standard under 07 AS 42.05.900, after notice and an opportunity for hearing, the entity is subject to a fine 08 of $20 for every megawatt hour that the entity is below the clean energy standard. The 09 commission may waive the noncompliance fine in whole or in part upon determination 10 that a load-serving entity is unable to meet the clean energy standard because of 11 reasons outside the reasonable control of the load-serving entity as set out in (b) of this 12 section or the entity establishes a good cause for noncompliance as set out in (c) of 13 this section. 14 (b) Events or circumstances that are outside of a load-serving entity's 15 reasonable control may include 16 (1) weather-related damage; 17 (2) natural disasters; 18 (3) mechanical or resource failure; 19 (4) failure of clean electrical energy producers to meet contractual 20 obligations to the load-serving entity; 21 (5) labor strikes or lockouts; 22 (6) transmission network constraint that prevented the load-serving 23 entity from partially or fully using clean electrical energy for net electricity sales; and 24 (7) other similar events and circumstances. 25 (c) Factors for establishing good cause for noncompliance may include 26 (1) the actions taken by the load-serving entity to procure the clean 27 electrical energy; 28 (2) the extent of good faith efforts by the load-serving entity to 29 comply; 30 (3) the lack of past failures to comply; 31 (4) the likelihood and amount of future clean electrical energy to be 01 procured by the load-serving entity; 02 (5) the impact of the noncompliance fine on the load-serving entity 03 considering the size or ownership of the load-serving entity; 04 (6) other similar information. 05 (d) If the commission waives all or part of a noncompliance fine, the 06 commission shall require additional reporting from the load-serving entity to 07 demonstrate the entity is taking all reasonable actions under the entity's control to 08 satisfy the clean energy standard. 09 (e) A fine paid by a load-serving entity under this section may not be included 10 or recovered in rates paid by the load-serving entity's customers unless the 11 commission determines that 12 (1) payment of the fine would be at less cost to the customers than the 13 purchase of a clean energy resource to comply with the clean energy standard; or 14 (2) there are insufficient clean energy resources available for the load- 15 serving entity to comply with the clean energy standard. 16 Sec. 42.05.920. Exemptions. Load-serving entities are exempt from 17 compliance with the clean energy standard under AS 42.05.900(a) if the aggregate net 18 electricity sales for all load-serving entities on the interconnected electric energy 19 transmission network meets or exceeds the aggregate clean energy standard for all 20 load-serving entities on the interconnected electric energy transmission network. 21 Sec. 42.05.925. Definitions. In AS 42.05.900 - 42.05.925, 22 (1) "clean electrical energy" means electricity or energy generated 23 from alternative energy resources; 24 (2) "clean energy credit" means one credit equal to the generation 25 attributes of one megawatt hour that is derived from a clean energy resource; where 26 fossil and clean fuels are co-fired in the same generating unit, the unit is considered to 27 generate clean electrical energy in direct proportion to the percentage of the total heat 28 input value represented by the heat input value of the clean fuels; 29 (3) "clean energy resource" means 30 (A) wind, solar, geothermal, wasteheat recovery, hydrothermal, 31 wave, tidal, river in-stream, or hydropower; 01 (B) low-emission nontoxic biomass based on solid or liquid 02 organic fuels from wood, forest and field residues, or animal or fish products; 03 (C) dedicated energy crops available on a renewable basis; 04 (D) landfill gas and digester gas; or 05 (E) nuclear; 06 (4) "clean energy standard" means the required percentage of a load- 07 serving entity's net electrical energy sales to customers in the entity's service area that 08 is represented by clean electrical energy as required under AS 42.05.900(a) or (b); 09 (5) "clean energy storage" means the capture of energy produced at 10 one time for use at a later time; 11 (6) "compliance period" means each 10-year period identified in 12 AS 42.05.900(a) or (b); 13 (7) "distributive energy system" means a clean energy resource or 14 clean energy storage that is located on any property owned or leased by a customer 15 within the service territory of the load-serving entity that is interconnected on the 16 customer's side of the utility meter; 17 (8) "interconnected electric energy transmission network" has the 18 meaning given in AS 42.05.790; 19 (9) "load-serving entity" has the meaning given in AS 42.05.790; 20 (10) "megawatt hour" means 1,000,000 watts of electricity being used 21 in one hour and includes the steam equivalent of a megawatt hour; 22 (11) "transmission network constraint" means a lack of transmission 23 line capacity to deliver electricity without exceeding thermal, voltage, and stability 24 limits designed to ensure reliability of the interconnected electric energy transmission 25 network. 26 * Sec. 7. AS 44.83.940 is amended by adding a new subsection to read: 27 (b) The authority shall biennially, not later than the first day of the first regular 28 session of each legislature, prepare a report identifying progress developing clean and 29 clean energy resources in rural parts of the state. The report shall include a description 30 of the authority's regional planning efforts in rural areas for clean and clean energy 31 resource development, identify infrastructure necessary for rural clean and clean 01 energy projects, and evaluate the feasibility and cost of the rural clean and clean 02 energy projects. 03 * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to 04 read: 05 REGULATIONS. Within two years after the effective date of this Act, the Regulatory 06 Commission of Alaska shall adopt regulations necessary to implement the changes made by 07 this Act. 08 * Sec. 9. This Act takes effect July 1, 2022.