HB 368: "An Act relating to clean energy standards and a clean energy transferable tax credit; and providing for an effective date."
00 HOUSE BILL NO. 368 01 "An Act relating to clean energy standards and a clean energy transferable tax credit; 02 and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 05 to read: 06 PURPOSE. The purpose of this Act is to establish a clean energy standard that 07 requires certain electric utilities to derive increasing percentages of the utility's net electricity 08 sales from clean energy sources. Nothing in this Act is intended to constitute implementation 09 by the Regulatory Commission of Alaska of the federal Public Utility Regulatory Policies Act 10 of 1978 (16 U.S.C. 2705). 11 * Sec. 2. AS 42.05.381 is amended by adding a new subsection to read: 12 (p) The rate for transmission of clean energy generated from capacity 13 constructed on or after July 1, 2024, to comply with a clean energy standard under 14 AS 42.05.900 shall be a uniform transmission services rate, developed by the electric
01 reliability organization for the Railbelt, subject to review and approval by the 02 commission. A load-serving entity may not charge more than the uniform transmission 03 services rate for energy transmitted to comply with a clean energy standard under 04 AS 42.05.900. 05 * Sec. 3. AS 42.05.780(a) is amended to read: 06 (a) An electric reliability organization shall file with the commission in a 07 petition for approval an integrated resource plan for meeting the reliability 08 requirements of all customers within its interconnected electric energy transmission 09 network in a manner that provides the greatest value, consistent with the load-serving 10 entities' obligations. An integrated resource plan must contain an evaluation of the full 11 range of cost-effective means for load-serving entities to meet the service 12 requirements of all customers, including additional generation, transmission, battery 13 storage, and conservation or similar improvements in efficiency. An integrated 14 resource plan must include options to meet customers' collective needs in a manner 15 that provides the greatest value, consistent with the public interest, regardless of the 16 location or ownership of new facilities or conservation activities. An integrated 17 resource plan must identify the most cost-effective strategies for the 18 interconnected electric energy transmission network to satisfy the clean energy 19 standard under AS 42.05.900. 20 * Sec. 4. AS 42.05.785(a) is amended to read: 21 (a) A public utility, including a public utility that is exempt from other 22 regulation under AS 42.05.711 or another provision of this chapter, that is 23 interconnected with an interconnected electric energy transmission network served by 24 an electric reliability organization certificated by the commission may not construct a 25 large energy facility unless the commission determines that the facility 26 (1) is necessary to the interconnected electric energy transmission 27 network with which it would be interconnected; 28 (2) complies with reliability standards; [AND] 29 (3) would, in a cost-effective manner, meet the needs of a load-serving 30 entity that is substantially served by the facility; and 31 (4) is not detrimental to a load-serving entity's ability to meet the
01 clean energy standard under AS 42.05.900. 02 * Sec. 5. AS 42.05 is amended by adding new sections to read: 03 Article 11A. Clean Energy Standard. 04 Sec. 42.05.900. Clean energy standard. (a) A load-serving entity that is 05 subject to the standards of an electric reliability organization under AS 42.05.760 shall 06 comply with the clean energy standard established in this section. Under the clean 07 energy standard, a load-serving entity's portfolio shall include clean energy in the 08 following percentages: 09 (1) 35 percent by December 31, 2036; 10 (2) 60 percent by December 31, 2051. 11 (b) A power purchase agreement entered into between a load-serving entity 12 and a clean energy producer may be included when calculating the load-serving 13 entity's compliance with the clean energy standard required under this section if 14 (1) the effective date of the power purchase agreement is before the 15 end of the compliance period; 16 (2) the power purchase agreement guarantees that the clean electrical 17 energy producer will deliver the clean energy to the load-serving entity not later than 18 two years after the compliance period; and 19 (3) the power purchase agreement is approved by the commission in 20 accordance with AS 42.05.381 and 42.05.431(a) and (b) before the end of the 21 compliance period. 22 (c) A load-serving entity may satisfy the clean energy standard through energy 23 produced by distributed energy systems, regardless of whether the energy is acquired 24 by the load-serving entity or used by the customer. 25 (d) A load-serving entity's compliance with the clean energy standard shall be 26 based on historical data, collected in a manner consistent with industry standards and 27 commission regulations. 28 (e) A load-serving entity shall design and implement an accounting system to 29 verify compliance with the clean energy standard, to ensure that clean energy is 30 counted only once for the purpose of meeting the clean energy standard, and to track 31 energy consumption displaced because of energy efficiency investments under (g) of
01 this section. The accounting system must be approved by the commission. 02 (f) The commission shall, by regulation, develop a proxy for the ratio of net 03 energy acquired by a load-serving entity at metered intervals to total energy produced 04 from distributed energy systems. Using the proxy, the commission shall determine an 05 estimate of total energy produced by distributed energy systems available to satisfy a 06 load-serving entity's clean energy standard. The commission shall update the proxy 07 developed under this subsection not less than once every five years. 08 (g) A load-serving entity may satisfy the clean energy standard with energy 09 consumption displaced because of energy efficiency investments, including 10 investment in consumer efficiency upgrades, if the displaced consumption is 11 documented by the accounting system required under (e) of this section. 12 (h) The commission shall adopt regulations that establish a mechanism for a 13 load-serving entity to opt out of the clean energy standard if the commission 14 determines that it is impossible for the load-serving entity to comply with the standard 15 using current technology without long-term effects on the load-serving entity's rates. 16 Regulations adopted by the commission must provide the criteria and procedure for a 17 load-serving entity to opt out of each required percentage in (a)(1) and (2) of this 18 section. A load-serving entity is not eligible to apply for clean energy transferable tax 19 credits under AS 42.05.910 if the entity has opted out of the clean energy standard 20 under this subsection. 21 (i) The commission shall adopt a minimum standard for electric power 22 transmission lines sufficient to ensure seamless end-to-end electrical energy 23 transmission. A load-serving entity may not increase rates paid by ratepayers to fund 24 transmission intertie upgrades required under this subsection, but a load-serving entity 25 may increase rates to fund other required transmission line upgrades. Notwithstanding 26 AS 42.05.900 - 42.05.935, load-serving entities subject to the standards of an electric 27 reliability organization are not subject to the clean energy standard before electric 28 power transmission lines in the interconnected electric energy transmission network 29 served by the electric reliability organization are upgraded to the minimum standard 30 required by this subsection. If the upgrade required under this subsection is not 31 completed before December 31, 2026,
01 (1) 35 percent of sales in the load-serving entity's portfolio must be 02 from clean energy within 10 years after the upgrade is complete; and 03 (2) 60 percent of sales must be from clean energy within 25 years after 04 the upgrade is complete, or when electric power transmission lines connect the 05 interconnected electric energy transmission network in the Railbelt to the service area 06 of the Copper Valley Electric Association, whichever is later. 07 Sec. 42.05.905. Reporting. (a) Beginning March 1, 2025, a load-serving entity 08 subject to the clean energy standard shall submit an annual report to the commission 09 that documents the load-serving entity's progress toward satisfying the clean energy 10 standard in the preceding calendar year. The annual report must document the entity's 11 total production from distributed energy systems and net electricity sales from clean 12 energy for the applicable calendar year and include the information required by the 13 commission. 14 (b) The commission shall adopt regulations governing the reporting 15 requirements to document compliance and minimize the administrative costs and 16 burden on a load-serving entity. 17 (c) The commission may investigate a load-serving entity's compliance with a 18 clean energy standard and collect any information reasonably necessary to verify and 19 audit the information provided to the commission by the load-serving entity. 20 Sec. 42.05.910. Clean energy transferable tax credits. (a) A load-serving 21 entity may apply for the clean energy transferable tax credit under AS 43.98.080 in the 22 amount of 0.2 cents for each kilowatt-hour of clean energy that is 23 (1) produced by the load-serving entity at a facility that meets the 24 qualifications in (b) of this section; and 25 (2) sold by the load-serving entity to an unrelated person during the 26 taxable year. 27 (b) A facility qualifies for the clean energy transferable tax credit under this 28 section if the facility 29 (1) is owned by the load-serving entity; 30 (2) is used to generate clean energy; 31 (3) is placed into service after the effective date of this section; and
01 (4) has been in service for 10 years or less. 02 Sec. 42.05.915. Waiver. (a) The commission may waive the requirement that a 03 load-serving entity comply with the clean energy standard if, after notice and 04 opportunity for a hearing, the commission determines that a load-serving entity is 05 unable to meet the clean energy standard because of reasons outside the reasonable 06 control of the load-serving entity as set out in (b) of this section or the entity 07 establishes a good cause as set out in (c) of this section. The commission may grant a 08 waiver under this section for a period of not longer than five years. 09 (b) The following events or circumstances are outside of a load-serving 10 entity's reasonable control: 11 (1) weather-related damage; 12 (2) natural disasters; 13 (3) failure of clean energy producers to meet contractual obligations to 14 the load-serving entity; 15 (4) transmission network constraint that prevents the load-serving 16 entity from partially or fully using clean energy for net electricity sales; 17 (5) global pandemics; and 18 (6) acts of war. 19 (c) The following factors may establish good cause for a waiver: 20 (1) the actions taken by the load-serving entity to procure the clean 21 energy; 22 (2) the extent of good faith efforts by the load-serving entity to 23 comply; 24 (3) the lack of past failures to comply; 25 (4) the likelihood and amount of future clean energy to be procured by 26 the load-serving entity; 27 (5) the effect of the noncompliance fine on the load-serving entity 28 considering the size or ownership of the load-serving entity; 29 (6) the good faith effort by the load-serving entity to meet the clean 30 energy standard after an event or circumstance enumerated in (b) of this section. 31 (d) A load-serving entity is not eligible to apply for the clean energy
01 transferable tax credit under AS 42.05.910 while a waiver under this section is in 02 effect. 03 Sec. 42.05.920. Exemptions. (a) A load-serving entity is exempt from 04 compliance with the clean energy standard if the aggregate net electricity sales for all 05 load-serving entities on the interconnected electric energy transmission network meets 06 or exceeds the aggregate clean energy standard for all load-serving entities on the 07 interconnected electric energy transmission network. 08 (b) If an exemption under (a) of this section does not apply, a load-serving 09 entity is exempt from its first noncompliance with a clean energy standard. 10 Sec. 42.05.925. Net billing. (a) A load-serving entity subject to the clean 11 energy standard shall credit in a tariff the account of a retail customer for the number 12 of kilowatt-hours, at the export credit rate set by the commission in accordance with 13 (b) of this section, of electric energy supplied by the customer's distributed energy 14 system to the load-serving entity. The tariff may not limit the aggregate capacity that 15 customers may install unless the commission, after a hearing, finds that capacity 16 limitation is necessary to protect system reliability. 17 (b) The commission shall by regulation establish a method to determine 18 annually the amount of a reasonable seasonal and time variant export credit rate for 19 electric energy supplied to a load-serving entity by a customer's distributed energy 20 system. In determining the export credit rate, the commission may consider any 21 relevant factors, including avoided costs of load-serving entities. 22 Sec. 42.05.930. Additional clean energy resources. At least once every five 23 years, the Alaska Energy Authority shall submit a report to the legislature identifying 24 whether the authority recommends that the legislature add any available technologies 25 to the definition of "clean energy" in AS 42.05.935 for purposes of complying with the 26 clean energy standard. The authority shall submit a report required under this section 27 to the senate secretary and the chief clerk of the house of representatives and notify the 28 legislature that the report is available. 29 Sec. 42.05.935. Definitions. In AS 42.05.900 - 42.05.935, 30 (1) "clean energy" means electrical energy that 31 (A) when generated by a load-serving entity, does not release
01 carbon dioxide or releases carbon dioxide in an amount that is offset by the 02 amount of carbon dioxide the load-serving entity absorbs or removes from the 03 atmosphere; 04 (B) is generated from coal with a sulfur content of one percent 05 or less by weight; 06 (C) is generated from renewable energy resources; or 07 (D) is generated from nuclear energy; 08 (2) "clean energy standard" means the required percentage of a load- 09 serving entity's net electrical energy sales to customers in the entity's service area that 10 is represented by clean energy as required under AS 42.05.900; 11 (3) "compliance period" means each period identified in 12 AS 42.05.900(a) or (i); 13 (4) "distributed energy system" means a renewable energy resource 14 that is located on any property owned or leased by a customer within the service 15 territory of the load-serving entity that is interconnected on the customer's side of the 16 utility meter; 17 (5) "interconnected electric energy transmission network" has the 18 meaning given in AS 42.05.790; 19 (6) "load-serving entity" has the meaning given in AS 42.05.790; 20 (7) "Railbelt" means the geographic region from the Kenai Peninsula 21 to Interior Alaska that is connected to a common electric transmission backbone; 22 (8) "renewable energy resource" means a resource, other than 23 petroleum, natural gas, or coal, that naturally replenishes over a human, not a 24 geological, time frame, is ultimately derived from solar power, water power, or wind 25 power, comes from the sun or from thermal inertia of the earth, and minimizes the 26 output of toxic material in the conversion of the energy; in this paragraph, "resource" 27 includes 28 (A) solar and solar thermal energy, wind energy, and kinetic 29 energy of moving water, including 30 (i) waves, tides, or currents; 31 (ii) run-of-river hydropower, in-river hydrokinetic;
01 (iii) conventional hydropower, lake tap hydropower; 02 (iv) water released through a dam; and 03 (v) geothermal energy; 04 (B) waste to energy systems, including 05 (i) wood; 06 (ii) landfill gas produced by municipal solid waste or 07 fuel that has been manufactured in whole or significant part from 08 waste; 09 (iii) biofuels produced in the state; and 10 (iv) thermal energy produced from a geothermal heat 11 pump using municipal solid waste, including biogenic and 12 anthropogenic factions; 13 (9) "transmission network constraint" means a lack of transmission 14 line capacity to deliver electricity without exceeding thermal, voltage, and stability 15 limits designed to ensure reliability of the interconnected electric energy transmission 16 network. 17 * Sec. 6. AS 42.45.110(a) is amended to read: 18 (a) The costs used to calculate the amount of power cost equalization for all 19 electric utilities eligible under AS 42.45.100 - 42.45.150 include all allowable costs, 20 except return on equity, used by the commission to determine the revenue requirement 21 for electric utilities subject to rate regulation under AS 42.05. The costs used in 22 determining the power cost equalization per kilowatt-hour shall exclude any other type 23 of assistance that reduces the customer's costs of power on a kilowatt-hour basis and 24 that is provided to the electric utility within 60 days before the commission determines 25 the power cost equalization per kilowatt-hour of the electric utility. In calculating 26 power cost equalization, the commission may not consider validated costs or kilowatt- 27 hour sales associated with a United States Department of Defense facility or revenue 28 from the sale of recovered heat. 29 * Sec. 7. AS 43.98 is amended by adding a new section to read: 30 Article 5. Clean Energy Transferable Tax Credit. 31 Sec. 43.98.080. Clean energy transferable tax credit. (a) The department
01 shall provide a clean energy transferable tax credit certificate to a load-serving entity, 02 as defined in AS 42.05.790, for qualified clean energy production under 03 AS 42.05.910. The department shall publish the name and contact information for 04 each person provided a clean energy transferable tax credit certificate under this 05 subsection. 06 (b) A clean energy transferable tax credit certificate may be sold, assigned, 07 exchanged, conveyed, or otherwise transferred in whole or in part. 08 (c) A taxpayer acquiring a clean energy transferable tax credit certificate may 09 use the credit or a portion of the credit to offset taxes imposed under AS 10.25 and this 10 title. Except as provided in (e) of this section, any portion of the credit not used may 11 be used at a later period or transferred under (b) of this section. 12 (d) The department shall adopt regulations necessary for the administration of 13 this section. 14 (e) A clean energy transferable tax credit certificate, whether sold, assigned, 15 exchanged, conveyed, or otherwise transferred, in whole or in part, must be used 16 within five years after being provided by the department. 17 (f) A clean energy transferable tax credit certificate may not be applied to 18 reduce a person's tax liability to below zero. 19 (g) A person acquiring two or more clean energy transferable tax credit 20 certificates may combine the unused amounts of the credits for sale, assignment, 21 exchange, conveyance, or other transfer. At the request of a person holding a clean 22 energy transferable tax credit, the department shall replace a certificate that represents 23 the full amount of tax credits available with multiple certificates that each represent a 24 portion of the total tax credits available for the purpose of sale, assignment, exchange, 25 conveyance, or other transfer under this subsection or, upon request, shall provide one 26 tax credit certificate that represents the combined value of multiple tax credit 27 certificates. A tax credit certificate replaced or provided by the department under this 28 subsection must state the expiration date and the amount of each credit that is included 29 in the certificate. Combining or splitting unused amounts of credits under this 30 subsection does not change or extend the period in which each credit that is included 31 in the combination or split must be used.
01 * Sec. 8. AS 44.83.940 is amended by adding a new subsection to read: 02 (b) Not later than the first day of the first regular session of each legislature, 03 the authority shall submit a report to the senate secretary and chief clerk of the house 04 of representatives and notify the legislature that the report is available. The report 05 must identify the authority's progress in developing clean energy in rural regions of 06 the state, evaluate clean energy development in rural regions, identify infrastructure 07 necessary for rural clean energy projects, and evaluate the feasibility and cost of rural 08 clean energy projects. 09 * Sec. 9. This Act takes effect July 1, 2024.