CSHB 368(ENE): "An Act relating to clean energy standards and a clean energy transferable tax credit; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 368(ENE) 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 a minimum standard for electric power 13 transmission lines sufficient to ensure seamless end-to-end electrical energy 14 transmission. A load-serving entity may not increase rates paid by ratepayers to fund 15 transmission intertie upgrades required under this subsection, but a load-serving entity 16 may increase rates to fund other required transmission line upgrades. Notwithstanding 17 AS 42.05.900 - 42.05.935, load-serving entities subject to the standards of an electric 18 reliability organization are not subject to the clean energy standard before electric 19 power transmission lines in the interconnected electric energy transmission network 20 served by the electric reliability organization are upgraded to the minimum standard 21 required by this subsection. If the upgrade required under this subsection is not 22 completed before December 31, 2026, 23 (1) 35 percent of sales in the load-serving entity's portfolio must be 24 from clean energy within 10 years after the upgrade is complete; and 25 (2) 60 percent of sales must be from clean energy within 25 years after 26 the upgrade is complete, or when electric power transmission lines connect the 27 interconnected electric energy transmission network in the Railbelt to the service area 28 of the Copper Valley Electric Association, whichever is later. 29 Sec. 42.05.905. Reporting. (a) Beginning March 1, 2025, a load-serving entity 30 subject to the clean energy standard shall submit an annual report to the commission 31 that documents the load-serving entity's progress toward satisfying the clean energy
01 standard in the preceding calendar year. The annual report must document the entity's 02 total production from distributed energy systems and net electricity sales from clean 03 energy for the applicable calendar year and include the information required by the 04 commission. 05 (b) The commission shall adopt regulations governing the reporting 06 requirements to document compliance and minimize the administrative costs and 07 burden on a load-serving entity. 08 (c) The commission may investigate a load-serving entity's compliance with a 09 clean energy standard and collect any information reasonably necessary to verify and 10 audit the information provided to the commission by the load-serving entity. 11 Sec. 42.05.910. Clean energy transferable tax credits. (a) A load-serving 12 entity or independent power producer may apply for the clean energy transferable tax 13 credit under AS 43.98.080 in the amount of 0.2 cents for each kilowatt-hour of clean 14 energy that is 15 (1) produced by the load-serving entity or independent power producer 16 at a facility that meets the qualifications in (b) of this section; and 17 (2) sold by the load-serving entity or independent power producer to 18 an unrelated person during the taxable year. 19 (b) A facility qualifies for the clean energy transferable tax credit under this 20 section if the facility 21 (1) is owned by the load-serving entity or independent power producer; 22 (2) is used to generate clean energy; 23 (3) is placed into service after the effective date of this section; and 24 (4) has been in service for 10 years or less. 25 (c) If the owner of a facility places a new generating unit or additional 26 generating capacity into service that is used to generate clean energy at the facility 27 after the effective date of this section, the owner may apply for the clean energy 28 transferable tax credit for 10 years from the date the new unit or additional capacity is 29 placed into service, but only to the extent of the increased amount of clean energy 30 produced at the facility because of the new unit or additional capacity. 31 (d) A school district may apply for the clean energy transferable tax credit
01 under AS 43.98.080 for clean energy produced from a distributed energy system that 02 is located on property owned by the school district and that meets the qualifications in 03 (b)(2) - (4) of this section, regardless of whether the energy is sold to an unrelated 04 person. A school district is entitled to the same amount of credit as a load-serving 05 entity under this section for the number of kilowatt-hours of clean energy produced by 06 the school district's distributed energy system. In this subsection, "school district" 07 means a city or borough school district or regional educational attendance area. 08 (e) The owner of a facility that qualifies for a clean energy transferable tax 09 credit under (b) of this section and produces clean energy for an electric utility that 10 receives power cost equalization under AS 42.45.100 - 42.45.150 is eligible for an 11 increased clean energy transferable tax credit in the amount of an additional one cent 12 for each kilowatt-hour of clean energy that meets the requirements in (a) of this 13 section and is produced for the electric utility. The owner of the facility may be the 14 electric utility. In this subsection, "electric utility" has the meaning given in 15 AS 42.45.150. 16 Sec. 42.05.915. Waiver. (a) The commission may waive the requirement that a 17 load-serving entity comply with the clean energy standard if, after notice and 18 opportunity for a hearing, the commission determines that a load-serving entity is 19 unable to meet the clean energy standard because of reasons outside the reasonable 20 control of the load-serving entity as set out in (b) of this section or the entity 21 establishes a good cause as set out in (c) of this section. The commission may grant a 22 waiver under this section for a period of not longer than five years. 23 (b) The following events or circumstances are outside of a load-serving 24 entity's reasonable control: 25 (1) weather-related damage; 26 (2) natural disasters; 27 (3) failure of clean energy producers to meet contractual obligations to 28 the load-serving entity; 29 (4) transmission network constraint that prevents the load-serving 30 entity from partially or fully using clean energy for net electricity sales; 31 (5) global pandemics; and
01 (6) acts of war. 02 (c) The following factors may establish good cause for a waiver: 03 (1) the actions taken by the load-serving entity to procure the clean 04 energy; 05 (2) the extent of good faith efforts by the load-serving entity to 06 comply; 07 (3) the lack of past failures to comply; 08 (4) the likelihood and amount of future clean energy to be procured by 09 the load-serving entity; 10 (5) the effect of the noncompliance fine on the load-serving entity 11 considering the size or ownership of the load-serving entity; 12 (6) the good faith effort by the load-serving entity to meet the clean 13 energy standard after an event or circumstance enumerated in (b) of this section. 14 Sec. 42.05.920. Exemptions. (a) A load-serving entity is exempt from 15 compliance with the clean energy standard if the aggregate net electricity sales for all 16 load-serving entities on the interconnected electric energy transmission network meets 17 or exceeds the aggregate clean energy standard for all load-serving entities on the 18 interconnected electric energy transmission network. 19 (b) If an exemption under (a) of this section does not apply, a load-serving 20 entity is exempt from its first noncompliance with a clean energy standard. 21 Sec. 42.05.925. Net billing. (a) A load-serving entity subject to the clean 22 energy standard shall credit in a tariff the account of a retail customer for the number 23 of kilowatt-hours, at the export credit rate set by the commission in accordance with 24 (b) of this section, of electric energy supplied by the customer's distributed energy 25 system to the load-serving entity. The tariff may not limit the aggregate capacity that 26 customers may install unless the commission, after a hearing, finds that capacity 27 limitation is necessary to protect system reliability. 28 (b) The commission shall by regulation establish a method to determine 29 annually the amount of a reasonable seasonal and time variant export credit rate for 30 electric energy supplied to a load-serving entity by a customer's distributed energy 31 system. In determining the export credit rate, the commission may consider any
01 relevant factors, including avoided costs of load-serving entities. 02 Sec. 42.05.930. Additional clean energy resources. At least once every five 03 years, the Alaska Energy Authority shall submit a report to the legislature identifying 04 whether the authority recommends that the legislature add any available technologies 05 to the definition of "clean energy" in AS 42.05.935 for purposes of complying with the 06 clean energy standard. The authority shall submit a report required under this section 07 to the senate secretary and the chief clerk of the house of representatives and notify the 08 legislature that the report is available. 09 Sec. 42.05.935. Definitions. In AS 42.05.900 - 42.05.935, 10 (1) "clean energy" means electrical energy that 11 (A) when generated by a load-serving entity, does not release 12 carbon dioxide or releases carbon dioxide in an amount that is offset by the 13 amount of carbon dioxide the load-serving entity absorbs or removes from the 14 atmosphere; 15 (B) is generated from coal with a sulfur content of one percent 16 or less by weight; 17 (C) is generated from renewable energy resources; or 18 (D) is generated from nuclear energy; 19 (2) "clean energy standard" means the required percentage of a load- 20 serving entity's net electrical energy sales to customers in the entity's service area that 21 is represented by clean energy as required under AS 42.05.900; 22 (3) "compliance period" means each period identified in 23 AS 42.05.900(a) or (h); 24 (4) "distributed energy system" means a renewable energy resource 25 that is located on any property owned or leased by a customer within the service 26 territory of the load-serving entity that is interconnected on the customer's side of the 27 utility meter; 28 (5) "independent power producer" means a person, other than a load- 29 serving entity, that owns or operates a facility for the generation of electricity for use 30 primarily by the public; 31 (6) "interconnected electric energy transmission network" has the
01 meaning given in AS 42.05.790; 02 (7) "load-serving entity" has the meaning given in AS 42.05.790; 03 (8) "Railbelt" means the geographic region from the Kenai Peninsula 04 to Interior Alaska that is connected to a common electric transmission backbone; 05 (9) "renewable energy resource" means a resource, other than 06 petroleum, natural gas, or coal, that naturally replenishes over a human, not a 07 geological, time frame, is ultimately derived from solar power, water power, or wind 08 power, comes from the sun or from thermal inertia of the earth, and minimizes the 09 output of toxic material in the conversion of the energy; in this paragraph, "resource" 10 includes 11 (A) solar and solar thermal energy, wind energy, and kinetic 12 energy of moving water, including 13 (i) waves, tides, or currents; 14 (ii) run-of-river hydropower, in-river hydrokinetic; 15 (iii) conventional hydropower, lake tap hydropower; 16 (iv) water released through a dam; and 17 (v) geothermal energy; 18 (B) waste to energy systems, including 19 (i) wood; 20 (ii) landfill gas produced by municipal solid waste or 21 fuel that has been manufactured in whole or significant part from 22 waste; 23 (iii) biofuels produced in the state; and 24 (iv) thermal energy produced from a geothermal heat 25 pump using municipal solid waste, including biogenic and 26 anthropogenic factions; 27 (10) "transmission network constraint" means a lack of transmission 28 line capacity to deliver electricity without exceeding thermal, voltage, and stability 29 limits designed to ensure reliability of the interconnected electric energy transmission 30 network. 31 * Sec. 6. AS 42.45.110(a) is amended to read:
01 (a) The costs used to calculate the amount of power cost equalization for all 02 electric utilities eligible under AS 42.45.100 - 42.45.150 include all allowable costs, 03 except return on equity, used by the commission to determine the revenue requirement 04 for electric utilities subject to rate regulation under AS 42.05. The costs used in 05 determining the power cost equalization per kilowatt-hour shall exclude any other type 06 of assistance that reduces the customer's costs of power on a kilowatt-hour basis and 07 that is provided to the electric utility within 60 days before the commission determines 08 the power cost equalization per kilowatt-hour of the electric utility. In calculating 09 power cost equalization, the commission may not consider validated costs or kilowatt- 10 hour sales associated with a United States Department of Defense facility or revenue 11 from the sale of recovered heat. 12 * Sec. 7. AS 43.98 is amended by adding a new section to read: 13 Article 5. Clean Energy Transferable Tax Credit. 14 Sec. 43.98.080. Clean energy transferable tax credit. (a) The department 15 shall provide a clean energy transferable tax credit certificate for qualified clean 16 energy production under AS 42.05.910. The department shall publish the name and 17 contact information for each person provided a clean energy transferable tax credit 18 certificate under this subsection. 19 (b) A clean energy transferable tax credit certificate may be sold, assigned, 20 exchanged, conveyed, or otherwise transferred in whole or in part. 21 (c) A taxpayer acquiring a clean energy transferable tax credit certificate may 22 use the credit or a portion of the credit to offset taxes imposed under AS 10.25 and this 23 title. Except as provided in (e) of this section, any portion of the credit not used may 24 be used at a later period or transferred under (b) of this section. 25 (d) The department shall adopt regulations necessary for the administration of 26 this section. 27 (e) A clean energy transferable tax credit certificate, whether sold, assigned, 28 exchanged, conveyed, or otherwise transferred, in whole or in part, must be used 29 within five years after being provided by the department. 30 (f) A clean energy transferable tax credit certificate may not be applied to 31 reduce a person's tax liability to below zero.
01 (g) A person acquiring two or more clean energy transferable tax credit 02 certificates may combine the unused amounts of the credits for sale, assignment, 03 exchange, conveyance, or other transfer. At the request of a person holding a clean 04 energy transferable tax credit, the department shall replace a certificate that represents 05 the full amount of tax credits available with multiple certificates that each represent a 06 portion of the total tax credits available for the purpose of sale, assignment, exchange, 07 conveyance, or other transfer under this subsection or, upon request, shall provide one 08 tax credit certificate that represents the combined value of multiple tax credit 09 certificates. A tax credit certificate replaced or provided by the department under this 10 subsection must state the expiration date and the amount of each credit that is included 11 in the certificate. Combining or splitting unused amounts of credits under this 12 subsection does not change or extend the period in which each credit that is included 13 in the combination or split must be used. 14 * Sec. 8. AS 44.83.940 is amended by adding a new subsection to read: 15 (b) Not later than the first day of the first regular session of each legislature, 16 the authority shall submit a report to the senate secretary and chief clerk of the house 17 of representatives and notify the legislature that the report is available. The report 18 must identify the authority's progress in developing clean energy in rural regions of 19 the state, evaluate clean energy development in rural regions, identify infrastructure 20 necessary for rural clean energy projects, and evaluate the feasibility and cost of rural 21 clean energy projects. 22 * Sec. 9. This Act takes effect July 1, 2024.