SB 101: "An Act relating to a renewable portfolio standard; relating to electrical energy transmission; relating to distributed energy systems; relating to power cost equalization; relating to the Alaska Energy Authority; and providing for an effective date."
00 SENATE BILL NO. 101 01 "An Act relating to a renewable portfolio standard; relating to electrical energy 02 transmission; relating to distributed energy systems; relating to power cost equalization; 03 relating to the Alaska Energy Authority; 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 renewable portfolio standard that 08 requires certain electric utilities to derive increasing percentages of the utility's net electricity 09 sales from renewable energy resources. Nothing in this Act is intended to constitute 10 implementation by the Regulatory Commission of Alaska of the federal Public Utility 11 Regulatory Policies Act of 1978 (16 U.S.C. 2705). 12 * Sec. 2. AS 42.05.391(a) is amended to read: 13 (a) Except as provided in AS 42.05.306, a public utility may not, as to rates, 14 grant an unreasonable preference or advantage to any of its customers or subject a
01 customer to an unreasonable prejudice or disadvantage. A public utility may not 02 establish or maintain an unreasonable difference as to rates, either as between 03 localities or between classes of service. A public utility offering net metering for 04 customers who install distributed energy systems is not engaging in rate 05 discrimination solely because some customers receive net metering. A municipally 06 owned utility may offer uniform or identical rates for a public utility service to 07 customers located in different areas within its certificated service area who receive the 08 same class of service. Any uniform or identical rate shall, upon complaint, be subject 09 to review by the commission and may be set aside if shown to be unreasonable. In this 10 subsection, "distributed energy system" has the meaning given in AS 42.05.930. 11 * Sec. 3. AS 42.05.780(a) is amended to read: 12 (a) An electric reliability organization shall file with the commission in a 13 petition for approval an integrated resource plan for meeting the reliability 14 requirements of all customers within its interconnected electric energy transmission 15 network in a manner that provides the greatest value, consistent with the load-serving 16 entities' obligations. An integrated resource plan must contain an evaluation of the full 17 range of cost-effective means for load-serving entities to meet the service 18 requirements of all customers, including additional generation, transmission, battery 19 storage, and conservation or similar improvements in efficiency. An integrated 20 resource plan must include options to meet customers' collective needs in a manner 21 that provides the greatest value, consistent with the public interest, regardless of the 22 location or ownership of new facilities or conservation activities. An integrated 23 resource plan must include options by which each load-serving entity may satisfy 24 the renewable portfolio standard under AS 42.05.900. 25 * Sec. 4. AS 42.05.785(a) is amended to read: 26 (a) A public utility, including a public utility that is exempt from other 27 regulation under AS 42.05.711 or another provision of this chapter, that is 28 interconnected with an interconnected electric energy transmission network served by 29 an electric reliability organization certificated by the commission may not construct a 30 large energy facility unless the commission determines that the facility 31 (1) is necessary to the interconnected electric energy transmission
01 network with which it would be interconnected; 02 (2) complies with reliability standards; [AND] 03 (3) would, in a cost-effective manner, meet the needs of a load-serving 04 entity that is substantially served by the facility; and 05 (4) is not detrimental to a load-serving entity's ability to meet the 06 renewable portfolio standard under AS 42.05.900. 07 * Sec. 5. AS 42.05 is amended by adding new sections to read: 08 Article 11A. Renewable Portfolio Standard. 09 Sec. 42.05.900. Renewable portfolio standard. (a) A load-serving entity that 10 is subject to the standards of an electric reliability organization under AS 42.05.760 11 shall comply with the renewable portfolio standard established in this section. Under 12 the renewable portfolio standard, a load-serving entity's portfolio shall include sales 13 from renewable energy resources in the following percentages: 14 (1) 25 percent by December 31, 2027; 15 (2) 55 percent by December 31, 2035; 16 (3) 80 percent by December 31, 2040. 17 (b) A purchase power agreement entered into between a load-serving entity 18 and a renewable electrical energy producer will be considered to satisfy all or part of 19 the percentages required under (a) of this section if 20 (1) the effective date of the purchase power agreement is before the 21 end of the compliance period; 22 (2) the purchase power agreement guarantees that the renewable 23 electrical energy producer will deliver the renewable electrical energy to the load- 24 serving entity not later than two years after the compliance period; and 25 (3) the purchase power agreement is approved by the commission in 26 accordance with AS 42.05.381 and 42.05.431(a) and (b) before the end of the 27 compliance period; if the purchase power agreement is not approved by the 28 commission, the load-serving entity may be subject to a noncompliance fine under 29 AS 42.05.915. 30 (c) To qualify as part of a load-serving entity's portfolio, renewable energy 31 resources used by a load-serving entity must be located within the load-serving entity's
01 service area, connected to the same interconnected electric energy transmission 02 network that serves the load-serving entity's customers, or located within the service 03 area of an electric utility whose customers receive power cost equalization under 04 AS 42.45.100 - 42.45.150. 05 (d) A load-serving entity may satisfy the renewable portfolio standard through 06 energy produced by distributed energy systems, regardless of whether the energy is 07 acquired by the load-serving entity or used by the customer. 08 (e) A load-serving entity's compliance with the renewable portfolio standard 09 shall be based on historical data, collected in a manner consistent with industry 10 standards and commission regulations. 11 (f) A load-serving entity shall design and implement an accounting system to 12 verify compliance with the renewable portfolio standard to ensure that renewable 13 electrical energy is counted only once for the purpose of meeting the renewable 14 portfolio standard. 15 (g) The commission shall, by regulation, develop a proxy for the ratio of net 16 energy acquired by a load-serving entity at metered intervals to total energy produced 17 from distributed energy systems. Using the proxy, the commission shall determine an 18 estimate of total energy produced by distributed energy systems available to satisfy a 19 load-serving entity's renewable portfolio standard. The commission shall update the 20 proxy developed under this subsection not less than once every five years. 21 (h) A load-serving entity may also satisfy the renewable portfolio standard 22 through renewable energy credits that qualify as part of the load-serving entity's 23 portfolio under AS 42.05.910. 24 (i) A load-serving entity may also satisfy the renewable portfolio standard 25 with energy consumption displaced because of energy efficiency investments made in 26 whole or part with payments under AS 42.05.915(g), if the displaced consumption is 27 documented under a program established by the state. 28 Sec. 42.05.905. Reporting. (a) Beginning March 1, 2025, a load-serving entity 29 subject to the renewable portfolio standard shall submit an annual report to the 30 commission that documents the load-serving entity's progress toward satisfying the 31 renewable portfolio standard under AS 42.05.900 in the preceding calendar year. The
01 annual report must document the entity's total production from distributed energy 02 systems and net electricity sales from renewable energy resources for the applicable 03 calendar year, document the entity's satisfaction of penalties imposed under 04 AS 42.05.915, and include the information required by the commission. 05 (b) The commission shall adopt regulations governing the reporting 06 requirements under (a) of this section to document compliance and minimize the 07 administrative costs and burden on a load-serving entity. 08 (c) The commission may investigate a load-serving entity's compliance with a 09 renewable portfolio standard and collect any information necessary to verify and audit 10 the information provided to the commission by the load-serving entity. 11 Sec. 42.05.910. Renewable energy credits. (a) To qualify as part of a load- 12 serving entity's portfolio, renewable energy credits must be bundled renewable energy 13 credits from generation located within a load-serving entity's service area or connected 14 to the same interconnected electric energy transmission network that serves the load- 15 serving entity's customers or must be purchased from generation located within the 16 service area of an electric utility that serves customers who receive power cost 17 equalization under AS 42.45.100 - 42.45.150. 18 (b) A renewable energy credit may be used only once and then must be 19 retired. 20 (c) Each load-serving entity is responsible for tracking and demonstrating that 21 a renewable energy credit used to comply with the renewable portfolio standard is 22 derived from a renewable energy resource, that the load-serving entity has not 23 previously used, traded, sold, or otherwise transferred the renewable energy credit, and 24 that the renewable energy credit is retired upon its use. 25 (d) A renewable energy credit may be traded, sold, or otherwise transferred for 26 value. 27 (e) Revenue received by a load-serving entity for the trade, sale, or transfer of 28 a renewable energy credit shall be credited to the load-serving entity's cost of power 29 adjustment to the benefit of the load-serving entity's customers. 30 Sec. 42.05.915. Noncompliance fine; waiver. (a) If the commission 31 determines that a load-serving entity failed to meet the renewable portfolio standard
01 under AS 42.05.900, after notice and an opportunity for hearing, the entity is, each 02 year that the entity fails to meet the renewable portfolio standard, subject to a fine of 03 $20 for every megawatt hour that the entity is below the renewable portfolio standard. 04 (b) The commission may waive the noncompliance fine in whole or in part 05 upon determination that a load-serving entity is unable to meet the renewable portfolio 06 standard because of reasons outside the reasonable control of the load-serving entity as 07 set out in (c) of this section or the entity establishes a good cause for noncompliance 08 as set out in (d) of this section. 09 (c) 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 renewable electrical energy producers to meet contractual 14 obligations to the load-serving entity; 15 (4) transmission network constraint that prevents the load-serving 16 entity from partially or fully using renewable electrical energy for net electricity sales; 17 (5) global pandemics; and 18 (6) acts of war. 19 (d) The following factors may establish good cause for noncompliance: 20 (1) the actions taken by the load-serving entity to procure the 21 renewable electrical 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 renewable electrical energy to 26 be procured by 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 30 renewable portfolio standard after an event or circumstance enumerated in (c) of this 31 section.
01 (e) If the commission waives all or part of a noncompliance fine, the 02 commission may require additional reporting from a load-serving entity to 03 demonstrate the entity is taking all reasonable actions under its control to satisfy the 04 renewable portfolio standard. 05 (f) A fine paid by a load-serving entity under this section may not be included 06 or recovered in rates, but the load-serving entity may recover a payment made to a 07 customer under (g) of this section. 08 (g) A load-serving entity may, within one year after the commission imposes a 09 noncompliance fine, satisfy the fine by paying a customer all or a portion of the 10 customer's costs of installing a distributed energy system or energy efficiency 11 technologies. When paying customer costs of installing a distributed energy system, 12 the load-serving entity shall, if total requests for costs exceed the amount of the 13 noncompliance fine, prioritize customers with mean household annual incomes at or 14 below 80 percent of the median census district income where the load-serving entity of 15 the customer is located. 16 Sec. 42.05.920. Exemptions. (a) A load-serving entity is exempt from 17 compliance with the renewable portfolio standard under AS 42.05.900 if the aggregate 18 net electricity sales for all load-serving entities on the interconnected electric energy 19 transmission network meets or exceeds the aggregate renewable portfolio standard for 20 all load-serving entities on the interconnected electric energy transmission network. 21 (b) If an exemption under (a) of this section does not apply, a load-serving 22 entity is exempt from its first noncompliance with a renewable portfolio standard. An 23 exemption under this subsection does not apply for the compliance period ending 24 December 31, 2040. 25 Sec. 42.05.925. Net metering. (a) A load-serving entity subject to the 26 renewable portfolio standard under AS 42.05.900 shall monthly credit in a tariff the 27 account of a retail customer for the number of kilowatt-hours, at the full retail rate per 28 kilowatt-hour, of electric energy supplied by the customer's distributed energy system 29 to the load-serving entity. The tariff may not limit the aggregate capacity that 30 customers may install unless the commission, after a hearing, finds that capacity 31 limitation is necessary to protect system reliability.
01 (b) For up to seven years after a customer's distributed energy system is 02 connected to the load-serving entity and generates power, a credit under (a) of this 03 section that exceeds the customer's monthly bill for service will roll over to the 04 following month and continue to roll over until used. Unused credits expire on 05 March 31 of each year. 06 (c) The credits under (b) of this section are not available for a distributed 07 energy system installed before July 1, 2023. 08 Sec. 42.05.930. Definitions. In AS 42.05.900 - 42.05.930, 09 (1) "bundled renewable energy credits" means renewable energy 10 credits that are sold or used together with their associated energy; 11 (2) "compliance period" means each period identified in 12 AS 42.05.900(a); 13 (3) "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 (4) "interconnected electric energy transmission network" has the 18 meaning given in AS 42.05.790; 19 (5) "load-serving entity" has the meaning given in AS 42.05.790; 20 (6) "megawatt hour" means 1,000,000 watts of electricity being used in 21 one hour and includes the steam equivalent of a megawatt hour; 22 (7) "renewable electrical energy" means electricity or energy generated 23 from renewable energy resources; 24 (8) "renewable energy credit" means one credit equal to the generation 25 attributes of one megawatt hour that is derived from a renewable energy resource 26 located within the load-serving entity's service area or within the interconnected 27 electric energy transmission network where a load-serving entity's service area is 28 located, or purchased from generation located within the service area of an electric 29 utility that serves customers who receive power cost equalization under AS 42.45.100 30 - 42.45.150; where fossil and renewable fuels are co-fired in the same generating unit, 31 the unit is considered to generate renewable electrical energy in direct proportion to
01 the percentage of the total heat input value represented by the heat input value of the 02 renewable fuels; 03 (9) "renewable energy resource" means a resource, other than 04 petroleum, nuclear, natural gas, or coal, that naturally replenishes over a human, not a 05 geological, time frame, is ultimately derived from solar power, water power, or wind 06 power, comes from the sun or from thermal inertia of the earth, and minimizes the 07 output of toxic material in the conversion of the energy; in this paragraph, "resource" 08 includes 09 (A) solar and solar thermal energy, wind energy, and kinetic 10 energy of moving water, including 11 (i) waves, tides, or currents; 12 (ii) run-of-river hydropower, in-river hydrokinetic; 13 (iii) conventional hydropower, lake tap hydropower; 14 (iv) water released through a dam; and 15 (v) geothermal energy; 16 (B) waste to energy systems, including 17 (i) wood; 18 (ii) landfill gas produced by municipal solid waste or 19 fuel that has been manufactured in whole or significant part from 20 waste; 21 (iii) biofuels produced in the state; and 22 (iv) thermal energy produced from a geothermal heat 23 pump using municipal solid waste, including biogenic and 24 anthropogenic factions; 25 (10) "renewable portfolio standard" means the required percentage of a 26 load-serving entity's net electrical energy sales to customers in the entity's service area 27 that is represented by renewable electrical energy as required under AS 42.05.900(a); 28 (11) "transmission network constraint" means a lack of transmission 29 line capacity to deliver electricity without exceeding thermal, voltage, and stability 30 limits designed to ensure reliability of the interconnected electric energy transmission 31 network.
01 * Sec. 6. AS 42.45.110(a) is amended to read: 02 (a) The costs used to calculate the amount of power cost equalization for all 03 electric utilities eligible under AS 42.45.100 - 42.45.150 include all allowable costs, 04 except return on equity, used by the commission to determine the revenue requirement 05 for electric utilities subject to rate regulation under AS 42.05. The costs used in 06 determining the power cost equalization per kilowatt-hour shall exclude any other type 07 of assistance that reduces the customer's costs of power on a kilowatt-hour basis and 08 that is provided to the electric utility within 60 days before the commission determines 09 the power cost equalization per kilowatt-hour of the electric utility. In calculating 10 power cost equalization, the commission may not consider validated costs or kilowatt- 11 hour sales associated with a United States Department of Defense facility, revenue 12 from the sale of recovered heat, or revenue from the sale of renewable energy 13 credits acquired under AS 42.05.910. 14 * Sec. 7. 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 renewable energy resources in 19 rural regions of the state, evaluate renewable energy resource development in rural 20 regions, identify infrastructure necessary for rural renewable energy projects, and 21 evaluate the feasibility and cost of rural renewable energy projects. 22 * Sec. 8. This Act takes effect July 1, 2023.