§ 8059 — Sustainable Energy Utility
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(a)Definitions. —As used in this section:
(1) “Affected electric energy provider” means an electric distribution company, rural electric cooperative, or municipal electric company serving energy customers in Delaware.
(2) “Affected energy provider” means an affected electric energy provider or affected natural gas distribution company.
(3) “Affected natural gas distribution company” means a natural gas distribution company serving energy customers in Delaware.
(4) “Agency” means any state agency, authority, or any political subdivision of the State or local government, including, but not limited to, county, city, township, village or municipal government, local school districts, and institutions of higher education, any state-supported institution, or a joint action agency composed of political subdivisions.
(5) “Commission” means the Delaware Public Service Commission.
(6) “Energy efficiency” means a decrease in consumption of electric energy or natural gas on a per unit of production basis which does not cause a reduction in the quality or level of service provided to the energy customer, achieved through measures or programs that target consumer behavior, or replace or improve the performance of equipment, processes, or devices. Energy efficiency can also mean the reduction in transmission and distribution losses associated with the design and operation of the electrical system.
(7) “Energy savings” means reductions in electricity consumption, reductions in natural gas consumption, electricity peak demand response programs resulting in reduced electricity consumption, or measurable efficiency gains from the transition to lower-emission fuels, as determined by the Secretary through regulations pursuant to paragraph (h)(3) of this section.
(8) “Secretary” means the Secretary of the Department of Natural Resources and Environmental Control.
(9) “SEU Oversight Board” (“the Board”) means the board created pursuant to this section.
(10) “Sustainable Energy Utility” (“SEU”) is the nonprofit entity created pursuant to the provisions of this section to develop and coordinate programs for energy end-users in Delaware for the purpose of promoting the sustainable use of energy in Delaware.
(b)Intent of legislation. —The General Assembly finds that there remain in Delaware significant, cost-effective opportunities to acquire end-user energy efficiency savings that can lower customers’ bills and reduce the environmental impacts of energy production, delivery, and use. Delaware has an opportunity to create new markets for customer-sited renewable energy generation that will help build jobs in Delaware, improve our national security, keep value within the local economy, improve energy reliability, and protect Delawareans from the damaging effects of recurrent energy price spikes.
(c)Sustainable Energy Utility administrative organization. —(1) This section creates the “Sustainable Energy Utility” (“SEU”). The SEU shall design and deliver comprehensive end-user energy efficiency and customer-sited renewable energy services to Delaware’s households and businesses. The SEU shall be unaffiliated with any of the State’s electric or gas utilities, public or private.
(2) Routine administration of the SEU shall be managed by an executive director selected by the Board through an open and competitive selection process.
(d)SEU Oversight Board. —(1) a. The business and affairs of the SEU shall be managed by or under the direction of the SEU Oversight Board. The SEU Oversight Board shall consist of 11 members and shall include the Secretary of the Department of Natural Resources and Environmental Control (“DNREC”) or the Secretary’s designee, and the Public Advocate or the Public Advocate’s designee. The Board shall include representation from each county. Seven members of the SEU Oversight Board shall be appointed by and serve at the pleasure of the Governor, and may include, but not be limited to, representatives from the nonprofit environmental community, the nonprofit energy community, the nonprofit community servicing the low and moderate income community, the financing/accounting community, business, labor, and education. One member of the SEU Oversight Board shall be appointed by and serve at the pleasure of the President Pro Tempore, and 1 member shall be appointed by and serve at the pleasure of the Speaker of the House. The Board shall elect 1 of its members to serve as a chairperson by a majority vote. The Director of the Division of Climate, Coastal and Energy of DNREC, or the Director’s designee, shall serve on the Board in an ex officio nonvoting capacity. The terms of the board members shall typically be 4 years, and shall be staggered. The Governor may appoint members for terms of less than 4 years to ensure that the terms are staggered. The Governor may, at any time, remove any gubernatorial appointee to the SEU Oversight Board for gross inefficiency, malfeasance, misfeasance or nonfeasance, in office. A gubernatorial appointee may be deemed to have resigned their position if they are absent from 3 consecutive board meetings without good cause.
b. The SEU Oversight Board shall be governed by and subject to the Delaware Freedom of Information Act (Chapter 100 of this title).
c. The SEU Oversight Board shall include a provision in its bylaws pertaining to conflicts of interest and Board members shall be required to sign conflict of interest statements.
(2) The SEU Oversight Board may, from time to time, appoint 1 or more advisory committees. An advisory committee may include representatives of organizations which represent low and moderate income energy consumers, low and moderate income housing consumers, civic organizations, environmental organizations, the energy industry, the energy efficiency and energy conservation community, the renewable energy community, marketing and public relations, small business, agriculture, accounting, business management, banking, finance, nonprofit communities, the general public, and the academic community. The Board shall decide the number of advisory committee members (including ex officio members).
a. Among other things, the advisory committee may provide advice to the Board on issues of public policy and public education which may enhance the performance and quality of service of the SEU.
b. A candidate for an advisory committee shall require a2/3vote of Board members in order to serve. Criteria for the advisory committee members shall include professional experience, community service, reputation, significance to Delaware, a diversified representation of the Delaware community and geographical representation of the State.
c. Nominations for the advisory committee may be submitted by Board members and public solicitation.
(3) Board members shall serve without compensation.
(4) No board member shall receive financial gain from service on the Board.
(5) Board members shall not be employed by any organization directly or indirectly affiliated with the SEU or its contractors for a period of not less than 2 years after the end of their service on the Board.
(6) The Board shall adopt by-laws, by September 28, 2007, to govern itself.
(7) The Board shall have the following responsibilities, among others permitted by law:
a. Review and approve the contract-term and performance targets recommended by the executive director.
b. Review and approve any proposed modifications to SEU performance targets or program designs.
(e)SEU executive director responsibilities. —The SEU executive director is responsible for the day-to-day functions and responsibilities of the SEU. The executive director’s chief responsibilities include oversight of program management, and setting and compliance with appropriate performance and budgetary targets.
(1)Program research and design. —a. The executive director shall develop a comprehensive suite of program designs. Each program design must specify, at minimum, program goals, performance targets, an estimated budget, an implementation strategy, and an evaluation strategy. The executive director is not required to design or initiate all programs at once, but the executive director must demonstrate how each program fits within the SEU’s overall strategy to meet the SEU’s long-term performance targets.
b. The executive director is expected to fulfill the following responsibilities through program designs, RFPs, and program implementation:
1. To be responsive to customers and market forces in implementing and redesigning the programs;
2. To design a portfolio of programs to allow all energy end-users, regardless of electricity or gas retail providers, and regardless of market segment or end-use fuel, to participate in the SEU programs;
3. To promote program initiatives and market strategies that address the needs of persons or businesses facing the most significant barriers to participation;
4. To promote coordinated program delivery, including coordination with low income programs, other efficiency programs, and utility programs;
5. To coordinate with relevant regional and national energy efforts and markets, including markets for pollution emissions offsets and credits, and renewable energy credits;
6. To consider innovative approaches to delivering sustainable energy services, including strategies to encourage third-party financing and leveraged customer contributions to the cost of program measures, as consistent with principles of sound program design;
7. To offer “one-stop shopping” and be the point-of-contact for sustainable energy services in Delaware;
8. To create a comprehensive website that provides easy access to SEU programs and information for all Delawareans, allowing them to participate in SEU programs electronically;
9. To emphasize “lost opportunity” markets, which are sustainable energy measures that can only be cost-effectively captured at particular times, such as during new construction or extensive remodeling; and
10. To emphasize market strategies to deliver services.
(2)Administration of contracts. —The SEU shall propose and adopt rules to guide the bidding process and criteria to guide bid selection. The RFPs shall specify a contract term not to exceed the limitation set forth in The Energy Performance Contracting Act set forth in subchapter V of Chapter 69 of this title.
(3)Oversight and reporting. —a. The SEU Oversight Board shall develop a 3- to 5-year strategic plan, with input provided by board members, stakeholder groups across the State, and the public at large. The strategic plan shall be made available to the public on the SEU’s website. The SEU’s strategic plan shall include an educational component for the general public with a continued focus on residential energy efficiency projects.
b. The SEU shall publish a comprehensive annual report which shall be submitted to the Governor and the General Assembly and made available to the public on the SEU’s website.
c. The SEU shall have certified financial statements prepared at the end of each fiscal year and make them available to the public on the SEU’s website.
d. The SEU’s financial statements shall be audited every other year by an independent certified public accounting firm qualified to perform such an audit, and the audit results shall be made available to the public on the SEU’s website.
(f)Funding for the SEU. —(1) DNREC may partner with the SEU to assist in the administration of some or all of the Green Energy Fund in accordance with § 8057 of this title.
(2)Bonds of the SEU. —a. The SEU may from time to time issue bonds for any corporate purpose and all such bonds, notes, bond anticipation notes or other obligations of the SEU issued pursuant to this section shall be and are hereby declared to be negotiable for all purposes notwithstanding their payment from a limited source and without regard to any other law or laws. In anticipation of the sale of such bonds, the SEU may issue negotiable bond anticipation notes and may renew the same from time to time, but the maximum maturity of any such note, including renewals thereof, shall not exceed 5 years from the date of issue of the original note. Such notes shall be paid from any revenues of the SEU available therefor and not otherwise pledged, or from the proceeds of sale of the bonds of the SEU in anticipation of which they were issued. The notes shall be issued in the same manner as the bonds. Such notes and the resolution or resolutions authorizing the same may contain any provisions, conditions or limitations which a bond resolution of the SEU may contain.
b. The bonds and notes of every issue shall be payable solely out of the revenues of the SEU, subject only to any agreements with the holders of particular bonds or notes pledging any particular revenues and subject to any agreements with any participating facility. Notwithstanding that bonds and notes may be payable from a special fund, they shall be and be deemed to be, for all purposes, negotiable instruments subject only to the provisions of the bonds and notes for registration.
c. The bonds may be issued as serial bonds or as term bonds, or the SEU, in its discretion may issue bonds of both types. The bonds shall be authorized by resolution of the members of the SEU Oversight Board and shall bear such date or dates, mature at such time or times, not exceeding 50 years from their respective dates, bear interest at such rate or rates, payable at such time or times, be in such denominations, be in such form, either coupon or registered, carry such registration privileges, be executed in such manner, be payable in lawful money of the United States of America at such place or places, and be subject to such terms of redemption, as such resolution or resolutions may provide. Such resolution or resolutions may delegate to any combination of 3 of the members of the SEU Oversight Board, the power to determine any of the matters set forth in this paragraph (f)(2) and the power to award the bonds to a purchaser or purchasers at public sale or to negotiate a sale to a purchaser or purchasers. The bonds or notes may be sold at public or private sale for such price or prices as the SEU shall determine. Pending preparation of the definitive bonds, the SEU may issue interim receipts or certificates which shall be exchanged for such definitive bonds.
d. Neither the members of the SEU Oversight Board nor any person executing the bonds or notes shall be liable personally on the bonds or notes or be subject to any personal liability or accountability by reason of the issuance thereof.
e. The SEU shall have power, out of any funds available therefor, to purchase its bonds or notes. The SEU may hold, pledge, cancel or resell such bonds or notes subject to and in accordance with agreements with bondholders or participating facilities. The SEU may elect to have bonds issued by a conduit issuer and borrow the proceeds thereof.
f. Bonds or notes issued under this section shall not be deemed to constitute a debt or liability of the State or of any political subdivisions thereof or a pledge of the faith and credit of the State or of any such political subdivision, but shall be payable solely from the funds herein provided therefor. All such bonds or notes shall contain on the face thereof a statement to the effect that neither the State nor any political subdivision thereof shall be obligated to pay the same or the interest thereon and that neither the faith and credit nor the taxing power of the State or of any political subdivision thereof is pledged to the payment of the principal of or the interest on such bonds. The issuance of bonds under this section shall not directly or indirectly or contingently obligate the State or any political subdivision thereof to levy or to pledge any form of taxation whatever therefor, or to make any appropriation for their payment. Nothing contained in this section shall prevent or be construed to prevent the SEU from pledging its full faith and credit or the full faith and credit of a participating facility to the payment of bonds or issue of bonds authorized pursuant to this section.
g. Interest on bonds or notes issued under this section shall be exempt from income taxation by this State or any political subdivision thereof.
(3) Revenue sources contributing to the SEU for the purpose of paying bond debt may include but not be limited to funds from shared savings agreements with SEU participants and partial proceeds from the sale of Renewable Energy Credits or Solar Renewable Energy Credits in local and regional markets. The Green Energy Fund shall provide equity leverage for the SEU.
(4) Incentives provided through the SEU or proceeds from the Regional Greenhouse Gas Initiative shall be exempt from taxation by the State and by the counties and municipalities of the State.
(g)Contracts with the State or agencies. —The State or any agency may enter into contracts with the SEU or a qualified provider (as defined in § 6972(5) of this title) for the purpose of acquiring, constructing, operating, or providing a project, including arrangements for paying the costs of such project, which costs may include debt service requirements of the SEU relating to that project. If the SEU procures a contract in accordance with subsection (e) of this section, a contract between the SEU and the State or an agency that provides the benefit of the contract to the State or agency may be entered into by the State or agency without additional competitive procurement.
No obligation of the State or an agency under an installment payment agreement, a guaranteed energy performance contract or any other agreement entered into in connection with a project under this Chapter 80 or Chapter 69 of this title shall constitute or create a debt of the State or agency. No such obligation of the State or an agency shall constitute a tax supported obligation or a bond or a note of the State as provided in Chapter 74 of this title.
(h)Expansion of cost-effective energy efficiency programs. —Notwithstanding progress towards the achievement of the energy savings targets in § 1502(a) of Title 26, each affected energy provider shall implement energy efficiency, energy conservation, and peak demand reduction programs that are cost-effective, reliable, and feasible as determined through regulations promulgated pursuant to paragraph (h)(3) of this section and delivered in collaboration with the Sustainable Energy Utility as described herein.
(1)Development and delivery of programs. —a. An advisory council consisting of 13 members shall be established by the Secretary and shall include 2 representatives of the Sustainable Energy Utility, and 1 representative of each of the following sectors:
1. Affected energy providers;
2. Manufacturing;
3. Agriculture;
4. Environmental;
5. Commercial;
6. Residential; and
7. Low-income sectors.
The advisory council will assist affected energy providers in the development of energy efficiency, peak demand reduction, and emission-reducing fuel switching programs to meet the requirements of this section and in evaluation, measurement and verification of energy savings. Programs shall be designed to maximize the cost-savings benefits for ratepayers by utilizing private financing and allowance proceeds from the Regional Greenhouse Gas Initiative to the maximum extent practicable and consistent with this section, as the preferred sources of program financing prior to expenditures that would otherwise be eligible for rate recovery. The advisory council shall also recommend adoption of financing mechanisms, including, but not limited to, on-bill financing, property assessed clean energy (“PACE”) models, and other innovative financing tools.
b. The advisory council, in collaboration with the Public Service Commission staff, and the Public Advocate, shall recommend candidate energy efficiency, and reduction, and emission-reducing fuel-switching program elements that are cost-effective, reliable, and feasible, including financing mechanisms. Such programs shall prioritize the use of energy audits to identify comprehensive energy efficiency measures that maximize cost-effective savings. The advisory council shall recommend 3-year program portfolios and define associated savings targets for the consideration of each affected energy provider.
c. Unless otherwise provided, affected energy providers shall prepare and submit to the advisory council 3-year program plans, schedules, and budgets designed to reflect the recommended program portfolios, including the defined energy savings targets. On a 3-year cycle, the advisory council shall review energy efficiency, peak demand reduction, and fuel switching program plans for each affected energy provider and recommend them for approval by the appropriate regulatory authority, if it finds them to be cost-effective through a net-cost-benefit analysis that quantifies expected cost savings when considered in their entirety pursuant to regulations required by paragraph (h)(3) of this section. Such programs must reduce overall utility bills.
d. Evaluation, measurement, and verification costs incurred by the advisory council and affected energy providers shall be included as costs in the cost-effectiveness test for the program portfolios. Costs shall be reimbursed first by any direct revenues from the programs, including but not limited to revenues from wholesale capacity markets. If such revenues are greater than program costs, the additional revenues shall be applied towards reducing the costs of future energy efficiency programs. If such revenues are less than program costs, the remaining costs shall be allocated to affected energy providers on the basis of total annual sales of energy and reimbursed by affected energy providers as part of energy efficiency and peak demand response program operation costs.
e. The Commission shall review the programs and portfolios recommended by the advisory council, including evaluating the projected net-cost savings, in determining whether to approve such programs for implementation by Commission-regulated affected energy providers. Notwithstanding any provision in Title 26, the Commission shall approve the recovery of appropriate costs incurred by Commission-regulated affected energy providers for approved programs and portfolios on an annual basis, in the same manner as other supply resources, including allocated costs pursuant to this paragraph (h)(1). The Commission shall approve cost recovery for cost-effective energy savings resulting from cost-effective programs and portfolios of commission-regulated affected energy providers that are verified through procedures established in regulations promulgated pursuant to paragraph (h)(3) of this section and determined not to increase overall utility bills. Recovery of appropriate costs shall be through a rate-recovery mechanism that is consistent with the goals and objectives of this section and recommended by the advisory council, filed by the affected energy providers, and approved by the Commission.
1. For the portion of efficiency programs not financed through SEU-secured private financing or Regional Greenhouse Gas Initiative allowance proceeds, or other SEU resources, the Commission shall utilize a process that achieves the efficient and timely recovery on an annual basis by commission-regulated affected energy providers of appropriate costs and associated rates of return related to implementing activities and programs recommended by the advisory council.
2. For commission-regulated affected energy providers, appropriate costs incurred arising out of activities and programs recommended by the advisory council that are not subject to contemporaneous recovery shall be subject to deferred accounting treatment to ensure that program costs are less than expected savings. Program costs may not be placed in the permanent rate base, nor exceed the amortization schedule of the deferred accounting treatment.
3. Peak demand reduction programs of commission-regulated affected energy providers that are currently under review or already have been approved by the Commission, including dynamic pricing and direct load control, shall not be subject to review and approval by the advisory council.
f. Affected energy providers that are not regulated by the Commission may elect to develop, implement and fund programs for energy efficiency and peak demand reduction recommended for approval by the boards of directors for rural electric cooperatives or the pertinent local regulatory authorities for municipal electric companies. For purposes of any comparable plan implemented pursuant to the requirements of § 363 of Title 26, energy efficiency resulting in a reduction in overall energy consumption that exceeds 10% of the electricity provider’s 2007 electric consumption shall constitute an “eligible energy resource” under § 352 of Title 26, provided such energy provider has first achieved the 15% energy savings goal as required by § 1502(a)(1) of Title 26 and determined pursuant to paragraph (h)(3) of this section. Such energy efficiency shall be measured and verified as provided in paragraph (h)(3) of this section.
g. The affected energy providers and the Sustainable Energy Utility shall collaborate to promote available energy efficiency and peak demand reduction programs through a common marketing platform provided by the SEU, which shall serve as an easily accessible resource for all residents of Delaware seeking to save money through energy efficiency.
h. The advisory council and the Sustainable Energy Utility may collaborate to design programs to promote and support the development and construction of energy-efficient housing, including programs to alleviate the potential increased upfront costs caused by the adoption of local stretch codes.
i. Nothing in this section shall reduce the authority of the Sustainable Energy Utility as defined in this title. The Sustainable Energy Utility, at its discretion, may provide private financing, allowance proceeds from the Regional Greenhouse Gas Initiative, or other financial resources to reduce implementation costs of energy efficiency programs in coordination with the affected energy providers and may collaborate with affected energy providers to provide efficiency programs.
(2)Annual reporting. —DNREC shall annually publish a report on statewide electricity and natural gas consumption and electricity peak energy demand and make the report available to the general public by December 31 of each calendar year. All affected energy providers shall provide actual and projected electric and natural gas consumption and peak usage data to DNREC on an annual basis as specified in regulations promulgated pursuant to paragraph (h)(3) of this section. The report shall identify progress toward the energy and peak savings targets of § 1502(a) of Title 26. In determining compliance with the applicable energy savings requirements, the Secretary shall exclude reported electricity savings or natural gas savings that are not adequately demonstrated and documented, in accordance with the regulations promulgated under paragraph (h)(3) of this section.
(3)Evaluation, measurement, and verification of energy efficiency. —a. Not later than June 30, 2015, the Secretary of the Department of Natural Resources and Environmental Control, with the cooperation of affected energy providers, shall, by regulation, establish the requirements of this subsection, including, but not limited to:
1. Evaluation, measurement and verification procedures and standards, including impact evaluation, environmental outcomes, process evaluation, market effects, and cost-effectiveness evaluation;
2. Requirements under which affected energy providers shall demonstrate, document, and report compliance with the energy savings targets established under § 1502(a) of Title 26; and
3. Procedures and standards for defining and measuring electricity savings and natural gas savings that can be counted towards the energy savings targets established under § 1502(a) and (b) of Title 26.
b. All regulations promulgated under this chapter shall be adopted under the Administrative Procedures Act, Chapter 101 of Title 29. Regulations promulgated by the Secretary shall not differ significantly among affected natural gas distribution companies or among affected electric energy providers. Regulations promulgated pursuant to this chapter and case decisions issued under the auspices of this chapter by the Secretary shall be subject to direct appeal to the Superior Court pursuant to the provisions of the Administrative Procedures Act, Chapter 101 of Title 29. The Environmental Appeals Board shall not have jurisdiction over any such appeal.
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