§ 39-1-27.7. System reliability and least-cost procurement.
(a) Least-cost procurement shall comprise system reliability and energy efficiency and
conservation procurement, as provided for in this section, and supply procurement,
as provided for in § 39-1-27.8, as complementary but distinct activities that have as common purpose meeting electrical
and natural gas energy needs in Rhode Island, in a manner that is optimally cost-effective,
reliable, prudent, and environmentally responsible.
(b) The commission shall establish not later than June 1, 2008, standards for system reliability
and energy efficiency and conservation procurement that shall include standards and
guidelines for:
(1) System reliability procurement, including but not limited to:
(i) Procurement of energy supply from diverse sources, including, but not limited to,
renewable energy resources as defined in chapter 26 of this title;
(ii) Distributed generation, including, but not limited to, renewable energy resources
and thermally leading combined heat and power systems, that is reliable and is cost-effective,
with measurable, net system benefits;
(iii) Demand response, including, but not limited to, distributed generation, back-up generation,
and on-demand usage reduction, that shall be designed to facilitate electric customer
participation in regional demand response programs, including those administered by
the independent service operator of New England ("ISO-NE�), and/or are designed to
provide local system reliability benefits through load control or using on-site generating
capability;
(iv) To effectuate the purposes of this division, the commission may establish standards
and/or rates (A) For qualifying distributed generation, demand response, and renewable
energy resources; (B) For net metering; (C) For back-up power and/or standby rates
that reasonably facilitate the development of distributed generation; and (D) For
such other matters as the commission may find necessary or appropriate.
(2) Least-cost procurement, which shall include procurement of energy efficiency and energy
conservation measures that are prudent and reliable and when such measures are lower
cost than acquisition of additional supply, including supply for periods of high demand.
(c) The standards and guidelines provided for by subsection (b) shall be subject to periodic
review and as appropriate amendment by the commission, which review will be conducted
not less frequently than every three (3) years after the adoption of the standards
and guidelines.
(d) To implement the provisions of this section:
(1) The commissioner of the office of energy resources and the energy efficiency and resources
management council, either jointly or separately, shall provide the commission findings
and recommendations with regard to system reliability and energy efficiency and conservation
procurement on or before March 1, 2008, and triennially on or before March 1 thereafter
through March 1, 2028. The report shall be made public and be posted electronically
on the website of the office of energy resources.
(2) The commission shall issue standards not later than June 1, 2008, with regard to plans
for system reliability and energy efficiency and conservation procurement, which standards
may be amended or revised by the commission as necessary and/or appropriate.
(3) The energy efficiency and resources management council shall prepare by July 15, 2008,
a reliability and efficiency procurement opportunity report that shall identify opportunities
to procure efficiency, distributed generation, demand response, and renewables and
that shall be submitted to the electrical distribution company, the commission, the
office of energy resources, and the joint committee on energy.
(4) Each electrical and natural gas distribution company shall submit to the commission
on or before September 1, 2008, and triennially on or before September 1 thereafter
through September 1, 2028, a plan for system reliability and energy efficiency and
conservation procurement. In developing the plan, the distribution company may seek
the advice of the commissioner and the council. The plan shall include measurable
goals and target percentages for each energy resource, pursuant to standards established
by the commission, including efficiency, distributed generation, demand response,
combined heat and power, and renewables. The plan shall be made public and be posted
electronically on the website of the office of energy resources, and shall also be
submitted to the general assembly.
(5) The commission shall issue an order approving all energy-efficiency measures that
are cost-effective and lower cost than acquisition of additional supply, with regard
to the plan from the electrical and natural gas distribution company, and reviewed
and approved by the energy efficiency and resources management council, and any related
annual plans, and shall approve a fully reconciling funding mechanism to fund investments
in all efficiency measures that are cost-effective and lower cost than acquisition
of additional supply, not greater than sixty (60) days after it is filed with the
commission.
(6)(i) Each electrical and natural gas distribution company shall provide a status report,
which shall be public, on the implementation of least-cost procurement on or before
December 15, 2008, and on or before February 1, 2009, to the commission, the division,
the commissioner of the office of energy resources, and the energy efficiency and
resources management council which may provide the distribution company recommendations
with regard to effective implementation of least-cost procurement. The report shall
include the targets for each energy resource included in the order approving the plan
and the achieved percentage for energy resource, including the achieved percentages
for efficiency, distributed generation, demand response, combined heat and power,
and renewables, as well as the current funding allocations for each eligible energy
resource and the businesses and vendors in Rhode Island participating in the programs.
The report shall be posted electronically on the website of the office of energy resources.
(ii) Beginning on November 1, 2012, or before, each electric distribution company shall
support the installation and investment in clean and efficient combined heat and power
installations at commercial, institutional, municipal, and industrial facilities.
This support shall be documented annually in the electric distribution company's energy-efficiency
program plans. In order to effectuate this provision, the energy efficiency and resource
management council shall seek input from the public, the gas and electric distribution
company, the commerce corporation, and commercial and industrial users, and make recommendations
regarding services to support the development of combined heat and power installations
in the electric distribution company's annual and triennial energy-efficiency program
plans.
(iii) The energy-efficiency annual plan shall include, but not be limited to, a plan for
identifying and recruiting qualified combined heat and power projects, incentive levels,
contract terms and guidelines, and achievable megawatt targets for investments in
combined heat and power systems. In the development of the plan, the energy efficiency
and resource management council and the electric distribution company shall factor
into the combined heat and power plan and program, the following criteria: (A) Economic
development benefits in Rhode Island, including direct and indirect job creation and
retention from investments in combined heat and power systems; (B) Energy and cost
savings for customers; (C) Energy supply costs; (D) Greenhouse gas emissions standards
and air quality benefits; and (E) System reliability benefits.
(iv) The energy efficiency and resource management council shall conduct at least one public
review meeting annually, to discuss and review the combined heat and power program,
with at least seven (7) business days' notice, prior to the electric and gas distribution
utility submitting the plan to the commission. The commission shall evaluate the submitted
combined heat and power program as part of the annual energy-efficiency plan. The
commission shall issue an order approving the energy-efficiency plan and programs
within sixty (60) days of the filing.
(e) If the commission shall determine that the implementation of system reliability and
energy efficiency and conservation procurement has caused, or is likely to cause,
under or over-recovery of overhead and fixed costs of the company implementing the
procurement, the commission may establish a mandatory rate-adjustment clause for the
company so affected in order to provide for full recovery of reasonable and prudent
overhead and fixed costs.
(f) The commission shall conduct a contested case proceeding to establish a performance-based
incentive plan that allows for additional compensation for each electric distribution
company and each company providing gas to end-users and/or retail customers based
on the level of its success in mitigating the cost and variability of electric and
gas services through procurement portfolios.
(g)(1) The office of energy resources shall conduct a study and analysis of the electric
and gas distribution company's state energy efficiency programs that will examine
implemented program and planned conservation measures and review and confirm the claimed
energy savings. In carrying out this study, the office shall utilize a representative
sample of different customer classes and measures that have and/or will be participating
in the state energy efficiency programs. At a minimum, the study performed by the
office of energy resources shall include the following in its scope of work:
(i) Independently review and summarize the electric and gas distribution company process
for incorporating results from completed evaluation studies into ongoing energy efficiency
program reporting and implementation.
(ii) Conduct an independent review of gas and electricity efficiency programs, which may
include billing analysis techniques. The scope and subjects of this analysis will
be decided by the working group with input and advice from an independent consultant.
The analysis will be conducted by a qualified independent consultant using industry
accepted methods.
(iii) Review the data-collection practices, including metering equipment used; sampling
frequency; sample sizes; and data validation procedures, and the methods for data
analysis employed, as deemed appropriate by the independent evaluator.
(iv) Study results and recommendations will be presented to the public utilities commission
and the energy efficiency and resource management council.
(2) The office of energy resources shall consult with the working group in development
of the request for proposals (RFP), and during the course of the study, including
the preliminary study results. The working group shall be comprised of one representative
from each of the following groups chosen by the office of energy resources:
(i) Large commercial and industrial energy users;
(ii) Small business energy users;
(iii) Residential energy users;
(iv) Municipal and state energy users;
(v) Low-income energy users;
(vi) Electric and gas distribution company; and
(vii) Energy efficiency and resource management council.
(3) The office of energy resources, in consultation with the electric and gas distribution
company and representatives referenced in subsection (g)(2), shall be authorized to
hire an energy consulting company or firm to carry out the energy efficiency verification
study. The costs associated with this study, including, but not limited to, those
associated with the consultant or firm contract and reasonable administrative costs
incurred by the office in the execution of subsection (g) of this section, shall be
recoverable through the system benefit charge subject to commission approval. Funding
shall be transferred from the electric and gas distribution utility to the office
of energy resources upon request by the office.
(4) The office of energy resources shall submit this report on or before October 30, 2019,
to the governor, the president of the senate, and the speaker of the house. The office
and its selected energy consulting company or firm shall host two (2) public presentations
on the preliminary and final results of the study.