Connecticut Legislation On Renewable Energy Resources

Public Act 03-135, which amends Connecticut's Electric Restructuring Law, may result in significant benefits to owners of certain facilities that generate electricity from renewable energy sources.

By way of background, Connecticut's Electric Restructuring Law (enacted in 1998 as P.A. 98-28) designated certain generators of electricity utilizing renewable energy sources as "Class I" and "Class II" energy sources.1 P.A. 98-28 required competitive suppliers of retail electricity to include certain percentages of Class I and Class II energy in their electric supply portfolios.  These "Portfolio Standards" were first imposed on July 1, 2001 and escalated annually after that date.  These provisions were intended to create demand for electricity generated by Class I and Class II energy sources, thereby encouraging further development and construction of facilities utilizing such energy sources.  However, because the overwhelming majority of Connecticut's end-user electric customers have continued to purchase electricity under so-called "Standard Offers" (and because the Standard Offers are exempt from the Portfolio Standards), to date there has been little demand in Connecticut for electricity from Class I and Class II energy sources.  Thus, further development of such sources of electricity has not been encouraged to any significant extent to date as a result of P.A. 98-28.  This state of affairs is about to change.

P.A. 03-135 made three significant changes to the Portfolio Standards requirements.  First,

"energy derived from . . . ocean thermal power, wave or tidal power, low–emission advanced renewable energy conversion technologies, [and] a run–of–the–river hydropower facility provided such facility has a generating capacity of not more than five megawatts, does not cause an appreciable change in the river flow, and began operation after the effective date of this section. . ."

are now included in the category of Class I renewable energy sources.2 Second, the Portfolio Standards have been amended to require, on and after July 1, 2004, a relatively greater percentage of Class I energy sources (as compared to Class II energy sources) in electric supply portfolios.  Third (and perhaps most significantly), electric utilities supplying Standard Offer service will be required, as of January 1, 2004, to comply with the Portfolio Standards.  The combined effect of these changes will likely be a significant increase in the value of electricity derived from Class I energy sources.

This Alert is provided for informational and educational purposes only and is not intended as legal advice.  This publication may be considered advertising under applicable state laws. ã 2003 Halloran & Sage.

1 "Class I renewable energy sources" included "solar power, wind power, a fuel cell, methane gas from landfills, or a biomass facility. . . ."  "Class II renewable energy sources" included "energy from a trash-to-energy facility, or a biomass facility that does not meet the criteria for a class I renewable energy source or a hydropower facility. . . ."  Conn. Gen. Stat § 16-1(a)(26) and (27).

2 The effective date of this section of P.A. 03-135 was July 1, 2003.