House Bill No. 5337 seeks to overhaul the incentive framework for district heating systems in Connecticut by repealing the existing program and establishing a new one under the Department of Energy and Environmental Protection (DEEP). The bill defines a "district heating system" as a natural gas demand reduction system that captures a minimum of thirty million British thermal units (BTUs) of waste heat and distributes at least seventy-five percent of it to end-use customers. It mandates gas companies to create an incentive program aimed at reducing natural gas demand, replacing the current incentive payments based on projected demand reductions with a new methodology that calculates incentives based on the projected lifetime reduction in natural gas consumption attributable to the district heating system. The new program is required to be implemented by July 1, 2027.

Furthermore, the bill introduces new requirements for cost-effectiveness methodologies related to energy conservation and management plans, aligning them with existing laws governing the Connecticut Green Bank and consumer protections for electric suppliers. It retains provisions allowing district heating system owners or operators to charge end-use customers a connection fee equivalent to the incentive amount received. Funding for these incentives will be sourced from a conservation adjustment mechanism on gas customer bills, capped at nine million dollars, with any revenue exceeding two million dollars to be collected over a minimum of two years. The act is set to take effect on October 1, 2026, and will necessitate the hiring of a new Research Analyst within DEEP to oversee the program, along with associated consulting costs.

Statutes affected:
Raised Bill: 16-258d
ET Joint Favorable: 16-258d
File No. 383: 16-258d