Bill Summary – FastDemocracy

67th Legislature                                                                                                      SB 237.1
                                                    SENATE BILL NO. 237
                                                 INTRODUCED BY D. KARY
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   A BILL FOR AN ACT ENTITLED: “AN ACT ELIMINATING THE COMMUNITY RENEWABLE ENERGY
   PROJECT REQUIREMENT FROM MONTANA'S RENEWABLE RESOURCE STANDARD; AMENDING
   SECTIONS 69-3-2003, 69-3-2004, 69-3-2005, 69-3-2006, AND 90-4-1202, MCA; AND PROVIDING AN
   IMMEDIATE EFFECTIVE DATE AND A RETROACTIVE APPLICABILITY DATE.”
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   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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              Section 1. Section 69-3-2003, MCA, is amended to read:
              "69-3-2003.    Definitions. As used in this part, unless the context requires otherwise, the following
   definitions apply:
              (1)   "Ancillary services" means services or tariff provisions related to generation and delivery of electric
   power other than simple generation, transmission, or distribution. Ancillary services related to transmission
   services include energy losses, energy imbalances, scheduling and dispatching, load following, system
   protection, spinning reserves and nonspinning reserves, and reactive power.
              (2)   "Balancing authority" means a transmission system control operator who balances electricity
   supply and load at all times to meet transmission system operating criteria and to provide reliable electric
   service to customers.
              (3)   "Common ownership" means the same or substantially similar persons or entities that maintain a
   controlling interest in more than one community renewable energy project even if the ownership shares differ
   between two community renewable energy projects. Two community renewable energy projects may not be
   considered to be under common ownership simply because the same entity provided debt or equity or both
   debt and equity to both projects.
              (4)   "Community renewable energy project" means an eligible renewable resource that:
              (a)   is interconnected on the utility side of the meter in which local owners have a controlling interest
   and that is less than or equal to 25 megawatts in total calculated nameplate capacity; or
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              (b)   is owned by a public utility and has less than or equal to 25 megawatts in total nameplate
   capacity.
              (5)(3)    (a) "Competitive electricity supplier" means any person, corporation, or governmental entity
   that is selling electricity to small customers at retail rates in the state of Montana and that is not a public utility or
   cooperative.
              (b)   The term does not include governmental entities selling electricity produced only by facilities
   generating less than 250 kilowatts that were in operation prior to 1990.
              (6)(4)    "Compliance year" means each calendar year beginning January 1 and ending December 31,
   starting in 2008, for which compliance with this part must be demonstrated.
              (7)(5)    "Cooperative utility" means:
              (a)   a utility qualifying as an electric cooperative pursuant to Title 35, chapter 18; or
              (b)   an existing municipal electric utility as of May 2, 1997.
              (8)(6)    "Dispatch ability" means the ability of either a balancing authority or the owner of an electric
   generating resource to rapidly start, stop, increase, or decrease electricity production from that generating
   resource in order to respond to the balancing authority's need to match supply resources to loads on the
   transmission system.
              (9)(7)    "Electric generating resource" means any plant or equipment used to generate electricity by any
   means.
              (10)(8)    "Eligible renewable resource" means a facility either located within Montana or delivering
   electricity from another state into Montana that commences commercial operation after January 1, 2005, or a
   hydroelectric project expansion referred to in subsection (10)(d)(iii) (8)(d)(iii), any of which produces electricity
   from one or more of the following sources:
              (a)   wind;
              (b)   solar;
              (c)   geothermal;
              (d)   water power, in the case of a hydroelectric project that:
              (i)   does not require a new appropriation, diversion, or impoundment of water and that has a
   nameplate rating of 10 megawatts or less;
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              (ii) is installed at an existing reservoir or on an existing irrigation system that does not have
   hydroelectric generation as of April 16, 2009, and has a nameplate capacity of 15 megawatts or less; or
              (iii) is an expansion of an existing hydroelectric project that commences construction and increases
   existing generation capacity on or after October 1, 2013. Engineering estimates of the average incremental
   generation from the increase in existing generation capacity must be submitted to the commission for review.
   The commission shall determine an average annual incremental generation that will constitute the eligible
   renewable resource from the capacity expansion, subject to further revision by the commission in the event of
   significant changes in stream flow or dam operation.
              (e)   landfill or farm-based methane gas;
              (f)   gas produced during the treatment of wastewater;
              (g)   low-emission, nontoxic biomass based on dedicated energy crops, animal wastes, or solid organic
   fuels from wood, forest, or field residues, including wood pieces that have been treated with chemical
   preservatives, such as creosote, pentachlorophenol, or copper-chrome arsenic, and that are used at a facility
   that has a nameplate capacity of 5 megawatts or less;
              (h)   hydrogen derived from any of the sources in this subsection (10) (8) for use in fuel cells; and
              (i)   the renewable energy fraction from:
              (i)   the sources identified in this subsection (10) (8) of electricity production from a multiple-fuel
   process with fossil fuels;
              (ii) flywheel storage as defined in 15-6-157(4)(d);
              (iii) hydroelectric pumped storage as defined in 15-6-157(4)(e);
              (iv) batteries; and
              (v)   compressed air derived from any of the sources in this subsection (10) (8) that is forced into an
   underground storage reservoir and later released, heated, and passed through a turbine generator.
              (11) "Local owners" means:
              (a)   Montana residents;
              (b)   general partnerships of which all partners are Montana residents;
              (c)   business entities organized under the laws of Montana that:
              (i)   have less than $50 million of gross revenue;
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67th Legislature                                                                                                         SB 237.1
              (ii) have less than $100 million of assets; and
              (iii) have at least 50% of the equity interests, income interests, and voting interests owned by Montana
   residents;
              (d)   Montana nonprofit organizations;
              (e)   Montana-based tribal councils;
              (f)   Montana political subdivisions or local governments;
              (g)   Montana-based cooperatives other than cooperative utilities; or
              (h)   any combination of the individuals or entities listed in subsections (11)(a) through (11)(g).
              (12)(9) "Nonspinning reserve" means offline generation that can be ramped up to capacity and
   synchronized to the grid within 10 minutes and that is needed to maintain system frequency stability during
   emergency conditions, unforeseen load swings, and generation disruptions.
              (13)(10) "Public utility" means any electric utility regulated by the commission pursuant to Title 69,
   chapter 3, on January 1, 2005, including the public utility's successors or assignees.
              (14)(11) "Renewable energy credit" means a tradable certificate of proof of 1 megawatt hour of
   electricity generated by an eligible renewable resource that is tracked and verified by the commission and
   includes all of the environmental attributes associated with that 1 megawatt-hour unit of electricity production.
              (15)(12) "Renewable energy fraction" means the proportion of electricity output directly attributable to
   electricity and associated renewable energy credits produced by one of the sources identified in subsection
   (10).
              (16)(13) "Seasonality" means the degree to which an electric generating resource is capable of
   producing electricity in each of the seasons of the year.
              (17)(14) "Small customer" means a retail customer that has an individual load with an average monthly
   demand of less than 5,000 kilowatts.
              (18)(15) "Spinning reserve" means the online reserve capacity that is synchronized to the grid system
   and immediately responsive to frequency control and that is needed to maintain system frequency stability
   during emergency conditions, unforeseen load swings, and generation disruptions.
              (19)(16) "Total calculated nameplate capacity" means the calculation of total nameplate capacity of the
   community renewable energy project and other eligible renewable resources that are:
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              (a)   located within 5 miles of the project;
              (b)   constructed within the same 12-month period; and
              (c)   under common ownership."
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              Section 2. Section 69-3-2004, MCA, is amended to read:
              "69-3-2004.    Renewable resource standard -- administrative penalty -- waiver. (1) Except as
   provided in 69-3-2007 and subsections (11) through (14) (9) through (12) of this section, a graduated
   renewable energy standard is established for public utilities and competitive electricity suppliers as provided in
   subsections subsection (2) through (4) of this section.
              (2)   In each compliance year beginning January 1, 2008, through December 31, 2009, each public
   utility and competitive electricity supplier shall procure a minimum of 5% of its retail sales of electrical energy in
   Montana from eligible renewable resources.
              (3)   (a) In each compliance year beginning January 1, 2010, through December 31, 2014, each public
   utility and competitive electricity supplier, except as provided in subsections (13) and (14), shall procure a
   minimum of 10% of its retail sales of electrical energy in Montana from eligible renewable resources.
              (b)   Beginning January 1, 2012, as part of their compliance with subsection (3)(a), public utilities shall
   purchase both the renewable energy credits and the electricity output from community renewable energy
   projects that total at least 50 megawatts in nameplate capacity.
              (c)   Public utilities shall proportionately allocate the purchase required under subsection (3)(b) based
   on each public utility's retail sales of electrical energy in Montana in the calendar year 2011.
              (4)(2)   (a) In the compliance year beginning January 1, 2015, and in each succeeding compliance
   year, each public utility and competitive electricity supplier, except as provided in subsections (13) (11) and (14)
   (12), shall procure a minimum of 15% of its retail sales of electrical energy in Montana from eligible renewable
   resources.
              (b)   (i) As part of their compliance with subsection (4)(a), public utilities shall purchase both the
   renewable energy credits and the electricity output from community renewable energy projects that total at least
   75 megawatts in nameplate capacity.
              (ii) In meeting the standard in subsection (4)(b)(i), a public utility may include purchases made under
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67th Legislature                                                                                                         SB 237.1
   subsection (3)(b).
              (c)   Public utilities shall proportionately allocate the purchase required under subsection (4)(b) based
   on each public utility's proportion of the total retail sales of electrical energy by public utilities in Montana in the
   calendar year 2014.
              (5)(3)   (a) In complying with the standards required under subsections subsection (2) through (4), a
   public utility or competitive electricity supplier shall, for any given compliance year, calculate its procurement
   requirement based on the public utility's or competitive electricity supplier's previous year's sales of electrical
   energy to retail customers in Montana.
              (b)   The standards in subsections subsection (2) through (4) must be calculated on a delivered-energy
   basis after accounting for any line losses.
              (6)(4)   A public utility or competitive electricity supplier has until 3 months following the end of each
   compliance year to purchase renewable energy credits for that compliance year.
              (7)(5)   (a) In order to meet the standards established in subsections subsection (2) through (4), a
   public utility or competitive electricity supplier may only use:
              (i)   electricity from an eligible renewable resource in which the associated renewable energy credits
   have not been sold separately;
              (ii) renewable energy credits created by an eligible renewable resource purchased separately from the
   associated electricity; or
              (iii) any combination of subsections (7)(a)(i) (5)(a)(i) and (7)(a)(ii) (5)(a)(ii).
              (b)   A public utility or competitive electricity supplier may not resell renewable energy credits and count
   those sold credits against the public utility's or the competitive electricity supplier's obligation to meet the
   standards established in subsections subsection (2) through (4).
              (c)   Renewable energy credits sold through a voluntary service such as the one provided for in 69-8-
   210(2) may not be applied against a public utility's or competitive electricity supplier's obligation to meet the
   standards established in subsections subsection (2) through (4).
              (8)(6)   Nothing in this part limits a public utility or competitive electricity supplier from exceeding the
   standards established in subsections subsection (2) through (4).
              (9)(7)   If a public utility or competitive electricity supplier exceeds a standard established in
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67th Legislature                                                                                                        SB 237.1
   subsections subsection (2) through (4) in any compliance year, the public utility or competitive electricity
   supplier may carry forward the amount by which the standard was exceeded to comply with the standard in
   either or both of the 2 subsequent compliance years. The carryforward may not be double-counted.
              (10)(8) Except as provided in subsections (11) and (12) (9) and (10), if a public utility or competitive
   electricity supplier is unable to meet the standards established in subsections subsection (2) through (4) in any
   compliance year, that public utility or competitive electricity supplier shall pay an administrative penalty,
   assessed by the commission, of $10 for each megawatt hour of renewable energy credits that the public utility
   or competitive electricity supplier failed to procure. A public utility may not recover this penalty in electricity
   rates. Money generated from these penalties must be deposited in the universal low-income energy assistance
   fund established in 69-8-412(1)(b).
              (11)(9) A public utility or competitive electricity supplier may petition the commission for a short-term
   waiver from full compliance with the standards in subsections subsection (2) through (4) and the penalties
   levied under subsection (10) (8). The petition must demonstrate that the:
              (a)   public utility or competitive electricity supplier has undertaken all reasonable steps to procure
   renewable energy credits under long-term contract, but full compliance cannot be achieved either because
   renewable energy credits cannot be procured or for other legitimate reasons that are outside the control of the
   public utility or competitive electricity supplier; or
              (b)   integration of additional eligible renewable resources into the electrical grid will clearly and
   d