H. B. 4012
(By Delegates Fleischauer, Manypenny and Staggers)
[Introduced January 13, 2010; referred to the
Committee on Government Organization then Finance.]
A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §24-2G-1, §24-2G-2,
§24-2G-3, §24-2G-4, §24-2G-5, §24-2G-6, §24-2G-7, §24-2G-8 and
§24-2G-9, all relating to energy efficiency for electric and
gas utilities and their customers; defining terms;
establishing required energy efficiency programs and plans;
setting forth time tables; establishing targets and goals;
identifying certain metering and grid technologies; providing
for revenue sharing; establishing penalties; and providing for
$600,000 in special license fees for implementation purposes.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §24-2G-1, §24-2G-2,
§24-2G-3, §24-2G-4, §24-2G-5, §24-2G-6, §24-2G-7, §24-2G-8 and
§24-2G-9, all to read as follows:
ARTICLE 2G. Energy Efficiency.
§24-2G-1. Short title.
This article shall be known as the "West Virginia Energy
Efficiency Act."
§24-2G-2. Findings and purpose.
The Legislature finds and declares that:
(1) Energy efficiency is among the least expensive ways to
meet the growing electricity demands of the state; and
(2) To provide affordable, reliable and clean energy for
consumers of West Virginia, it is the goal of the state to, based
on electricity consumption for calendar year 2009, achieve the
following energy efficiency, conservation and demand response
targets:
(A) Fifteen percent reduction in per capita electricity
consumption by the end of 2016; and
(B) Fifteen percent reduction in per capita peak demand by the
end of 2016.
§24-2G-3. Definitions.
As used in this article:
(1) "Demand response program" means a program established by
an electric utility that promotes changes in electricity usage by
customers from their normal consumption patterns in response to:
(A) Changes in the price of electricity over time; or
(B) Incentives designed to promote lower electricity use at times of high wholesale market prices or when system reliability is
jeopardized.
(2) "Electricity consumption" and "electricity consumed" mean
the sum of retail electricity sales to all customers and reported
electricity losses within the electric distribution system.
(3) "Peak demand" means the highest level of electricity
demand in the state measured in megawatts during the period from
January 1 to December 31 of a year on a weather-normalized basis.
(4) "Per capita electricity consumption" means the resultant
amount calculated by dividing the total gigawatt-hours of
electricity consumed by electricity customers in the state as of
December 31 for each year, as determined by the commission by the
population of the state as of December 31 of that year.
(5) "Plan" means an electricity savings and demand reduction
plan and cost recovery proposal.
§24-2G-4. Energy efficiency programs required.
(a) Beginning with the 2010 calendar year and each year
thereafter, the commission shall calculate:
(1) The per capita electricity consumption for each year; and
(2) The peak demand for each year.
(b) Subject to review and approval by the commission, each gas
utility and electric utility shall develop and implement programs
and services to encourage and promote the efficient use and
conservation of energy by consumers, commercial and industrial end users, gas utilities, and electric utilities.
(c) As directed by the commission, each municipal electric
utility and each electric cooperative that serves a population of
less than fifty thousand in its service territory shall include
energy efficiency and conservation programs or services as part of
the services provided to its customers.
(d) The commission shall:
(1) Require each gas utility and electric utility to establish
a program or service that the commission finds appropriate and
cost effective to encourage and promote the efficient use and
conservation of energy; and
(2) Adopt rate-making policies that provide cost recovery and,
in appropriate circumstances, reasonable financial incentives for
gas utilities and electric utilities to establish programs and
services that encourage and promote the efficient use and
conservation of energy.
(e) Except as provided in subsection (c) of this section, by
December 31, 2010, by rule or order, the commission shall:
(1) To the extent the commission determines that
cost-effective energy efficiency and conservation programs and
services are available, for each affected class, require each
electric utility to provide for its electricity customers
cost-effective energy efficiency and conservation programs and
services with projected and verifiable electricity savings that are designed to achieve, based on per capita electricity consumed in
the electric utility's service territory during the year 2009, a
targeted reduction, at a minimum, of:
(A) Five percent by the end of 2012;
(B) Ten percent by the end of 2014; and
(C) Fifteen percent by the end of 2016.
(2) Require each electric utility to implement a
cost-effective demand response program in the electric utility's
service territory that, based on per capita peak demand of
electricity consumed in the electric utility's service territory
during the year 2009, is designed to achieve, at a minimum, a
targeted reduction of:
(A) Five percent by the end of 2012;
(B) Ten percent by the end of 2014; and
(C) Fifteen percent by the end of 2016.
(f) (1) By July 1, 2010, and every three years thereafter, an
electric utility shall:
(A) Consult with the commission regarding the design and
adequacy of its plan to achieve the electricity savings and demand
reduction targets specified in subsection (e) of this section; and
(B) Provide the commission with any additional information
regarding the plan that the commission requests.
(2) By September 1, 2010, and every three years thereafter,
each electric utility shall submit its plan to the commission that details the electric utility's proposals for achieving the
electricity savings and demand reduction targets specified in
subsection (e) of this section for the three subsequent calendar
years.
(3) Each electric utility shall provide annual updates to the
commission on plan implementation and progress towards achieving
the electricity savings and demand reduction targets specified in
subsection (e) of this section.
(4) Each plan shall include:
(A) A description of the proposed energy efficiency and
conservation programs and services and the proposed demand response
program, anticipated costs, projected electricity savings and any
other information requested by the commission.
(B) Each plan shall address residential, commercial and
industrial sectors as appropriate, including low-income communities
and low-to-moderate-income communities.
(5) The commission shall review each electric utility's plan
to determine if the plan is adequate and cost-effective in
achieving the electricity savings and demand reduction targets
specified in subsection (e) of this section.
(6) The commission may request additional information from an
electric utility regarding its plan.
(g) (1) In determining whether a program or service encourages
and promotes the efficient use and conservation of energy, the commission shall consider its:
(A) Impact on jobs;
(B) Impact on the environment;
(C) Impact on rates of each ratepayer class; and
(D) Cost-effectiveness.
(2) The commission shall monitor and analyze the impact of
each program and service to ensure that the outcome of each program
or service provides the best possible results.
(3) In monitoring and analyzing the impact of a program or
service under paragraph (2) of this subdivision, if the commission
determine that the outcome of the program or services may not be
providing the best possible results, the commission shall direct
the electric utility to include in its annual update, under
subdivision (3), subsection (f) of this section, specific measures
to address the findings.
(h) (1) At least once each year, each electric utility and gas
utility shall notify affected customers of the energy efficiency
and conservation charges imposed and benefits conferred.
(2) The notice shall be posted on the utility's website and
provided to its customers by including it with a customer's billing
information, such as a bill insert or bill message.
§24-2G-5. Energy efficiency program reports.
(a) On or before January 1 of each year, the commission shall
report to the Legislature on:
(1) The status of programs and services to encourage and
promote the efficient use and conservation of energy, including an
evaluation of the impact of programs and services that are directed
to low-income communities, low-to-moderate-income communities to
the extent possible, and other particular classes of ratepayers;
(2) A recommendation for the appropriate funding level to
adequately fund these programs and services; and
(3) The per capita electricity consumption and the peak demand
for the previous calendar year.
(b) By December 31, 2013, the commission shall:
(1) Review the anticipated achievement of the goals set forth
in section two of this article for purposes of determining whether
electricity consumption and peak demand reduction targets should be
set beyond 2016; and
(2) After providing opportunity for public comment, report its
findings to the Senate Finance Committee and the House of Delegates
Finance Committee.
(c) By December 31, 2013, the commission shall:
(1) Study the feasibility of setting energy savings targets in
2016 and 2021 for natural gas companies; and
(2) After providing opportunity for public comment, report its
findings to the Senate Finance Committee and the House of Delegates
Finance Committee.
§24-2G-6. Smart meter and smart grid technology.
The commission shall evaluate whether advanced meter
technology, commonly known as "smart meters," and digital
automation of the components of the entire power supply system,
commonly known as "smart grid," are cost-effective in reducing
consumption and peak demand of electricity. If smart meter or
smart grid technology are found to be cost-effective, the
commission may require, by rule or order, each electric utility to
implement, as appropriate, smart meter or smart grid technology in
its service territory.
§24-2G-7. Revenue sharing.
(a) If, after notice and opportunity for hearing and based
upon its analysis of the annual plan updates required under
subdivision (3), subsection (f), section four and subsection (g),
section four of this article, the commission determines that an
electric utility has failed to comply with an energy efficiency or
peak demand reduction requirement of subsection (e), section four
of this article, the commission shall determine the number of
kilowatt hours of electricity savings by which the supplier has
fallen short of the standards, and assess a forfeiture on the
utility, in the amount equal to $0.04 per kilowatt hour for each
such kilowatt hour. Any revenue from this forfeiture shall be
deposited to the credit of the Low Income Weatherization Assistance
Program in the Governors Office of Economic Opportunity.
(b) The commission may establish rules regarding the content of an application by an electric utility for commission approval of
a revenue sharing mechanism under this article by which the utility
and the customer share the economic benefits of energy
conservation. That application shall not be considered an
application to increase rates and may be included as part of a
proposal to establish, continue or expand energy efficiency or
conservation programs. The commission by order may approve an
application under this subsection if it determines both that the
revenue sharing mechanism provides for the recovery of revenue, as
well as incentive rates of return, that otherwise may be foregone
by the utility as a result of or in connection with the
implementation by the electric utility of any energy efficiency or
energy conservation programs and reasonably aligns the interests of
the utility and its customers in favor of those programs:
Provided, That the revenue sharing mechanism is structured to: (1)
Prevent over-earning and provide an appropriate downward
adjustment to a utility's return on equity in recognition of the
significant reduction in risk associated with the use of the
incentive mechanism; (2) ensure that the utility engages in
incremental conservation efforts to meet and maintain energy
efficiency requirements; and (3) require the utility to demonstrate
that the reduced usage reflected in revenue sharing adjustments are
specifically linked to the utility's promotion of energy efficiency
programs.
§24-2G-8. Special license fee.
(a) (1) Notwithstanding any other provision of this code, for
fiscal year 2010 only, in addition to the amounts appropriated in
the budget bill for fiscal year 2010, the commission may establish
up to $600,000 as a special license fee for the commission and its
Consumer Advocate Division to accomplish the requirements of this
article.
(2) Of the $600,000 that may be collected under paragraph (1)
of this subsection:
(A) Up to $500,000 may be expended in accordance with an
approved budget amendment for consultants, personnel and related
expenses of the commission as it determines is necessary to
accomplish the requirements of this article; and
(B) Up to $100,000 may be expended in accordance with an
approved budget amendment for consultants, personnel and related
expenses of the Consumer Advocate Division as it determines is
necessary to accomplish the requirements of this article.
(3) The special license fee shall be imposed only on those
electric utilities otherwise subject to the license fees under
section six, article three, chapter twenty-four of this code. The
amounts collected shall be deposited in the Public Service
Commission Fund.
(4) The amount of the bill sent to each electric utility
subject to the special license fee shall be that amount resulting from multiplying:
(A) The amount authorized to be collected under this
subsection; and
(B) The ratio of gross operating revenues of the entity
subject to the special license fee to the total gross operating
revenues for all entities subject to the special license fee.
(b) It is the intent of the Legislature that, beginning with
fiscal year 2011, the annual state budget include amounts for the
commission and the Consumer Advocate Division for the
implementation of this article, including consultants, personnel
and related expenses.
§24-2G-9. Severability.
The provisions of this article are severable, and if any
phrase, clause, sentence or provision is declared to be invalid or
is preempted by federal law or regulation, the validity of the
remainder of this article is not affected.
NOTE: The purpose of this bill is to provide the Public
Service Commission the authority to require electric and gas
utilities to develop and implement plans for the efficient use,
conservation and reduction of energy usage. The bill sets forth
goals to reduce electricity usage by five percent by 2013, ten
percent by 2015 and fifteen percent by 2017. The bill also
requires electric utilities to submit plans for reaching those
goals, provides for revenue sharing and the opportunity for
financial incentives for gas and electric utilities to establish
energy saving programs. Additionally, the bill authorizes a
special license fee up to $600,000 to be collected from the
affected utilities to implement the bill's requirements and
establishes a penalty of $0.04 per kilowatt hour for those
utilities that fail to comply with the commission's reduction requirements. Moreover, the bill requires the commission to file
usage reports and the results of studies concerning the feasability
of additional demand reduction targets beyond 2017 with the
Legislature.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.