CT Regulators Order New Incentives for Distributed Generation

In two recent decisions (Docket Nos. 05-07-16 and 05-07-17), the Connecticut Department of Utility Control (DPUC) has provided a selection of incentives to encourage electricity customers to install on-site distributed generation projects. Incentives include lower back-up power charges, lower natural gas fuel charges and direct grants and payments to cover installation costs.

A customer-side distributed resource is defined as (a) the generation of electricity from a unit with a rating of not more than 65 megawatts on the premises of a retail end user within the transmission and distribution system including, but not limited to, fuel cells, photovoltaic systems or small wind turbines, or (b) a reduction in the demand for electricity on the premises of a retail end user in the distribution system through methods of conservation and load management, including, but not limited to, peak reduction systems and demand response systems.

The DPUC says that customers will be eligible to receive: monetary grants in proportion to the amount of electric load they will remove from the grid, gas rebates that will result in the waiver of gas distribution charges for natural gas used by these facilities, lower back-up charges for these customers in the event that they need to take power from the electric company if their own system isn't operational, and renewable energy credits that can be generated by customers which they can sell into the market to assist in offsetting a project's costs.

In addition, the DPUC has also contracted with Bank of America (BOA) to provide low interest loans to customers that seek to finance these investments over a number of years. Under the terms of the current agreement, BOA will offer financing through the end of this year, or until $150 million worth of projects has be financed through the program. As required under the new law, the interest rate charged to customers will be guaranteed to be no greater than the prime rate. Any buy-down of interest charges to get to the prime rate level will be paid by electric ratepayers.

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Iowa Passes 25 Percent Renewable Fuels Standard

Iowa's Governor has indicated that he will sign legislation (HF 2754) passed this week calling for Iowa to have renewable fuels - ethanol and biodiesel - meet 25 percent of the state's motor fuel needs by 2020. The new renewable fuels standard relies on a 10 percent ethanol blends and a rapid expansion of E-85 (85% ethanol) infrastructure to get to the goal.

June 29, 2006 UPDATE: When we published this story, we mistakenly called this initiative a renewable fuels mandate. Gas retailers in Iowa are not required to meet the biofuels goals so it isn't a mandate. If they don't meet the targets they may not receive the full tax incentives. Here is an updated story from DOE's Energy Efficiency and Renewable Energy Program: New Iowa Legislation to Boost Renewable Fuel Use.

For consumers, the legislation will mean expanded access to E-85, which is currently available at only 30 outlets across the state. By contrast, neighboring Minnesota boasts more than 200 locations for E-85.

The Iowa Renewable Fuels Association (IRFA) was pleased with the outcome and provided the following summary of the main provisions in the bill:

• A new ethanol promotion tax credit for each gallon of ethanol blended into gasoline (replaces existing tax credit beginning in 2009). This incentive is linked to a retailer dealer's achievement of the renewable fuels goal schedule. The tax credit increases from 2.5 cents per gallon for retailers within 4% of the schedule to 6.5 cents for retailers meeting or exceeding the schedule.
• A retail tax credit for E-85 of 25 cents per gallon (phases out by 2020).
• A retail tax credit for biodiesel blends of 3 cents per gallon (for retailers who sell more than 50% biodiesel blends.)
• An expanded infrastructure program designed to help retailers and wholesalers offset the cost of bringing E85 and biodiesel blends to consumers.

A companion bill (HF 2759) provides $2 million in funding to expand the E-85 network at filling stations across the state.

Iowa has plenty of in-state biofuels capacity to meet the renewable fuels goals. IRFA says that by the end of 2006, Iowa will have a minimum of 27 ethanol plants capable of producing over 1.7 billion gallons per year. In addition, at least 6 biodiesel plants will be capable of producing more than 120 million gallons per year.

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