HB 1824-1_ Filed 03/29/2007, 12:00
Adopted 3/29/2007
COMMITTEE REPORT
MADAM PRESIDENT:
The Senate Committee on Utilities and Regulatory Affairs, to which was referred House Bill No. 1824,
has had the same under consideration and begs leave to report the same back to the Senate with the
recommendation that said bill be AMENDED as follows:
SOURCE: Page 1, line 1; (07)AM182408.1. -->
Page 1, between the enacting clause and line 1, begin a new
paragraph and insert:
SOURCE: IC 8-1-2-6.1; (07)AM182408.1. -->
"SECTION 1. IC 8-1-2-6.1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 6.1. (a) As used in
this section, "clean coal technology" means a technology (including
precombustion treatment of coal):
(1) that is used at a new or existing electric
or steam generating
facility and directly or indirectly reduces
or avoids airborne
emissions of
sulfur or nitrogen based pollutants
that are:
(A) associated with the combustion or use of coal; and
(B) regulated, or reasonably anticipated by the commission
to be regulated, by:
(i) the federal government;
(ii) the state;
(iii) a political subdivision of the state; or
(iv) any agency of a unit of government described in
items (i) through (iii); and
(2) that either:
(A) is not in general commercial use at the same or greater
scale in new or existing facilities in the United States as of
January 1, 1989; or
(B) has been selected by the United States Department of
Energy for funding under its Innovative Clean Coal
Technology program and is finally approved for such funding
on or after January 1, 1989.
(b) As used in this section, "Indiana coal" means coal from a mine
whose coal deposits are located in the ground wholly or partially in
Indiana regardless of the location of the mine's tipple.
(c) Except as provided in subsection (d), the commission shall allow
a utility to recover as operating expenses those expenses associated
with:
(1) research and development designed to increase use of Indiana
coal; and
(2) preconstruction costs (including design and engineering costs)
associated with employing clean coal technology at a new or
existing coal burning electric or steam generating facility if the
commission finds that the facility:
(A) utilizes and will continue to utilize (as its primary fuel
source) Indiana coal; or
(B) is justified, because of economic considerations or
governmental requirements, in utilizing nonIndiana coal;
after the technology is in place.
(d) The commission may only allow a utility to recover
preconstruction costs as operating expenses on a particular project if
the commission awarded a certificate under IC 8-1-8.7 for that project.
(e) The commission shall establish guidelines for determining
recoverable expenses.
SOURCE: IC 8-1-2-6.6; (07)AM182408.2. -->
SECTION 2. IC 8-1-2-6.6 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 6.6. (a) As used in
this section:
"Clean coal technology" means a technology (including
precombustion treatment of coal):
(1) that is used at a new or existing electric
or steam generating
facility and directly or indirectly reduces
or avoids airborne
emissions of
sulfur or nitrogen based pollutants
that are:
(A) associated with
the combustion or use of coal; and
(B) regulated, or reasonably anticipated by the commission
to be regulated, by:
(i) the federal government;
(ii) the state;
(iii) a political subdivision of the state; or
(iv) any agency of a unit of government described in
items (i) through (iii); and
(2) that either:
(A) is not in general commercial use at the same or greater
scale in new or existing facilities in the United States as of
January 1, 1989; or
(B) has been selected by the United States Department of
Energy for funding under its Innovative Clean Coal
Technology program and is finally approved for such funding
on or after January 1, 1989.
"Indiana coal" means coal from a mine whose coal deposits are
located in the ground wholly or partially in Indiana regardless of the
location of the mine's tipple.
"Qualified pollution control property" means an air pollution control
device on a coal burning electric or steam generating facility or any
equipment that constitutes clean coal technology that has been
approved for use by the commission, that meets applicable state or
federal requirements, and that is designed to accommodate the burning
of coal from the geological formation known as the Illinois Basin.
"Utility" refers to any electric or steam generating utility allowed
by law to earn a return on its investment.
(b) Upon the request of a utility that began construction after
October 1, 1985, and before March 31, 2002, of qualified pollution
control property that is to be used and useful for the public
convenience, the commission shall for ratemaking purposes add to the
value of that utility's property the value of the qualified pollution
control property under construction, but only if at the time of the
application and thereafter:
(1) the facility burns only Indiana coal as its primary fuel source
once the air pollution control device is fully operational; or
(2) the utility can prove to the commission that the utility is
justified because of economic considerations or governmental
requirements in utilizing some nonIndiana coal.
(c) The commission shall adopt rules under IC 4-22-2 to implement
this section.
SOURCE: IC 8-1-2-6.7; (07)AM182408.3. -->
SECTION 3. IC 8-1-2-6.7 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 6.7. (a) As used in
this section, "clean coal technology" means a technology (including
precombustion treatment of coal):
(1) that is used in a new or existing electric or steam generating
facility and directly or indirectly reduces or avoids airborne
emissions of sulfur or nitrogen based pollutants that are:
(A) associated with the combustion or use of coal; and
(B) regulated, or reasonably anticipated by the commission
to be regulated, by:
(i) the federal government;
(ii) the state;
(iii) a political subdivision of the state; or
(iv) any agency of a unit of government described in
items (i) through (iii); and
(2) that either:
(A) is not in general commercial use at the same or greater
scale in new or existing facilities in the United States as of
January 1, 1989; or
(B) has been selected by the United States Department of
Energy for funding under its Innovative Clean Coal
Technology program and is finally approved for such funding
on or after January 1, 1989.
(b) The commission shall allow a public or municipally owned
electric or steam utility that incorporates clean coal technology to
depreciate that technology over a period of not less than ten (10) years
or the useful economic life of the technology, whichever is less and not
more than twenty (20) years if it finds that the facility where the clean
coal technology is employed:
(1) utilizes and will continue to utilize (as its primary fuel source)
Indiana coal; or
(2) is justified, because of economic considerations or
governmental requirements, in utilizing nonIndiana coal;
after the technology is in place.
SOURCE: IC 8-1-2-6.8; (07)AM182408.4. -->
SECTION 4. IC 8-1-2-6.8 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 6.8. (a) This
section applies to a utility that begins construction of qualified
pollution control property after March 31, 2002.
(b) As used in this section, "clean coal technology" means a
technology (including precombustion treatment of coal):
(1) that is used in a new or existing energy or steam generating
facility and directly or indirectly reduces or avoids airborne
emissions of sulfur, mercury, or nitrogen oxides or other regulated
air emissions that are:
(A) associated with the combustion or use of coal; and
(B) regulated, or reasonably anticipated by the commission
to be regulated, by:
(i) the federal government;
(ii) the state;
(iii) a political subdivision of the state; or
(iv) any agency of a unit of government described in
items (i) through (iii); and
(2) that either:
(A) was not in general commercial use at the same or greater
scale in new or existing facilities in the United States at the
time of enactment of the federal Clean Air Act Amendments
of 1990 (P.L.101-549); or
(B) has been selected by the United States Department of
Energy for funding under its Innovative Clean Coal
Technology program and is finally approved for such funding
on or after the date of enactment of the federal Clean Air Act
Amendments of 1990 (P.L.101-549).
(c) As used in this section, "qualified pollution control property"
means an air pollution control device on a coal burning energy or
steam generating facility or any equipment that constitutes clean coal
technology that has been approved for use by the commission and that
meets applicable state or federal requirements.
(d) As used in this section, "utility" refers to any energy or steam
generating utility allowed by law to earn a return on its investment.
(e) Upon the request of a utility that begins construction after March
31, 2002, of qualified pollution control property that is to be used and
useful for the public convenience, the commission shall for ratemaking
purposes add to the value of that utility's property the value of the
qualified pollution control property under construction.
(f) The commission shall adopt rules under IC 4-22-2 to implement
this section.
SOURCE: IC 8-1-8.7-1; (07)AM182408.5. -->
SECTION 5. IC 8-1-8.7-1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 1. As used in this
chapter, "clean coal technology" means a technology (including
precombustion treatment of coal):
(1) that is used in a new or existing electric or steam generating
facility and directly or indirectly reduces or avoids airborne
emissions of sulfur or nitrogen based pollutants that are:
(A) associated with the combustion or use of coal; and
(B) regulated, or reasonably anticipated by the commission
to be regulated, by:
(i) the federal government;
(ii) the state;
(iii) a political subdivision of the state; or
(iv) any agency of a unit of government described in
items (i) through (iii); and
(2) that either:
(A) is not in general commercial use at the same or greater
scale in new or existing facilities in the United States as of
January 1, 1989; or
(B) has been selected by the United States Department of
Energy for funding under its Innovative Clean Coal
Technology program and is finally approved for such funding
on or after January 1, 1989.
SOURCE: IC 8-1-8.7-3; (07)AM182408.6. -->
SECTION 6. IC 8-1-8.7-3 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 3. (a) Except as
provided in subsection (c), a public utility may not use clean coal
technology at a new or existing electric
or steam generating facility
without first applying for and obtaining from the commission a
certificate that states that public convenience and necessity will be
served by the use of clean coal technology.
(b) The commission shall issue a certificate of public convenience
and necessity under subsection (a) if the commission finds that a clean
coal technology project offers substantial potential of reducing
sulfur
or nitrogen based pollutants
described in section 1(1) of this chapter
in a more efficient manner than conventional technologies in general
use as of January 1, 1989. For purposes of this chapter, a project that
the United States Department of Energy has selected for funding under
its Innovative Clean Coal Technology program and is finally approved
for funding after December 31, 1988, is not considered a conventional
technology in general use as of January 1, 1989. When determining
whether to grant a certificate under this section, the commission shall
examine the following factors:
(1) The costs for constructing, implementing, and using clean coal
technology compared to the costs for conventional emission
reduction facilities.
(2) Whether a clean coal technology project will also extend the
useful life of an existing electric
or steam generating facility and
the value of that extension.
(3) The potential reduction of
sulfur and nitrogen based pollutants
described in section 1(1) of this chapter that can be achieved
by the proposed clean coal technology system.
(4) The reduction of
sulfur nitrogen based pollutants
described
in section 1(1) of this chapter that can be achieved by
conventional pollution control equipment.
(5) Federal
sulfur and nitrogen based pollutant emission
standards.
(6) The likelihood of success of the proposed project.
(7) The cost and feasibility of the retirement of an existing electric
or steam generating facility.
(8) The dispatching priority for the facility utilizing clean coal
technology, considering direct fuel costs, revenues and expenses
of the utility, and environmental factors associated with
byproducts resulting from the utilization of the clean coal
technology.
(9) Any other factors the commission considers relevant,
including whether the construction, implementation, and use of
clean coal technology is in the public's interest.
(c) A public utility is not required to obtain a certificate under this
chapter for a clean coal technology project that constitutes a research
and development project that may be expensed under IC 8-1-2-6.1.
SOURCE: IC 8-1-8.8-3; (07)AM182408.7. -->
SECTION 7. IC 8-1-8.8-3 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 3. As used in this
chapter, "clean coal technology" means a technology (including
precombustion treatment of coal):
(1) that is used in a new or existing energy or steam generating
facility and directly or indirectly reduces airborne emissions of
sulfur, mercury, or nitrogen oxides or other regulated air
emissions that are:
(A) associated with the combustion or use of coal; and
(B) regulated, or reasonably anticipated by the commission
to be regulated, by:
(i) the federal government;
(ii) the state;
(iii) a political subdivision of the state; or
(iv) any agency of a unit of government described in
items (i) through (iii); and
(2) that either:
(A) was not in general commercial use at the same or greater
scale in new or existing facilities in the United States at the
time of enactment of the federal Clean Air Act Amendments
of 1990 (P.L.101-549); or
(B) has been selected by the United States Department of
Energy for funding under its Innovative Clean Coal
Technology program and is finally approved for such funding
on or after the date of enactment of the federal Clean Air Act
Amendments of 1990 (P.L.101-549).
SOURCE: IC 8-1-8.8-6.3; (07)AM182408.8. -->
SECTION 8. IC 8-1-8.8-6.3 IS ADDED TO THE INDIANA CODE
AS A
NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]:
Sec. 6.3. (a) As used in this chapter, "existing
electric or steam generating facility" refers to a facility in Indiana,
other than a new energy generating facility, that, regardless of its
fuel source, is used to generate electricity or steam.
(b) The term does not include a facility that generates electricity
or steam from the incineration, burning, or heating of any:
(1) general household;
(2) institutional;
(3) commercial;
(4) industrial lunchroom;
(5) office; or
(6) landscape;
waste.
SOURCE: IC 8-1-8.8-11.5; (07)AM182408.9. -->
SECTION 9. IC 8-1-8.8-11.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE UPON PASSAGE]: Sec. 11.5. (a) As used in this
section, "regulated air emissions" means air emissions from an
electric or steam generating facility that are regulated, or
reasonably anticipated by the commission to be regulated, by:
(1) the federal government;
(2) the state;
(3) a political subdivision of the state; or
(4) any agency of a unit of government described in
subdivisions (1) through (3).
(b) As used in this section, "regulated air emissions project"
means a project designed to reduce regulated air emissions from an
existing electric or steam generating facility. The term includes
projects that provide offset programs, such as agricultural and
forestry activities, that reduce the level of greenhouse gases in the
atmosphere.
(c) An energy utility (as defined in IC 8-1-2.5-2) may petition the
commission for approval of the construction, installation, and
operation of a regulated air emissions project. If the commission
finds, after notice and hearing, the proposed regulated air
emissions project to be reasonable and necessary, the commission
shall approve the project and provide the following incentives:
(1) The timely recovery of costs associated with the regulated
air emissions project, including capital, operation,
maintenance, depreciation, tax, and financing costs incurred
during the construction and operation of the project.
(2) The recovery of costs associated with:
(A) the purchase of emissions allowances; or
(B) the payment of emission taxes;
arising from compliance with air emissions regulations.
(d) In addition to the incentives described in subsection (c), the
commission may provide any other financial incentives the
commission considers appropriate.
SOURCE: IC 8-1-8.9; (07)AM182408.10. -->
SECTION 10. IC 8-1-8.9 IS ADDED TO THE INDIANA CODE
AS A
NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2007]:
Chapter 8.9. Conservation and Load Management Programs for
Electric Utilities
Sec. 1. (a) The general assembly makes the following findings:
(1) Growth of Indiana's population and economic base has
created a need for additional sources of reliable electric
energy in Indiana.
(2) In addition to the construction of new energy generating
facilities, the development and implementation of cost
effective conservation and load management programs is
needed if Indiana is to continue to provide reliable electric
utility service at reasonable prices.
(3) Economic barriers exist to the increased development and
implementation of conservation and load management
programs by electric utilities.
(4) It is in the public interest for the state to encourage the
increased development and implementation of cost effective
conservation and load management programs by:
(A) removing economic barriers to the development and
implementation of conservation and load management
programs; and
(B) providing financial incentives to electric utilities to
develop and implement conservation and load
management programs.
(b) The purpose of this chapter is to:
(1) enhance the competitiveness of Indiana's economy; and
(2) complement the state's efforts to encourage the
construction of new energy generating facilities;
through the promotion and increased use of cost effective
conservation and load management programs.
Sec. 2. As used in this chapter, "conservation and load
management program" means a program that:
(1) is sponsored by an electric utility;
(2) is designed to:
(A) reduce the amount of electricity consumed by the
electric utility's customers; or
(B) otherwise influence customers' timing or use of
electricity to reduce the demand placed on the electric
utility's distribution system; and
(3) employs any of the following to achieve the reduction or
change in customers' electricity use described in subdivision
(2):
(A) End use devices or other equipment.
(B) Special rates or rate structures.
(C) Customer incentives.
(D) Customer education initiatives.
(E) Other technologies or services.
Sec. 3. (a) As used in this chapter, "conservation and load
management costs" means the capital, operating, and maintenance
costs incurred by an electric utility in developing and implementing
a conservation and load management program.
(b) The term includes the following costs associated with an
electric utility's conservation and load management program:
(1) Research and development costs.
(2) Administrative costs.
(3) Labor costs, including costs for services of contractors and
subcontractors.
(4) Equipment and depreciation costs.
(5) Tax costs.
(6) Financing costs.
(7) Financial incentives paid to participating customers.
(8) Marketing and advertising costs.
(9) Monitoring and evaluation costs.
(10) Financial incentives offered by the electric utility for:
(A) investment in; or
(B) performance associated with;
its conservation and load management program.
Sec. 4. (a) As used in this chapter, "electric utility" means a
utility:
(1) that generates or distributes electricity; and
(2) whose rates and charges are regulated by the commission.
(b) The term includes the following:
(1) A rural electric membership corporation organized under
IC 8-1-13.
(2) A corporation organized under IC 23-17 that is an electric
cooperative and that has at least one (1) member that is a
corporation organized under IC 8-1-13.
Sec. 5. As used in this chapter, "lost revenues" refers to
revenues lost by an electric utility as a result of not generating
electricity because of the implementation of a conservation and
load management program. In determining the revenues lost as a
result of a conservation and load management program, an electric
utility shall subtract the value of any reduced operating or
maintenance costs resulting from the program, including fuel cost
savings.
Sec. 6. As used in this chapter, "performance based shared
savings incentive" means an incentive mechanism designed to
allocate the net system benefits of an electric utility's conservation
and load management programs between:
(1) the electric utility's shareholders; and
(2) the electric utility's retail customers.
Sec. 7. (a) The commission shall encourage electric utilities to
implement conservation and load management programs by
creating the following incentives for the implementation of
conservation and load management programs, if the programs are
found by the commission to be reasonable and necessary:
(1) The timely recovery of conservation and load management
costs over a reasonable amortization period, as determined by
the commission.
(2) The timely recovery of lost revenues, or the authorization
of other mechanisms to remove lost revenues as a barrier to
the implementation of conservation and load management
programs.
(3) The authorization of a return to the electric utility in the
form of:
(A) a timely return equal to the electric utility's weighted
cost of capital (as determined under 170 IAC 4-6-14) with
respect to the electric utility's total unrecovered capital
investment in conservation and load management
programs; or
(B) a performance based shared savings incentive.
(4) Other financial incentives the commission considers
appropriate.
(b) An electric utility that seeks one (1) or more of the incentives
described in subsection (a) must file, on a form approved by the
commission, an application with the commission for approval of
the incentives sought.
(c) The commission shall, after notice and hearing, issue a
determination on the eligibility of the electric utility's conservation
and load management program for the financial incentives
described in subsection (a) not later than one hundred twenty (120)
days after the date of the electric utility's application under
subsection (b).".
SOURCE: Page 1, line 10 -->
Page 1, line 10, after "counties," insert "
each of".
Renumber all SECTIONS consecutively.
(Reference is to HB 1824 as reprinted February 24, 2007.)
and when so amended that said bill do pass .
Committee Vote: Yeas 9, Nays 0.
____________________________________
Senator Hershman, Chairperson
AM 182413/DI 101 2007