S.B. 202

This document includes Senate Committee Amendments incorporated into the bill on Tue, Feb 19, 2008 at 9:51 AM by rday. --> 1

ENERGY RESOURCE AND CARBON EMISSION
2 REDUCTION INITIATIVE
3 2008 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Curtis S. Bramble
6 House Sponsor: ____________
7
8 LONG TITLE
9 General Description:
10 This bill provides that an electrical corporation or municipal electric utility maintain a
11 percentage of electricity sold in the form of renewable energy resources.
12 Highlighted Provisions:
13 This bill:
14 . addresses the application of Title 54, Chapter 17, Energy Resource Procurement Act
15 to certain renewable energy resources;
16 . defines terms;
17 . provides that 20% of an electrical corporation's or municipal electric utility's
18 adjusted retail electric sales beginning in the year 2025 come from qualifying
19 electricity, including renewable energy resources, if cost effective;
20 . provides for the issuance and recognition of a renewable energy certificate for
21 certain electrical generation and actions by an energy user;
22 . requires plans and reports concerning an electrical corporation's or municipal
23 electric utility's progress in acquiring qualifying electricity;
24 . addresses cost recovery for certain energy resources;
25 . requires certain state agencies to make rules concerning carbon capture and
26 geological storage of captured carbon emissions; and
27 . makes technical changes.

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- 2 - 28 Monies Appropriated in this Bill:
29 None
30 Other Special Clauses:
31 This bill provides an immediate effective date.
32 Utah Code Sections Affected:
33 AMENDS:
34 54-17-201, as last amended by Laws of Utah 2007, Chapter 289
35 54-17-302, as last amended by Laws of Utah 2007, Chapter 289
36 54-17-303, as enacted by Laws of Utah 2005, Chapter 11
37 ENACTS:
38 10-19-101, Utah Code Annotated 1953
39 10-19-102, Utah Code Annotated 1953
40 10-19-201, Utah Code Annotated 1953
41 10-19-202, Utah Code Annotated 1953
42 10-19-301, Utah Code Annotated 1953
43 10-19-302, Utah Code Annotated 1953
44 54-17-502, Utah Code Annotated 1953
45 54-17-601, Utah Code Annotated 1953
46 54-17-602, Utah Code Annotated 1953
47 54-17-603, Utah Code Annotated 1953
48 54-17-604, Utah Code Annotated 1953
49 54-17-605, Utah Code Annotated 1953
50 54-17-606, Utah Code Annotated 1953
51 54-17-607, Utah Code Annotated 1953
52 54-17-701, Utah Code Annotated 1953
53
54 Be it enacted by the Legislature of the state of Utah:
55 Section 1. Section 10-19-101 is enacted to read:
56 CHAPTER 19. MUNICIPAL ELECTRIC UTILITY CARBON
57 EMISSION REDUCTION ACT
58 Part 1. General Provisions

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- 3 - 59 10-19-101. Title.
60 This chapter is known as the "Municipal Electric Utility Carbon Emission Reduction
61 Act."
62 Section 2. Section 10-19-102 is enacted to read:
63 10-19-102. Definitions.
64 As used in this chapter:
65 (1) "Adjusted retail electric sales" means the total kilowatt-hours of retail electric sales
66 of a municipal electric utility to customers in this state in a calendar year, reduced by:
67 (a) the amount of those kilowatt-hours attributable to electricity generated or purchased
68 in that calendar year from qualifying zero carbon emissions generation and qualifying carbon
69 sequestration generation;
70 (b) the amount of those kilowatt-hours attributable to electricity generated or purchased
71 in that calendar year from generation located within the geographic boundary of the Western
72 Electricity Coordinating Council that derives its energy from one or more of the following but
73 that does not satisfy the definition of a renewable energy source or that otherwise has not been
74 used to satisfy Subsection 10-19-201 (1):
75 (i) wind energy;
76 (ii) solar photovoltaic and solar thermal energy;
77 (iii) wave, tidal, and ocean thermal energy;
78 (iv) except for combustion of wood that has been treated with chemical preservatives
79 such as creosote, pentachlorophenol or chromated copper arsenate, biomass and biomass
80 byproducts, including:
81 (A) organic waste;
82 (B) forest or rangeland woody debris from harvesting or thinning conducted to improve
83 forest or rangeland ecological health and to reduce wildfire risk;
84 (C) agricultural residues;
85 (D) dedicated energy crops; and
86 (E) landfill gas or biogas produced from organic matter, wastewater, anaerobic
87 digesters, or municipal solid waste;
88 (v) geothermal energy;
89 (vi) hydro-electric energy; or

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- 4 - 90 (vii) waste gas and waste heat capture or recovery; and
91 (c) the number of kilowatt-hours attributable to reductions in retail sales in that
92 calendar year from activities or programs promoting electric energy efficiency or conservation
93 or more efficient management of electric energy load.
94 (2) "Amount of kilowatt-hours attributable to electricity generated or purchased in that
95 calendar year from qualifying carbon sequestration generation," for qualifying carbon
96 sequestration generation, means the kilowatt-hours supplied by a facility during the calendar
97 year multiplied by the ratio of the amount of carbon dioxide captured from the facility and
98 sequestered to the sum of the amount of carbon dioxide captured from the facility and
99 sequestered plus the amount of carbon dioxide emitted from the facility during the same
100 calendar year.
101 (3) "Banked renewable energy certificate" means a bundled or unbundled renewable
102 energy certificate that is:
103 (a) not used in a calendar year to comply with this part or with a renewable energy
104 program in another state; and
105 (b) carried forward into a subsequent year.
106 (4) "Bundled renewable energy certificate" means a renewable energy certificate for
107 qualifying electricity that is acquired:
108 (a) by a municipal electric utility by a trade, purchase, or other transfer of electricity
109 that includes the renewable energy attributes of, or certificate that is issued for, the electricity;
110 or
111 (b) by a municipal electric utility by generating the electricity for which the renewable
112 energy certificate is issued.
113 (5) "Commission" means the Public Service Commission.
114 (6) "Municipal electric utility" means any municipality that owns, operates, controls, or
115 manages a facility that provides electric power for a retail customer, whether domestic,
116 commercial, industrial, or otherwise.
117 (7) "Qualifying carbon sequestration generation" means a fossil-fueled generating
118 facility located within the geographic boundary of the Western Electricity Coordinating
119 Council that:
120 (a) becomes operational or is retrofitted on or after January 1, 2008; and

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- 5 - 121 (b) reduces carbon dioxide emissions into the atmosphere through permanent
122 geological sequestration or through other verifiably permanent reductions in carbon dioxide
123 emissions through the use of technology.
124 (8) "Qualifying electricity" means electricity generated on or after January 1, 1995
125 from a renewable energy source if:
126 (a) (i) the renewable energy source is located within the geographic boundary of the
127 Western Electricity Coordinating Council; or
128 (ii) the qualifying electricity is delivered to the transmission system of a municipal
129 electric utility or a delivery point designated by the municipal electric utility for the purpose of
130 subsequent delivery to the municipal electric utility; and
131 (b) the renewable energy attributes of the electricity are not traded, sold, transferred, or
132 otherwise used to satisfy another state's renewable energy program.
133 (9) "Qualifying zero carbon emissions generation":
134 (a) means a generation facility located within the geographic boundary of the Western
135 Electricity Coordinating Council that:
136 (i) becomes operational on or after January 1, 2008; and
137 (ii) does not produce carbon as a byproduct of the generation process;
138 (b) includes generation powered by nuclear fuel; and
139 (c) does not include renewable energy sources used to satisfy a target established under
140 Section 10-19-201 .
141 (10) "Renewable energy certificate" means a certificate issued in accordance with the
142 requirements of Sections 10-19-202 and 54-17-603 .
143 (11) "Renewable energy source" means:
144 (a) an electric generation facility or generation capability or upgrade that becomes
145 operational on or after January 1, 1995 that derives its energy from one or more of the
146 following:
147 (i) wind energy;
148 (ii) solar photovoltaic and solar thermal energy;
149 (iii) wave, tidal, and ocean thermal energy;
150 (iv) except for combustion of wood that has been treated with chemical preservatives
151 such as creosote, pentachlorophenol or chromated copper arsenate, biomass and biomass

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- 6 - 152 byproducts, including:
153 (A) organic waste;
154 (B) forest or rangeland woody debris from harvesting or thinning conducted to improve
155 forest or rangeland ecological health and to reduce wildfire risk;
156 (C) agricultural residues;
157 (D) dedicated energy crops; and
158 (E) landfill gas or biogas produced from organic matter, wastewater, anaerobic
159 digesters, or municipal solid waste;
160 (v) geothermal energy located outside the state;
161 (vi) waste gas and waste heat capture or recovery; or
162 (vii) efficiency upgrades to a hydroelectric facility, without regard to the date upon
163 which the facility became operational, if the upgrades become operational on or after January
164 1, 1995;
165 (b) any of the following:
166 (i) up to 50 average megawatts of electricity per year per municipal electric utility from
167 a certified low-impact hydroelectric facility, without regard to the date upon which the facility
168 becomes operational, if the facility is certified as a low-impact hydroelectric facility on or after
169 January 1, 1995, by a national certification organization;
170 (ii) geothermal energy if located within the state, without regard to the date upon which
171 the facility becomes operational; and
172 (iii) hydroelectric energy if located within the state, without regard to the date upon
173 which the facility becomes operational;
174 (c) hydrogen gas derived from any source of energy described in Subsection (11)(a) or
175 (b);
176 (d) if an electric generation facility employs multiple energy sources, that portion of the
177 electricity generated that is attributable to energy sources described in Subsections (11)(a)
178 through (c); and
179 (e) any of the following located in the state and owned by a user of energy:
180 (i) a demand side management measure, as defined by Subsection 54-7-12.8 (1) with
181 the quantity of renewable energy certificates to which the user is entitled determined by the
182 equivalent energy saved by the measure;

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- 7 - 183 (ii) a solar thermal system that reduces the consumption of fossil fuels, with the
184 quantity of renewable energy certificates to which the user is entitled determined by the
185 equivalent kilowatt-hours saved, except to the extent the commission determines otherwise
186 with respect to net-metered energy;
187 (iii) a solar photovoltaic system that reduces the consumption of fossil fuels with the
188 quantity of renewable energy certificates to which the user is entitled determined by the total
189 production of the system, except to the extent the commission determines otherwise with
190 respect to net-metered energy;
191 (iv) a hydroelectric or geothermal facility, with the quantity of renewable energy
192 certificates to which the user is entitled determined by the total production of the facility,
193 except to the extent the commission determines otherwise with respect to net-metered energy;
194 (v) a waste gas or waste heat capture or recovery system other than from a combined
195 cycle combustion turbine that does not use waste gas or waste heat, with the quantity of
196 renewable energy certificates to which the user is entitled determined by the total production of
197 the system, except to the extent the commission determines otherwise with respect to
198 net-metered energy; and
199 (vi) the station use of solar thermal energy, solar photovoltaic energy, hydroelectric
200 energy, geothermal energy, waste gas, or waste heat capture and recovery.
201 (12) "Unbundled renewable energy certificate" means a renewable energy certificate
202 associated with:
203 (a) qualifying electricity that is acquired by a municipal electric utility or other person
204 by trade, purchase, or other transfer without acquiring the electricity for which the certificate
205 was issued; or
206 (b) activities listed in Subsection (11)(e).
207 Section 3. Section 10-19-201 is enacted to read:
208 Part 2. Renewable Energy Provisions
209 10-19-201. Target amount of qualifying electricity -- Renewable energy certificate
210 -- Cost-effectiveness.
211 (1) (a) To the extent that it is cost-effective to do so, beginning in 2025 the annual
212 retail electric sales in this state of each municipal electric utility shall consist of qualifying
213 electricity or renewable energy certificates in an amount equal to at least 20% of adjusted retail

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- 8 - 214 electric sales.
215 (b) The amount under Subsection (1)(a) is computed based upon adjusted retail sales
216 for the calendar year commencing 36 months before the first day of the year for which the
217 target calculated under Subsection (1)(a) applies.
218 (c) Notwithstanding Subsections (1)(a) and (b) an increase in the annual target from
219 one year to the next is limited to the greater of:
220 (i) 17,500 megawatt-hours; or
221 (ii) 20% of the prior year's amount under Subsections (1)(a) and (b).
222 (2) Cost-effectiveness under Subsection (1) is determined using any criteria applicable
223 to the municipal electric utility's acquisition of a significant energy resource established by the
224 municipality's legislative body.
225 (3) This section does not require a municipal electric utility to:
226 (a) substitute qualifying electricity for electricity from a generation source owned or
227 contractually committed, or from a contractual commitment for a power purchase;
228 (b) enter into any additional electric sales commitment or any other arrangement for the
229 sale or other disposition of electricity that is not already, or would not be, entered into by the
230 municipal electric utility; or
231 (c) acquire qualifying electricity in excess of its adjusted retail electric sales.
232 (4) A municipal electrical corporation may combine the following to meet Subsection
233 (1):
234 (a) qualifying electricity from a renewable energy source owned by the municipal
235 electric utility;
236 (b) qualifying electricity acquired by the municipal electric utility through trade, power
237 purchase, or other transfer; and
238 (c) a bundled or unbundled renewable energy certificate, including a banked renewable
239 energy certificate.
240 (5) To meet Subsection (1), a municipal electric utility may also count:
241 (a) qualifying electricity generated or acquired or renewable energy certificates
242 acquired for a program permitting the municipal electric utility's customers to voluntarily
243 contribute to a renewable energy source; and
244 (b) electricity allocated to this state that is produced by a hydroelectric facility

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- 9 - 245 becoming operational after December 31, 2007 if the hydroelectric facility is located in any
246 state in which the municipal electric utility, or the interlocal entity with which the municipal
247 electric utility has a contract, provides electric service.
248 Section 4. Section 10-19-202 is enacted to read:
249 10-19-202. Renewable energy certificate -- Use to satisfy other requirements.
250 (1) A municipal electric utility may buy, sell, trade, or otherwise transfer a renewable
251 energy certificate issued or recognized under Section 54-17-603 .
252 (2) For the purpose of satisfying Subsection 10-19-201 (1) and the issuance of a
253 renewable energy certificate under Section 54-17-603 :
254 (a) a renewable energy source located in this state that derives its energy from solar
255 photovoltaic and solar thermal energy shall be credited for 2.4 kilowatt-hours of qualifying
256 electricity for each 1.0 kilowatt-hour generated; and
257 (b) if two or more municipal electric utilities jointly own a renewable energy resource,
258 each municipal electric utility shall be credited with 1.0 kilowatt-hour of qualifying electricity
259 for 1.0 kilowatt-hour of the renewable energy resource allocated to the municipal electric utility
260 by contract, unless the contract otherwise provides.
261 (3) A renewable energy certificate:
262 (a) may be used only once to satisfy Subsection 10-19-201 (1);
263 (b) may be used to satisfy Subsection 10-19-201 (1) and the qualifying electricity on
264 which the renewable energy certificate is based may be used to satisfy any federal renewable
265 energy requirement; and
266 (c) may not be used if it has been used to satisfy any other state's renewable energy
267 requirement.
268 Section 5. Section 10-19-301 is enacted to read:
269 Part 3. Administrative Provisions
270 10-19-301. Plans and reports.
271 (1) A municipal electric utility shall develop and maintain a plan for implementing
272 Subsection 10-19-201 (1).
273 (2) A progress report concerning a plan under Subsection (1) shall be filed with the
274 municipality's legislative body by January 1 of each of the years 2010, 2015, 2020, and 2024.
275 (3) The progress report under Subsection (2) shall contain:

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- 10 - 276 (a) the actual and projected amount of qualifying electricity through 2025;
277 (b) the source of qualifying electricity;
278 (c) an estimate of the cost of achieving the target;
279 (d) a discussion of conditions impacting the renewable energy source and qualifying
280 electricity markets; and
281 (e) any recommendation for a suggested legislative or program change.
282 (4) The plan and progress report required by Subsections (1) and (2) may include
283 procedures that will be used by the municipal electric utility to identify and select any
284 cost-effective renewable energy resource and qualifying electricity.
285 (5) By July 1, 2026, the municipal electric utility shall file a final progress report
286 demonstrating:
287 (a) how Subsection 10-19-201 (1) is satisfied for the year 2025; or
288 (b) the reason why Subsection 10-19-201 (1) is not satisfied for the year 2025, if it is
289 not satisfied.
290 (6) The plan and any progress report filed under this section shall be publicly available
291 at the municipal legislative body's office.
292 Section 6. Section 10-19-302 is enacted to read:
293 10-19-302. Municipal authority -- Commission authority.
294 (1) The municipal legislative body may adopt procedures necessary to implement this
295 chapter.
296 (2) Nothing in this chapter authorizes the commission to exercise any power over a
297 municipal electric utility's electrical generation, demand-side management program, or other
298 operation.
299 Section 7. Section 54-17-201 is amended to read:
300 54-17-201. Solicitation process required -- Exception.
301 (1) (a) An affected electrical utility shall comply with this chapter to acquire or
302 construct a significant energy resource after February 25, 2005.
303 (b) Notwithstanding Subsection (1)(a), this chapter does not apply to a significant
304 energy resource for which the affected electrical utility has issued a solicitation before February
305 25, 2005.
306 (2) (a) Except as provided in Subsection (3), to acquire or construct a significant

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- 11 - 307 energy resource, an affected electrical utility shall conduct a solicitation process that is
308 approved by the commission.
309 (b) To obtain the approval of the commission of a solicitation process, the affected
310 electrical utility shall file with the commission a request for approval that includes:
311 (i) a description of the solicitation process the affected electrical utility will use;
312 (ii) a complete proposed solicitation; and
313 (iii) any other information the commission requires by rule made in accordance with
314 Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
315 (c) In ruling on the request for approval of a solicitation process, the commission shall
316 determine whether the solicitation process:
317 (i) complies with this chapter and rules made in accordance with Title 63, Chapter 46a,
318 Utah Administrative Rulemaking Act; and
319 (ii) is in the public interest taking into consideration:
320 (A) whether it will most likely result in the acquisition, production, and delivery of
321 electricity at the lowest reasonable cost to the retail customers of an affected electrical utility
322 located in this state;
323 (B) long-term and short-term impacts;
324 (C) risk;
325 (D) reliability;
326 (E) financial impacts on the affected electrical utility; and
327 (F) other factors determined by the commission to be relevant.
328 (d) Before approving a solicitation process under this section the commission:
329 (i) may hold a public hearing; and
330 (ii) shall provide an opportunity for public comment.
331 (e) As part of its review of a solicitation process, the commission may provide the
332 affected electrical utility guidance on any additions or changes to its proposed solicitation
333 process.
334 (f) Unless the commission determines that additional time to analyze a solicitation
335 process is warranted and is in the public interest, within [90] 60 days of the day on which the
336 affected electrical utility files a request for approval of the solicitation process, the commission
337 shall:

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- 12 - 338 (i) approve a proposed solicitation process;
339 (ii) suggest modifications to a proposed solicitation process; or
340 (iii) reject a proposed solicitation process.
341 (3) Notwithstanding Subsection (2), an affected electrical utility may acquire or
342 construct a significant energy resource without conducting a solicitation process if it obtains a
343 waiver of the solicitation requirement in accordance with Section 54-17-501 .
344 (4) In accordance with the commission's authority under Subsection 54-12-2 (2), the
345 commission shall determine:
346 (a) whether this chapter or another competitive bidding procedure shall apply to a
347 purchase of a significant energy resource by an affected electrical utility from a small power
348 producer or cogenerator; and
349 (b) if this chapter applies as provided in Subsection (4)(a), the manner in which this
350 chapter applies to a purchase of a significant energy resource by an affected electrical utility
351 from a small power producer or cogenerator.
352 Section 8. Section 54-17-302 is amended to read:
353 54-17-302. Approval of a significant energy resource decision required.
354 (1) If pursuant to Part 2, Solicitation Process, an affected electrical utility is required to
355 conduct a solicitation for a significant energy resource or obtains a waiver of the requirement to
356 conduct a solicitation under Section 54-17-501 , but does not obtain a waiver of the requirement
357 to obtain approval of the significant energy resource decision under Section 54-17-501 , the
358 affected electrical utility shall obtain approval of its significant energy resource decision:
359 (a) after the completion of the solicitation process, if the affected electrical utility is
360 required to conduct a solicitation; and
361 (b) before an affected electrical utility may construct or enter into a binding agreement
362 to acquire the significant energy resource.
363 (2) (a) To obtain the approval required by Subsection (1), the affected electrical utility
364 shall file a request for approval with the commission.
365 (b) The request for approval required by this section shall include any information
366 required by the commission by rule made in accordance with Title 63, Chapter 46a, Utah
367 Administrative Rulemaking Act.
368 (3) In ruling on a request for approval of a significant energy resource decision, the

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- 13 - 369 commission shall determine whether the significant energy resource decision:
370 (a) is reached in compliance with this chapter and rules made in accordance with Title
371 63, Chapter 46a, Utah Administrative Rulemaking Act;
372 (b) (i) is reached in compliance with the solicitation process approved by the
373 commission in accordance with Part 2, Solicitation Process; or
374 (ii) is reached after the waiver of the solicitation process as provided in Subsection
375 54-17-201 (3); and
376 (c) is in the public interest, taking into consideration:
377 (i) whether it will most likely result in the acquisition, production, and delivery of
378 electricity at the lowest reasonable cost to the retail customers of an affected electrical utility
379 located in this state;
380 (ii) long-term and short-term impacts;
381 (iii) risk;
382 (iv) reliability;
383 (v) financial impacts on the affected electrical utility; and
384 (vi) other factors determined by the commission to be relevant.
385 (4) The commission may not approve a significant energy resource decision under this
386 section before holding a public hearing.
387 (5) Unless the commission determines that additional time to analyze a significant
388 energy resource decision is warranted and is in the public interest, within [180] 120 days of the
389 day on which the affected electrical utility files a request for approval, the commission shall:
390 (a) approve the significant energy resource decision;
391 (b) approve the significant energy resource decision subject to conditions imposed by
392 the commission; or
393 (c) disapprove the significant energy resource decision.
394 (6) The commission shall include in its order under this section:
395 (a) findings as to the total projected costs for construction or acquisition of an
396 approved significant energy resource; and
397 (b) the basis upon which the findings described in Subsection (6)(a) are made.
398 (7) Notwithstanding any other provision of this part, an affected electrical utility may
399 acquire a significant energy resource without obtaining approval pursuant to this section if it

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- 14 - 400 obtains a waiver of the requirement for approval in accordance with Section 54-17-501 .
401 (8) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
402 commission shall make rules regarding the process for approval of a significant energy
403 resource decision under this section.
404 Section 9. Section 54-17-303 is amended to read:
405 54-17-303. Cost recovery.
406 (1) (a) Except as otherwise provided in this section, if the commission approves a
407 significant energy resource decision under Section 54-17-302 , the commission shall, in a
408 general rate case or other appropriate commission proceeding, include in the affected electrical
409 utility's retail electric rates the state's share of costs:
410 (i) relevant to the proceeding;
411 (ii) incurred by the affected electrical utility in constructing or acquiring the approved
412 significant energy resource; and
413 (iii) up to the projected costs specified in the commission's order issued under Section
414 54-17-302 .
415 (b) (i) The commission shall, in a general rate case or other appropriate commission
416 proceeding, include in the affected electrical utility's retail electric rates the state's share of the
417 incremental cost relevant to the proceeding that were prudently incurred by the affected
418 electrical utility to identify, evaluate, and submit a reasonable benchmark option, whether or
419 not the benchmark option is selected or becomes operational.
420 (ii) A recoverable cost under Subsection (1)(b)(i) shall be included in the affected
421 electrical utility's project costs for the purpose of evaluating the project's cost-effectiveness.
422 (iii) A recoverable cost under Subsection (1)(b)(i) may not be added to the cost or
423 otherwise considered in the evaluation of a project proposed by any person other than the
424 affected electrical utility for the purpose of evaluating that person's proposal.
425 [(b)] (c) Except to the extent that the commission enters an order under Section
426 54-17-304 , an increase from the projected costs specified in the commission's order issued
427 under Section 54-17-302 shall be subject to review by the commission as part of a rate hearing
428 under Section 54-7-12 .
429 (2) (a) Subsequent to the commission issuing an order described in Subsection (2)(a)(i)
430 or (ii), the commission may disallow some or all costs incurred in connection with an

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- 15 - 431 approved significant energy resource decision if the commission finds that an affected
432 electrical utility's actions in implementing an approved significant energy resource decision are
433 not prudent because of new information or changed circumstances that occur after:
434 (i) the commission's approval of the significant energy resource decisions under
435 Section 54-17-302 ; or
436 (ii) a commission order to proceed under Section 54-17-304 .
437 (b) In making a determination of prudence under Subsection (2)(a), the commission
438 shall use the standards identified in Section 54-4-4 .
439 (3) Notwithstanding any other provision of this chapter, the commission may disallow
440 some or all of the costs incurred by an affected electrical utility in connection with an approved
441 significant energy resource decision upon a finding by the commission that the affected
442 electrical utility is responsible for a material misrepresentation or concealment in connection
443 with an approval process under this chapter.
444 Section 10. Section 54-17-502 is enacted to read:
445 54-17-502. Renewable energy source -- Solicitation -- Consultant.
446 (1) Sections 54-17-102 through 54-17-404 do not apply to a significant energy resource
447 that is a renewable energy source as defined in Section 54-17-601 if the nameplate capacity of
448 the renewable energy source does not exceed 300 megawatts or, if applicable, the quantity of
449 capacity that is the subject of a contract for the purchase of electricity from a renewable energy
450 source does not exceed 300 megawatts.
451 (2) (a) (i) An affected electrical utility shall issue a public solicitation of bids for a
452 renewable energy source up to 300 megawatts in size by January 31 of each year in which it
453 reasonably anticipates that it will need to acquire or commence construction of a renewable
454 energy resource.
455 (ii) A solicitation for a renewable energy source issued by January 31, 2008 for up to
456 99 megawatts satisfies the requirement of this Subsection (2) for the year 2008 if:
457 (A) within 30 days after the day on which this section takes effect, the affected
458 electrical utility amends the solicitation to seek bids for projects up to 300 megawatts in size;
459 and
460 (B) within 60 days after the day on which this section takes effect and as soon as
461 practicable, the commission retains a consultant in accordance with Subsection (3).

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- 16 - 462 (b) A consultant hired under Subsection (2)(a)(ii)(B) shall perform the consultant's
463 duties under Subsection (3) in relation to the status of the solicitation process at the time the
464 consultant is retained and may not unreasonably delay the solicitation process.
465 (c) For a solicitation issued after January 31, 2008:
466 (i) the affected electrical utility shall develop a reasonable process for pre-approval of
467 bidders; and
468 (ii) in addition to publicly issuing the solicitation in Subsection (2)(a)(i), the affected
469 electrical utility shall send copies of the solicitation to each potential bidder who is
470 pre-approved.
471 (d) The affected electrical utility shall evaluate in good faith each bid that is received
472 and negotiate in good faith with each bidder whose bid appears to be cost effective, as defined
473 in Section 54-17-602 .
474 (e) Beginning on August 1, 2008, and on each August 1 thereafter, the affected
475 electrical utility shall file a notice with the commission indicating whether it reasonably
476 anticipates that it will need to acquire or commence construction of a renewable energy
477 resource during the following year.
478 (3) (a) If the commission receives a notice under Subsection (2)(e) that the affected
479 electrical utility reasonably anticipates that it will need to acquire or commence construction of
480 a renewable energy source during the following year, the commission shall promptly retain a
481 consultant to:
482 (i) validate that the affected electrical utility is following the bidder pre-approval
483 process developed pursuant to Subsection (2)(c) and make recommendations for changes to the
484 pre-approval process for future solicitations;
485 (ii) monitor and document all material aspects of the bids, bid evaluations, and bid
486 negotiations between the affected electrical utility and any bidders in the solicitation process;
487 (iii) maintain adequate documentation of each bid, including the solicitation,
488 evaluation, and negotiation processes and the reason for the conclusion of negotiations, which
489 documentation shall be transmitted to the commission at the conclusion of all negotiations in
490 the solicitation; and
491 (iv) be available to testify under oath before the commission in any relevant proceeding
492 concerning all aspects of the public solicitation process.

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- 17 - 493 (b) The commission and the consultant shall use all reasonable efforts to not delay the
494 solicitation process.
495 (4) Documentation provided to the commission by the consultant shall be available to
496 the affected electrical utility, any bidder, or other interested person under terms and conditions
497 and at times determined appropriate by the commission.
498 (5) (a) The commission and the consultant shall execute a contract approved by the
499 commission with terms and conditions approved by the commission.
500 (b) Unless otherwise provided by contract, an invoice for the consultant's services shall
501 be sent to the Division of Public Utilities for review and approval.
502 (c) After approval under Subsection (5)(b), the invoice shall be forwarded to the
503 affected electrical utility for payment to the consultant.
504 (d) The affected electrical utility may, in a general rate case or other appropriate
505 commission proceeding, include, and the Commission shall allow, recovery by the affected
506 electrical utility of any amount paid by the affected electrical utility for the consultant.
507 (6) (a) Nothing in this section precludes an affected electrical utility from constructing
508 or acquiring any renewable energy source project outside the solicitation process provided for
509 in this section, including purchasing electricity from any renewable energy source project that
510 chooses to self-certify as a qualifying facility under the federal Public Utility Regulatory
511 Policies Act of 1978.
512 (b) An affected electrical utility that constructs a renewable energy source outside the
513 solicitation process of this section or Section 54-17-201 shall file a notice with the commission
514 at least 60 days before the date of commencement of construction, indicating the size and
515 location of the renewable energy source.
516 (c) The date of commencement of construction under Subsection (6)(b) is the date of
517 any directive from an affected electrical utility to the person responsible for the construction of
518 the renewable energy source authorizing or directing the person to proceed with construction.
519 (d) For an affected electrical utility whose rates are regulated by the commission, the
520 utility has the burden of proving in a rate case or other appropriate commission proceeding the
521 prudence, reasonableness, and cost-effectiveness of construction under this Subsection (6),
522 including the method used to evaluate the risks and value of any bid submitted in the
523 solicitation under this section.

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- 18 - 524 (7) Nothing in this section requires an affected electrical utility to enter into any
525 transaction that it reasonably believes is not cost effective or otherwise is not in the public
526 interest.
527 Section 11. Section 54-17-601 is enacted to read:
528 Part 6. Carbon Emission Reductions for Electrical Corporations
529 54-17-601. Definitions.
530 As used in this part:
531 (1) "Adjusted retail electric sales" means the total kilowatt-hours of retail electric sales
532 of an electrical corporation to customers in this state in a calendar year, reduced by:
533 (a) the amount of those kilowatt-hours attributable to electricity generated or purchased
534 in that calendar year from qualifying zero carbon emissions generation and qualifying carbon
535 sequestration generation;
536 (b) the amount of those kilowatt-hours attributable to electricity generated or purchased
537 in that calendar year from generation located within the geographic boundary of the Western
538 Electricity Coordinating Council that derives its energy from one or more of the following but
539 that does not satisfy the definition of a renewable energy source or that otherwise has not been
540 used to satisfy Subsection 54-17-602 (1):
541 (i) wind energy;
542 (ii) solar photovoltaic and solar thermal energy;
543 (iii) wave, tidal, and ocean thermal energy;
544 (iv) except for combustion of wood that has been treated with chemical preservatives
545 such as creosote, pentachlorophenol or chromated copper arsenate, biomass and biomass
546 byproducts, including:
547 (A) organic waste;
548 (B) forest or rangeland woody debris from harvesting or thinning conducted to improve
549 forest or rangeland ecological health and to reduce wildfire risk;
550 (C) agricultural residues;
551 (D) dedicated energy crops; and
552 (E) landfill gas or biogas produced from organic matter, wastewater, anaerobic
553 digesters, or municipal solid waste;
554 (v) geothermal energy;

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- 19 - 555 (vi) hydroelectric energy; or
556 (vii) waste gas and waste heat capture or recovery; and
557 (c) the number of kilowatt-hours attributable to reductions in retail sales in that
558 calendar year from demand side management as defined in Section 54-7-12.8 , with the
559 kilowatt-hours for an electrical corporation whose rates are regulated by the commission and
560 adjusted by the commission to exclude kilowatt-hours for which a renewable energy certificate
561 is issued under Subsection 54-17-603 (4)(b).
562 (2) "Amount of kilowatt-hours attributable to electricity generated or purchased in that
563 calendar year from qualifying carbon sequestration generation," for qualifying carbon
564 sequestration generation, means the kilowatt-hours supplied by a facility during the calendar
565 year multiplied by the ratio of the amount of carbon dioxide captured from the facility and
566 sequestered to the sum of the amount of carbon dioxide captured from the facility and
567 sequestered plus the amount of carbon dioxide emitted from the facility during the same
568 calendar year.
569 (3) "Banked renewable energy certificate" means a bundled or unbundled renewable
570 energy certificate that is:
571 (a) not used in a calendar year to comply with this part or with a renewable energy
572 program in another state; and
573 (b) carried forward into a subsequent year.
574 (4) "Bundled renewable energy certificate" means a renewable energy certificate for
575 qualifying electricity that is acquired:
576 (a) by an electrical corporation by a trade, purchase, or other transfer of electricity that
577 includes the renewable energy attributes of, or certificate that is issued for, the electricity; or
578 (b) by an electrical corporation by generating the electricity for which the renewable
579 energy certificate is issued.
580 (5) "Electrical corporation":
581 (a) is as defined in Section 54-2-1 ; and
582 (b) does not include a person generating electricity that is not for sale to the public.
583 (6) "Qualifying carbon sequestration generation" means a fossil-fueled generating
584 facility located within the geographic boundary of the Western Electricity Coordinating
585 Council that:

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- 20 - 586 (a) becomes operational or is retrofitted on or after January 1, 2008; and
587 (b) reduces carbon dioxide emissions into the atmosphere through permanent
588 geological sequestration or through another verifiably permanent reduction in carbon dioxide
589 emissions through the use of technology.
590 (7) "Qualifying electricity" means electricity generated on or after January 1, 1995
591 from a renewable energy source if:
592 (a) (i) the renewable energy source is located within the geographic boundary of the
593 Western Electricity Coordinating Council; or
594 (ii) the qualifying electricity is delivered to the transmission system of an electrical
595 corporation or a delivery point designated by the electrical corporation for the purpose of
596 subsequent delivery to the electrical corporation; and
597 (b) the renewable energy attributes of the electricity are not traded, sold, transferred, or
598 otherwise used to satisfy another state's renewable energy program.
599 (8) "Qualifying zero carbon emissions generation":
600 (a) means a generation facility located within the geographic boundary of the Western
601 Electricity Coordinating Council that:
602 (i) becomes operational on or after January 1, 2008; and
603 (ii) does not produce carbon as a byproduct of the generation process;
604 (b) includes generation powered by nuclear fuel; and
605 (c) does not include renewable energy sources used to satisfy the requirement
606 established under Subsection 54-17-602 (1).
607 (9) "Renewable energy certificate" means a certificate issued under Section 54-17-603 .
608 (10) "Renewable energy source" means:
609 (a) an electric generation facility or generation capability or upgrade that becomes
610 operational on or after January 1, 1995 that derives its energy from one or more of the
611 following:
612 (i) wind energy;
613 (ii) solar photovoltaic and solar thermal energy;
614 (iii) wave, tidal, and ocean thermal energy;
615 (iv) except for combustion of wood that has been treated with chemical preservatives
616 such as creosote, pentachlorophenol or chromated copper arsenate, biomass and biomass

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- 21 - 617 byproducts, including:
618 (A) organic waste;
619 (B) forest or rangeland woody debris from harvesting or thinning conducted to improve
620 forest or rangeland ecological health and to reduce wildfire risk;
621 (C) agricultural residues;
622 (D) dedicated energy crops; and
623 (E) landfill gas or biogas produced from organic matter, wastewater, anaerobic
624 digesters, or municipal solid waste;
625 (v) geothermal energy located outside the state;
626 (vi) waste gas and waste heat capture or recovery; or
627 (vii) efficiency upgrades to a hydroelectric facility, without regard to the date upon
628 which the facility became operational, if the upgrades become operational on or after January
629 1, 1995;
630 (b) any of the following:
631 (i) up to 50 average megawatts of electricity per year per electrical corporation from a
632 certified low-impact hydroelectric facility, without regard to the date upon which the facility
633 becomes operational, if the facility is certified as a low-impact hydroelectric facility on or after
634 January 1, 1995, by a national certification organization;
635 (ii) geothermal energy if located within the state, without regard to the date upon which
636 the facility becomes operational; or
637 (iii) hydroelectric energy if located within the state, without regard to the date upon
638 which the facility becomes operational;
639 (c) hydrogen gas derived from any source of energy described in Subsection (10)(a) or
640 (b);
641 (d) if an electric generation facility employs multiple energy sources, that portion of the
642 electricity generated that is attributable to energy sources described in Subsections (10)(a)
643 through (c); and
644 (e) any of the following located in the state and owned by a user of energy:
645 (i) a demand side management measure, as defined by Subsection 54-7-12.8 (1), with
646 the quantity of renewable energy certificates to which the user is entitled determined by the
647 equivalent energy saved by the measure;

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- 22 - 648 (ii) a solar thermal system that reduces the consumption of fossil fuels, with the
649 quantity of renewable energy certificates to which the user is entitled determined by the
650 equivalent kilowatt-hours saved, except to the extent the commission determines otherwise
651 with respect to net-metered energy;
652 (iii) a solar photovoltaic system that reduces the consumption of fossil fuels with the
653 quantity of renewable energy certificates to which the user is entitled determined by the total
654 production of the system, except to the extent the commission determines otherwise with
655 respect to net-metered energy;
656 (iv) a hydroelectric or geothermal facility with the quantity of renewable energy
657 certificates to which the user is entitled determined by the total production of the facility,
658 except to the extent the commission determines otherwise with respect to net-metered energy;
659 (v) a waste gas or waste heat capture or recovery system, other than from a combined
660 cycle combustion turbine that does not use waste gas or waste heat, with the quantity of
661 renewable energy certificates to which the user is entitled determined by the total production of
662 the system, except to the extent the commission determines otherwise with respect to
663 net-metered energy; and
664 (vi) the station use of solar thermal energy, solar photovoltaic energy, hydroelectric
665 energy, geothermal energy, waste gas, or waste heat capture and recovery.
666 (11) "Unbundled renewable energy certificate" means a renewable energy certificate
667 associated with:
668 (a) qualifying electricity that is acquired by an electrical corporation or other person by
669 trade, purchase, or other transfer without acquiring the electricity for which the certificate was
670 issued; or
671 (b) activities listed in Subsection (10)(e).
672 Section 12. Section 54-17-602 is enacted to read:
673 54-17-602. Target amount of qualifying electricity -- Renewable energy certificate
674 -- Cost-effectiveness -- Cooperatives.
675 (1) (a) To the extent that it is cost effective to do so, beginning in 2025 the annual retail
676 electric sales in this state of each electrical corporation shall consist of qualifying electricity or
677 renewable energy certificates in an amount equal to at least 20% of adjusted retail electric
678 sales.

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(b) The amount under Subsection (1)(a) is computed based upon adjusted retail electric
680 sales for the calendar year commencing 36 months before the first day of the year for which the
681 target calculated under Subsection (1)(a) applies.
682 (c) Notwithstanding Subsections (1)(a) and (b), an increase in the annual target from
683 one year to the next may not exceed the greater of:
684 (i) 17,500 megawatt-hours; or
685 (ii) 20% of the prior year's amount under Subsections (1)(a) and (b).
686 (2) S. (a) .S Cost-effectiveness under Subsection (1) S. for other than a cooperative
686a association .S is determined in comparison to other viable
687 resource options using the criteria provided by Subsection 54-17-201 (2)(c)(ii).
687a S. (b) For an electrical corporation that is a cooperative association, cost-effectiveness is
687b determined using criteria applicable to the cooperative association's acquisition of a significant
687c energy resource established by the cooperative association's board of directors. .S
688 (3) This section does not require an electrical corporation to:
689 (a) substitute qualifying electricity for electricity from a generation source owned or
690 contractually committed, or from a contractual commitment for a power purchase;
691 (b) enter into any additional electric sales commitment or any other arrangement for the
692 sale or other disposition of electricity that is not already, or would not be, entered into by the
693 electrical corporation; or
694 (c) acquire qualifying electricity in excess of its adjusted retail electric sales.
695 (4) For the purpose of Subsection (1), an electrical corporation may combine the
696 following:
697 (a) qualifying electricity from a renewable energy source owned by the electrical
698 corporation;
699 (b) qualifying electricity acquired by the electrical corporation through trade, power
700 purchase, or other transfer; and
701 (c) a bundled or unbundled renewable energy certificate, including a banked renewable
702 energy certificate.
703 (5) For an electrical corporation whose rates the commission regulates, the following
704 rules concerning renewable energy certificates apply:
705 (a) a banked renewable energy certificate with an older issuance date shall be used
706 before any other banked renewable energy certificate issued at a later date is used; and
707 (b) the total of all unbundled renewable energy certificates, including unbundled
708 banked renewable energy certificates, may not exceed 20% of the amount of the annual target
709 provided for in Subsection (1).

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- 24 - 710 (6) An electrical corporation that is a cooperative association may count towards
711 Subsection (1) any of the following:
712 (a) electric production allocated to this state from hydroelectric facilities becoming
713 operational after December 31, 2007 if the facilities are located in any state in which the
714 cooperative association, or a generation and transmission cooperative with which the
715 cooperative association has a contract, provides electric service;
716 (b) qualifying electricity generated or acquired or renewable energy certificates
717 acquired for a program that permits a retail customer to voluntarily contribute to a renewable
718 energy source; and
719 (c) notwithstanding Subsection 54-17-601 (7), an unbundled renewable energy
720 certificate purchased from a renewable energy source located outside the geographic boundary
721 of the Western Electricity Coordinating Council if the electricity on which the unbundled
722 renewable energy certificate is based would be considered qualifying electricity if the
723 renewable energy source was located within the geographic boundary of the Western
724 Electricity Coordinating Council.
725 (7) The use of the renewable attributes associated with qualifying electricity to satisfy
726 any federal renewable energy requirement does not preclude the electricity from being
727 qualifying electricity for the purpose of this chapter.
728 Section 13. Section 54-17-603 is enacted to read:
729 54-17-603. Renewable energy certificate -- Issuance -- Use to satisfy other
730 requirements.
731 (1) The commission shall establish a process for issuance or recognition of a renewable
732 energy certificate.
733 (2) The commission process under Subsection (1) shall provide for the issuance,
734 monitoring, accounting, transfer, and use of a renewable energy certificate, including in
735 electronic form.
736 (3) The commission S. :
736a (a) .S may consult with another state or a federal agency and any
737 regional system or trading program to fulfil Subsection (1). S. ; and
737a (b) allow use of a renewable energy certificate that is issued, monitored, accounted for,
737b or transferred by or through a regional system or trading program, including the Western
737c Renewable Energy Generation Information system, to fulfil this part's provisions .S
738 (4) A renewable energy certificate shall be issued for:
739 (a) qualifying electricity generated on and after January 1, 1995; and
740 (b) the activities of an energy user described in Subsections 10-19-102 (11)(e) and

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- 25 - 741 54-17-601 (10)(e) on and after January 1, 1995.
742 (5) The person requesting a renewable energy certificate shall affirm that the renewable
743 energy attributes of the electricity have not been traded, sold, transferred, or otherwise used to
744 satisfy another state's renewable energy requirements.
745 (6) (a) For the purpose of satisfying Subsection 54-17-602 (1) and the issuance of a
746 renewable energy certificate under this section, a renewable energy source located in this state
747 that derives its energy from solar photovoltaic or solar thermal energy shall be credited for 2.4
748 kilowatt-hours of qualifying electricity for each 1.0 kilowatt-hour generated.
749 (b) Notwithstanding Subsection (6)(a), the acquisition or construction by an electrical
750 corporation of a renewable energy source that derives its energy from solar photovoltaic or
751 solar thermal energy shall comply with the cost-effectiveness criteria of Subsection
752 54-17-201 (2)(c)(ii).
753 (7) A renewable energy certificate issued under this section:
754 (a) does not expire; and
755 (b) may be banked.
756 (8) The commission may recognize a renewable energy certificate that is issued,
757 monitored, accounted for, or transferred by or through another state or a regional system or
758 trading program, including the Western Renewable Energy Generation Information System, if
759 the renewable energy certificate is for qualifying electricity.
760 (9) A renewable energy certificate:
761 (a) may be used only once to satisfy Subsection 54-17-602 (1);
762 (b) may be used for the purpose of Subsection 54-17-602 (1) and the qualifying
763 electricity on which the renewable energy certificate is based may be used to satisfy any federal
764 renewable energy requirement; and
765 (c) may not be used if it has been used to satisfy any other state's renewable energy
766 requirement.
767 (10) The commission shall establish procedures and reasonable rates permitting an
768 electrical corporation that is a purchasing utility under Section 54-12-2 to acquire or retain a
769 renewable energy certificate associated with the purchase of power from an independent energy
770 producer.
771 Section 14. Section 54-17-604 is enacted to read:

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Senate Committee Amendments 2-19-2008 rd/crp 772

54-17-604. Plans and reports.
773 (1) An electrical corporation shall develop and maintain a plan for implementing
774 Subsection 54-17-602 (1), consistent with the cost-effectiveness criteria of Subsection
775 54-17-201 (2)(c)(ii).
776 (2) S. (a) .S A progress report concerning a plan under Subsection (1) S. for other
776a than a cooperative association .S shall be filed with the
777 commission by January 1 of each of the years 2010, 2015, 2020, and 2024.
777a S. (b) For an electrical corporation that is a cooperative association, a progress report shall
777b be filed with the cooperative association's board of directors by January 1 of each of the years
777c 2010, 2015, 2020, and 2024. .S
778 (3) The progress report under Subsection (2) shall contain:
779 (a) the actual and projected amount of qualifying electricity through 2025;
780 (b) the source of qualifying electricity;
781 (c) S. (i) .S an analysis of the cost-effectiveness of renewable energy sources S. for
781a other than a cooperative association; or
781b (ii) an estimate of the cost of achieving the target for an electrical corporation that is a
781c cooperative association .S ;
782 (d) a discussion of conditions impacting the renewable energy source and qualifying
783 electricity markets;
784 (e) any recommendation for a suggested legislative or program change; and
785 (f) S. for other than a cooperative association, .S any other information requested by
785a the commission or considered relevant by the
786 electrical corporation.
787 (4) The plan and progress report required by Subsections (1) and (2) may include
788 procedures that will be used by the electrical corporation to identify and select any renewable
789 energy resource and qualifying electricity that satisfy the criteria of Subsection
790 54-17-201 (2)(c)(ii).
791 (5) By July 1, 2026, each electrical corporation shall file a final progress report
792 demonstrating:
793 (a) how Subsection 54-17-602 (1) is satisfied for the year 2025; or
794 (b) the reason why Subsection 54-17-602 (1) is not satisfied for the year 2025, if it is
795 not satisfied.
796 (6) By January 1 of each of the years 2011, 2016, 2021, and 2025, the Division of
797 Public Utilities shall submit to the Legislature a report containing a summary of any progress
798 report filed under Subsections (2) through (5).
799 (7) The summary required by Subsection (6) shall include any recommendation for
800 legislative changes.
801 (8) (a) By July 1, 2027, the commission shall submit to the Legislature a report
802 summarizing the final progress reports and recommending any legislative changes.

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Senate Committee Amendments 2-19-2008 rd/crp 803

(b) The 2027 summary may contain a recommendation to the Legislature concerning
804 any action to be taken with respect to an electrical corporation that does not satisfy Subsection
805 54-17-602 (1) for 2025.
806 (c) The commission shall provide an opportunity for public comment and take
807 evidence before recommending any action to be taken with respect to an electrical corporation
808 that does not satisfy Subsection 54-17-602 (1) for 2025.
809 (9) If a recommendation containing a penalty for failure to satisfy Subsection
810 54-17-602 (1) is made under Subsection (8), the proposal shall require that any amount paid by
811 an electrical corporation as a penalty be utilized to fund demand-side management for the retail
812 customers of the electrical corporation paying the penalty.
813 (10) A penalty may not be proposed under this section if an electrical corporation's
814 failure to satisfy Subsection 54-17-602 (1) is due to:
815 (a) a lack of cost-effective means to satisfy the requirement; or
816 (b) force majeure.
816a S. (11) By July 1, 2026, an electrical corporation that is a cooperative association shall file a
816b final progress report demonstrating:
816c (a) how Subsection 54-17-602(1) is satisfied for the year 2025; or
816d (b) the reason why Subsection 54-17-602(1) is not satisfied for the year 2025 if it is not
816e satisfied.
816f (12) The plan and any progress report filed under this section by an electrical
816g corporation that is a cooperative association shall be publicly available at the cooperative
816h association's office or posted on the cooperative association's website. .S
817 Section 15. Section 54-17-605 is enacted to read:
818 54-17-605. Recovery of costs for renewable energy activities.
819 (1) In accordance with other law, the commission shall include in the retail electric
820 rates of an electrical corporation whose rates the commission regulates the state's share of any
821 of the costs listed in Subsection (2) that are relevant to the proceeding in which the commission
822 is considering the electrical corporation's rates:
823 (a) if the costs are prudently incurred by the electrical corporation in connection with:
824 (i) the acquisition of a renewable energy certificate;
825 (ii) the acquisition of qualifying electricity for which a renewable energy certificate
826 will be issued after the acquisition; and
827 (iii) the acquisition, construction, and use of a renewable energy source; and
828 (b) to the extent any qualifying electricity or renewable energy source under Subsection
829 (1)(a) satisfies the cost-effectiveness criteria of Subsection 54-17-201 (2)(c)(ii).
830 (2) The following are costs that may be recoverable under Subsection (1):
831 (a) a cost of siting, acquisition of property rights, equipment, design, licensing,
832 permitting, construction, owning, operating, or otherwise acquiring a renewable energy source
833 and any associated asset, including transmission;

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- 28 - 834 (b) a cost to acquire qualifying electricity through trade, power purchase, or other
835 transfer;
836 (c) a cost to acquire a bundled or unbundled renewable energy certificate, if any net
837 revenue from the sale of a renewable energy certificate allocable to this state is also included in
838 rates;
839 (d) a cost to interconnect a renewable energy source to the electrical corporation's
840 transmission and distribution system;
841 (e) a cost associated with using a physical or financial asset to integrate, firm, or shape
842 a renewable energy source on a firm annual basis to meet a retail electricity need; and
843 (f) any cost associated with transmission and delivery of qualifying electricity to a
844 retail electricity consumer.
845 (3) (a) The commission may allow an electrical corporation to use an adjustment
846 mechanism or reasonable method other than a rate case under Sections 54-4-4 and 54-7-12 to
847 allow recovery of costs identified in Subsection (2).
848 (b) If the commission allows the use of an adjustment mechanism, both the costs and
849 any associated benefit shall be reflected in the mechanism, to the extent practicable.
850 (c) This Subsection (3) creates no presumption for or against the use of an adjustment
851 mechanism.
852 (4) (a) The commission may permit an electrical corporation to include in its retail
853 electric rates the state's share of costs prudently incurred by the electrical corporation in
854 connection with a renewable energy source, whether or not the renewable energy source
855 ultimately becomes operational, including costs of:
856 (i) siting;
857 (ii) property acquisition;
858 (iii) equipment;
859 (iv) design;
860 (v) licensing;
861 (vi) permitting; and
862 (vii) other reasonable items related to the renewable energy source.
863 (b) Subsection (4)(a) creates no presumption concerning the prudence or recoverability
864 of the costs identified.

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- 29 - 865 (c) To the extent deferral is consistent with other applicable law, the commission may
866 allow an electrical corporation to defer costs recoverable under Subsection (4)(a) until the
867 recovery of the deferred costs can be considered in a rate proceeding or an adjustment
868 mechanism created under Subsection (3).
869 (d) An application to defer costs shall be filed within 60 days after the day on which
870 the electrical corporation determines that the renewable energy source project is impaired under
871 generally accepted accounting principles and will not become operational.
872 (e) Notwithstanding the opportunity to defer costs under Subsection (4)(c), a cost
873 incurred by an electrical corporation for siting, property acquisition, equipment, design,
874 licensing, and permitting of a renewable energy source that the electrical corporation proposes
875 to construct shall be included in the electrical corporation's project costs for the purpose of
876 evaluating the project's cost-effectiveness.
877 (f) A deferred cost under Subsection (4)(a) may not be added to, or otherwise
878 considered in the evaluation of, the cost of a project proposed by any person other than the
879 electrical corporation for the purpose of evaluating that person's proposal.
880 Section 16. Section 54-17-606 is enacted to read:
881 54-17-606. Commission rules.
882 The commission shall make rules as necessary to implement this part.
883 Section 17. Section 54-17-607 is enacted to read:
884 54-17-607. Procedure and appeals under this chapter.
885 (1) The governing authority, as defined in Section 54-15-102 , has primary jurisdiction
886 concerning issues of interpretation, implementation, and administration of this chapter.
887 (2) An appeal of a commission order under this chapter is governed by Chapter 7,
888 Hearings, Practice, and Procedure.
889 Section 18. Section 54-17-701 is enacted to read:
890 Part 7. Carbon Sequestration
891 54-17-701. Rules for carbon capture and geological storage.
892 (1) By January 1, 2011, the Division of Water Quality and the Division of Air Quality,
893 on behalf of the Board of Water Quality and the Board of Air Quality, respectively, in
894 collaboration with the commission and the Division of Oil, Gas and Mining and the Utah
895 Geological Survey, shall present recommended rules to the Legislature's Administrative Rules

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- 30 - 896 Review Committee for the following in connection with carbon capture and accompanying
897 geological sequestration of captured carbon:
898 (a) site characterization approval;
899 (b) geomechanical, geochemical, and hydrogeological simulation;
900 (c) risk assessment;
901 (d) mitigation and remediation protocols;
902 (e) issuance of permits for test, injection, and monitoring wells;
903 (f) specifications for the drilling, construction, and maintenance of wells;
904 (g) issues concerning ownership of subsurface rights and pore space;
905 (h) allowed composition of injected matter;
906 (i) testing, monitoring, measurement, and verification for the entirety of the carbon
907 capture and geologic sequestration chain of operations, from the point of capture of the carbon
908 dioxide to the sequestration site;
909 (j) closure and decommissioning procedure;
910 (k) short- and long-term liability and indemnification for sequestration sites;
911 (l) conversion of enhanced oil recovery operations to carbon dioxide geological
912 sequestration sites; and
913 (m) other issues as identified.
914 (2) The entities listed in Subsection (1) shall report to the Legislature's Administrative
915 Rules Review Committee any proposals for additional statutory changes needed to implement
916 rules contemplated under Subsection (1).
917 (3) On or before July 1, 2009, the entities listed in Subsection (1) shall submit to the
918 Legislature's Public Utilities and Technology and Natural Resources, Agriculture, and
919 Environment Interim Committees a progress report on the development of the recommended
920 rules required by this part.
921 (4) The recommended rules developed under this section apply to the injection of
922 carbon dioxide and other associated injectants in allowable types of geological formations for
923 the purpose of reducing emissions to the atmosphere through long-term geological
924 sequestration as required by law or undertaken voluntarily or for subsequent beneficial reuse.
925 (5) The recommended rules developed under this section do not apply to the injection
926 of fluids through the use of Class II injection wells as defined in 40 C.F.R. 144.69(b) for the

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- 31 - 927 purpose of enhanced hydrocarbon recovery.
928 (6) Rules recommended under this section shall:
929 (a) ensure that adequate health and safety standards are met;
930 (b) minimize the risk of unacceptable leakage from the injection well and injection
931 zone for carbon capture and geologic sequestration; and
932 (c) provide adequate regulatory oversight and public information concerning carbon
933 capture and geologic sequestration.
934 Section 19. Effective date.
935 If approved by two-thirds of all the members elected to each house, this bill takes effect
936 upon approval by the governor, or the day following the constitutional time limit of Utah
937 Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto,
938 the date of veto override.

Legislative Review Note
as of 2-11-08 12:15 PM

Office of Legislative Research and General Counsel