S.B. 202

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.

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

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

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

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

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;

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

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

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:

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

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:

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

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;