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First Substitute S.B. 202

Senator Curtis S. Bramble proposes the following substitute bill:


             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: David Clark

             7      Cosponsor:Mike Dmitrich              8     
             9      LONG TITLE
             10      General Description:
             11          This bill provides that an electrical corporation or municipal electric utility maintain a
             12      percentage of electricity sold in the form of renewable energy resources and makes
             13      other changes concerning the acquisition of energy resources.
             14      Highlighted Provisions:
             15          This bill:
             16          .    addresses independent and qualifying power producers;
             17          .    addresses the application of Title 54, Chapter 17, Energy Resource Procurement Act
             18      to certain renewable energy resources;
             19          .    defines terms;
             20          .    provides that 20% of an electrical corporation's or municipal electric utility's
             21      adjusted retail electric sales beginning in the year 2025 come from qualifying
             22      electricity, including renewable energy resources, if cost effective;
             23          .    provides for the issuance and recognition of a renewable energy certificate for
             24      certain electrical generation and actions by an energy user;
             25          .    requires plans and reports concerning an electrical corporation's or municipal


             26      electric utility's progress in acquiring qualifying electricity;
             27          .    addresses cost recovery for certain energy resources;
             28          .    requires certain state agencies to make rules concerning carbon capture and
             29      geological storage of captured carbon emissions; and
             30          .    makes technical changes.
             31      Monies Appropriated in this Bill:
             32          None
             33      Other Special Clauses:
             34          This bill provides an immediate effective date.
             35      Utah Code Sections Affected:
             36      AMENDS:
             37          54-2-1, as last amended by Laws of Utah 2001, Chapter 212
             38          54-12-1, as enacted by Laws of Utah 1985, Chapter 180
             39          54-12-2, as last amended by Laws of Utah 1989, Chapter 4
             40          54-12-3, as enacted by Laws of Utah 1985, Chapter 180
             41          54-17-201, as last amended by Laws of Utah 2007, Chapter 289
             42          54-17-302, as last amended by Laws of Utah 2007, Chapter 289
             43          54-17-303, as enacted by Laws of Utah 2005, Chapter 11
             44      ENACTS:
             45          10-19-101, Utah Code Annotated 1953
             46          10-19-102, Utah Code Annotated 1953
             47          10-19-201, Utah Code Annotated 1953
             48          10-19-202, Utah Code Annotated 1953
             49          10-19-301, Utah Code Annotated 1953
             50          10-19-302, Utah Code Annotated 1953
             51          54-17-502, Utah Code Annotated 1953
             52          54-17-601, Utah Code Annotated 1953
             53          54-17-602, Utah Code Annotated 1953
             54          54-17-603, Utah Code Annotated 1953
             55          54-17-604, Utah Code Annotated 1953
             56          54-17-605, Utah Code Annotated 1953


             57          54-17-606, Utah Code Annotated 1953
             58          54-17-607, Utah Code Annotated 1953
             59          54-17-701, Utah Code Annotated 1953
             60     
             61      Be it enacted by the Legislature of the state of Utah:
             62          Section 1. Section 10-19-101 is enacted to read:
             63     
CHAPTER 19. MUNICIPAL ELECTRIC UTILITY CARBON

             64     
EMISSION REDUCTION ACT

             65     
Part 1. General Provisions

             66          10-19-101. Title.
             67          This chapter is known as the "Municipal Electric Utility Carbon Emission Reduction
             68      Act."
             69          Section 2. Section 10-19-102 is enacted to read:
             70          10-19-102. Definitions.
             71          As used in this chapter:
             72          (1) "Adjusted retail electric sales" means the total kilowatt-hours of retail electric sales
             73      of a municipal electric utility to customers in this state in a calendar year, reduced by:
             74          (a) the amount of those kilowatt-hours attributable to electricity generated or purchased
             75      in that calendar year from qualifying zero carbon emissions generation and qualifying carbon
             76      sequestration generation;
             77          (b) the amount of those kilowatt-hours attributable to electricity generated or purchased
             78      in that calendar year from generation located within the geographic boundary of the Western
             79      Electricity Coordinating Council that derives its energy from one or more of the following but
             80      that does not satisfy the definition of a renewable energy source or that otherwise has not been
             81      used to satisfy Subsection 10-19-201 (1):
             82          (i) wind energy;
             83          (ii) solar photovoltaic and solar thermal energy;
             84          (iii) wave, tidal, and ocean thermal energy;
             85          (iv) except for combustion of wood that has been treated with chemical preservatives
             86      such as creosote, pentachlorophenol or chromated copper arsenate, biomass and biomass
             87      byproducts, including:


             88          (A) organic waste;
             89          (B) forest or rangeland woody debris from harvesting or thinning conducted to improve
             90      forest or rangeland ecological health and to reduce wildfire risk;
             91          (C) agricultural residues;
             92          (D) dedicated energy crops; and
             93          (E) landfill gas or biogas produced from organic matter, wastewater, anaerobic
             94      digesters, or municipal solid waste;
             95          (v) geothermal energy;
             96          (vi) hydro-electric energy; or
             97          (vii) waste gas and waste heat capture or recovery; and
             98          (c) the number of kilowatt-hours attributable to reductions in retail sales in that
             99      calendar year from activities or programs promoting electric energy efficiency or conservation
             100      or more efficient management of electric energy load.
             101          (2) "Amount of kilowatt-hours attributable to electricity generated or purchased in that
             102      calendar year from qualifying carbon sequestration generation," for qualifying carbon
             103      sequestration generation, means the kilowatt-hours supplied by a facility during the calendar
             104      year multiplied by the ratio of the amount of carbon dioxide captured from the facility and
             105      sequestered to the sum of the amount of carbon dioxide captured from the facility and
             106      sequestered plus the amount of carbon dioxide emitted from the facility during the same
             107      calendar year.
             108          (3) "Banked renewable energy certificate" means a bundled or unbundled renewable
             109      energy certificate that is:
             110          (a) not used in a calendar year to comply with this part or with a renewable energy
             111      program in another state; and
             112          (b) carried forward into a subsequent year.
             113          (4) "Bundled renewable energy certificate" means a renewable energy certificate for
             114      qualifying electricity that is acquired:
             115          (a) by a municipal electric utility by a trade, purchase, or other transfer of electricity
             116      that includes the renewable energy attributes of, or certificate that is issued for, the electricity;
             117      or
             118          (b) by a municipal electric utility by generating the electricity for which the renewable


             119      energy certificate is issued.
             120          (5) "Commission" means the Public Service Commission.
             121          (6) "Municipal electric utility" means any municipality that owns, operates, controls, or
             122      manages a facility that provides electric power for a retail customer, whether domestic,
             123      commercial, industrial, or otherwise.
             124          (7) "Qualifying carbon sequestration generation" means a fossil-fueled generating
             125      facility located within the geographic boundary of the Western Electricity Coordinating
             126      Council that:
             127          (a) becomes operational or is retrofitted on or after January 1, 2008; and
             128          (b) reduces carbon dioxide emissions into the atmosphere through permanent
             129      geological sequestration or through other verifiably permanent reductions in carbon dioxide
             130      emissions through the use of technology.
             131          (8) "Qualifying electricity" means electricity generated on or after January 1, 1995
             132      from a renewable energy source if:
             133          (a) (i) the renewable energy source is located within the geographic boundary of the
             134      Western Electricity Coordinating Council; or
             135          (ii) the qualifying electricity is delivered to the transmission system of a municipal
             136      electric utility or a delivery point designated by the municipal electric utility for the purpose of
             137      subsequent delivery to the municipal electric utility; and
             138          (b) the renewable energy attributes of the electricity are not traded, sold, transferred, or
             139      otherwise used to satisfy another state's renewable energy program.
             140          (9) "Qualifying zero carbon emissions generation":
             141          (a) means a generation facility located within the geographic boundary of the Western
             142      Electricity Coordinating Council that:
             143          (i) becomes operational on or after January 1, 2008; and
             144          (ii) does not produce carbon as a byproduct of the generation process;
             145          (b) includes generation powered by nuclear fuel; and
             146          (c) does not include renewable energy sources used to satisfy a target established under
             147      Section 10-19-201 .
             148          (10) "Renewable energy certificate" means a certificate issued in accordance with the
             149      requirements of Sections 10-19-202 and 54-17-603 .


             150          (11) "Renewable energy source" means:
             151          (a) an electric generation facility or generation capability or upgrade that becomes
             152      operational on or after January 1, 1995 that derives its energy from one or more of the
             153      following:
             154          (i) wind energy;
             155          (ii) solar photovoltaic and solar thermal energy;
             156          (iii) wave, tidal, and ocean thermal energy;
             157          (iv) except for combustion of wood that has been treated with chemical preservatives
             158      such as creosote, pentachlorophenol or chromated copper arsenate, biomass and biomass
             159      byproducts, including:
             160          (A) organic waste;
             161          (B) forest or rangeland woody debris from harvesting or thinning conducted to improve
             162      forest or rangeland ecological health and to reduce wildfire risk;
             163          (C) agricultural residues;
             164          (D) dedicated energy crops; and
             165          (E) landfill gas or biogas produced from organic matter, wastewater, anaerobic
             166      digesters, or municipal solid waste;
             167          (v) geothermal energy located outside the state;
             168          (vi) waste gas and waste heat capture or recovery; or
             169          (vii) efficiency upgrades to a hydroelectric facility, without regard to the date upon
             170      which the facility became operational, if the upgrades become operational on or after January
             171      1, 1995;
             172          (b) any of the following:
             173          (i) up to 50 average megawatts of electricity per year per municipal electric utility from
             174      a certified low-impact hydroelectric facility, without regard to the date upon which the facility
             175      becomes operational, if the facility is certified as a low-impact hydroelectric facility on or after
             176      January 1, 1995, by a national certification organization;
             177          (ii) geothermal energy if located within the state, without regard to the date upon which
             178      the facility becomes operational; and
             179          (iii) hydroelectric energy if located within the state, without regard to the date upon
             180      which the facility becomes operational;


             181          (c) hydrogen gas derived from any source of energy described in Subsection (11)(a) or
             182      (b);
             183          (d) if an electric generation facility employs multiple energy sources, that portion of the
             184      electricity generated that is attributable to energy sources described in Subsections (11)(a)
             185      through (c); and
             186          (e) any of the following located in the state and owned by a user of energy:
             187          (i) a demand side management measure, as defined by Subsection 54-7-12.8 (1) with
             188      the quantity of renewable energy certificates to which the user is entitled determined by the
             189      equivalent energy saved by the measure;
             190          (ii) a solar thermal system that reduces the consumption of fossil fuels, with the
             191      quantity of renewable energy certificates to which the user is entitled determined by the
             192      equivalent kilowatt-hours saved, except to the extent the commission determines otherwise
             193      with respect to net-metered energy;
             194          (iii) a solar photovoltaic system that reduces the consumption of fossil fuels with the
             195      quantity of renewable energy certificates to which the user is entitled determined by the total
             196      production of the system, except to the extent the commission determines otherwise with
             197      respect to net-metered energy;
             198          (iv) a hydroelectric or geothermal facility, with the quantity of renewable energy
             199      certificates to which the user is entitled determined by the total production of the facility,
             200      except to the extent the commission determines otherwise with respect to net-metered energy;
             201          (v) a waste gas or waste heat capture or recovery system other than from a combined
             202      cycle combustion turbine that does not use waste gas or waste heat, with the quantity of
             203      renewable energy certificates to which the user is entitled determined by the total production of
             204      the system, except to the extent the commission determines otherwise with respect to
             205      net-metered energy; and
             206          (vi) the station use of solar thermal energy, solar photovoltaic energy, hydroelectric
             207      energy, geothermal energy, waste gas, or waste heat capture and recovery.
             208          (12) "Unbundled renewable energy certificate" means a renewable energy certificate
             209      associated with:
             210          (a) qualifying electricity that is acquired by a municipal electric utility or other person
             211      by trade, purchase, or other transfer without acquiring the electricity for which the certificate


             212      was issued; or
             213          (b) activities listed in Subsection (11)(e).
             214          Section 3. Section 10-19-201 is enacted to read:
             215     
Part 2. Renewable Energy Provisions

             216          10-19-201. Target amount of qualifying electricity -- Renewable energy certificate
             217      -- Cost-effectiveness.
             218          (1) (a) To the extent that it is cost-effective to do so, beginning in 2025 the annual
             219      retail electric sales in this state of each municipal electric utility shall consist of qualifying
             220      electricity or renewable energy certificates in an amount equal to at least 20% of adjusted retail
             221      electric sales.
             222          (b) The amount under Subsection (1)(a) is computed based upon adjusted retail sales
             223      for the calendar year commencing 36 months before the first day of the year for which the
             224      target calculated under Subsection (1)(a) applies.
             225          (c) Notwithstanding Subsections (1)(a) and (b) an increase in the annual target from
             226      one year to the next is limited to the greater of:
             227          (i) 17,500 megawatt-hours; or
             228          (ii) 20% of the prior year's amount under Subsections (1)(a) and (b).
             229          (2) Cost-effectiveness under Subsection (1) is determined using any criteria applicable
             230      to the municipal electric utility's acquisition of a significant energy resource established by the
             231      municipality's legislative body.
             232          (3) This section does not require a municipal electric utility to:
             233          (a) substitute qualifying electricity for electricity from a generation source owned or
             234      contractually committed, or from a contractual commitment for a power purchase;
             235          (b) enter into any additional electric sales commitment or any other arrangement for the
             236      sale or other disposition of electricity that is not already, or would not be, entered into by the
             237      municipal electric utility; or
             238          (c) acquire qualifying electricity in excess of its adjusted retail electric sales.
             239          (4) A municipal electrical corporation may combine the following to meet Subsection
             240      (1):
             241          (a) qualifying electricity from a renewable energy source owned by the municipal
             242      electric utility;


             243          (b) qualifying electricity acquired by the municipal electric utility through trade, power
             244      purchase, or other transfer; and
             245          (c) a bundled or unbundled renewable energy certificate, including a banked renewable
             246      energy certificate.
             247          (5) To meet Subsection (1), a municipal electric utility may also count:
             248          (a) qualifying electricity generated or acquired or renewable energy certificates
             249      acquired for a program permitting the municipal electric utility's customers to voluntarily
             250      contribute to a renewable energy source; and
             251          (b) electricity allocated to this state that is produced by a hydroelectric facility
             252      becoming operational after December 31, 2007 if the hydroelectric facility is located in any
             253      state in which the municipal electric utility, or the interlocal entity with which the municipal
             254      electric utility has a contract, provides electric service.
             255          Section 4. Section 10-19-202 is enacted to read:
             256          10-19-202. Renewable energy certificate -- Use to satisfy other requirements.
             257          (1) A municipal electric utility may buy, sell, trade, or otherwise transfer a renewable
             258      energy certificate issued or recognized under Section 54-17-603 .
             259          (2) For the purpose of satisfying Subsection 10-19-201 (1) and the issuance of a
             260      renewable energy certificate under Section 54-17-603 :
             261          (a) a renewable energy source located in this state that derives its energy from solar
             262      photovoltaic and solar thermal energy shall be credited for 2.4 kilowatt-hours of qualifying
             263      electricity for each 1.0 kilowatt-hour generated; and
             264          (b) if two or more municipal electric utilities jointly own a renewable energy resource,
             265      each municipal electric utility shall be credited with 1.0 kilowatt-hour of qualifying electricity
             266      for 1.0 kilowatt-hour of the renewable energy resource allocated to the municipal electric utility
             267      by contract, unless the contract otherwise provides.
             268          (3) A renewable energy certificate:
             269          (a) may be used only once to satisfy Subsection 10-19-201 (1);
             270          (b) may be used to satisfy Subsection 10-19-201 (1) and the qualifying electricity on
             271      which the renewable energy certificate is based may be used to satisfy any federal renewable
             272      energy requirement; and
             273          (c) may not be used if it has been used to satisfy any other state's renewable energy


             274      requirement.
             275          Section 5. Section 10-19-301 is enacted to read:
             276     
Part 3. Administrative Provisions

             277          10-19-301. Plans and reports.
             278          (1) A municipal electric utility shall develop and maintain a plan for implementing
             279      Subsection 10-19-201 (1).
             280          (2) A progress report concerning a plan under Subsection (1) shall be filed with the
             281      municipality's legislative body by January 1 of each of the years 2010, 2015, 2020, and 2024.
             282          (3) The progress report under Subsection (2) shall contain:
             283          (a) the actual and projected amount of qualifying electricity through 2025;
             284          (b) the source of qualifying electricity;
             285          (c) an estimate of the cost of achieving the target;
             286          (d) a discussion of conditions impacting the renewable energy source and qualifying
             287      electricity markets; and
             288          (e) any recommendation for a suggested legislative or program change.
             289          (4) The plan and progress report required by Subsections (1) and (2) may include
             290      procedures that will be used by the municipal electric utility to identify and select any
             291      cost-effective renewable energy resource and qualifying electricity.
             292          (5) By July 1, 2026, the municipal electric utility shall file a final progress report
             293      demonstrating:
             294          (a) how Subsection 10-19-201 (1) is satisfied for the year 2025; or
             295          (b) the reason why Subsection 10-19-201 (1) is not satisfied for the year 2025, if it is
             296      not satisfied.
             297          (6) The plan and any progress report filed under this section shall be publicly available
             298      at the municipal legislative body's office.
             299          Section 6. Section 10-19-302 is enacted to read:
             300          10-19-302. Municipal authority -- Commission authority.
             301          (1) The municipal legislative body may adopt procedures necessary to implement this
             302      chapter.
             303          (2) Nothing in this chapter authorizes the commission to exercise any power over a
             304      municipal electric utility's electrical generation, demand-side management program, or other


             305      operation.
             306          Section 7. Section 54-2-1 is amended to read:
             307           54-2-1. Definitions.
             308          As used in this title:
             309          (1) "Avoided costs" means the incremental costs to an electrical corporation of electric
             310      energy or capacity or both which, due to the purchase of electric energy or capacity or both
             311      from small power production or cogeneration facilities, the electrical corporation would not
             312      have to generate itself or purchase from another electrical corporation.
             313          (2) "Cogeneration facility":
             314          (a) means a facility which produces:
             315          (i) electric energy; and
             316          (ii) steam or forms of useful energy, including heat, which are used for industrial,
             317      commercial, heating, or cooling purposes; and
             318          (b) is a qualifying cogeneration facility under federal law.
             319          (3) "Commission" means the Public Service Commission of Utah.
             320          (4) "Commissioner" means a member of the commission.
             321          (5) (a) "Corporation" includes an association, and a joint stock company having any
             322      powers or privileges not possessed by individuals or partnerships.
             323          (b) "Corporation" does not include towns, cities, counties, conservancy districts,
             324      improvement districts, or other governmental units created or organized under any general or
             325      special law of this state.
             326          (6) "Distribution electrical cooperative" includes an electrical corporation that:
             327          (a) is a cooperative;
             328          (b) conducts a business that includes the retail distribution of electricity the cooperative
             329      purchases or generates for the cooperative's members; and
             330          (c) is required to allocate or distribute savings in excess of additions to reserves and
             331      surplus on the basis of patronage to the cooperative's:
             332          (i) members; or
             333          (ii) patrons.
             334          (7) "Electrical corporation" includes every corporation, cooperative association, and
             335      person, their lessees, trustees, and receivers, owning, controlling, operating, or managing any


             336      electric plant, or in any way furnishing electric power for public service or to its consumers or
             337      members for domestic, commercial, or industrial use, within this state, except independent
             338      energy producers, and except where electricity is generated on or distributed by the producer
             339      solely for the producer's own use, or the use of the producer's tenants, or for the use of
             340      members of an association of unit owners formed under Title 57, Chapter 8, Condominium
             341      Ownership Act, and not for sale to the public generally.
             342          (8) "Electric plant" includes all real estate, fixtures, and personal property owned,
             343      controlled, operated, or managed in connection with or to facilitate the production, generation,
             344      transmission, delivery, or furnishing of electricity for light, heat, or power, and all conduits,
             345      ducts, or other devices, materials, apparatus, or property for containing, holding, or carrying
             346      conductors used or to be used for the transmission of electricity for light, heat, or power.
             347          (9) "Gas corporation" includes every corporation and person, their lessees, trustees, and
             348      receivers, owning, controlling, operating, or managing any gas plant for public service within
             349      this state or for the selling or furnishing of natural gas to any consumer or consumers within the
             350      state for domestic, commercial, or industrial use, except in the situation that:
             351          (a) gas is made or produced on, and distributed by the maker or producer through,
             352      private property:
             353          (i) solely for the maker's or producer's own use or the use of the maker's or producer's
             354      tenants; and
             355          (ii) not for sale to others;
             356          (b) gas is compressed on private property solely for the owner's own use or the use of
             357      the owner's employees as a motor vehicle fuel; or
             358          (c) gas is compressed by a retailer of motor vehicle fuel on the retailer's property solely
             359      for sale as a motor vehicle fuel.
             360          (10) "Gas plant" includes all real estate, fixtures, and personal property owned,
             361      controlled, operated, or managed in connection with or to facilitate the production, generation,
             362      transmission, delivery, or furnishing of gas, natural or manufactured, for light, heat, or power.
             363          (11) "Heat corporation" includes every corporation and person, their lessees, trustees,
             364      and receivers, owning, controlling, operating, or managing any heating plant for public service
             365      within this state.
             366          (12) (a) "Heating plant" includes all real estate, fixtures, machinery, appliances, and


             367      personal property controlled, operated, or managed in connection with or to facilitate the
             368      production, generation, transmission, delivery, or furnishing of artificial heat.
             369          (b) "Heating plant" does not include either small power production facilities or
             370      cogeneration facilities.
             371          (13) "Independent energy producer" means every electrical corporation, person,
             372      corporation, or government entity, their lessees, trustees, or receivers, that own, operate,
             373      control, or manage [a small] an independent power production or cogeneration facility.
             374          (14) "Independent power production facility" means a facility that:
             375          (a) produces electric energy solely by the use, as a primary energy source, of biomass,
             376      waste, a renewable resource, a geothermal resource, or any combination of the preceding
             377      sources; or
             378          (b) is a qualifying power production facility.
             379          [(14)] (15) "Private telecommunications system" includes all facilities for the
             380      transmission of signs, signals, writing, images, sounds, messages, data, or other information of
             381      any nature by wire, radio, lightwaves, or other electromagnetic means, excluding mobile radio
             382      facilities, that are owned, controlled, operated, or managed by a corporation or person,
             383      including their lessees, trustees, receivers, or trustees appointed by any court, for the use of that
             384      corporation or person and not for the shared use with or resale to any other corporation or
             385      person on a regular basis.
             386          [(15)] (16) (a) "Public utility" includes every railroad corporation, gas corporation,
             387      electrical corporation, distribution electrical cooperative, wholesale electrical cooperative,
             388      telephone corporation, telegraph corporation, water corporation, sewerage corporation, heat
             389      corporation, and independent energy producer not described in Subsection [(15)] (16)(d),
             390      where the service is performed for, or the commodity delivered to, the public generally, or in
             391      the case of a gas corporation or electrical corporation where the gas or electricity is sold or
             392      furnished to any member or consumers within the state for domestic, commercial, or industrial
             393      use.
             394          (b) (i) If any railroad corporation, gas corporation, electrical corporation, telephone
             395      corporation, telegraph corporation, water corporation, sewerage corporation, heat corporation,
             396      or independent energy producer not described in Subsection [(15)] (16)(d), performs a service
             397      for or delivers a commodity to the public, it is considered to be a public utility, subject to the


             398      jurisdiction and regulation of the commission and this title.
             399          (ii) If a gas corporation, independent energy producer not described in Subsection
             400      [(15)] (16)(d), or electrical corporation sells or furnishes gas or electricity to any member or
             401      consumers within the state, for domestic, commercial, or industrial use, for which any
             402      compensation or payment is received, it is considered to be a public utility, subject to the
             403      jurisdiction and regulation of the commission and this title.
             404          (c) Any corporation or person not engaged in business exclusively as a public utility as
             405      defined in this section is governed by this title in respect only to the public utility owned,
             406      controlled, operated, or managed by the corporation or person, and not in respect to any other
             407      business or pursuit.
             408          (d) An independent energy producer is exempt from the jurisdiction and regulations of
             409      the commission with respect to an independent power production facility if it meets the
             410      requirements of Subsection [(15)] (16)(d)(i), (ii), or (iii), or any combination of these:
             411          (i) the commodity or service is produced or delivered, or both, by an independent
             412      energy producer solely for the uses exempted in Subsection (7) or for the use of state-owned
             413      facilities;
             414          (ii) the commodity or service is sold by an independent energy producer solely to an
             415      electrical corporation or other wholesale purchaser; or
             416          (iii) (A) the commodity or service delivered by the independent energy producer is
             417      delivered to an entity which controls, is controlled by, or affiliated with the independent energy
             418      producer or to a user located on real property managed by the independent energy producer;
             419      and
             420          (B) the real property on which the service or commodity is used is contiguous to real
             421      property which is owned or controlled by the independent energy producer. Parcels of real
             422      property separated solely by public roads or easements for public roads shall be considered as
             423      contiguous for purposes of this Subsection [(15)] (16).
             424          (e) Any person or corporation defined as an electrical corporation or public utility
             425      under this section may continue to serve its existing customers subject to any order or future
             426      determination of the commission in reference to the right to serve those customers.
             427          (f) (i) "Public utility" does not include any person that is otherwise considered a public
             428      utility under this Subsection [(15)] (16) solely because of that person's ownership of an interest


             429      in an electric plant, cogeneration facility, or small power production facility in this state if all of
             430      the following conditions are met:
             431          (A) the ownership interest in the electric plant, cogeneration facility, or small power
             432      production facility is leased to:
             433          (I) a public utility, and that lease has been approved by the commission;
             434          (II) a person or government entity that is exempt from commission regulation as a
             435      public utility; or
             436          (III) a combination of Subsections [(15)] (16)(f)(i)(A)(I) and (II);
             437          (B) the lessor of the ownership interest identified in Subsection [(15)] (16)(f)(i)(A) is:
             438          (I) primarily engaged in a business other than the business of a public utility; or
             439          (II) a person whose total equity or beneficial ownership is held directly or indirectly by
             440      another person engaged in a business other than the business of a public utility; and
             441          (C) the rent reserved under the lease does not include any amount based on or
             442      determined by revenues or income of the lessee.
             443          (ii) Any person that is exempt from classification as a public utility under Subsection
             444      [(15)] (16)(f)(i) shall continue to be so exempt from classification following termination of the
             445      lessee's right to possession or use of the electric plant for so long as the former lessor does not
             446      operate the electric plant or sell electricity from the electric plant. If the former lessor operates
             447      the electric plant or sells electricity, the former lessor shall continue to be so exempt for a
             448      period of 90 days following termination, or for a longer period that is ordered by the
             449      commission. This period may not exceed one year. A change in rates that would otherwise
             450      require commission approval may not be effective during the 90-day or extended period
             451      without commission approval.
             452          (g) "Public utility" does not include any person that provides financing for, but has no
             453      ownership interest in an electric plant, small power production facility, or cogeneration facility.
             454      In the event of a foreclosure in which an ownership interest in an electric plant, small power
             455      production facility, or cogeneration facility is transferred to a third-party financer of an electric
             456      plant, small power production facility, or cogeneration facility, then that third-party financer is
             457      exempt from classification as a public utility for 90 days following the foreclosure, or for a
             458      longer period that is ordered by the commission. This period may not exceed one year.
             459          (h) (i) The distribution or transportation of natural gas for use as a motor vehicle fuel


             460      does not cause the distributor or transporter to be a "public utility," unless the commission,
             461      after notice and a public hearing, determines by rule that it is in the public interest to regulate
             462      the distributers or transporters, but the retail sale alone of compressed natural gas as a motor
             463      vehicle fuel may not cause the seller to be a "public utility."
             464          (ii) In determining whether it is in the public interest to regulate the distributors or
             465      transporters, the commission shall consider, among other things, the impact of the regulation
             466      on the availability and price of natural gas for use as a motor fuel.
             467          [(16)] (17) "Purchasing utility" means any electrical corporation that is required to
             468      purchase electricity from small power production or cogeneration facilities pursuant to the
             469      Public Utility Regulatory Policies Act, 16 U.S.C. Section 824a-3.
             470          (18) "Qualifying power producer" means a corporation, cooperative association, or
             471      person, or the lessee, trustee, and receiver of the corporation, cooperative association, or
             472      person, who owns, controls, operates, or manages any qualifying power production facility or
             473      cogeneration facility.
             474          (19) "Qualifying power production facility" means a facility that:
             475          (a) produces electrical energy solely by the use, as a primary energy source, of biomass,
             476      waste, a renewable resource, a geothermal resource, or any combination of the preceding
             477      sources;
             478          (b) has a power production capacity that, together with any other facilities located at
             479      the same site, is no greater than 80 megawatts; and
             480          (c) is a qualifying small power production facility under federal law.
             481          [(17)] (20) "Railroad" includes every commercial, interurban, and other railway, other
             482      than a street railway, and each branch or extension of a railway, by any power operated,
             483      together with all tracks, bridges, trestles, rights-of-way, subways, tunnels, stations, depots,
             484      union depots, yards, grounds, terminals, terminal facilities, structures, and equipment, and all
             485      other real estate, fixtures, and personal property of every kind used in connection with a
             486      railway owned, controlled, operated, or managed for public service in the transportation of
             487      persons or property.
             488          [(18)] (21) "Railroad corporation" includes every corporation and person, their lessees,
             489      trustees, and receivers, owning, controlling, operating, or managing any railroad for public
             490      service within this state.


             491          [(19)] (22) (a) "Sewerage corporation" includes every corporation and person, their
             492      lessees, trustees, and receivers, owning, controlling, operating, or managing any sewerage
             493      system for public service within this state.
             494          (b) "Sewerage corporation" does not include private sewerage companies engaged in
             495      disposing of sewage only for their stockholders, or towns, cities, counties, conservancy
             496      districts, improvement districts, or other governmental units created or organized under any
             497      general or special law of this state.
             498          [(20) "Small power production facility" means a facility which:]
             499          [(a) produces electric energy solely by the use, as a primary energy source, of biomass,
             500      waste, renewable resources, geothermal resources, or any combination of them;]
             501          [(b) has a power production capacity that, together with any other facilities located at
             502      the same site, is not greater than 80 megawatts; and]
             503          [(c) is a qualifying small power production facility under federal law.]
             504          [(21)] (23) "Telegraph corporation" includes every corporation and person, their
             505      lessees, trustees, and receivers, owning, controlling, operating, or managing any telegraph line
             506      for public service within this state.
             507          [(22)] (24) "Telegraph line" includes all conduits, ducts, poles, wires, cables,
             508      instruments, and appliances, and all other real estate, fixtures, and personal property owned,
             509      controlled, operated, or managed in connection with or to facilitate communication by
             510      telegraph, whether that communication be had with or without the use of transmission wires.
             511          [(23)] (25) (a) "Telephone corporation" means any corporation or person, and their
             512      lessees, trustee, receivers, or trustees appointed by any court, who owns, controls, operates,
             513      manages, or resells a public telecommunications service as defined in Section 54-8b-2 .
             514          (b) "Telephone corporation" does not mean a corporation, partnership, or firm
             515      providing:
             516          (i) intrastate telephone service offered by a provider of cellular, personal
             517      communication systems (PCS), or other commercial mobile radio service as defined in 47
             518      U.S.C. Sec. 332 that has been issued a covering license by the Federal Communications
             519      Commission;
             520          (ii) Internet service; or
             521          (iii) resold intrastate toll service.


             522          [(24)] (26) "Telephone line" includes all conduits, ducts, poles, wires, cables,
             523      instruments, and appliances, and all other real estate, fixtures, and personal property owned,
             524      controlled, operated, or managed in connection with or to facilitate communication by
             525      telephone whether that communication is had with or without the use of transmission wires.
             526          [(25)] (27) "Transportation of persons" includes every service in connection with or
             527      incidental to the safety, comfort, or convenience of the person transported, and the receipt,
             528      carriage, and delivery of that person and that person's baggage.
             529          [(26)] (28) "Transportation of property" includes every service in connection with or
             530      incidental to the transportation of property, including in particular its receipt, delivery,
             531      elevation, transfer, switching, carriage, ventilation, refrigeration, icing, dunnage, storage, and
             532      hauling, and the transmission of credit by express companies.
             533          [(27)] (29) "Water corporation" includes every corporation and person, their lessees,
             534      trustees, and receivers, owning, controlling, operating, or managing any water system for
             535      public service within this state. It does not include private irrigation companies engaged in
             536      distributing water only to their stockholders, or towns, cities, counties, water conservancy
             537      districts, improvement districts, or other governmental units created or organized under any
             538      general or special law of this state.
             539          [(28)] (30) (a) "Water system" includes all reservoirs, tunnels, shafts, dams, dikes,
             540      headgates, pipes, flumes, canals, structures, and appliances, and all other real estate, fixtures,
             541      and personal property owned, controlled, operated, or managed in connection with or to
             542      facilitate the diversion, development, storage, supply, distribution, sale, furnishing, carriage,
             543      appointment, apportionment, or measurement of water for power, fire protection, irrigation,
             544      reclamation, or manufacturing, or for municipal, domestic, or other beneficial use.
             545          (b) "Water system" does not include private irrigation companies engaged in
             546      distributing water only to their stockholders.
             547          [(29)] (31) "Wholesale electrical cooperative" includes every electrical corporation that
             548      is:
             549          (a) in the business of the wholesale distribution of electricity it has purchased or
             550      generated to its members and the public; and
             551          (b) required to distribute or allocate savings in excess of additions to reserves and
             552      surplus to members or patrons on the basis of patronage.


             553          Section 8. Section 54-12-1 is amended to read:
             554           54-12-1. Legislative policy.
             555          (1) The Legislature declares that in order to promote the more rapid development of
             556      new sources of electrical energy, to maintain the economic vitality of the state through the
             557      continuing production of goods and the employment of its people, and to promote the efficient
             558      utilization and distribution of energy, it is desirable and necessary to encourage independent
             559      energy producers to competitively develop sources of electric energy not otherwise available to
             560      Utah businesses, residences, and industries served by electrical corporations, and to remove
             561      unnecessary barriers to energy transactions involving independent energy producers and
             562      electrical corporations.
             563          (2) It is the policy of this state to encourage the development of [small] independent
             564      and qualifying power production and cogeneration facilities, to promote a diverse array of
             565      economical and permanently sustainable energy resources in an environmentally acceptable
             566      manner, and to conserve our finite and expensive energy resources and provide for their most
             567      efficient and economic utilization.
             568          Section 9. Section 54-12-2 is amended to read:
             569           54-12-2. Purchase of power from qualifying power producers.
             570          (1) Purchasing utilities shall offer to purchase power from [independent energy]
             571      qualifying power producers.
             572          (2) The commission shall establish reasonable rates, terms, and conditions for the
             573      purchase or sale of electricity or electrical generating capacity, or both, between a purchasing
             574      utility and [an independent energy] a qualifying power producer. In establishing these rates,
             575      terms, and conditions, the commission shall either establish a procedure under which [small]
             576      qualifying power producers [and cogenerators] offer competitive bids for the sale of power to
             577      purchasing utilities or devise an alternative method which considers the purchasing utility's
             578      avoided costs. The capacity component of avoided costs shall reflect the purchasing utility's
             579      long-term deferral or cancellation of generating units which may result from the purchase of
             580      power from [independent energy] qualifying power producers.
             581          (3) Purchasing utilities and [independent energy] qualifying power producers may
             582      agree to rates, terms, or conditions for the sale of electricity or electrical capacity which differ
             583      from the rates, terms, and conditions adopted by the commission under Subsection (2).


             584          (4) The commission may adopt further rules which encourage the development of
             585      small power production and cogeneration facilities.
             586          Section 10. Section 54-12-3 is amended to read:
             587           54-12-3. Recovery of investment costs.
             588          The commission may not consider any purchasing utility's purchase of power from [an
             589      independent energy] a qualifying power producer as a reason for disallowing recovery of the
             590      purchasing utility's investment costs for facilities which are in use prior to signing a contract
             591      for the purchase of power from [an independent energy] a qualifying power producer.
             592          Section 11. Section 54-17-201 is amended to read:
             593           54-17-201. Solicitation process required -- Exception.
             594          (1) (a) An affected electrical utility shall comply with this chapter to acquire or
             595      construct a significant energy resource after February 25, 2005.
             596          (b) Notwithstanding Subsection (1)(a), this chapter does not apply to a significant
             597      energy resource for which the affected electrical utility has issued a solicitation before February
             598      25, 2005.
             599          (2) (a) Except as provided in Subsection (3), to acquire or construct a significant
             600      energy resource, an affected electrical utility shall conduct a solicitation process that is
             601      approved by the commission.
             602          (b) To obtain the approval of the commission of a solicitation process, the affected
             603      electrical utility shall file with the commission a request for approval that includes:
             604          (i) a description of the solicitation process the affected electrical utility will use;
             605          (ii) a complete proposed solicitation; and
             606          (iii) any other information the commission requires by rule made in accordance with
             607      Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
             608          (c) In ruling on the request for approval of a solicitation process, the commission shall
             609      determine whether the solicitation process:
             610          (i) complies with this chapter and rules made in accordance with Title 63, Chapter 46a,
             611      Utah Administrative Rulemaking Act; and
             612          (ii) is in the public interest taking into consideration:
             613          (A) whether it will most likely result in the acquisition, production, and delivery of
             614      electricity at the lowest reasonable cost to the retail customers of an affected electrical utility


             615      located in this state;
             616          (B) long-term and short-term impacts;
             617          (C) risk;
             618          (D) reliability;
             619          (E) financial impacts on the affected electrical utility; and
             620          (F) other factors determined by the commission to be relevant.
             621          (d) Before approving a solicitation process under this section the commission:
             622          (i) may hold a public hearing; and
             623          (ii) shall provide an opportunity for public comment.
             624          (e) As part of its review of a solicitation process, the commission may provide the
             625      affected electrical utility guidance on any additions or changes to its proposed solicitation
             626      process.
             627          (f) Unless the commission determines that additional time to analyze a solicitation
             628      process is warranted and is in the public interest, within [90] 60 days of the day on which the
             629      affected electrical utility files a request for approval of the solicitation process, the commission
             630      shall:
             631          (i) approve a proposed solicitation process;
             632          (ii) suggest modifications to a proposed solicitation process; or
             633          (iii) reject a proposed solicitation process.
             634          (3) Notwithstanding Subsection (2), an affected electrical utility may acquire or
             635      construct a significant energy resource without conducting a solicitation process if it obtains a
             636      waiver of the solicitation requirement in accordance with Section 54-17-501 .
             637          (4) In accordance with the commission's authority under Subsection 54-12-2 (2), the
             638      commission shall determine:
             639          (a) whether this chapter or another competitive bidding procedure shall apply to a
             640      purchase of a significant energy resource by an affected electrical utility from a small power
             641      producer or cogenerator; and
             642          (b) if this chapter applies as provided in Subsection (4)(a), the manner in which this
             643      chapter applies to a purchase of a significant energy resource by an affected electrical utility
             644      from a small power producer or cogenerator.
             645          Section 12. Section 54-17-302 is amended to read:


             646           54-17-302. Approval of a significant energy resource decision required.
             647          (1) If pursuant to Part 2, Solicitation Process, an affected electrical utility is required to
             648      conduct a solicitation for a significant energy resource or obtains a waiver of the requirement to
             649      conduct a solicitation under Section 54-17-501 , but does not obtain a waiver of the requirement
             650      to obtain approval of the significant energy resource decision under Section 54-17-501 , the
             651      affected electrical utility shall obtain approval of its significant energy resource decision:
             652          (a) after the completion of the solicitation process, if the affected electrical utility is
             653      required to conduct a solicitation; and
             654          (b) before an affected electrical utility may construct or enter into a binding agreement
             655      to acquire the significant energy resource.
             656          (2) (a) To obtain the approval required by Subsection (1), the affected electrical utility
             657      shall file a request for approval with the commission.
             658          (b) The request for approval required by this section shall include any information
             659      required by the commission by rule made in accordance with Title 63, Chapter 46a, Utah
             660      Administrative Rulemaking Act.
             661          (3) In ruling on a request for approval of a significant energy resource decision, the
             662      commission shall determine whether the significant energy resource decision:
             663          (a) is reached in compliance with this chapter and rules made in accordance with Title
             664      63, Chapter 46a, Utah Administrative Rulemaking Act;
             665          (b) (i) is reached in compliance with the solicitation process approved by the
             666      commission in accordance with Part 2, Solicitation Process; or
             667          (ii) is reached after the waiver of the solicitation process as provided in Subsection
             668      54-17-201 (3); and
             669          (c) is in the public interest, taking into consideration:
             670          (i) whether it will most likely result in the acquisition, production, and delivery of
             671      electricity at the lowest reasonable cost to the retail customers of an affected electrical utility
             672      located in this state;
             673          (ii) long-term and short-term impacts;
             674          (iii) risk;
             675          (iv) reliability;
             676          (v) financial impacts on the affected electrical utility; and


             677          (vi) other factors determined by the commission to be relevant.
             678          (4) The commission may not approve a significant energy resource decision under this
             679      section before holding a public hearing.
             680          (5) Unless the commission determines that additional time to analyze a significant
             681      energy resource decision is warranted and is in the public interest, within [180] 120 days of the
             682      day on which the affected electrical utility files a request for approval, the commission shall:
             683          (a) approve the significant energy resource decision;
             684          (b) approve the significant energy resource decision subject to conditions imposed by
             685      the commission; or
             686          (c) disapprove the significant energy resource decision.
             687          (6) The commission shall include in its order under this section:
             688          (a) findings as to the total projected costs for construction or acquisition of an
             689      approved significant energy resource; and
             690          (b) the basis upon which the findings described in Subsection (6)(a) are made.
             691          (7) Notwithstanding any other provision of this part, an affected electrical utility may
             692      acquire a significant energy resource without obtaining approval pursuant to this section if it
             693      obtains a waiver of the requirement for approval in accordance with Section 54-17-501 .
             694          (8) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             695      commission shall make rules regarding the process for approval of a significant energy
             696      resource decision under this section.
             697          Section 13. Section 54-17-303 is amended to read:
             698           54-17-303. Cost recovery.
             699          (1) (a) Except as otherwise provided in this section, if the commission approves a
             700      significant energy resource decision under Section 54-17-302 , the commission shall, in a
             701      general rate case or other appropriate commission proceeding, include in the affected electrical
             702      utility's retail electric rates the state's share of costs:
             703          (i) relevant to the proceeding;
             704          (ii) incurred by the affected electrical utility in constructing or acquiring the approved
             705      significant energy resource; and
             706          (iii) up to the projected costs specified in the commission's order issued under Section
             707      54-17-302 .


             708          (b) (i) The commission shall, in a general rate case or other appropriate commission
             709      proceeding, include in the affected electrical utility's retail electric rates the state's share of the
             710      incremental cost relevant to the proceeding that were prudently incurred by the affected
             711      electrical utility to identify, evaluate, and submit a reasonable benchmark option, whether or
             712      not the benchmark option is selected or becomes operational.
             713          (ii) A recoverable cost under Subsection (1)(b)(i) shall be included in the affected
             714      electrical utility's project costs for the purpose of evaluating the project's cost-effectiveness.
             715          (iii) A recoverable cost under Subsection (1)(b)(i) may not be added to the cost or
             716      otherwise considered in the evaluation of a project proposed by any person other than the
             717      affected electrical utility for the purpose of evaluating that person's proposal.
             718          [(b)] (c) Except to the extent that the commission enters an order under Section
             719      54-17-304 , an increase from the projected costs specified in the commission's order issued
             720      under Section 54-17-302 shall be subject to review by the commission as part of a rate hearing
             721      under Section 54-7-12 .
             722          (2) (a) Subsequent to the commission issuing an order described in Subsection (2)(a)(i)
             723      or (ii), the commission may disallow some or all costs incurred in connection with an
             724      approved significant energy resource decision if the commission finds that an affected
             725      electrical utility's actions in implementing an approved significant energy resource decision are
             726      not prudent because of new information or changed circumstances that occur after:
             727          (i) the commission's approval of the significant energy resource decisions under
             728      Section 54-17-302 ; or
             729          (ii) a commission order to proceed under Section 54-17-304 .
             730          (b) In making a determination of prudence under Subsection (2)(a), the commission
             731      shall use the standards identified in Section 54-4-4 .
             732          (3) Notwithstanding any other provision of this chapter, the commission may disallow
             733      some or all of the costs incurred by an affected electrical utility in connection with an approved
             734      significant energy resource decision upon a finding by the commission that the affected
             735      electrical utility is responsible for a material misrepresentation or concealment in connection
             736      with an approval process under this chapter.
             737          Section 14. Section 54-17-502 is enacted to read:
             738          54-17-502. Renewable energy source -- Solicitation -- Consultant.


             739          (1) Sections 54-17-102 through 54-17-404 do not apply to a significant energy resource
             740      that is a renewable energy source as defined in Section 54-17-601 if the nameplate capacity of
             741      the renewable energy source does not exceed 300 megawatts or, if applicable, the quantity of
             742      capacity that is the subject of a contract for the purchase of electricity from a renewable energy
             743      source does not exceed 300 megawatts.
             744          (2) (a) (i) An affected electrical utility shall issue a public solicitation of bids for a
             745      renewable energy source up to 300 megawatts in size by January 31 of each year in which it
             746      reasonably anticipates that it will need to acquire or commence construction of a renewable
             747      energy resource.
             748          (ii) A solicitation for a renewable energy source issued by January 31, 2008 for up to
             749      99 megawatts satisfies the requirement of this Subsection (2) for the year 2008 if:
             750          (A) not later than 30 days after the day on which this section takes effect, the affected
             751      electrical utility amends the solicitation or initiates a new solicitation to seek bids for
             752      renewable energy source projects up to 300 megawatts in size; and
             753          (B) within 60 days after the day on which this section takes effect and as soon as
             754      practicable, the commission retains a consultant in accordance with Subsection (3).
             755          (b) A consultant hired under Subsection (2)(a)(ii)(B) shall perform the consultant's
             756      duties under Subsection (3) in relation to the status of the solicitation process at the time the
             757      consultant is retained and may not unreasonably delay the solicitation process.
             758          (c) For a solicitation issued after January 31, 2008:
             759          (i) the affected electrical utility shall develop a reasonable process for pre-approval of
             760      bidders; and
             761          (ii) in addition to publicly issuing the solicitation in Subsection (2)(a)(i), the affected
             762      electrical utility shall send copies of the solicitation to each potential bidder who is
             763      pre-approved.
             764          (d) The affected electrical utility shall evaluate in good faith each bid that is received
             765      and negotiate in good faith with each bidder whose bid appears to be cost effective, as defined
             766      in Section 54-17-602 .
             767          (e) Beginning on August 1, 2008, and on each August 1 thereafter, the affected
             768      electrical utility shall file a notice with the commission indicating whether it reasonably
             769      anticipates that it will need to acquire or commence construction of a renewable energy


             770      resource during the following year.
             771          (3) (a) If the commission receives a notice under Subsection (2)(e) that the affected
             772      electrical utility reasonably anticipates that it will need to acquire or commence construction of
             773      a renewable energy source during the following year, the commission shall promptly retain a
             774      consultant to:
             775          (i) validate that the affected electrical utility is following the bidder pre-approval
             776      process developed pursuant to Subsection (2)(c) and make recommendations for changes to the
             777      pre-approval process for future solicitations;
             778          (ii) monitor and document all material aspects of the bids, bid evaluations, and bid
             779      negotiations between the affected electrical utility and any bidders in the solicitation process;
             780          (iii) maintain adequate documentation of each bid, including the solicitation,
             781      evaluation, and negotiation processes and the reason for the conclusion of negotiations, which
             782      documentation shall be transmitted to the commission at the conclusion of all negotiations in
             783      the solicitation; and
             784          (iv) be available to testify under oath before the commission in any relevant proceeding
             785      concerning all aspects of the public solicitation process.
             786          (b) The commission and the consultant shall use all reasonable efforts to not delay the
             787      solicitation process.
             788          (4) Documentation provided to the commission by the consultant shall be available to
             789      the affected electrical utility, any bidder, or other interested person under terms and conditions
             790      and at times determined appropriate by the commission.
             791          (5) (a) The commission and the consultant shall execute a contract approved by the
             792      commission with terms and conditions approved by the commission.
             793          (b) Unless otherwise provided by contract, an invoice for the consultant's services shall
             794      be sent to the Division of Public Utilities for review and approval.
             795          (c) After approval under Subsection (5)(b), the invoice shall be forwarded to the
             796      affected electrical utility for payment to the consultant.
             797          (d) The affected electrical utility may, in a general rate case or other appropriate
             798      commission proceeding, include, and the Commission shall allow, recovery by the affected
             799      electrical utility of any amount paid by the affected electrical utility for the consultant.
             800          (6) (a) Nothing in this section precludes an affected electrical utility from constructing


             801      or acquiring any renewable energy source project outside the solicitation process provided for
             802      in this section, including purchasing electricity from any renewable energy source project that
             803      chooses to self-certify as a qualifying facility under the federal Public Utility Regulatory
             804      Policies Act of 1978.
             805          (b) An affected electrical utility that constructs a renewable energy source outside the
             806      solicitation process of this section or Section 54-17-201 shall file a notice with the commission
             807      at least 60 days before the date of commencement of construction, indicating the size and
             808      location of the renewable energy source.
             809          (c) The date of commencement of construction under Subsection (6)(b) is the date of
             810      any directive from an affected electrical utility to the person responsible for the construction of
             811      the renewable energy source authorizing or directing the person to proceed with construction.
             812          (d) For an affected electrical utility whose rates are regulated by the commission, the
             813      utility has the burden of proving in a rate case or other appropriate commission proceeding the
             814      prudence, reasonableness, and cost-effectiveness of construction under this Subsection (6),
             815      including the method used to evaluate the risks and value of any bid submitted in the
             816      solicitation under this section.
             817          (7) Nothing in this section requires an affected electrical utility to enter into any
             818      transaction that it reasonably believes is not cost effective or otherwise is not in the public
             819      interest.
             820          Section 15. Section 54-17-601 is enacted to read:
             821     
Part 6. Carbon Emission Reductions for Electrical Corporations

             822          54-17-601. Definitions.
             823          As used in this part:
             824          (1) "Adjusted retail electric sales" means the total kilowatt-hours of retail electric sales
             825      of an electrical corporation to customers in this state in a calendar year, reduced by:
             826          (a) the amount of those kilowatt-hours attributable to electricity generated or purchased
             827      in that calendar year from qualifying zero carbon emissions generation and qualifying carbon
             828      sequestration generation;
             829          (b) the amount of those kilowatt-hours attributable to electricity generated or purchased
             830      in that calendar year from generation located within the geographic boundary of the Western
             831      Electricity Coordinating Council that derives its energy from one or more of the following but


             832      that does not satisfy the definition of a renewable energy source or that otherwise has not been
             833      used to satisfy Subsection 54-17-602 (1):
             834          (i) wind energy;
             835          (ii) solar photovoltaic and solar thermal energy;
             836          (iii) wave, tidal, and ocean thermal energy;
             837          (iv) except for combustion of wood that has been treated with chemical preservatives
             838      such as creosote, pentachlorophenol or chromated copper arsenate, biomass and biomass
             839      byproducts, including:
             840          (A) organic waste;
             841          (B) forest or rangeland woody debris from harvesting or thinning conducted to improve
             842      forest or rangeland ecological health and to reduce wildfire risk;
             843          (C) agricultural residues;
             844          (D) dedicated energy crops; and
             845          (E) landfill gas or biogas produced from organic matter, wastewater, anaerobic
             846      digesters, or municipal solid waste;
             847          (v) geothermal energy;
             848          (vi) hydroelectric energy; or
             849          (vii) waste gas and waste heat capture or recovery; and
             850          (c) the number of kilowatt-hours attributable to reductions in retail sales in that
             851      calendar year from demand side management as defined in Section 54-7-12.8 , with the
             852      kilowatt-hours for an electrical corporation whose rates are regulated by the commission and
             853      adjusted by the commission to exclude kilowatt-hours for which a renewable energy certificate
             854      is issued under Subsection 54-17-603 (4)(b).
             855          (2) "Amount of kilowatt-hours attributable to electricity generated or purchased in that
             856      calendar year from qualifying carbon sequestration generation," for qualifying carbon
             857      sequestration generation, means the kilowatt-hours supplied by a facility during the calendar
             858      year multiplied by the ratio of the amount of carbon dioxide captured from the facility and
             859      sequestered to the sum of the amount of carbon dioxide captured from the facility and
             860      sequestered plus the amount of carbon dioxide emitted from the facility during the same
             861      calendar year.
             862          (3) "Banked renewable energy certificate" means a bundled or unbundled renewable


             863      energy certificate that is:
             864          (a) not used in a calendar year to comply with this part or with a renewable energy
             865      program in another state; and
             866          (b) carried forward into a subsequent year.
             867          (4) "Bundled renewable energy certificate" means a renewable energy certificate for
             868      qualifying electricity that is acquired:
             869          (a) by an electrical corporation by a trade, purchase, or other transfer of electricity that
             870      includes the renewable energy attributes of, or certificate that is issued for, the electricity; or
             871          (b) by an electrical corporation by generating the electricity for which the renewable
             872      energy certificate is issued.
             873          (5) "Electrical corporation":
             874          (a) is as defined in Section 54-2-1 ; and
             875          (b) does not include a person generating electricity that is not for sale to the public.
             876          (6) "Qualifying carbon sequestration generation" means a fossil-fueled generating
             877      facility located within the geographic boundary of the Western Electricity Coordinating
             878      Council that:
             879          (a) becomes operational or is retrofitted on or after January 1, 2008; and
             880          (b) reduces carbon dioxide emissions into the atmosphere through permanent
             881      geological sequestration or through another verifiably permanent reduction in carbon dioxide
             882      emissions through the use of technology.
             883          (7) "Qualifying electricity" means electricity generated on or after January 1, 1995
             884      from a renewable energy source if:
             885          (a) (i) the renewable energy source is located within the geographic boundary of the
             886      Western Electricity Coordinating Council; or
             887          (ii) the qualifying electricity is delivered to the transmission system of an electrical
             888      corporation or a delivery point designated by the electrical corporation for the purpose of
             889      subsequent delivery to the electrical corporation; and
             890          (b) the renewable energy attributes of the electricity are not traded, sold, transferred, or
             891      otherwise used to satisfy another state's renewable energy program.
             892          (8) "Qualifying zero carbon emissions generation":
             893          (a) means a generation facility located within the geographic boundary of the Western


             894      Electricity Coordinating Council that:
             895          (i) becomes operational on or after January 1, 2008; and
             896          (ii) does not produce carbon as a byproduct of the generation process;
             897          (b) includes generation powered by nuclear fuel; and
             898          (c) does not include renewable energy sources used to satisfy the requirement
             899      established under Subsection 54-17-602 (1).
             900          (9) "Renewable energy certificate" means a certificate issued under Section 54-17-603 .
             901          (10) "Renewable energy source" means:
             902          (a) an electric generation facility or generation capability or upgrade that becomes
             903      operational on or after January 1, 1995 that derives its energy from one or more of the
             904      following:
             905          (i) wind energy;
             906          (ii) solar photovoltaic and solar thermal energy;
             907          (iii) wave, tidal, and ocean thermal energy;
             908          (iv) except for combustion of wood that has been treated with chemical preservatives
             909      such as creosote, pentachlorophenol or chromated copper arsenate, biomass and biomass
             910      byproducts, including:
             911          (A) organic waste;
             912          (B) forest or rangeland woody debris from harvesting or thinning conducted to improve
             913      forest or rangeland ecological health and to reduce wildfire risk;
             914          (C) agricultural residues;
             915          (D) dedicated energy crops; and
             916          (E) landfill gas or biogas produced from organic matter, wastewater, anaerobic
             917      digesters, or municipal solid waste;
             918          (v) geothermal energy located outside the state;
             919          (vi) waste gas and waste heat capture or recovery; or
             920          (vii) efficiency upgrades to a hydroelectric facility, without regard to the date upon
             921      which the facility became operational, if the upgrades become operational on or after January
             922      1, 1995;
             923          (b) any of the following:
             924          (i) up to 50 average megawatts of electricity per year per electrical corporation from a


             925      certified low-impact hydroelectric facility, without regard to the date upon which the facility
             926      becomes operational, if the facility is certified as a low-impact hydroelectric facility on or after
             927      January 1, 1995, by a national certification organization;
             928          (ii) geothermal energy if located within the state, without regard to the date upon which
             929      the facility becomes operational; or
             930          (iii) hydroelectric energy if located within the state, without regard to the date upon
             931      which the facility becomes operational;
             932          (c) hydrogen gas derived from any source of energy described in Subsection (10)(a) or
             933      (b);
             934          (d) if an electric generation facility employs multiple energy sources, that portion of the
             935      electricity generated that is attributable to energy sources described in Subsections (10)(a)
             936      through (c); and
             937          (e) any of the following located in the state and owned by a user of energy:
             938          (i) a demand side management measure, as defined by Subsection 54-7-12.8 (1), with
             939      the quantity of renewable energy certificates to which the user is entitled determined by the
             940      equivalent energy saved by the measure;
             941          (ii) a solar thermal system that reduces the consumption of fossil fuels, with the
             942      quantity of renewable energy certificates to which the user is entitled determined by the
             943      equivalent kilowatt-hours saved, except to the extent the commission determines otherwise
             944      with respect to net-metered energy;
             945          (iii) a solar photovoltaic system that reduces the consumption of fossil fuels with the
             946      quantity of renewable energy certificates to which the user is entitled determined by the total
             947      production of the system, except to the extent the commission determines otherwise with
             948      respect to net-metered energy;
             949          (iv) a hydroelectric or geothermal facility with the quantity of renewable energy
             950      certificates to which the user is entitled determined by the total production of the facility,
             951      except to the extent the commission determines otherwise with respect to net-metered energy;
             952          (v) a waste gas or waste heat capture or recovery system, other than from a combined
             953      cycle combustion turbine that does not use waste gas or waste heat, with the quantity of
             954      renewable energy certificates to which the user is entitled determined by the total production of
             955      the system, except to the extent the commission determines otherwise with respect to


             956      net-metered energy; and
             957          (vi) the station use of solar thermal energy, solar photovoltaic energy, hydroelectric
             958      energy, geothermal energy, waste gas, or waste heat capture and recovery.
             959          (11) "Unbundled renewable energy certificate" means a renewable energy certificate
             960      associated with:
             961          (a) qualifying electricity that is acquired by an electrical corporation or other person by
             962      trade, purchase, or other transfer without acquiring the electricity for which the certificate was
             963      issued; or
             964          (b) activities listed in Subsection (10)(e).
             965          Section 16. Section 54-17-602 is enacted to read:
             966          54-17-602. Target amount of qualifying electricity -- Renewable energy certificate
             967      -- Cost-effectiveness -- Cooperatives.
             968          (1) (a) To the extent that it is cost effective to do so, beginning in 2025 the annual retail
             969      electric sales in this state of each electrical corporation shall consist of qualifying electricity or
             970      renewable energy certificates in an amount equal to at least 20% of adjusted retail electric
             971      sales.
             972          (b) The amount under Subsection (1)(a) is computed based upon adjusted retail electric
             973      sales for the calendar year commencing 36 months before the first day of the year for which the
             974      target calculated under Subsection (1)(a) applies.
             975          (c) Notwithstanding Subsections (1)(a) and (b), an increase in the annual target from
             976      one year to the next may not exceed the greater of:
             977          (i) 17,500 megawatt-hours; or
             978          (ii) 20% of the prior year's amount under Subsections (1)(a) and (b).
             979          (2) (a) Cost-effectiveness under Subsection (1) for other than a cooperative association
             980      is determined in comparison to other viable resource options using the criteria provided by
             981      Subsection 54-17-201 (2)(c)(ii).
             982          (b) For an electrical corporation that is a cooperative association, cost effectiveness is
             983      determined using criteria applicable to the cooperative association's acquisition of a significant
             984      energy resource established by the cooperative association's board of directors.
             985          (3) This section does not require an electrical corporation to:
             986          (a) substitute qualifying electricity for electricity from a generation source owned or


             987      contractually committed, or from a contractual commitment for a power purchase;
             988          (b) enter into any additional electric sales commitment or any other arrangement for the
             989      sale or other disposition of electricity that is not already, or would not be, entered into by the
             990      electrical corporation; or
             991          (c) acquire qualifying electricity in excess of its adjusted retail electric sales.
             992          (4) For the purpose of Subsection (1), an electrical corporation may combine the
             993      following:
             994          (a) qualifying electricity from a renewable energy source owned by the electrical
             995      corporation;
             996          (b) qualifying electricity acquired by the electrical corporation through trade, power
             997      purchase, or other transfer; and
             998          (c) a bundled or unbundled renewable energy certificate, including a banked renewable
             999      energy certificate.
             1000          (5) For an electrical corporation whose rates the commission regulates, the following
             1001      rules concerning renewable energy certificates apply:
             1002          (a) a banked renewable energy certificate with an older issuance date shall be used
             1003      before any other banked renewable energy certificate issued at a later date is used; and
             1004          (b) the total of all unbundled renewable energy certificates, including unbundled
             1005      banked renewable energy certificates, may not exceed 20% of the amount of the annual target
             1006      provided for in Subsection (1).
             1007          (6) An electrical corporation that is a cooperative association may count towards
             1008      Subsection (1) any of the following:
             1009          (a) electric production allocated to this state from hydroelectric facilities becoming
             1010      operational after December 31, 2007 if the facilities are located in any state in which the
             1011      cooperative association, or a generation and transmission cooperative with which the
             1012      cooperative association has a contract, provides electric service;
             1013          (b) qualifying electricity generated or acquired or renewable energy certificates
             1014      acquired for a program that permits a retail customer to voluntarily contribute to a renewable
             1015      energy source; and
             1016          (c) notwithstanding Subsection 54-17-601 (7), an unbundled renewable energy
             1017      certificate purchased from a renewable energy source located outside the geographic boundary


             1018      of the Western Electricity Coordinating Council if the electricity on which the unbundled
             1019      renewable energy certificate is based would be considered qualifying electricity if the
             1020      renewable energy source was located within the geographic boundary of the Western
             1021      Electricity Coordinating Council.
             1022          (7) The use of the renewable attributes associated with qualifying electricity to satisfy
             1023      any federal renewable energy requirement does not preclude the electricity from being
             1024      qualifying electricity for the purpose of this chapter.
             1025          Section 17. Section 54-17-603 is enacted to read:
             1026          54-17-603. Renewable energy certificate -- Issuance -- Use to satisfy other
             1027      requirements.
             1028          (1) The commission shall establish a process for issuance or recognition of a renewable
             1029      energy certificate.
             1030          (2) The commission process under Subsection (1) shall provide for the issuance,
             1031      monitoring, accounting, transfer, and use of a renewable energy certificate, including in
             1032      electronic form.
             1033          (3) The commission:
             1034          (a) may consult with another state or a federal agency and any regional system or
             1035      trading program to fulfil Subsection (1); and
             1036          (b) allow use of a renewable energy certificate that is issued, monitored, accounted for,
             1037      or transferred by or through a regional system or trading program, including the Western
             1038      Renewable Energy Generation Information system, to fulfil this part's provisions.
             1039          (4) A renewable energy certificate shall be issued for:
             1040          (a) qualifying electricity generated on and after January 1, 1995; and
             1041          (b) the activities of an energy user described in Subsections 10-19-102 (11)(e) and
             1042      54-17-601 (10)(e) on and after January 1, 1995.
             1043          (5) The person requesting a renewable energy certificate shall affirm that the renewable
             1044      energy attributes of the electricity have not been traded, sold, transferred, or otherwise used to
             1045      satisfy another state's renewable energy requirements.
             1046          (6) (a) For the purpose of satisfying Subsection 54-17-602 (1) and the issuance of a
             1047      renewable energy certificate under this section, a renewable energy source located in this state
             1048      that derives its energy from solar photovoltaic or solar thermal energy shall be credited for 2.4


             1049      kilowatt-hours of qualifying electricity for each 1.0 kilowatt-hour generated.
             1050          (b) Notwithstanding Subsection (6)(a), the acquisition or construction by an electrical
             1051      corporation of a renewable energy source that derives its energy from solar photovoltaic or
             1052      solar thermal energy shall comply with the cost-effectiveness criteria of Subsection
             1053      54-17-201 (2)(c)(ii).
             1054          (7) A renewable energy certificate issued under this section:
             1055          (a) does not expire; and
             1056          (b) may be banked.
             1057          (8) The commission may recognize a renewable energy certificate that is issued,
             1058      monitored, accounted for, or transferred by or through another state or a regional system or
             1059      trading program, including the Western Renewable Energy Generation Information System, if
             1060      the renewable energy certificate is for qualifying electricity.
             1061          (9) A renewable energy certificate:
             1062          (a) may be used only once to satisfy Subsection 54-17-602 (1);
             1063          (b) may be used for the purpose of Subsection 54-17-602 (1) and the qualifying
             1064      electricity on which the renewable energy certificate is based may be used to satisfy any federal
             1065      renewable energy requirement; and
             1066          (c) may not be used if it has been used to satisfy any other state's renewable energy
             1067      requirement.
             1068          (10) The commission shall establish procedures and reasonable rates permitting an
             1069      electrical corporation that is a purchasing utility under Section 54-12-2 to acquire or retain a
             1070      renewable energy certificate associated with the purchase of power from an independent energy
             1071      producer.
             1072          Section 18. Section 54-17-604 is enacted to read:
             1073          54-17-604. Plans and reports.
             1074          (1) An electrical corporation shall develop and maintain a plan for implementing
             1075      Subsection 54-17-602 (1), consistent with the cost-effectiveness criteria of Subsection
             1076      54-17-201 (2)(c)(ii).
             1077          (2) (a) A progress report concerning a plan under Subsection (1) for other than a
             1078      cooperative association shall be filed with the commission by January 1 of each of the years
             1079      2010, 2015, 2020, and 2024.


             1080          (b) For an electrical corporation that is a cooperative association, a progress report
             1081      shall be filed with the cooperative association's board of directors by January 1 of each of the
             1082      years 2010, 2015, 2020, and 2024.
             1083          (3) The progress report under Subsection (2) shall contain:
             1084          (a) the actual and projected amount of qualifying electricity through 2025;
             1085          (b) the source of qualifying electricity;
             1086          (c) (i) an analysis of the cost-effectiveness of renewable energy sources for other than a
             1087      cooperative association; or
             1088          (ii) an estimate of the cost of achieving the target for an electrical corporation that is a
             1089      cooperative association;
             1090          (d) a discussion of conditions impacting the renewable energy source and qualifying
             1091      electricity markets;
             1092          (e) any recommendation for a suggested legislative or program change; and
             1093          (f) for other than a cooperative association, any other information requested by the
             1094      commission or considered relevant by the electrical corporation.
             1095          (4) The plan and progress report required by Subsections (1) and (2) may include
             1096      procedures that will be used by the electrical corporation to identify and select any renewable
             1097      energy resource and qualifying electricity that satisfy the criteria of Subsection
             1098      54-17-201 (2)(c)(ii).
             1099          (5) By July 1, 2026, each electrical corporation shall file a final progress report
             1100      demonstrating:
             1101          (a) how Subsection 54-17-602 (1) is satisfied for the year 2025; or
             1102          (b) the reason why Subsection 54-17-602 (1) is not satisfied for the year 2025, if it is
             1103      not satisfied.
             1104          (6) By January 1 of each of the years 2011, 2016, 2021, and 2025, the Division of
             1105      Public Utilities shall submit to the Legislature a report containing a summary of any progress
             1106      report filed under Subsections (2) through (5).
             1107          (7) The summary required by Subsection (6) shall include any recommendation for
             1108      legislative changes.
             1109          (8) (a) By July 1, 2027, the commission shall submit to the Legislature a report
             1110      summarizing the final progress reports and recommending any legislative changes.


             1111          (b) The 2027 summary may contain a recommendation to the Legislature concerning
             1112      any action to be taken with respect to an electrical corporation that does not satisfy Subsection
             1113      54-17-602 (1) for 2025.
             1114          (c) The commission shall provide an opportunity for public comment and take
             1115      evidence before recommending any action to be taken with respect to an electrical corporation
             1116      that does not satisfy Subsection 54-17-602 (1) for 2025.
             1117          (9) If a recommendation containing a penalty for failure to satisfy Subsection
             1118      54-17-602 (1) is made under Subsection (8), the proposal shall require that any amount paid by
             1119      an electrical corporation as a penalty be utilized to fund demand-side management for the retail
             1120      customers of the electrical corporation paying the penalty.
             1121          (10) A penalty may not be proposed under this section if an electrical corporation's
             1122      failure to satisfy Subsection 54-17-602 (1) is due to:
             1123          (a) a lack of cost-effective means to satisfy the requirement; or
             1124          (b) force majeure.
             1125          (11) By July 1, 2026, an electrical corporation that is a cooperative association shall
             1126      file a final progress report demonstrating:
             1127          (a) how Subsection 54-17-602 (1) is satisfied for the year 2025; or
             1128          (b) the reason why Subsection 54-17-602 (1) is not satisfied for the year 2025 if it is not
             1129      satisfied.
             1130          (12) The plan and any progress report file under this section by an electrical
             1131      corporation that is cooperative association shall be publicly available at the cooperative
             1132      association's office or posted on the cooperative association's website.
             1133          Section 19. Section 54-17-605 is enacted to read:
             1134          54-17-605. Recovery of costs for renewable energy activities.
             1135          (1) In accordance with other law, the commission shall include in the retail electric
             1136      rates of an electrical corporation whose rates the commission regulates the state's share of any
             1137      of the costs listed in Subsection (2) that are relevant to the proceeding in which the commission
             1138      is considering the electrical corporation's rates:
             1139          (a) if the costs are prudently incurred by the electrical corporation in connection with:
             1140          (i) the acquisition of a renewable energy certificate;
             1141          (ii) the acquisition of qualifying electricity for which a renewable energy certificate


             1142      will be issued after the acquisition; and
             1143          (iii) the acquisition, construction, and use of a renewable energy source; and
             1144          (b) to the extent any qualifying electricity or renewable energy source under Subsection
             1145      (1)(a) satisfies the cost-effectiveness criteria of Subsection 54-17-201 (2)(c)(ii).
             1146          (2) The following are costs that may be recoverable under Subsection (1):
             1147          (a) a cost of siting, acquisition of property rights, equipment, design, licensing,
             1148      permitting, construction, owning, operating, or otherwise acquiring a renewable energy source
             1149      and any associated asset, including transmission;
             1150          (b) a cost to acquire qualifying electricity through trade, power purchase, or other
             1151      transfer;
             1152          (c) a cost to acquire a bundled or unbundled renewable energy certificate, if any net
             1153      revenue from the sale of a renewable energy certificate allocable to this state is also included in
             1154      rates;
             1155          (d) a cost to interconnect a renewable energy source to the electrical corporation's
             1156      transmission and distribution system;
             1157          (e) a cost associated with using a physical or financial asset to integrate, firm, or shape
             1158      a renewable energy source on a firm annual basis to meet a retail electricity need; and
             1159          (f) any cost associated with transmission and delivery of qualifying electricity to a
             1160      retail electricity consumer.
             1161          (3) (a) The commission may allow an electrical corporation to use an adjustment
             1162      mechanism or reasonable method other than a rate case under Sections 54-4-4 and 54-7-12 to
             1163      allow recovery of costs identified in Subsection (2).
             1164          (b) If the commission allows the use of an adjustment mechanism, both the costs and
             1165      any associated benefit shall be reflected in the mechanism, to the extent practicable.
             1166          (c) This Subsection (3) creates no presumption for or against the use of an adjustment
             1167      mechanism.
             1168          (4) (a) The commission may permit an electrical corporation to include in its retail
             1169      electric rates the state's share of costs prudently incurred by the electrical corporation in
             1170      connection with a renewable energy source, whether or not the renewable energy source
             1171      ultimately becomes operational, including costs of:
             1172          (i) siting;


             1173          (ii) property acquisition;
             1174          (iii) equipment;
             1175          (iv) design;
             1176          (v) licensing;
             1177          (vi) permitting; and
             1178          (vii) other reasonable items related to the renewable energy source.
             1179          (b) Subsection (4)(a) creates no presumption concerning the prudence or recoverability
             1180      of the costs identified.
             1181          (c) To the extent deferral is consistent with other applicable law, the commission may
             1182      allow an electrical corporation to defer costs recoverable under Subsection (4)(a) until the
             1183      recovery of the deferred costs can be considered in a rate proceeding or an adjustment
             1184      mechanism created under Subsection (3).
             1185          (d) An application to defer costs shall be filed within 60 days after the day on which
             1186      the electrical corporation determines that the renewable energy source project is impaired under
             1187      generally accepted accounting principles and will not become operational.
             1188          (e) Notwithstanding the opportunity to defer costs under Subsection (4)(c), a cost
             1189      incurred by an electrical corporation for siting, property acquisition, equipment, design,
             1190      licensing, and permitting of a renewable energy source that the electrical corporation proposes
             1191      to construct shall be included in the electrical corporation's project costs for the purpose of
             1192      evaluating the project's cost-effectiveness.
             1193          (f) A deferred cost under Subsection (4)(a) may not be added to, or otherwise
             1194      considered in the evaluation of, the cost of a project proposed by any person other than the
             1195      electrical corporation for the purpose of evaluating that person's proposal.
             1196          Section 20. Section 54-17-606 is enacted to read:
             1197          54-17-606. Commission rules.
             1198          The commission shall make rules as necessary to implement this part.
             1199          Section 21. Section 54-17-607 is enacted to read:
             1200          54-17-607. Procedure and appeals under this chapter.
             1201          (1) The governing authority, as defined in Section 54-15-102 , has primary jurisdiction
             1202      concerning issues of interpretation, implementation, and administration of this chapter.
             1203          (2) An appeal of a commission order under this chapter is governed by Chapter 7,


             1204      Hearings, Practice, and Procedure.
             1205          Section 22. Section 54-17-701 is enacted to read:
             1206     
Part 7. Carbon Sequestration

             1207          54-17-701. Rules for carbon capture and geological storage.
             1208          (1) By January 1, 2011, the Division of Water Quality and the Division of Air Quality,
             1209      on behalf of the Board of Water Quality and the Board of Air Quality, respectively, in
             1210      collaboration with the commission and the Division of Oil, Gas and Mining and the Utah
             1211      Geological Survey, shall present recommended rules to the Legislature's Administrative Rules
             1212      Review Committee for the following in connection with carbon capture and accompanying
             1213      geological sequestration of captured carbon:
             1214          (a) site characterization approval;
             1215          (b) geomechanical, geochemical, and hydrogeological simulation;
             1216          (c) risk assessment;
             1217          (d) mitigation and remediation protocols;
             1218          (e) issuance of permits for test, injection, and monitoring wells;
             1219          (f) specifications for the drilling, construction, and maintenance of wells;
             1220          (g) issues concerning ownership of subsurface rights and pore space;
             1221          (h) allowed composition of injected matter;
             1222          (i) testing, monitoring, measurement, and verification for the entirety of the carbon
             1223      capture and geologic sequestration chain of operations, from the point of capture of the carbon
             1224      dioxide to the sequestration site;
             1225          (j) closure and decommissioning procedure;
             1226          (k) short- and long-term liability and indemnification for sequestration sites;
             1227          (l) conversion of enhanced oil recovery operations to carbon dioxide geological
             1228      sequestration sites; and
             1229          (m) other issues as identified.
             1230          (2) The entities listed in Subsection (1) shall report to the Legislature's Administrative
             1231      Rules Review Committee any proposals for additional statutory changes needed to implement
             1232      rules contemplated under Subsection (1).
             1233          (3) On or before July 1, 2009, the entities listed in Subsection (1) shall submit to the
             1234      Legislature's Public Utilities and Technology and Natural Resources, Agriculture, and


             1235      Environment Interim Committees a progress report on the development of the recommended
             1236      rules required by this part.
             1237          (4) The recommended rules developed under this section apply to the injection of
             1238      carbon dioxide and other associated injectants in allowable types of geological formations for
             1239      the purpose of reducing emissions to the atmosphere through long-term geological
             1240      sequestration as required by law or undertaken voluntarily or for subsequent beneficial reuse.
             1241          (5) The recommended rules developed under this section do not apply to the injection
             1242      of fluids through the use of Class II injection wells as defined in 40 C.F.R. 144.69(b) for the
             1243      purpose of enhanced hydrocarbon recovery.
             1244          (6) Rules recommended under this section shall:
             1245          (a) ensure that adequate health and safety standards are met;
             1246          (b) minimize the risk of unacceptable leakage from the injection well and injection
             1247      zone for carbon capture and geologic sequestration; and
             1248          (c) provide adequate regulatory oversight and public information concerning carbon
             1249      capture and geologic sequestration.
             1250          Section 23. Effective date.
             1251          If approved by two-thirds of all the members elected to each house, this bill takes effect
             1252      upon approval by the governor, or the day following the constitutional time limit of Utah
             1253      Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto,
             1254      the date of veto override.


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