As Introduced 133rd General Assembly Regular Session H. B. No. 6 2019-2020 Representatives Callender, Wilkin A BILL To amend sections 3706.02, 3706.03, 4928.644, and 1 4928.66 and to enact sections 3706.40, 3706.42, 2 3706.44, 3706.45, 3706.46, 3706.47, 3706.471, 3 3706.48, 3706.481, 3706.482, 3706.49, 3706.50, 4 4928.46, 4928.47, and 4928.471 of the Revised 5 Code to create the Ohio Clean Air Program, to 6 facilitate and encourage electricity production 7 and use from clean air resources, to facilitate 8 investment to reduce the emissions from other 9 generating technologies that can be readily 10 dispatched to satisfy demand in real time, and 11 proactively engage the buying power of consumers 12 in this state for the purpose of improving air 13 quality in this state. 14 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: Section 1. That sections 3706.02, 3706.03, 4928.644, and 15 4928.66 be amended and sections 3706.40, 3706.42, 3706.44, 16 3706.45, 3706.46, 3706.47, 3706.471, 3706.48, 3706.481, 17 3706.482, 3706.49, 3706.50, 4928.46, 4928.47, and 4928.471 of 18 the Revised Code be enacted to read as follows: 19 H. B. No. 6 As Introduced Sec. 3706.02. (A) There is hereby created the Ohio air Page 2 20 quality development authority. Such authority is a body both 21 corporate and politic in this state, and the carrying out of its 22 purposes and the exercise by it of the powers conferred by 23 Chapter 3706. of the Revised Code shall be held to be, and are 24 hereby determined to be, essential governmental functions and 25 public purposes of the state, but the authority shall not be 26 immune from liability by reason thereof. 27 (B) The authority shall consist of seven eleven members as follows: five (1) Five members appointed by the governor, with the 28 29 30 advice and consent of the senate, no more than three of whom 31 shall be members of the same political party, and the 32 (2) The director of environmental protection and the , who shall be a member ex officio without compensation; (3) The director of health, who shall be members a member ex officio without compensation; (4) Four legislative members, who shall be members ex 33 34 35 36 37 officio without compensation. The speaker of the house of 38 representatives, the president of the senate, and the minority 39 leader of each house shall each appoint one of the legislative 40 members. The legislative members may participate fully in all 41 the board's deliberations and activities. Each 42 Each appointive member shall be a resident of the state, 43 and a qualified elector therein. The members of the authority 44 first appointed shall continue in office for terms expiring on 45 June 30, 1971, June 30, 1973, June 30, 1975, June 30, 1977, and 46 June 30, 1978, respectively, the term of each member to be 47 designated by the governor. Appointed members' terms of office 48 H. B. No. 6 As Introduced Page 3 shall be for eight years, commencing on the first day of July 49 and ending on the thirtieth day of June. Each appointed member 50 shall hold office from the date of his appointment until the end 51 of the term for which he was appointed. Any member appointed to 52 fill a vacancy occurring prior to the expiration of the term for 53 which his the member's predecessor was appointed shall hold 54 office for the remainder of such term. Any appointed member 55 shall continue in office subsequent to the expiration date of 56 his the member's term until his the member's successor takes 57 office, or until a period of sixty days has elapsed, whichever 58 occurs first. A member of the authority is eligible for 59 reappointment. Each appointed member of the authority, before 60 entering upon his official duties, shall take an oath as 61 provided by Section 7 of Article XV, Ohio Constitution. The 62 governor may at any time remove any member of the authority for 63 misfeasance, nonfeasance, or malfeasance in office. The 64 authority shall elect one of its appointed members as chairman 65 chairperson and another as vice-chairman vice-chairperson, and 66 shall appoint a secretary-treasurer who need not be a member of 67 the authority. Four members of the authority shall constitute a 68 quorum, and the affirmative vote of four members shall be 69 necessary for any action taken by vote of the authority. No 70 vacancy in the membership of the authority shall impair the 71 rights of a quorum by such vote to exercise all the rights and 72 perform all the duties of the authority. 73 Before (C) Except as provided in division (D) of this 74 section, before the issuance of any air quality revenue bonds 75 under Chapter 3706. of the Revised Code, each appointed member 76 of the authority shall give a surety bond to the state in the 77 penal sum of twenty-five thousand dollars and the secretary- 78 treasurer shall give such a bond in the penal sum of fifty 79 H. B. No. 6 As Introduced Page 4 thousand dollars, each such surety bond to be conditioned upon 80 the faithful performance of the duties of the office, to be 81 executed by a surety company authorized to transact business in 82 this state, and to be approved by the governor and filed in the 83 office of the secretary of state. Each Except as provided in 84 division (B)(4) of this section, each appointed member of the 85 authority shall receive an annual salary of five thousand 86 dollars, payable in monthly installments. Each member shall be 87 reimbursed for his the actual expenses necessarily incurred in 88 the performance of his official duties. All expenses incurred in 89 carrying out Chapter 3706. of the Revised Code shall be payable 90 solely from funds provided under Chapter 3706. of the Revised 91 Code, appropriated for such purpose by the general assembly, or 92 provided by the controlling board. No liability or obligation 93 shall be incurred by the authority beyond the extent to which 94 moneys have been so provided or appropriated. 95 (D) The four legislative members appointed under division 96 (B)(4) of this section shall be exempt from the requirement 97 under division (C) of this section to give a surety bond. 98 Sec. 3706.03. (A) It is hereby declared to be the public 99 policy of the state through the operations of the Ohio air 100 quality development authority under this chapter to contribute 101 toward one or more of the following: to 102 (1) To provide for the conservation of air as a natural resource of the state, and to ; 103 104 (2) To prevent or abate the pollution thereof, to ; 105 (3) To provide for the comfort, health, safety, and 106 general welfare of all employees, as well as all other 107 inhabitants of the state, to ; 108 H. B. No. 6 As Introduced Page 5 (4) To assist in the financing of air quality facilities 109 for industry, commerce, distribution, and research, including 110 public utility companies, to ; 111 (5) To create or preserve jobs and employment 112 opportunities or improve the economic welfare of the people, or 113 assist and cooperate with governmental agencies in achieving 114 such purposes; 115 (6) To maintain operations of certified clean air 116 resources, as defined in section 3706.40 of the Revised Code, 117 that, through continued operation, are expected to provide the 118 greatest quantity of carbon-dioxide-free electric energy 119 generation, and to encourage the operation and development of 120 other clean air resources that provide carbon-dioxide-free 121 electric energy generation; 122 (7) To encourage reduced emissions resources, as defined 123 in section 3706.40 of the Revised Code, to reduce the resources' 124 emissions. 125 (B) In furtherance of such public policy the Ohio air 126 quality development authority may initiate do any of the 127 following: 128 (1) Initiate, acquire, construct, maintain, repair, and 129 operate air quality projects or cause the same to be operated 130 pursuant to a lease, sublease, or agreement with any person or 131 governmental agency; may make 132 (2) Make loans and grants to governmental agencies for the 133 acquisition or construction of air quality facilities by such 134 governmental agencies; may make 135 (3) Make loans to persons for the acquisition or 136 construction of air quality facilities by such persons; may 137 H. B. No. 6 As Introduced enter Page 6 138 (4) Enter into commodity contracts with, or make loans for 139 the purpose of entering into commodity contracts to, any person, 140 governmental agency, or entity located within or without the 141 state in connection with the acquisition or construction of air 142 quality facilities; and may issue 143 (5) Issue air quality revenue bonds of this state payable 144 solely from revenues, to pay the cost of such projects, 145 including any related commodity contracts. 146 (C) Any air quality project shall be determined by the 147 authority to be not inconsistent with any applicable air quality 148 standards duly established and then required to be met pursuant 149 to the "Clean Air Act," 84 Stat. 1679 (1970), 42 U.S.C.A. 1857, 150 as amended. Any resolution of the authority providing for 151 acquiring or constructing such projects or for making a loan or 152 grant for such projects shall include a finding by the authority 153 that such determination has been made. Determinations by 154 resolution of the authority that a project is an air quality 155 facility under this chapter and is consistent with the purposes 156 of section 13 of Article VIII, Ohio Constitution, and this 157 chapter, shall be conclusive as to the validity and 158 enforceability of the air quality revenue bonds issued to 159 finance such project and of the resolutions, trust agreements or 160 indentures, leases, subleases, sale agreements, loan agreements, 161 and other agreements made in connection therewith, all in 162 accordance with their terms. 163 Sec. 3706.40. As used in sections 3706.40 to 3706.50 of the Revised Code: (A) "Clean air resource" means an electric generating 164 165 166 H. B. No. 6 As Introduced Page 7 facility that emits zero carbon dioxide and that produces 167 electricity from the utilization or consumption of any form of 168 primary energy that satisfies all of the following criteria: 169 (1) The facility does not receive state tax exemptions, 170 deferrals, exclusions, allowances, payments, credits, 171 deductions, or reimbursements calculated using a metric that 172 provides a value for air emissions not produced by the facility 173 through any program other than the Ohio clean air program 174 created under section 3706.42 of the Revised Code. 175 (2) The facility is not wholly owned by a municipal or 176 cooperative corporation or a group, association, or consortium 177 of those corporations. 178 (3) The facility is not used to supply customers of a 179 wholly owned municipal or cooperative corporation or a group, 180 association, or consortium of those corporations. 181 (4) Either of the following: 182 (a) The facility has made a significant historical 183 contribution to the air quality of the state by minimizing 184 emissions that result from electricity generated in this state. 185 (b) The facility will make a significant contribution 186 toward minimizing emissions that result from electric generation 187 in this state. 188 (5) The facility is interconnected with PJM 189 interconnection, L.L.C., or its successor organization. 190 (6) The facility is either of the following: 191 (a) A major utility facility as defined in section 4906.01 192 of the Revised Code; 193 H. B. No. 6 As Introduced (b) An economically significant wind farm as defined in section 4906.13 of the Revised Code. (B) "Reduced emissions resource" means an electric Page 8 194 195 196 generating facility that emits a reduced amount of carbon 197 dioxide in the production of electricity from the utilization or 198 consumption of any form of primary energy that satisfies all of 199 the following criteria: 200 (1) The facility does not receive state tax exemptions, 201 deferrals, exclusions, allowances, payments, credits, 202 deductions, or reimbursements calculated using a metric that 203 provides a value for air emissions not produced by the facility 204 through any program other than the Ohio clean air program 205 created under section 3706.42 of the Revised Code. 206 (2) The facility is not wholly owned by a municipal or 207 cooperative corporation or a group, association, or consortium 208 of those corporations. 209 (3) The facility is not used to supply customers of a 210 wholly owned municipal or cooperative corporation or a group, 211 association, or consortium of those corporations. 212 (4) Either of the following: 213 (a) The facility has made a significant historical 214 contribution to the air quality of the state by minimizing 215 emissions that result from electricity generated in this state. 216 (b) The facility will make a significant contribution 217 toward minimizing emissions that result from electric generation 218 in this state. 219 (5) The facility is interconnected with PJM interconnection, L.L.C., or its successor organization. 220 221 H. B. No. 6 As Introduced (6) The facility is a major utility facility as defined in section 4906.01 of the Revised Code. (C) "Program year" means the twelve-month period beginning Page 9 222 223 224 the first day of June of a given year of the Ohio clean air 225 program and ending the thirty-first day of May of the following 226 year. 227 (D) "Electric distribution utility" and "renewable energy 228 resource" have the same meanings as in section 4928.01 of the 229 Revised Code. 230 (E) "Annual capacity factor" means the actual energy 231 produced in a year divided by the energy that would have been 232 produced if the facility was operating continuously at the 233 maximum rating. 234 (F) "Clean air credit" means a credit that represents the 235 clean air attributes of one megawatt hour of electric energy 236 produced from a certified clean air resource. 237 Sec. 3706.42. (A) There is hereby created the Ohio clean air program. (B) Any person owning or controlling an electric 238 239 240 generating facility that meets the definition of a clean air 241 resource or reduced emissions resource in section 3706.40 of the 242 Revised Code may submit a written application with the Ohio air 243 quality development authority for certification as a clean air 244 resource or reduced emissions resource to be eligible to 245 participate in the Ohio clean air program. Applications shall be 246 submitted by the first day of February for any program year 247 beginning the first day of June of the same calendar year. 248 (C) Applications shall include all of the following information: 249 250 H. B. No. 6 As Introduced (1) The in-service date and estimated remaining useful life of the resource; (2) For existing resources, the quantity of megawatt hours Page 10 251 252 253 generated by the resource annually and the annual capacity 254 factor for each of the previous five calendar years; 255 (3) A forecast estimate of the annual quantity of megawatt 256 hours to be generated by the resource and the projected annual 257 capacity factor over the remaining useful life of the resource; 258 (4) A forecast estimate of the emissions that would occur 259 in this state during the remaining useful life of the resource 260 if the resource discontinued operations prior to the end of the 261 resource's useful life; 262 (5) Verified documentation demonstrating all of the following: (a) That certification as a clean air resource or reduced 263 264 265 emissions resource and participation in the Ohio clean air 266 program will permit the resource to reduce future emissions per 267 unit of electrical energy generated in this state; 268 (b) That without certification as a clean air resource or 269 reduced emissions resource, the positive contributions to the 270 air quality of this state that the resource has made and is 271 capable of making in the future may be diminished or eliminated; 272 (c) That the clean air resource or reduced emissions 273 resource meets the definition of a clean air resource or reduced 274 emissions resource, as applicable, in section 3706.40 of the 275 Revised Code; 276 (d) That the person seeking certification owns or controls the resource. 277 278 H. B. No. 6 As Introduced Page 11 (6) The resource's nameplate capacity; 279 (7) The level of funding requested from the Ohio clean air 280 program; 281 (8) Any other data or information that the authority 282 requests and determines is necessary to evaluate an application 283 for certification as a clean air resource or reduced emissions 284 resource or to demonstrate that certification would be in the 285 public interest. 286 (D) The authority shall post on the authority's web site 287 all applications and nonconfidential supporting materials 288 submitted under this section. 289 (E) Interested persons may file comments not later than 290 twenty days after the date that an application is posted on the 291 authority's web site. All comments shall be posted on the 292 authority's web site. An applicant may respond to those comments 293 not later than ten days thereafter. 294 Sec. 3706.44. (A) On or before the thirty-first day of 295 March, the Ohio air quality development authority shall review 296 all applications timely submitted under section 3706.42 of the 297 Revised Code and issue an order certifying a clean air resource 298 or reduced emissions resource for one or more program years as 299 determined by the authority in its sole discretion. A certified 300 clean air resource or certified reduced emissions resource shall 301 be eligible to participate in the Ohio clean air program, 302 provided that the resource continues to meet the definition of a 303 clean air resource or reduced emissions resource, as applicable, 304 in section 3706.40 of the Revised Code and any additional 305 requirements set by the authority. 306 (B) In the event the authority does not issue an order 307 H. B. No. 6 As Introduced Page 12 under division (A) of this section by the thirty-first day of 308 March, each electric generating facility included in a timely 309 and properly filed application shall be deemed a clean air 310 resource or reduced emissions resource, as applicable, that is 311 eligible for participation in the Ohio clean air program. 312 (C)(1) The authority, in its sole discretion, may 313 decertify a clean air resource or reduced emissions resource at 314 any time if it determines that certification is not in the 315 public interest. 316 (2) Before decertifying a clean air resource or reduced 317 emissions resource, the authority shall hold a public hearing 318 and allow for public comment. 319 Sec. 3706.45. (A) During the last year in which 320 certification as a clean air resource or reduced emissions 321 resource is effective under section 3706.44 of the Revised Code, 322 the Ohio air quality development authority shall reevaluate the 323 eligibility of the clean air resource or reduced emissions 324 resource for participation in the Ohio clean air program. At the 325 time of reevaluation, if the clean air resource or reduced 326 emissions resource still meets the definition of a clean air 327 resource or reduced emissions resource, as applicable, in 328 section 3706.40 of the Revised Code and any additional 329 requirements that were imposed by the authority when the 330 resource was last certified, the authority shall recertify the 331 resource for one or more program years. 332 (B)(1) If the authority recertifies the clean air resource 333 or reduced emissions resource under division (A) of this 334 section, the authority may impose requirements on the clean air 335 resource or reduced emissions resource that are in addition to 336 any requirements that were imposed when the resource was last 337 H. B. No. 6 As Introduced Page 13 certified. If additional requirements are imposed at the time of 338 recertification, the resource shall comply with both the old 339 requirements and the new requirements. 340 (2) The authority shall adopt rules in accordance with 341 Chapter 119. of the Revised Code to determine the amount of time 342 during which a clean air resource or reduced emissions resource 343 must come into compliance with the new requirements. 344 Sec. 3706.46. (A) For the purpose of funding benefits 345 provided by the Ohio clean air program, there is hereby created 346 the Ohio clean air program fund. The fund shall be in the 347 custody of the state treasurer but shall not be part of the 348 state treasury. The fund shall consist of the charges under 349 section 3706.47 of the Revised Code. All interest generated by 350 the fund shall be retained in the fund and used for the purpose 351 of funding the Ohio clean air program. 352 (B) The treasurer shall distribute the moneys in the Ohio 353 clean air program fund in accordance with the directions 354 provided by the Ohio air quality development authority. 355 Sec. 3706.47. (A) Each retail electric customer of an 356 electric distribution utility in this state shall pay a per- 357 account monthly charge, which shall be billed and collected by 358 each electric distribution utility and remitted to the state 359 treasurer for deposit into the Ohio clean air program fund, 360 created under section 3706.46 of the Revised Code. 361 (B) The monthly charges established under division (A) of this section shall be: (1) For customers classified by the utility as residential, two dollars and fifty cents; (2) For customers classified by the utility as commercial, 362 363 364 365 366 H. B. No. 6 As Introduced Page 14 twenty dollars, except as provided in division (B)(4) of this 367 section; 368 (3) For customers classified by the utility as industrial, 369 two hundred fifty dollars, except as provided in division (B)(4) 370 of this section; 371 (4) For customers classified by the utility as commercial 372 or industrial that exceeded forty-five million kilowatt hours of 373 electricity at a single location in the preceding year, two 374 thousand five hundred dollars. 375 (C) Except as provided in division (D) of this section, a 376 customer required to pay the monthly charge under divisions (A) 377 and (B) of this section shall be exempt from paying costs 378 associated with the requirements under sections 4928.64 and 379 4928.66 of the Revised Code, unless the customer opts, in 380 accordance with section 3706.471 of the Revised Code, to pay 381 those costs in addition to the charge imposed under this 382 section. 383 (D) A customer required to pay the monthly charge under 384 divisions (A) and (B) of this section shall continue to pay the 385 following costs associated with the requirements under sections 386 4928.64 and 4928.66 of the Revised Code: 387 (1) Costs prudently incurred for contractual obligations 388 that existed prior to the effective date of this section by an 389 electric distribution utility in reliance on the requirements 390 under sections 4928.64 and 4928.66 of the Revised Code; 391 (2) Costs prudently incurred by an electric distribution 392 utility associated with programs approved by the public 393 utilities commission under section 4928.64 or 4928.66 of the 394 Revised Code that are modified or eliminated as a result of 395 H. B. No. 6 As Introduced Page 15 ...B... of the 133rd general assembly, including any costs to 396 discontinue those programs. 397 Sec. 3706.471. Any customer opting to pay costs associated 398 with the requirements under sections 4928.64 and 4928.66 of the 399 Revised Code shall do so by providing a written notice of intent 400 to opt in to pay either or both the renewable energy monthly 401 charge or the energy efficiency and peak demand reduction 402 monthly charge to the electric distribution utility from which 403 it receives service. The customer shall submit a complete copy 404 of the opt-in notice to the secretary of the public utilities 405 commission. The notice shall include all of the following: 406 (A) A statement indicating that the customer has elected to opt in; (B) An indication of whether the customer is opting to pay 407 408 409 both charges or which charge the customer is opting to pay; 410 (C) The effective date of the election to opt in; 411 (D) The account number for each customer account to which 412 the opt in shall apply; 413 (E) The physical location of the customer's load center. 414 Sec. 3706.48. Each owner of a certified clean air resource 415 or certified reduced emissions resource shall report to the Ohio 416 air quality development authority, not later than seven days 417 after the close of each month during a program year, the number 418 of megawatt hours the resource produced in the previous month. 419 Sec. 3706.481. A certified clean air resource shall earn a 420 clean air credit for each megawatt hour of electricity it 421 produces. 422 Sec. 3706.482. (A) Not later than fourteen days after the 423 H. B. No. 6 As Introduced Page 16 close of each month during a program year, the Ohio air quality 424 development authority shall direct the treasurer of state to 425 remit money from the Ohio clean air program fund, as long as 426 there is sufficient money in the fund, to each owner of a 427 certified clean air resource in the amount equivalent to the 428 number of credits earned by the resource during the previous 429 month multiplied by the credit price. 430 (B)(1) The price for each clean air credit in the first program year shall be nine dollars and twenty-five cents. (2) In subsequent program years, the price may be adjusted 431 432 433 for inflation using the gross domestic product implicit price 434 deflator as published by the United States department of 435 commerce, bureau of economic analysis. 436 Sec. 3706.49. (A) To facilitate air quality development 437 related capital formation and investment by or in a certified 438 reduced emissions resource, the Ohio air quality development 439 authority may pledge a portion of moneys that may, in the 440 future, be accumulated in the Ohio clean air program fund for 441 the benefit of any certified reduced emissions resource, 442 provided the resource agrees to be bound by the conditions the 443 authority, in its sole discretion, may attach to the pledge. 444 (B) The authority shall not be required to direct 445 distribution of moneys in the Ohio clean air program fund unless 446 or until there are adequate moneys available in the Ohio clean 447 air program fund. Nothing herein shall cause any such pledge to 448 be construed or applied to create, directly or indirectly, a 449 general obligation of or for this state. 450 Sec. 3706.50. (A) Not later than ninety days after the 451 effective date of this section, the Ohio air quality development 452 H. B. No. 6 As Introduced Page 17 authority shall adopt rules under Chapter 119. of the Revised 453 Code that are necessary to begin implementation of the Ohio 454 clean air program. The rules adopted under this division shall 455 include provisions for tracking the number of clean air credits 456 earned by each certified clean air resource during each month of 457 a program year, based on the information reported under section 458 3706.48 of the Revised Code. 459 (B) Not later than two hundred seventy-five days after the 460 effective date of this section, the authority shall adopt rules 461 under Chapter 119. of the Revised Code that are necessary for 462 the further implementation and administration of the Ohio clean 463 air program. 464 Sec. 4928.46. (A) In the event that the federal energy 465 regulatory commission authorizes a program by which this state 466 may take action to satisfy any portion of the capacity resource 467 obligation associated with the organized wholesale market that 468 functions to meet the capacity, energy services, and ancillary 469 services needs of consumers in this state, the public utilities 470 commission shall promptly review the program and submit a report 471 of its findings to the general assembly. 472 (B) The report shall include any recommendations for 473 legislation that may be necessary to permit this state to 474 beneficially participate in any such program. 475 Sec. 4928.47. (A) As used in this section, "clean air resource" means any of the following: (1) A clean air resource as defined in section 3706.40 of the Revised Code; 476 477 478 479 (2) A customer-sited renewable energy resource; 480 (3) A renewable energy resource that is a self-generator. 481 H. B. No. 6 As Introduced (B)(1) Through its general supervision, ratemaking, cost Page 18 482 assignment, allocation, rate schedule approval, and rulemaking 483 authority, as well as its authority under section 4905.31 of the 484 Revised Code, the public utilities commission shall facilitate 485 and encourage the establishment of retail purchased power 486 agreements having a term of three years or more through which 487 consumers commit to satisfy a portion of their electricity 488 requirements from the output of a clean air resource. 489 (2) The commission's application and administration of 490 this section shall be the same for all clean air resources 491 regardless of whether the resource is certified or eligible for 492 certification under the Ohio clean air program created under 493 section 3706.42 of the Revised Code. 494 (3) In addition to any other benefits that may be 495 available as a result of the commission's application of its 496 authority under this section, on the effective date of a retail 497 purchased power agreement, the commission may exempt such 498 purchasing consumer from all of the following, provided the 499 customer agrees to forgo the benefits from compliance with the 500 programs established in sections 3706.42, 4928.64, and 4928.66 501 of the Revised Code: 502 (a) The Ohio clean air program charge established in section 3706.47 of the Revised Code; (b) The renewable energy charge for compliance with section 4928.64 of the Revised Code; (c) The energy efficiency and peak demand reduction charge for compliance with section 4928.66 of the Revised Code. (C)(1) Not later than ninety days after the effective date of this section, the commission shall promulgate rules under 503 504 505 506 507 508 509 510 H. B. No. 6 As Introduced Page 19 Chapter 119. of the Revised Code as necessary to begin the 511 implementation of this section. 512 (2) Not later than two hundred seventy-five days after the 513 effective date of this section, the commission shall promulgate 514 rules for further implementation and administration of this 515 section. 516 Sec. 4928.471. (A) Not earlier than thirty days after the 517 effective date of this section, an electric distribution utility 518 may file an application to implement a decoupling mechanism for 519 the 2019 calendar year and each calendar year thereafter. For an 520 electric distribution utility that applies for a decoupling 521 mechanism under this section, the base distribution rates for 522 residential and commercial customers shall be decoupled to the 523 base distribution revenue and revenue resulting from 524 implementation of section 4928.66 of the Revised Code and 525 recovered pursuant to an approved electric security plan under 526 section 4928.143 of the Revised Code, as of the twelve-month 527 period ending on December 31, 2018. An application under this 528 division shall not be considered an application under section 529 4909.18 of the Revised Code. 530 (B) The commission shall issue an order approving an 531 application for a decoupling mechanism filed under division (A) 532 of this section not later than sixty days after the application 533 is filed. Before approving the application, the commission shall 534 verify that the rate schedule or schedules are designed to 535 recover the electric distribution utility's 2018 annual revenues 536 as described in division (A) of this section and that the 537 decoupling rate design is aligned with the rate design of the 538 electric distribution utility's existing base distribution 539 rates. The decoupling mechanism shall recover an amount equal to 540 H. B. No. 6 As Introduced Page 20 the base distribution revenue and revenue resulting from 541 implementation of section 4928.66 of the Revised Code and 542 recovered pursuant to an approved electric security plan under 543 section 4928.143 of the Revised Code, as of the twelve-month 544 period ending on December 31, 2018. The decoupling mechanism 545 shall be adjusted annually thereafter to reconcile any over 546 recovery or under recovery from the prior year and to enable an 547 electric distribution utility to recover the same level of 548 revenues described in division (A) of this section in each year. 549 (C) The commission's approval of a decoupling mechanism 550 under this section shall not affect any other rates, riders, 551 charges, schedules, classifications, or services previously 552 approved by the commission. The decoupling mechanism shall 553 remain in effect until the next time that the electric 554 distribution utility applies for and the commission approves 555 base distribution rates for the utility under section 4909.18 of 556 the Revised Code. 557 Sec. 4928.644. (A) The public utilities commission may 558 reduce either baseline described in section 4928.643 of the 559 Revised Code to adjust for new economic growth in the electric 560 distribution utility's certified territory or in the electric 561 services company's service area in this state. 562 (B) For an electric distribution utility, neither baseline 563 shall include the load and usage of a customer who is subject to 564 the monthly charge established under section 3706.47 of the 565 Revised Code unless or until the customer opts to pay the charge 566 associated with compliance with section 4928.64 of the Revised 567 Code. 568 Sec. 4928.66. (A)(1)(a) Beginning in 2009, an electric distribution utility shall implement energy efficiency programs 569 570 H. B. No. 6 As Introduced Page 21 that achieve energy savings equivalent to at least three-tenths 571 of one per cent of the total, annual average, and normalized 572 kilowatt-hour sales of the electric distribution utility during 573 the preceding three calendar years to customers in this state. 574 An energy efficiency program may include a combined heat and 575 power system placed into service or retrofitted on or after the 576 effective date of the amendment of this section by S.B. 315 of 577 the 129th general assembly, September 10, 2012, or a waste 578 energy recovery system placed into service or retrofitted on or 579 after September 10, 2012, except that a waste energy recovery 580 system described in division (A)(38)(b) of section 4928.01 of 581 the Revised Code may be included only if it was placed into 582 service between January 1, 2002, and December 31, 2004. For a 583 waste energy recovery or combined heat and power system, the 584 savings shall be as estimated by the public utilities 585 commission. The savings requirement, using such a three-year 586 average, shall increase to an additional five-tenths of one per 587 cent in 2010, seven-tenths of one per cent in 2011, eight-tenths 588 of one per cent in 2012, nine-tenths of one per cent in 2013, 589 and one per cent in 2014. In 2015 and 2016, an electric 590 distribution utility shall achieve energy savings equal to the 591 result of subtracting the cumulative energy savings achieved 592 since 2009 from the product of multiplying the baseline for 593 energy savings, described in division (A)(2)(a) of this section, 594 by four and two-tenths of one per cent. If the result is zero or 595 less for the year for which the calculation is being made, the 596 utility shall not be required to achieve additional energy 597 savings for that year, but may achieve additional energy savings 598 for that year. Thereafter, the annual savings requirements shall 599 be, for years 2017, 2018, 2019, and 2020, one per cent of the 600 baseline, and two per cent each year thereafter, achieving 601 cumulative energy savings in excess of twenty-two per cent by 602 H. B. No. 6 As Introduced Page 22 the end of 2027. For purposes of a waste energy recovery or 603 combined heat and power system, an electric distribution utility 604 shall not apply more than the total annual percentage of the 605 electric distribution utility's industrial-customer load, 606 relative to the electric distribution utility's total load, to 607 the annual energy savings requirement. 608 (b) Beginning in 2009, an electric distribution utility 609 shall implement peak demand reduction programs designed to 610 achieve a one per cent reduction in peak demand in 2009 and an 611 additional seventy-five hundredths of one per cent reduction 612 each year through 2014. In 2015 and 2016, an electric 613 distribution utility shall achieve a reduction in peak demand 614 equal to the result of subtracting the cumulative peak demand 615 reductions achieved since 2009 from the product of multiplying 616 the baseline for peak demand reduction, described in division 617 (A)(2)(a) of this section, by four and seventy-five hundredths 618 of one per cent. If the result is zero or less for the year for 619 which the calculation is being made, the utility shall not be 620 required to achieve an additional reduction in peak demand for 621 that year, but may achieve an additional reduction in peak 622 demand for that year. In 2017 and each year thereafter through 623 2020, the utility shall achieve an additional seventy-five 624 hundredths of one per cent reduction in peak demand. 625 (2) For the purposes of divisions (A)(1)(a) and (b) of this section: 626 627 (a) The baseline for energy savings under division (A)(1) 628 (a) of this section shall be the average of the total kilowatt 629 hours the electric distribution utility sold in the preceding 630 three calendar years. The baseline for a peak demand reduction 631 under division (A)(1)(b) of this section shall be the average 632 H. B. No. 6 As Introduced Page 23 peak demand on the utility in the preceding three calendar 633 years, except that the commission may reduce either baseline to 634 adjust for new economic growth in the utility's certified 635 territory. Neither baseline shall include the load and usage of 636 any of the following customers: 637 (i) Beginning January 1, 2017, a customer for which a 638 reasonable arrangement has been approved under section 4905.31 639 of the Revised Code; 640 (ii) A customer that has opted out of the utility's portfolio plan under section 4928.6611 of the Revised Code; 641 642 (iii) A customer that has opted out of the utility's 643 portfolio plan under Section 8 of S.B. 310 of the 130th general 644 assembly; 645 (iv) A customer who is subject to the monthly charge 646 established by section 3706.47 of the Revised Code until or 647 unless the customer opts to pay the costs associated with 648 compliance with this section. 649 (b) The commission may amend the benchmarks set forth in 650 division (A)(1)(a) or (b) of this section if, after application 651 by the electric distribution utility, the commission determines 652 that the amendment is necessary because the utility cannot 653 reasonably achieve the benchmarks due to regulatory, economic, 654 or technological reasons beyond its reasonable control. 655 (c) Compliance with divisions (A)(1)(a) and (b) of this 656 section shall be measured by including the effects of all 657 demand-response programs for mercantile customers of the subject 658 electric distribution utility, all waste energy recovery systems 659 and all combined heat and power systems, and all such mercantile 660 customer-sited energy efficiency, including waste energy 661 H. B. No. 6 As Introduced Page 24 recovery and combined heat and power, and peak demand reduction 662 programs, adjusted upward by the appropriate loss factors. Any 663 mechanism designed to recover the cost of energy efficiency, 664 including waste energy recovery and combined heat and power, and 665 peak demand reduction programs under divisions (A)(1)(a) and (b) 666 of this section may exempt mercantile customers that commit 667 their demand-response or other customer-sited capabilities, 668 whether existing or new, for integration into the electric 669 distribution utility's demand-response, energy efficiency, 670 including waste energy recovery and combined heat and power, or 671 peak demand reduction programs, if the commission determines 672 that that exemption reasonably encourages such customers to 673 commit those capabilities to those programs. If a mercantile 674 customer makes such existing or new demand-response, energy 675 efficiency, including waste energy recovery and combined heat 676 and power, or peak demand reduction capability available to an 677 electric distribution utility pursuant to division (A)(2)(c) of 678 this section, the electric utility's baseline under division (A) 679 (2)(a) of this section shall be adjusted to exclude the effects 680 of all such demand-response, energy efficiency, including waste 681 energy recovery and combined heat and power, or peak demand 682 reduction programs that may have existed during the period used 683 to establish the baseline. The baseline also shall be normalized 684 for changes in numbers of customers, sales, weather, peak 685 demand, and other appropriate factors so that the compliance 686 measurement is not unduly influenced by factors outside the 687 control of the electric distribution utility. 688 (d)(i) Programs implemented by a utility may include the following: (I) Demand-response programs; 689 690 691 H. B. No. 6 As Introduced (II) Smart grid investment programs, provided that such programs are demonstrated to be cost-beneficial; (III) Customer-sited programs, including waste energy recovery and combined heat and power systems; (IV) Transmission and distribution infrastructure improvements that reduce line losses; (V) Energy efficiency savings and peak demand reduction Page 25 692 693 694 695 696 697 698 that are achieved, in whole or in part, as a result of funding 699 provided from the universal service fund established by section 700 4928.51 of the Revised Code to benefit low-income customers 701 through programs that include, but are not limited to, energy 702 audits, the installation of energy efficiency insulation, 703 appliances, and windows, and other weatherization measures. 704 (ii) No energy efficiency or peak demand reduction 705 achieved under divisions (A)(2)(d)(i)(IV) and (V) of this 706 section shall qualify for shared savings. 707 (iii) Division (A)(2)(c) of this section shall be applied 708 to include facilitating efforts by a mercantile customer or 709 group of those customers to offer customer-sited demand- 710 response, energy efficiency, including waste energy recovery and 711 combined heat and power, or peak demand reduction capabilities 712 to the electric distribution utility as part of a reasonable 713 arrangement submitted to the commission pursuant to section 714 4905.31 of the Revised Code. 715 (e) No programs or improvements described in division (A) 716 (2)(d) of this section shall conflict with any statewide 717 building code adopted by the board of building standards. 718 (B) In accordance with rules it shall adopt, the public utilities commission shall produce and docket at the commission 719 720 H. B. No. 6 As Introduced Page 26 an annual report containing the results of its verification of 721 the annual levels of energy efficiency and of peak demand 722 reductions achieved by each electric distribution utility 723 pursuant to division (A) of this section. A copy of the report 724 shall be provided to the consumers' counsel. 725 (C) If the commission determines, after notice and 726 opportunity for hearing and based upon its report under division 727 (B) of this section, that an electric distribution utility has 728 failed to comply with an energy efficiency or peak demand 729 reduction requirement of division (A) of this section, the 730 commission shall assess a forfeiture on the utility as provided 731 under sections 4905.55 to 4905.60 and 4905.64 of the Revised 732 Code, either in the amount, per day per undercompliance or 733 noncompliance, relative to the period of the report, equal to 734 that prescribed for noncompliances under section 4905.54 of the 735 Revised Code, or in an amount equal to the then existing market 736 value of one renewable energy credit per megawatt hour of 737 undercompliance or noncompliance. Revenue from any forfeiture 738 assessed under this division shall be deposited to the credit of 739 the advanced energy fund created under section 4928.61 of the 740 Revised Code. 741 (D) The commission may establish rules regarding the 742 content of an application by an electric distribution utility 743 for commission approval of a revenue decoupling mechanism under 744 this division. Such an application shall not be considered an 745 application to increase rates and may be included as part of a 746 proposal to establish, continue, or expand energy efficiency or 747 conservation programs. The commission by order may approve an 748 application under this division if it determines both that the 749 revenue decoupling mechanism provides for the recovery of 750 revenue that otherwise may be forgone by the utility as a result 751 H. B. No. 6 As Introduced Page 27 of or in connection with the implementation by the electric 752 distribution utility of any energy efficiency or energy 753 conservation programs and reasonably aligns the interests of the 754 utility and of its customers in favor of those programs. 755 (E) The commission additionally shall adopt rules that 756 require an electric distribution utility to provide a customer 757 upon request with two years' consumption data in an accessible 758 form. 759 Section 2. That existing sections 3706.02, 3706.03, 760 4928.644, and 4928.66 of the Revised Code are hereby repealed. 761 Section 3. (A) Not earlier than two years after the 762 effective date of this section, the Director of Environmental 763 Protection may apply to the Administrator of the United States 764 Environmental Protection Agency for an exemption from the 765 requirement to implement the decentralized motor vehicle 766 inspection and maintenance program established under section 767 3704.14 of the Revised Code. In making the application and for 768 purposes of complying with the "Federal Clean Air Act," the 769 Director shall request the Administrator to authorize the 770 implementation of the Ohio Clean Air Program established by this 771 act as an alternative to the decentralized program in those 772 areas of the state where the program is currently operating. 773 (B) As used in this section, "Federal Clean Air Act" has the same meaning as in section 3704.01 of the Revised Code. 774 775