Water, Energy and More Surface as Priorities

Water, Energy and More Surface as Priorities

 

By Greg Ellis, vice president of environmental and energy policy - Indiana Chamber of Commerce

An energized Indiana General Assembly got the lead out in 2017 and passed multiple environmental and energy bills. Senator Ed Charbonneau (R-Valparaiso) once again championed water resources legislation along with some help from Rep. David Ober (R-Albion) and Rep. Heath VanNatter (RKokomo). Meanwhile, Sen. Brandt Hershman (R-Buck Creek) and Rep. Ober moved much-needed energy legislation, which should be considered a great first step in a new energy plan for the state. Here are the highlights:

 

Old Business: Veto Override

Early in the session, Rep. David Wolkins (R-Warsaw) sought an override of then-Gov. Pence’s veto of 2016’s HB 1082 – the “No More Stringent Than” legislation. We supported this bill last year in its final form. The House voted to override the veto 65-29. The Senate veto override passed 49-1, with Sen. Mark Stoops (D-Bloomington) as the only no vote. As a result, 2016’s HB 1082 is now law; it prevents the Indiana Department of Environmental Management (IDEM) from implementing rules adopted by the Environmental Rules Board (ERB) or proposed by IDEM that would be stricter than federal rules until the Legislative Council or interim study committee has an opportunity to review them.

This law will create a high level of accountability and transparency as the ERB and IDEM will have to justify their rule and policy before the Legislature. It should provide certainty and give us ample opportunity to comment on any proposed rule that we have serious concerns with.

Environmental Legislation

While it was relatively quiet in what most would consider traditional environmental legislation, there were a few bills of importance that the Indiana Chamber supported and in one instance, had to work to get some language changed to clarify what substance was really being regulated. With that said, there were a number SPONSORED BY: Bose Public Affairs Group http://www.bosepublicaffairs.com/how-could- 31-7-billion-impact-you of bills that dealt with one of the key goals of Indiana Vision 2025 – water. These water measures are aimed to aid water utilities and promote both economic and resource sustainability, and growth in Indiana.

House Bill 1230 regulates disposal of coal combustion residuals. It authorizes ERB to adopt rules consistent with the regulations of the U.S. Environmental Protection Agency (EPA) concerning standards for the disposal of coal combustion residuals in landfills and surface impoundments. This applies to electric utilities.

House Bill 1234 regulates storage of anhydrous ammonia. Although this was not a bill that we supported or opposed, the language as introduced would have required every facility that stored ammonia for more than 30 days to apply for approval of the storage location from the state chemist’s office. This would have potentially affected a number of the Chamber’s members and their processes by adding another layer of regulation. The state chemist’s office indicated that it only intended the legislation to apply to agricultural ammonia, although that is not what the language indicated. We wanted certainty and thanks go to Sen. Jean Leising (R-Oldenburg) for adding clarifying language. Ammonia means agricultural anhydrous ammonia that is intended for use as a fertilizer for agricultural purposes.

Senate Bill 421 fixed issues with 2015’s Senate Bill 312 that regulated above-ground storage tanks. The issues were pointed out by the Chamber’s Environmental Policy Committee and ERB. The law, as passed in 2015, required duplicative reporting of tanks and contents to IDEM. The law had multiple exemptions for reporting and was not effective. This bill repeals the 2015 law requiring owners of certain aboveground storage tanks to register their tanks with IDEM.

It also urges the Legislative Council to assign the topic of public water supply protection to the Interim Study Committee on Environmental Affairs for study this fall.

House Bill 1211 establishes the Transborder Water Resources Authority as a body to study the subject of ownership rights in one or more transborder water resources shared by Indiana and other states; explores the desirability of entering into interstate compacts with other states concerning the use of transborder water resources; and makes recommendations concerning the content of any such interstate compact. This bill is important to the sustainability and development of Indiana’s water resources because there are a number of states currently involved in litigation regarding their transborder water resources. Fortunately, Indiana is not one of them; and this legislation should aid in avoiding burdensome litigation.

Senate Bill 416 established the Infrastructure Assistance Fund. Senate Bill 416, along with SB 511, were two bills championed by Sen. Charbonneau. Senate Bill 511 was incorporated into SB 416. This is a comprehensive water resources bill that is consistent with the Chamber’s policy positions and Indiana Vision 2025. It requires the Indiana Finance Authority (IFA) to study the ability of utilities to provide clean and safe drinking water in Indiana for the foreseeable future. It also requires the Indiana Utility Regulatory Commission (IURC) to consider governmental requirements arising from environmental law and their effect upon the utility's operational expenses in its deliberation.

The bill also requires ERB to adopt rules to carry out the intent of the law concerning the safety of the public water supply. It authorizes the commissioner of IDEM, when the point of water collection of a public water system is being relocated, to require that the water be tested at the new point of collection before the public water system may begin to collect water at the new location. This should help avoid situations like Flint, Michigan.

The most significant part of Senate Bill 416 is the establishment of the Infrastructure Assistance Fund. This is a result of information gathered through the Chamber’s 2014 water study and last year’s study by the IFA that was conducted by Jack Wittman. The IFA study projected need for the large amount of investment in infrastructure that can’t be absorbed by business and residential ratepayers. The Infrastructure Assistance Fund will provide grants, loans and other financial assistance for the planning, designing, acquisition, construction, renovation, improvement and expansion of public water systems.

It requires the IFA to administer the fund and to establish criteria for the making of grants, loans and other financial assistance from the fund. The bad news is that the Infrastructure Assistance Fund was not funded during this session, but the framework is in place. Future funding may also be achieved through the federal government, depending on the current federal administration’s plans.

House Bill 1519, Infrastructure Development Zone, is the last significant piece of water legislation and was authored by Rep. VanNatter. We initially had concerns about this bill; specifically, the proper allocation of costs, but supported it after those concerns were addressed by an amendment. This bill adds wastewater to an already existing law that allows gas and water utilities to extend services to unserved or underserved areas for purposed of economic development. The bill provides that a water or wastewater utility that is requested to extend utility service to an infrastructure development zone may petition the IURC for approval of the requested extension of service and if the petition is approved, the IURC shall approve rate schedules that include a surcharge payable by customers located in the geographic area within the jurisdiction of the governmental entity that requested the extension of service. A significant change that this makes is an amendment to the statute concerning infrastructure improvement charges for eligible water and wastewater utilities to change the definition of “eligible infrastructure improvements” with respect to municipally-owned utilities and not-for-profit utilities; and specifies that the adjustment of an eligible utility’s basic rates and charges to provide for the recovery of infrastructure improvement costs shall be calculated as a monthly fixed charge based upon meter size. This provision should make everyone pay their fair share and likely reduce the cost currently paid by a large individual user of water. Another significant provision of this bill allows a public water utility to seek to include customer lead service line improvements as eligible infrastructure improvements for purposes of the statute concerning infrastructure improvement charges for water and wastewater utilities. This should promote efficiency and public health, which should reduce costs in the end.

Energy Legislation

Senate Bill 309, authored by Sen. Hershman, was the most significant energy bill of the session; Rep. Ober was the House sponsor. The Chamber supported it and worked closely with a number of our members and allies to move it along. The bill would not have gone to Gov. Holcomb’s desk if not for everyone’s hard work. The bill received a lot of unfair publicity and criticism, which was often the result of inaccurate information being put out by its opponents, as it made it through the legislative process. Although the bill was publicized as a solar bill, that was not what this bill was about. It was titled as distributive generation but it had many moving parts. The bill addresses rising energy costs and a long-standing struggle between the investor-owned electric utilities and larger consumers of energy.

We recognize that SB 309 is not a one-size-fits-all or fix-all. Everyone’s energy needs and expectations are different, so this is a difficult area to come up with a solution that everyone will be completely satisfied with. The Chamber’s goal was to reduce or maintain current energy rates. Moreover, this bill addresses several areas of concern.

It expands current state law regarding cogeneration for users that generate their own energy with a capacity above 80 megawatts. The generation can occur at the site or be located at a contiguous property and must be integrated with the host operation if it is contiguous. The bill includes organic waste biomass facilities within the definition of an “alternative energy production facility”.

The bill increases transparency of rates through the posting of periodic review of rates by the IURC. The bill also requires the IURC to review the rates charged by electric utilities for backup power to eligible facilities and for purchases of power from eligible facilities, and to identify the extent to which the rates meet specified criteria.

The bill also provides for competitive procurement. Before the IURC can grant to an electricity supplier that is a public utility a certificate of public convenience and necessity for the construction of an electric facility with a generating capacity of more than 80 megawatts, it must find that the electricity supplier allowed or will allow third parties to submit firm and binding bids for the construction of the proposed facility. It provides that a public utility that installs a wind, a solar or an organic waste biomass project with a nameplate capacity of not more than 50,000 kilowatts – and uses a contractor that is subject to Indiana unemployment taxes selected through a competitive procurement process – is not required to obtain a certificate of public convenience and necessity for the project from the IURC. The bill was amended in the House in response to concerns by school corporations and their advisors. It urges the Legislative Council to assign the topic of self-generation of electricity by school corporations to the Interim Study Committee on Energy, Utilities and Telecommunications.

The portion of the bill that received the most attention dealt with net metering, which is a billing mechanism that credits renewable energy system owners for the excess self-generated electricity they add to the grid.

The bill provides that a net-metering tariff of an electricity supplier must remain available to its customers until the aggregate amount of net-metering facility nameplate capacity equals at least 1.5% of the electricity supplier’s most recent summer peak load or July 1, 2022, whichever occurs earlier. Currently, net metering is governed under the IURC and is capped at 1% of the peak summer load. Current law is silent on what happens when the 1% is reached. The bill grandfathers existing net-metering customers at the current retail rate they are receiving from the utilities for 30 years or 15 years, depending on when their energy source was installed.

While the bill will end net metering for those outside the timeframes, as net metering is currently defined, the customers that decide to produce their own energy (one megawatt or less), outside of those grandfathered and are not operating under a net-metering tariff, fall within the definition of distributed generation. The bill requires the investor-owned electric utilities to petition the IURC for approval of a rate for procurement of excess distributed generation once the 1.5% net-metering cap or five years is reached.

Although the law for producers of their own energy of between one megawatt and 80 megawatts remains relatively unchanged, this bill is a significant step toward achieving varying energy needs and controlling costs by giving more options to business consumers. Going forward, the bill can be used as a building block in future legislative sessions. The status quo or current stalemate on these issues is changing. Without any changes to current law, continued litigation of energy issues/costs would continue, which increases the costs to both ratepayers and the utilities.

 

Resource: Greg Ellis at (317) 264-6881 or email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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