MODEL BILLS

Greenhouse Gas Reduction Act

Summary: The Greenhouse Gas Reduction Act requires the state to make all state electricity generated by renewable energy resources by 2045 and achieve net-zero greenhouse gas emissions by 2050.

The RPS model is verbatim from the LPDD model law for deep decarbonization and the GHG reduction model is based on Maryland SB 323 (2016)

SECTION 1. SHORT TITLE

This Act shall be called the “Greenhouse Gas Reduction Act.”

SECTION 2. FINDINGS AND PURPOSE

(A) FINDINGS—the legislature finds that:

(1) The earth’s atmosphere is now warming at the fastest rate in recorded history, a trend that is projected to cause extensive damage to forests, marine ecosystems, and agriculture. Human communities are also threatened by climate change as seas rise, storms become more intense, and episodes of drought and flooding increase. The scientific evidence is now compelling that recent climate change is caused at least in part by human activities, especially the burning of fossil fuels, which has driven atmospheric carbon dioxide concentrations to their highest levels in four hundred twenty thousand years.

(2) Climate change poses a serious threat to the economic well-being, public health, natural resources, and the environment of the state. The potential adverse effects of global warming include a rise in sea levels, damage to marine ecosystems and the natural environment, extended drought and loss of soil moisture, an increase in the spread of infectious diseases, and an increase in the severity of storms and extreme weather events.

(3) In 2021, the Intergovernmental Panel on Climate Change, a body established by the United Nations, reported that human influence has warmed the climate at a rate that is unprecedented in at least the last 2,000 years. In 2019, atmospheric CO2 concentrations were higher than at any time in at least 2 million years, and concentrations of methane and nitrous oxide were higher than at any time in the last 800,000 years. Global surface temperature has increased faster since 1970 than in any other 50-year period over a least the last 2,000 years. For example, temperatures during the most recent decade (2011–2020) exceed those of the most recent multi-century warm period, around 6,500 years ago, the report indicates. Meanwhile, global mean sea level has risen faster since 1900 than over any preceding century in at least the last 3,000 years.

(4) It is essential for the State must be a leader in environmental stewardship. By reducing emissions in our state, this framework of action will serve as an example to other states, the federal government, and other countries to protect our fragile global environment.

(B) PURPOSE—This law is enacted to protect the health, safety and welfare of residents by helping curtail global climate change.

SECTION 3. RENEWABLE PORTFOLIO STANDARDS

After section XXX, the following new section XXX shall be inserted:

Section 1. Findings

[Additional findings are available in the model.]

Section 2. Definitions

The definitions in this section apply throughout this act unless the context clearly requires otherwise.

(1) “Affected market customer” is a customer of an investor-owned utility who becomes a market customer after the effective date of this act.

(2) “Allocation of electricity” means, for the purposes of setting electricity rates, the costs and benefits associated with the resources used to provide electricity to an electric utility’s retail electricity consumers that are located in this state.

(3) “Alternative compliance payment” means the payment established in section 9(2) of this act.

(4) “Attorney general” means the [insert state name] office of the attorney general.

(5) “Auditor” means: (a) The [insert state name] auditor’s office or its designee for utilities under its jurisdiction under this act that are consumer-owned utilities; or (b) an independent auditor selected by a utility that is not under the jurisdiction of the state auditor and is not an investor-owned utility.

(6) “Biomass energy” includes: electric energy generated from (i) organic by-products of pulping and the wood manufacturing process; (ii) animal manure; (iii) solid organic fuels from wood; (iv) forest or field residues; (v) untreated wooden demolition or construction debris; (vi) food waste and food processing residuals; (vii) liquors derived from algae; (viii) dedicated energy crops; and (ix) yard waste. “Biomass energy” does not include: electric energy generated from (i) wood pieces that have been treated with chemical preservatives such as creosote, pentachlorophenol, or copper-chrome-arsenic; (ii) wood from old growth forests; or (iii) municipal solid waste.

(7) “Carbon dioxide equivalent” means a metric measure used to compare the emissions from various greenhouse gases based upon their global warming potential.

(8) “Coal-fired resource” means a facility that uses coal-fired generating units, or that uses units fired in whole or in part by coal as feedstock, to generate electricity. “Coal-fired resource” does not include an electric generating facility that is included as part of a limited duration wholesale power purchase, not to exceed one month, made by an electric utility for delivery to retail electric customers that are located in this state for which the source of the power is not known at the time of entry into the transaction to procure the electricity.

(9) “Commission” means the [insert name of the state public utility commission].

(10) “Conservation and efficiency resources” means any reduction in electric power consumption that results from increases in the efficiency of energy use, production, transmission, or distribution.

(11) “Consumer-owned utility” means a municipal electric utility formed under [insert statutory cross-reference], a public utility district formed under [insert statutory cross-reference], an irrigation district formed under [insert statutory cross-reference], a cooperative formed under [insert statutory cross-reference], or a mutual corporation or association formed under [insert statutory cross-reference], that is engaged in the business of distributing electricity to more than one retail electric customer within the state.

(12) “Demand response” means changes in electric usage by demand-side resources from normal consumption levels, including in response to changes in the price of electricity, or incentive payments designed to induce lower retail customer electricity use at times of high wholesale market prices or when system reliability is jeopardized. “Demand response” may include measures to increase or decrease electricity production on the customer’s side of the meter in response to incentive payments.

(13) “Department” means [insert name of state agency with jurisdiction over COUs, if other than the state PUC].

(14) “Distributed energy resource” means a non-emitting electric generation or renewable resource or program that reduces electric demand, manages the level or timing of electricity consumption, or provides storage, electric energy, capacity, or ancillary services to an electric utility and that is located on the distribution system, any subsystem of the distribution system, or behind the customer meter, including conservation and energy efficiency.

(15) “Electric utility” or “utility” means a consumer-owned utility or an investor-owned utility.

(16) “Energy assistance” means a program undertaken by a utility to reduce the household energy burden of its customers, including, but not limited to, weatherization, conservation and efficiency services, and monetary assistance, such as a grant program or discounts for low-income households, intended to lower a household’s energy burden. “Energy assistance” may include direct customer ownership of distributed energy resources if ownership would achieve a reduction in the household energy burden for the customer more cost-effectively than other available conservation and demand-side measures.

(17) “Energy assistance need” means the amount of assistance necessary to achieve a level of household energy burden established by the Department or Commission.

(18) “Energy burden” means the share of annual household income used to pay annual home energy bills.

(19)(a) “Energy transformation project” means a project or program that provides energy-related goods or services, other than the generation of electricity; results in a reduction of fossil fuel consumption; and provides benefits to the customers of an electric utility.

(b) “Energy transformation project” may include but is not limited to:

(i) Home weatherization or other energy efficiency measures, including market transformation for energy efficiency products, in excess of other obligations in effect on the effective date of this act;

(ii) Support for electrification of the transportation sector including, but not limited to:

(A) Equipment on an electric utility’s transmission and distribution system to accommodate electric vehicle connections, as well as smart grid systems that enable electronic interaction between the electric utility and charging systems, and facilitate the utilization of vehicle batteries for system needs;

(B) Incentives for the sale or purchase of electric vehicles, both battery and fuel cell powered, as authorized under state or federal law;

(D) Incentives for the electrification of vehicle fleets utilizing a battery or fuel cell for electric supply;

(E) Incentives to install and operate equipment to produce or distribute renewable hydrogen; and

(F) Incentives for renewable hydrogen fueling stations;

(iii) Investment in distributed energy resources and grid modernization to facilitate distributed energy resources and improved grid resilience;

(iv) Investments in equipment for renewable natural gas processing, conditioning, and production, or equipment or infrastructure used solely for the purpose of delivering renewable natural gas for consumption or distribution;

(v) Contributions to self-directed investments in the following measures to serve the sites of large industrial gas and electrical customers: (A) conservation; (B) new renewable resources; (C) behind-the-meter technology that facilitates demand response cooperation to reduce peak loads; (D) infrastructure to support electrification of transportation needs, including battery and fuel cell electrification; or (E) renewable natural gas processing, conditioning, or production; and

(vi) Projects and programs that achieve energy efficiency and emission reductions in the agricultural sector, including bioenergy and renewable natural gas projects.

(20) “Fossil fuel” means natural gas, petroleum, coal, or any form of solid, liquid, or gaseous fuel derived from such a material.

(21) “Governing body” means the council of a city or town; the commissioners of an irrigation district, municipal electric utility, or public utility district; or the board of directors of an electric cooperative or mutual association that has the authority to recommend, set, or approve rates.

(22) “Greenhouse gas” includes carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and any other gas or gases designated by the [insert state air quality agency] by rule.

(23) “Greenhouse gas content calculation” means a calculation expressed in carbon dioxide equivalent and made by the [insert state air quality agency] for the purposes of determining the emissions from the complete combustion or oxidation of fossil fuels and the greenhouse gas emissions in electricity for use in calculating the greenhouse gas emissions content in electricity.

(24) “Highly-impacted community” means a community designated by the [insert state agency responsible for public health] based on cumulative impact analyses conducted pursuant to section 15 of this act, or a community located in census tracts that are fully or partially on “Indian country” as defined in 18 U.S.C. Sec. 1151.

(25) “Investor-owned utility” means a company owned by investors that is engaged in distributing electricity to more than one retail electric customer in the state.

(26) “Low-income” means household incomes as defined by [insert relevant state agency], provided that the definition may not exceed the higher of eighty percent of area median household income or two hundred percent of the federal poverty level, adjusted for household size.

(27) “Market customer” means a non-residential retail electric customer of an electric utility that: (i) purchases electricity from an entity or entities other than the utility with which it is directly interconnected; or (ii) generates electricity to meet one hundred percent of its own needs.

(27) “Natural gas” means naturally occurring mixtures of hydrocarbon gases and vapors consisting principally of methane, whether in gaseous or liquid form, including methane clathrate. “Natural gas” does not include renewable natural gas or the portion of renewable natural gas when blended into other fuels.

(28) “Non-emitting electric generation” means electricity from a generating facility or a resource that provides electric energy, capacity, or ancillary services to an electric utility and that does not emit greenhouse gases as a by-product of energy generation. “Non-emitting electric generation” does not include renewable resources.

(29) “Non-power attributes” means all environmentally-related characteristics, exclusive of energy, capacity, reliability, and other electrical power service attributes, that are associated with the generation of electricity, including but not limited to the facility’s fuel type, geographic location, vintage, qualification as a renewable resource, and avoided emissions of pollutants to the air, soil, or water, and avoided emissions of carbon dioxide and other greenhouse gases. “Non-power attributes” does not include any aspects, claims, characteristics, and benefits associated with the on-site capture and destruction of methane or other greenhouse gases at a facility through a digester system, landfill gas collection system, or other mechanism, which may be separately marketable as greenhouse gas emission reduction credits, offsets, or similar tradable commodities.

(30) “Qualified transmission line” means an overhead transmission line that is: (a) designed to carry a voltage in excess of one hundred thousand volts; (b) owned in whole or in part by an investor-owned utility; and (c) primarily or exclusively used by such an investor-owned utility as of the effective date of this act to transmit electricity generated by a coal-fired resource.

(31) “Renewable energy credit” means a tradable certificate of proof of one megawatt-hour of a renewable resource. The certificate includes all of the non-power attributes associated with that one megawatt-hour of electricity and the certificate is verified by a renewable energy credit tracking system selected by the [insert relevant state agency].

(32) “Renewable hydrogen” means hydrogen produced using renewable resources both as the source for the hydrogen and the source for the energy input into the production process.

(33) “Renewable natural gas” means a gas consisting largely of methane and other hydrocarbons derived from the decomposition of organic material in landfills, wastewater treatment facilities, and anaerobic digesters.

(34) “Renewable resource” means: (a) water; (b) wind; (c) solar energy; (d) geothermal energy; (e) renewable natural gas; (f) renewable hydrogen; (g) wave, ocean, or tidal power; (h) biodiesel fuel that is not derived from crops raised on land cleared from old growth or first growth forests; or (i) biomass energy.

(35) “Retail electric customer” means a person or entity that purchases electricity from any electric utility for ultimate consumption and not for resale. “Retail electric customer” does not include any person or entity that purchases electricity exclusively from carbon-free and eligible renewable resources pursuant to a special contract with an investor-owned utility approved by an order of the Commission prior to the effective date of this act.

(36) “Retail electric load” means the amount of megawatt-hours of electricity delivered in a given calendar year by an electric utility to its [insert state name] retail electric customers. “Retail electric load” does not include: (a) megawatt-hours delivered from qualifying facilities under the federal Public Utility Regulatory Policies Act of 1978, P.L. 95–617, in operation prior to the effective date of this section, provided that no entity other than the electric utility can make a claim on delivery of the megawatt-hours from those resources; or (b) megawatt-hours delivered to an electric utility’s system from a renewable resource through a voluntary renewable energy purchase by a retail electric customer of the utility in which the renewable energy credits associated with the megawatt-hours delivered are retired on behalf of the retail electric customer.

(37) “Thermal renewable energy credit” means, with respect to a facility that generates electricity using biomass energy that also generates thermal energy for a secondary purpose, a renewable energy credit that is equivalent to three million four hundred twelve thousand (3,412,000) British thermal units of energy used for such secondary purpose.

(38) “Unbundled renewable energy credit” means a renewable energy credit that is sold, delivered, or purchased separately from electricity. All thermal renewable energy credits are considered unbundled renewable energy credits.

(39) “Unspecified electricity” means an electricity source for which the fuel attribute is unknown or has been separated from the energy delivered to retail electric customers.

(40) “Vulnerable populations” means communities that experience a disproportionate cumulative risk from environmental burdens due to: (a) adverse socioeconomic factors, including unemployment, high housing and transportation costs relative to income, access to food and health care, and linguistic isolation; and (b) sensitivity factors, such as low birth-weight and higher rates of hospitalization.

Section 3. Milestone I: No Use of Coal-Fired Resources by End of 2025

(1)(a) On or before December 31, 2025, each electric utility must eliminate coal-fired resources from its allocation of electricity.

(b) The Commission shall allow in electric rates all decommissioning and remediation costs prudently incurred by an investor-owned utility with respect to a coal-fired resource.

(2) To address transition costs associated with existing power plants, the Commission must accelerate depreciation schedules for any coal-fired resource to a date no later than December 31, 2025. The Commission may accelerate the depreciation schedule for any qualified transmission line owned by an investor-owned utility when the Commission finds the qualified transmission line is no longer used and useful and there is no reasonable likelihood that the qualified transmission line will be utilized in the future. The adjusted depreciation schedule must require that a qualified transmission line be fully depreciated on or before December 31, 2025.

(3) The Commission shall allow in rates amounts on an investor-owned utility’s books that the Commission finds represent prudently incurred undepreciated investment in a fossil fuel generating resource that has been retired from service when:

(a) The retirement is due to ordinary wear and tear, casualties, acts of God, acts of governmental authority, inability to procure or use fuel, termination or expiration of any ownership, or an operation agreement affecting such a fossil fuel generating resource; or

(b) The Commission finds that the retirement is in the public interest.

(4) An electric utility that fails to comply with the requirements of subsection (1)(a) of this section must pay the administrative penalty established under section 9(1) of this act, except as otherwise provided in this act.

Section 4. Milestone II: GHG Neutrality of all Retail Electric Sales by 2030

(1) All retail sales of electricity to [insert state name] retail electric customers shall be greenhouse gas neutral by January 1, 2030.

(a) Demonstration of Compliance. For the four-year compliance period beginning January 1, 2030, and for each multiyear compliance period thereafter through December 31, 2044, an electric utility must demonstrate its compliance with this standard using a combination of non-emitting electric generation and electricity from renewable resources, or alternative compliance options, as provided in this section. To achieve compliance with this standard, an electric utility must: (i) pursue all cost-effective, reliable, and feasible conservation and efficiency resources to reduce or manage retail electric load; and (ii) use electricity from renewable resources and non-emitting electric generation in an amount equal to one hundred percent of the utility’s retail electric loads over each multiyear compliance period. An electric utility must achieve compliance with this standard for the following compliance periods: January 1, 2030, through December 31, 2033; January 1, 2034, through December 31, 2037; January 1, 2038, through December 31, 2041; and January 1, 2042, through December 31, 2044.

(b) Alternative Compliance Options. Through December 31, 2044, an electric utility may satisfy up to twenty percent of its compliance obligation under subsection (1) of this section through any combination of the following alternative compliance options:

(i) Making an alternative compliance payment under section 9(2) of this act;

(ii) Using unbundled renewable energy credits produced from eligible renewable resources, provided that there is no double counting of any non-power attributes associated with renewable energy credits within [insert state name] or programs in other jurisdictions, as follows:

(A) Investing in energy transformation projects, including additional conservation and efficiency resources beyond what is otherwise required under this section, provided the projects meet the requirements of subsection (2) of this section and are not credited as resources used to meet the standard under (a) of this subsection; or

(B) Using electricity from an energy recovery facility using municipal solid waste as the principal fuel source, where the facility is operated in compliance with federal laws and regulations and meets state air quality standards. An electric utility may only use electricity from such an energy recovery facility if the [insert relevant state agency] determines that electricity generation at the facility provides a net reduction in greenhouse gas emissions compared to any other available waste management best practice. The determination must be based on a life-cycle analysis comparing the energy recovery facility to other technologies available in the jurisdiction in which the facility is located for the waste management best practices of waste reduction, recycling, composting, and minimizing the use of a landfill.

(c) Electricity from renewable resources used to meet the standard under subsection (1) of this section must be verified by the retirement of renewable energy credits. Renewable energy credits must be tracked and retired in the tracking system selected by the [insert relevant state agency].

(d) Non-emitting electric generation used to meet the standard under subsection (1) of this section must be generated during the compliance period and must be verified by documentation that the electric utility owns the non-power attributes of the electricity generated by the non-emitting electric generation resource.

(2) Energy Transformation Projects. Investments in energy transformation projects used to satisfy an alternative compliance option provided under subsection (1)(b) of this section must use criteria developed by the [insert relevant state agency or agencies]. For the purpose of crediting an energy transformation project toward the standard in subsection (1) of this section, the [insert relevant state agency or agencies] shall establish a conversion factor of emissions reductions resulting from energy transformation projects to megawatt-hours of electricity from non-emitting electric generation that is consistent with the emission factors for unspecified electricity, or for energy transformation projects in the transportation sector, consistent with default emissions or conversion factors established by other jurisdictions for clean alternative fuels. Emissions reductions from energy transformation projects must be:

(a) Real, specific, identifiable, and quantifiable;

(b) Permanent: The [insert relevant state agency] must look to other jurisdictions in setting this standard and make a reasonable determination on length of time;

(d) Verifiable;

(e) Not required by another statute, rule, or other legal requirement; and

(f) Not reasonably assumed to occur absent investment, or if an investment has already been made, not reasonably assumed to occur absent additional funding in the near future.

(3) Energy transformation projects must be associated with the consumption of energy in [insert state name] and must not create a new use of fossil fuels that results in a net increase of fossil fuel usage.

(4) The compliance eligibility of energy transformation projects may be scaled or prorated by an approved protocol in order to distinguish effects related to reductions in electricity usage from reductions in fossil fuel usage.

(5) Any compliance obligation fulfilled through an investment in an energy transformation project is eligible for use only: (a) by the electric utility that makes the investment; or (b) if the investment is made by the [insert name of the relevant federal Power Marketing Administration, if any], by electric utilities that are preference customers of the [insert name of the relevant federal Power Marketing Administration, if any]. An electric utility making an investment in partnership with another electric utility or entity may claim credit proportional to its share invested in the total project cost.

(6) An electric utility that fails to meet the requirements of this section shall pay the administrative penalty established under section 9(1) of this act, except as otherwise provided in this act.

(7) In complying with this section, an electric utility shall ensure that all customers are benefiting from the transition to clean energy through the equitable distribution of energy and non-energy benefits and reduction of burdens to vulnerable populations and highly-impacted communities; through short-term and long-term public health and environmental benefits; and through energy resiliency and reliability.

(8) Affected market customers shall comply with the standard established under subsection (1) of this section; provided that a market customer that purchases electricity exclusively from carbon-free resources and eligible renewable resources pursuant to a special contract with an investor-owned utility approved by the Commission prior to the effective date of this act shall be subject to the requirements of such order and not to the standard established under subsection (1) of this section.

Section 5. Milestone III: 100% Non-Emitting Resources by 2045.

(1) Non-emitting electric generation and electricity from renewable resources shall supply one hundred percent of all sales of electricity to [insert state name] retail electric customers by January 1, 2045. By January 1, 2045, and each year thereafter, each electric utility must demonstrate its compliance with this standard using a combination of non-emitting electric generation and electricity from renewable resources.

(2) Each electric utility must incorporate subsection (1) of this section into all relevant planning and resource acquisition practices including, but not limited to, resource planning; the construction or acquisition of property, including electric generating facilities; and the provision of electricity service to retail electric customers.

(3) In planning to meet projected demand consistent with the requirements of subsection (2) of this section, an electric utility must pursue all cost-effective, reliable, and feasible conservation and efficiency resources, and demand response. In making new investments, an electric utility must, to the maximum extent feasible:

(a) Achieve targets at the lowest reasonable cost, considering risk;

(b) Consider acquisition of existing renewable resources; and

(c) In the acquisition of new resources constructed after the effective date of this section, rely on renewable resources and energy storage, insofar as doing so is consistent with (a) of this subsection.

(4) The [insert relevant state agencies] must incorporate this section into all relevant planning and utilize all programs authorized by statute to achieve subsection (1) of this section.

(5) An electric utility that fails to meet the requirements of this section shall pay the administrative penalty established under section 9(1) of this act, except as otherwise provided in this act.

(6) Affected market customers must comply with the standard established under subsection (1) of this section; provided that any market customer that purchases electricity exclusively from carbon-free resources and eligible renewable resources pursuant to a special contract with an investor-owned utility approved by the Commission prior to the effective date of this act shall be subject to the requirements of such order and not to the standard established under subsection (1) of this section.

Section 6. Utility Implementation Plans to Achieve Milestones

(1)(a) Within two years after the date of enactment, and every four years thereafter, each utility subject to resource planning regulation by the Commission must develop and submit to the Commission:

(i) A four-year clean energy implementation plan for the standards established under sections 4(1) and 5(1) of this act that proposes specific targets for energy efficiency, demand response, and renewable energy; and

(ii) Proposed interim targets for meeting the standard under section 4(1) of this act during the years prior to 2030 and between 2030 and 2045.

(b) A utility’s clean energy implementation plan must:

(i) Be informed by the utility’s clean energy action plan developed under section 14(g) of this act;

(ii) Be consistent with subsection (3) of this section; and

(iii) Identify specific actions to be taken by the utility over the next four years, consistent with the utility’s long-range integrated resource plan and resource adequacy requirements, that demonstrate progress toward meeting the standards under sections 4(1) and 5(1) of this act and the interim targets proposed under (a)(ii) of this subsection. The specific actions identified must be informed by the utility’s historic performance under median water conditions and resource capability and by the utility’s participation in centralized markets. In identifying specific actions in its clean energy implementation plan, the utility may also take into consideration any significant and unplanned loss or addition of load it experiences.

(c) The Commission, after a hearing, must by order approve, reject, or approve with conditions a clean energy implementation plan and interim targets for any utility subject to its resource planning jurisdiction. The Commission may, in its order, recommend or require more stringent targets than those proposed by the utility. The Commission may periodically adjust or expedite timelines if it can be demonstrated that the targets or timelines can be achieved in a manner consistent with the following:

(i) Maintaining and protecting the safety, reliable operation, and balancing of the electric system;

(ii) Planning to meet the standards at the lowest reasonable cost, considering risk;

(iii) Ensuring that all customers are benefiting from the transition to clean energy: through the equitable distribution of energy and non-energy benefits and the reduction of burdens to vulnerable populations and highly-impacted communities; long-term and short-term public health and environmental benefits and reduction of costs and risks; and energy resiliency and reliability; and

(iv) Ensuring that no customer or class of customers is unreasonably harmed by any resulting increases in the cost of utility-supplied electricity as may be necessary to comply with the standards.

(2)(a) Any consumer-owned utility not subject to resource planning jurisdiction of the Commission shall, within two years of the date of enactment, and every four years thereafter, submit to the [insert agency with jurisdiction over COU resource planning] a four-year clean energy implementation plan for the standards established under sections 4(1) and 5(1) of this act that:

(i) Proposes interim targets for meeting the standard under section 4(1) of this act during the years prior to 2030 and between 2030 and 2045, as well as specific targets for energy efficiency, demand response, and renewable energy;

(ii) Is informed by the consumer-owned utility’s clean energy action plan developed under section 14(g) of this act;

(iii) Is consistent with subsection (3) of this section; and

(iv) Identifies specific actions to be taken by the consumer-owned utility over the next four years, consistent with the utility’s long-range resource plan and resource adequacy requirements, that demonstrate progress towards meeting the standards under sections 4(1) and 5(1) of this act and the interim targets proposed under (a)(i) of this subsection. The specific actions identified must be informed by the consumer-owned utility’s historic performance under median water conditions and resource capability and by the consumer-owned utility’s participation in centralized markets. In identifying specific actions in its clean energy implementation plan, the consumer-owned utility may also take into consideration any significant and unplanned loss or addition of load it experiences.

(b) Except where the Commission regulates consumer-owned utility resource planning, the governing body of each consumer-owned utility must, after a public meeting, consider the consumer-owned utility’s proposed clean energy implementation plan and adopt a clean energy implementation plan for the consumer-owned utility. The clean energy implementation plan must be submitted to the [insert agency with jurisdiction over COU resource planning] and made available to the public. The governing body may adopt more stringent targets than those proposed by the consumer-owned utility and periodically adjust or expedite timelines if it can be demonstrated that such targets or timelines can be achieved in a manner consistent with the following:

(i) Maintaining and protecting the safety, reliable operation, and balancing of the electric system;

(ii) Planning to meet the standards at the lowest reasonable cost, considering risk;

(iii) Ensuring that all customers are benefiting from the transition to clean energy: through the equitable distribution of energy and non-energy benefits and reduction of burdens to vulnerable populations and highly-impacted communities; long-term and short-term public health and environmental benefits and reduction of costs and risks; and energy security and resiliency; and

(iv) Ensuring that no customer or class of customers is unreasonably harmed by any resulting increases in the cost of utility-supplied electricity as may be necessary to comply with the standards.

(3)(a) A utility shall be considered to be in compliance with the standards under sections 4(1) and 5(1) of this act if, over the four-year compliance period, the average annual incremental cost of meeting the standards or the interim targets established under subsection (1) of this section equals a two percent increase of the utility’s weather-adjusted sales revenue to customers for electric operations above the previous year. All costs included in the determination of cost impact must be directly attributable to actions necessary to comply with the requirements of sections 4 and 5 of this act.

(b) If a utility relies on (a) of this subsection as a basis for compliance with the standard under section 4(1) of this act, then it must demonstrate that it has maximized investments in renewable resources and non-emitting electric generation prior to using alternative compliance options allowed under section 4(1)(b) of this act.

(4) The Commission, for utilities over which is has resource planning jurisdiction, and the [insert relevant state agency], for utilities outside the Commission’s resource planning jurisdiction, must adopt rules establishing the methodology for calculating the incremental cost of compliance under this section, as compared to the cost of an alternative lowest reasonable cost portfolio of investments that are reasonably available.

Section 7. Calculation of GHG Content

(1) Each electric utility must provide to the [insert relevant state agency or agencies] its greenhouse gas content calculation in conformance with this section. A utility’s greenhouse gas content calculation must be based on the fuel sources that it reports and discloses in compliance with [insert reference to state GHG reporting requirement, if any.]

(2) For unspecified electricity, the utility must use an emissions rate determined, and periodically updated, by the [insert state air quality agency]. The [insert state air quality agency] must adopt an emissions rate for unspecified electricity consistent with the emissions rate established for other markets in the [insert surrounding region].

Section 8. Report to Legislature Regarding Implementation

Within four years of the date of enactment, and at least every four years thereafter, the [insert relevant state agency or agencies] must submit a report to the legislature evaluating the implementation of this act in terms of: (a) barriers to implementing sections [insert sections most likely to pose implementation challenges] of this act; (b) short-term and long-term public health and environmental benefits; (c) system reliability, including resource adequacy, transmission capability, grid security and resilience, and compliance with the reliability standards of the North American Electric Reliability Corporation; (d) affordability, including the effectiveness of this act in assisting low-income households experiencing a high energy burden; (e) potential improvements to the procurement processes of utilities; (f) new or emerging technologies that could be considered to be a renewable resource; and (g) the integration of actions taken pursuant to this act with carbon and electricity markets outside the state.

Section 9. Penalties

(1)(a) An electric utility or an affected market customer that fails to meet the standards established under sections 3(1), 4(1), or 5(1) of this act shall pay an administrative penalty to the [insert relevant state entity] in the amount of one hundred dollars, times the following multipliers, for each megawatt-hour of electric generation used to meet load that is not electricity from a renewable resource or non-emitting electric generation: (i) 1.5 for coal-fired resources; (ii) 0.84 for gas-fired peaking power plants; and (iii) 0.60 for gas-fired combined-cycle power plants.

(b) Beginning in [two years after the date of enactment], this penalty shall be adjusted on a biennial basis according to the rate of change of the inflation indicator, gross domestic product implicit price deflator, as published by the Bureau of Economic Analysis of the U.S. Department of Commerce or its successor. Beginning in [five years after the date of enactment], the Commission may by rule increase this penalty for utilities subject to its jurisdiction if the Commission determines that doing so will accelerate utilities’ compliance with the standards established under this act and that doing so is in the public interest.

(2) Consistent with the requirements of section 4(1)(b) of this act, a utility may satisfy up to twenty percent of its obligation to comply with the standard contained in section 4(1) of this act by using alternative compliance options in lieu of paying the administrative penalty.

(3)(a) The Commission is authorized to impose penalties as provided under this act on any utility subject to its jurisdiction. At the request of a utility subject to its jurisdiction, after a hearing, the Commission may issue an order relieving the utility of its administrative penalty obligation under subsection (1) of this section if it finds that:

(i) After taking all reasonable measures, the utility’s compliance with this act is likely to result in conflicts with or compromises to its obligation to comply with the mandatory and enforceable reliability standards of the North American Electric Reliability Corporation, violate prudent utility practice for assuring resource adequacy, or compromise the power quality or integrity of its system; or

(ii) The utility is unable to comply with the standards established in section 3(1), section 4(1), or section 5(1) of this act due to reasons beyond the reasonable control of the utility, as set forth in subsection (6) of this section.

(b) If the Commission issues an order pursuant to (a) of this subsection that relieves a utility of its administrative penalty obligation under subsection (1) of this section, the Commission may issue an order:

(i) Temporarily exempting the utility from the requirements of sections 3(1), 4(1), or 5(1) of this act for an amount of time sufficient to allow the utility to achieve full compliance with the standard;

(ii) Directing the utility to file a progress report to the Commission on achieving full compliance with the standard within six months after issuing the order, or within an amount of time determined to be reasonable by the Commission; and

(iii) Directing the utility to take specific actions to achieve full compliance with the requirements of this act.

(c) A utility may request an extension of a temporary exemption granted under this section. A utility that requests an extension must request an update to the order issued by the Commission under (b) of this subsection.

(4) Subsection (3) of this section does not permanently relieve a utility of its obligation to comply with the requirements of this act.

(5)(a) Unless a consumer-owned utility is subject to regulation by the Commission, the governing body of a consumer-owned utility may authorize a temporary exemption from the standards established under sections 3(1), 4(1), or 5(1) of this act, for an amount of time sufficient to allow the consumer-owned utility to achieve full compliance with the standard, if the governing body finds that:

(i) The consumer-owned utility’s compliance with the standard is likely to result in conflicts with or compromises to its obligation to comply with the mandatory and enforceable reliability standards of the North American Electric Reliability Corporation; violate prudent utility practice for assuring resource adequacy; or compromise the power quality or integrity of its system; or

(ii) The consumer-owned utility is unable to comply with the standard due to reasons beyond the reasonable control of the utility, as set forth in subsection (6) of this section; and

(iii) The consumer-owned utility has provided to the [insert state agency with jurisdiction over consumer-owned utilities] a plan demonstrating how it plans to achieve full compliance with the standard, consistent with the findings of the report submitted to the legislature under section 8 of this act.

(b) Upon request by the governing body of a consumer-owned utility, a consumer-owned utility must be relieved of its administrative penalty obligation under subsection (1) of this section if the [insert state agency with jurisdiction over consumer-owned utilities] issues a finding that:

(i) The governing body of the consumer-owned utility has properly issued a temporary exemption under (a) of this subsection for a period of time not to exceed six months; and

(ii) The governing body of the consumer-owned utility has submitted to the [insert state agency with jurisdiction over consumer-owned utilities] a plan to take specific actions to achieve full compliance with the standard, consistent with the findings of the report submitted to the legislature under section 8 of this act.

(c) Upon issuance of a finding by the [insert state agency with jurisdiction over consumer-owned utilities], the consumer-owned utility must submit a progress report to the [insert state agency with jurisdiction over consumer-owned utilities] upon achieving full compliance with the standard within the term authorized in the temporary exemption.

(d) A consumer-owned utility may request an extension of a temporary exemption granted under this subsection, subject to the same requirements as provided in (a) through (c) of this subsection.

(e) The attorney general may bring a civil action in the name of the state for any appropriate civil remedy including, but not limited to, injunctive relief, penalties, costs, and attorneys’ fees, to enforce compliance with this act:

(i) Upon the failure of the governing body of a consumer-owned utility to comply with the conditions of a temporary exemption found by the [insert state agency with jurisdiction over consumer-owned utilities] to be properly adopted or extended; or

(ii) Upon failure of the governing body of a consumer-owned utility to comply with a finding by the [insert state agency with jurisdiction over consumer-owned utilities] that a temporary exemption is not properly granted.

(f) This subsection does not permanently relieve a consumer-owned utility of its obligation to comply with the requirements of this act.

(6) Events or circumstances beyond the reasonable control of an electric utility may include but are not limited to (a) weather-related damage; (b) natural disasters; (c) mechanical or resource failure; (d) failure of a third party to meet contractual obligations to the electric utility; (e) actions of governmental authorities that adversely affect the generation, transmission, or distribution of non-emitting electric generation or renewable resources owned or under contract to an electric utility, including condemnation actions by municipal electric utilities, public utility districts, or irrigation districts that adversely affect a utility’s ability to meet the standards established in sections 3(1), 4(1), or 5(1) of this act; (f) inability to acquire sufficient transmission to transmit electricity from non-emitting electric generation or renewable resources to load; and (g) substantial limitations, restrictions, or prohibitions on non-emitting electric generation or renewable resources.

(7) An electric utility must notify its retail electric customers within three months of paying the administrative penalty established under subsection (1) of this section. An electric utility is not required to notify its retail electric customers when making a payment in the amount of the administrative penalty as an alternative compliance payment consistent with the requirements of section 4(1)(b) of this act.

(8) Moneys collected under this section must be deposited into an account for [specify state use of penalty moneys; for example, low-income weatherization and related assistance].

(9) For any utility subject to the jurisdiction of the Commission, the Commission shall determine compliance with the requirements of this act.

(10) For consumer-owned utility not subject to the jurisdiction of the Commission, the [insert state agency with jurisdiction over consumer-owned utilities] is responsible for auditing compliance with this act and rules adopted under this act that apply to those utilities, and the attorney general is responsible for enforcing that compliance.

(11) If the report submitted under section 8 of this act demonstrates adverse system reliability impacts from the implementation of sections 4 and 5 of this act, the governor may suspend or delay implementation of this act, or exempt an electric utility from paying the administrative penalty under this section, until system reliability impacts can be addressed. Adverse system reliability impacts may include, but are not limited to, the inability of electric utilities or transmission operators to meet reliability standards mandated by federal or state law and required by prudent utility practices.

Section 10. Rulemaking

(1) It is the intent of the legislature that the Commission and [insert other relevant state agencies] coordinate in developing rules related to process, timelines, and documentation that are necessary for the implementation of this act.

(2) The Commission may adopt rules to ensure the proper implementation and enforcement of this act as it applies to investor-owned utilities and any other utilities over which it has jurisdiction.

(3) To the extent that consumer-owned utilities are beyond the jurisdictional of the Commission, the [insert state agency authorized to regulate consumer-owned utilities] is authorized to adopt rules to ensure the proper implementation and enforcement of this act as it applies to consumer-owned utilities. Nothing in this subsection may be construed to restrict the rate-making authority of the governing body of a consumer-owned utility as otherwise provided by law.

(4) The [insert relevant state agency or agencies] shall adopt rules establishing reporting requirements for electric utilities to demonstrate compliance with this act.

(5) A utility subject to Commission jurisdiction must also report all information required in subsection (4) of this section to the Commission.

(6) A utility must also make reports required in this section available to its retail electric customers.

(7) The [insert relevant state agency] shall adopt rules, in consultation with [insert other relevant state agencies], to establish requirements for energy transformation project investments including, but not limited to, verification procedures, reporting standards, and other matters as necessary.

(8) The [insert relevant state agency] shall adopt rules providing for the measurement and tracking of thermal renewable energy credits that may be used for compliance under section 4 of this act.

(9) Pursuant to the administrative procedure act, [insert cross-reference to state APA], rules necessary for the implementation of this act must be adopted within 18 months of the date of enactment, unless otherwise specified in this act.

Section 11. Assistance to Low-Income Households

(1) It is the intent of the legislature to demonstrate progress toward making energy assistance funds available to low-income households consistent with the policies identified in this section.

(2) Within two years of the date of enactment, each utility shall demonstrate progress in providing energy assistance pursuant to the assessment and plans in subsection (4) of this section. To the extent practicable, priority shall be given to low-income households with a higher energy burden.

(3) Within two years of the date of enactment, the [insert relevant state agency] shall collect and disseminate data that will assist agency and utility efforts to provide energy assistance to low-income households. The [insert relevant state agency] shall update such data on a biennial basis, and make it publicly available.

(a) The aggregated data published by the [insert relevant state agency] shall include, but is not limited to: (i) the estimated number and demographic characteristics of households served by energy assistance for each utility and the dollar value of the assistance; (ii) the estimated level of energy burden and energy assistance need among customers served, accounting for household income and other drivers of energy burden; (iii) housing characteristics including housing type, home vintage, and fuel types; and (iv) energy efficiency potential.

(b) Each utility must disclose to the [insert relevant state agency], in a form prescribed by the [insert relevant state agency] (i) the amount and type of energy assistance and the number and type of households, if applicable, served by programs administered by the utility; (ii) the amount of money passed through to third parties that administer energy assistance programs; and (iii) subject to availability, any other information related to the utility’s low-income assistance programs that is requested by the [insert relevant state agency].

(4)(a) In addition to the requirements under subsection (3) of this section, each electric utility must submit biennially to the [insert relevant state agency] an assessment of:

(i) The programs and mechanisms used by the utility to reduce energy burden and the effectiveness of those programs and mechanisms in both short-term and sustained energy burden reductions;

(ii) The outreach strategies used to encourage participation of eligible households, including consultation with community-based organizations and Indian tribes as appropriate, and comprehensive enrollment campaigns that are linguistically and culturally appropriate to the customers they serve in vulnerable populations; and

(iii) The funding levels needed to increase current levels of energy assistance by [XX] percent by 2030, and by [XX] percent by 2050.

(b) The assessment required in (a) of this subsection must include a plan to improve the effectiveness of the assessed mechanisms and strategies toward meeting the energy assistance need.

(5) A consumer-owned utility may enter into an agreement with a public university, community-based organization, or joint operating agency to aggregate the disclosures required in this section and submit the assessment required in subsections (3) and (4) of this section.

(6)(a) The [insert relevant state agency] must submit a biennial report to the legislature that: (i) aggregates information into a statewide summary of energy assistance programs, energy burden, and energy assistance need; (ii) identifies and quantifies current expenditures on low-income energy assistance; and (iii) evaluates the effectiveness of additional optimal mechanisms for energy assistance including, but not limited to, customer rates, a low-income specific discount, system benefits charges, and public and private funds.

(b) The [insert relevant state agency] must also assess mechanisms to prioritize energy assistance towards low-income households with a higher energy burden.

(7) Nothing in this section may be construed to restrict the rate-making authority of the Commission or the governing body of a consumer-owned utility as otherwise provided by law.

Section 12. Integration with Carbon and Electricity Markets Outside the State

(1) Within six months after the date of enactment, the Commission shall convene a stakeholder work group to examine the integration of actions taken pursuant to this act with carbon and electricity markets outside the state, and the compatibility of the requirements of this act with any existing or planned cap-and-trade programs.

(2) To assist in its examination of the issues identified in this section, as well as any other related issues, the Commission shall, at a minimum, invite the participation of representative electric utilities, gas companies, any federal power marketing agencies serving the state, and public interest and environmental organizations.

(3) Within two years after the date of enactment, the Commission shall adopt rules facilitating the integration of actions taken pursuant to this act with carbon and electricity markets outside the state, and enhancing the compatibility of the requirements of this act with any existing or planned cap-and-trade programs.

Section 13. Social Cost of Carbon

For the purposes of this act, the cost of greenhouse gas emissions resulting from the generation of electricity, including the effect of emissions, is equal to the cost per metric ton of carbon dioxide equivalent emissions, using the two and one-half percent (2.5%) discount rate, listed in table 2, technical support document: Technical update of the social cost of carbon for regulatory impact analysis under Executive Order No. 12866, published by the interagency working group on social cost of greenhouse gases of the U.S. government, August 2016. The Commission and other implementing agencies must adjust the costs established in this section to reflect the effect of inflation.

Section 14. Integrated Resource Planning

An electric utility’s integrated resource plan shall, at a minimum, include:

(a) An assessment of commercially available conservation and efficiency resources. Such assessment may include, as appropriate, opportunities for development of combined heat and power as an energy and capacity resource, demand response and load management programs, and currently employed and new policies and programs needed to obtain the conservation and efficiency resources;

(b) An assessment of commercially available, utility scale renewable and non-renewable generating technologies, including a comparison of the benefits and risks of purchasing power or building new resources;

(c) A comparative evaluation of renewable and non-renewable generating resources, including transmission and distribution delivery costs, and conservation and efficiency resources using “lowest reasonable cost” as a criterion;

(d) An assessment of methods, commercially available technologies, or facilities for integrating renewable resources, including but not limited to battery storage and pumped storage;

(e) An identification of an appropriate resource adequacy requirement consistent with prudent utility practice in implementing sections 3 through 5 of this act;

(f) An assessment, informed by the cumulative impact analysis conducted under section 15 of this act, of ways to increase the benefits and reduce the public health and environmental burdens on vulnerable populations and highly-impacted communities.

(g) A ten-year clean energy action plan for implementing sections 3 through 5 of this act at the lowest reasonable cost, including the specific actions to be taken by the utility consistent with its integrated resource plan. The clean energy action plan must be informed by the utility’s ten-year cost-effective conservation potential, and identify the potential cost-effective demand response and load management programs that may be required. It shall identify renewable resources, non-emitting electric generation, and distributed energy resources that may be required to meet the utility’s resource adequacy requirement; identify any need to develop new or expanded bulk transmission and distribution facilities; and estimate the extent to which the utility may need to rely on alternative compliance options under section 4(1)(b) of this act.

(3) An electric utility shall consider the social cost of carbon, as determined under section 13 of this act, when developing its integrated resource plan and clean energy plan. The social cost of greenhouse gas emissions must be incorporated when evaluating and selecting conservation policies, programs, and targets, and when evaluating and selecting medium and long-term resources options.

Section 15. Designation of Communities Highly Impacted by Fossil Fuel Pollution and Climate Change

Within one year of the date of enactment, the [insert state agency responsible for public health] shall designate, based on a cumulative impact analysis, communities within the state highly impacted by fossil fuel pollution and climate change.

SECTION 4. GREENHOUSE GAS REDUCTION STANDARDS

After section XXX, the following new section XXX shall be inserted:

(A) DEFINITIONS—In this section:

“Department” means the Department of [Natural Resources].

(B) GOAL TO REDUCED GREENHOUSE GAS EMISSIONS

(1) The Department shall, on or before December 31, 202X, adopt final plans that reduce statewide greenhouse gas emissions by 40 percent from 2020 levels by 2035 and achieve net-zero emissions by 2050.

(2) The plans shall be developed in recognition of the finding by the Intergovernmental Panel on Climate Change that developed countries will need to reduce greenhouse gas emissions by between 80% and 95% from 1990 levels by 2050.

(3) The final plans shall include:

(a) Adopted regulations that implement all plan measures for which state agencies have existing statutory authority; and

(b) A summary of any new legislative authority needed to fully implement the plans and a timeline for seeking legislative authority.

(C) PLAN TO ACCOMPLISH REDUCTION IN GREENHOUSE GAS EMISSIONS—In developing and implementing the plans to reduce greenhouse gas emissions, the Department shall:

(1) Analyze the feasibility of measures to comply with the greenhouse gas emissions reductions required by this subtitle;

(2) Consider the impact on rural communities of any transportation related measures proposed in the plans;

(3) Provide that a greenhouse gas emissions source that voluntarily reduces its greenhouse gas emissions before the implementation of this subtitle shall receive appropriate credit for its early voluntary actions;

(4) Provide for the use of offset credits generated by alternative compliance mechanisms executed within the State, including carbon sequestration projects, to achieve compliance with greenhouse gas emissions reductions required by this subtitle;

(5) Ensure that the plans do not decrease the likelihood of reliable and affordable electrical service and statewide fuel supplies;

(6) Consider whether the measures would result in an increase in electricity costs to consumers in the State;

(7) Consider the impact of the plans on the ability of the State to attract, expand, and retain commercial aviation services, and to conserve, protect, and retain agriculture;

(8) Ensure that the greenhouse gas emissions reduction measures implemented in accordance with the plans:

(a) Are implemented in an efficient and cost–effective manner;

(b) Do not disproportionately impact rural or low–income, low– to moderate–income, or minority communities or any other particular class of electricity ratepayers;

(d) Are quantifiable, verifiable, and enforceable;

(e) Directly cause no loss of existing jobs in the manufacturing sector;

(f) Produce a net economic benefit to the State’s economy and a net increase in jobs in the State; and

(g) Encourage new employment opportunities in the State related to energy conservation, alternative energy supply, and greenhouse gas emissions reduction technologies.

(9) Consult with state and local agencies as appropriate; and

(10) Convene a series of public workshops to provide interested parties with an opportunity to comment on proposed plans.

(D) REPORTS—The Department shall monitor implementation of the plans required under this subtitle and shall submit a report, on or before October 1, 202X, and every 5 years thereafter, to the Governor and legislature that describes the State’s progress toward achieving the reductions in greenhouse gas emissions required under this subtitle.

SECTION 5. SEVERABILITY

The provisions of this Act shall be severable, and if any phrase, clause, sentence or provision is declared to be invalid or is preempted by federal law or regulation, the validity of the remainder of this Act shall not be affected.

SECTION 6. EFFECTIVE DATE

This Act shall take effect on July 1, 202X