CT Regulators Order New Incentives for Distributed Generation

In two recent decisions (Docket Nos. 05-07-16 and 05-07-17), the Connecticut Department of Utility Control (DPUC) has provided a selection of incentives to encourage electricity customers to install on-site distributed generation projects. Incentives include lower back-up power charges, lower natural gas fuel charges and direct grants and payments to cover installation costs.

A customer-side distributed resource is defined as (a) the generation of electricity from a unit with a rating of not more than 65 megawatts on the premises of a retail end user within the transmission and distribution system including, but not limited to, fuel cells, photovoltaic systems or small wind turbines, or (b) a reduction in the demand for electricity on the premises of a retail end user in the distribution system through methods of conservation and load management, including, but not limited to, peak reduction systems and demand response systems.

The DPUC says that customers will be eligible to receive: monetary grants in proportion to the amount of electric load they will remove from the grid, gas rebates that will result in the waiver of gas distribution charges for natural gas used by these facilities, lower back-up charges for these customers in the event that they need to take power from the electric company if their own system isn’t operational, and renewable energy credits that can be generated by customers which they can sell into the market to assist in offsetting a project’s costs.

In addition, the DPUC has also contracted with Bank of America (BOA) to provide low interest loans to customers that seek to finance these investments over a number of years. Under the terms of the current agreement, BOA will offer financing through the end of this year, or until $150 million worth of projects has be financed through the program. As required under the new law, the interest rate charged to customers will be guaranteed to be no greater than the prime rate. Any buy-down of interest charges to get to the prime rate level will be paid by electric ratepayers.