Plan for the Allocation and Distribution of Regional Greenhouse Gas Initiative Auction Proceeds

Regulation Authority:

RIGL 42-140-3, 42-140-4, 42-140-9, 23-83-6

Purpose and Reason:

Concise Explanatory Statement Pursuant to RIGL § 42-35-3(a)(1) R.I. General Law § 23-82-6 (a) directs the Office of Energy Resources (office) in consultation with the Department of Environmental Management (department) and the Energy Efficiency and Resource Management Council (council) to prepare an annual proposal to allocate the allowance proceeds from RGGI auctions or sales for the benefit of energy consumers through investment in the most cost-effective available projects that can reduce long-term consumer energy demands and costs. Quarterly auctions will take place in 2009. Rhode Island took part in the first two Regional Greenhouse Gas Initiative (RGGI) auctions of CO2 allowances on September 25, 2008 and December 17, 2008 in accordance with R.I. Gen. Law §23-82, as amended, as well as with DEM Air Pollution Control Regulation Nos. 46 and 47. The Rhode Island CO2 Budget Trading Program base budget for 2009 through 2014 is 2,659,239 tons of CO2 per year. The Plan proposes to allocate the net proceeds received from the RGGI allowance auctions/sales during the first two quarters of 2008 and the first three quarters of 2009, after deductions for administrative costs, as follows: • Sixty percent to the Least Cost Procurement Energy Efficiency Utility Account at National Grid for the sole purpose of supplementing and expanding energy efficiency efforts consistent with the PUC approved Energy Efficiency (EE) Procurement Plan and annual Energy Efficiency Program Plans for the investment in all cost-effective energy efficiency programs and projects that are lower cost than supply and reduce long-term consumer energy demands and costs. • Forty percent to the Innovative Financing and Partnership Account at the Utility for the sole purpose of investing in new partnerships, research, and pilot programs including innovative financing options and partnerships that can drive efficiency program development and enhancements to accelerate and broaden the energy savings for Rhode Islanders. As a result of comments received, the following changes were made that were not originally part of the proposed text. • A requirement was added that the Innovative Financing and Partnership Account at the Utility, pursuant to Section 4.3 may not be spent until National Grid proposes a spending plan to OER, which adheres to the requirements of these regulations, and that National Grid shall demonstrate the efforts and steps taken to encourage and enable other parties to participate in the implementation of the Innovative Financing and Partnership Account. This requirement was added to ensure proper oversight and stakeholder participation for the Innovative Financing and Partnership Account. • A requirement was added that OER shall prepare, in consultation with the department and the council, a report made available to the public by January 1st of each year describing the implementation and operation of RGGI revenues collected and the expenditures made pursuant to these regulations this section and that in said annual report, the OER shall confirm the spending plans pursuant to these regulations are to remain in effect in following next year unless OER determines there is a compelling reason to modify the spending plans. This requirement was added to ensure proper public accountability effective continuous implementation of RGGI revenues.