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Clean Energy Legislation Prominent in 2016, Key Issues to be Explored in 2017

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Clean Energy Legislation Prominent in 2016, Key Issues to be Explored in 2017

Legislatures in the District of Columbia and all but four states — Montana, Nevada, North Dakota and Texas — met in 2016, with a majority of the legislatures convening in the beginning of January and adjourning by the end of June. Utility-related legislation was enacted in 15 jurisdictions.

In a Topical Special Report issued Jan. 17, RRA provides an overview of major energy-related legislation enacted in 2016, gubernatorial and legislative information for 2017, and a brief preview of legislation expected to be introduced in the forthcoming months.

Reducing carbon emissions and increasing renewable portfolio standards, or RPS, to comply with the U.S. Environmental Protection Agency's Clean Power Plan, or CPP, were the focus of several state legislatures in 2016, even though the CPP is subject to various challenges. Given the complexities of complying with the CPP, many states continue to move forward with related initiatives to be prepared if the plan is ultimately implemented.

District of Columbia, Michigan, Oregon and Rhode Island enacted measures enhancing their RPS during the 2016 legislative session. Legislation was enacted in Maryland and Pennsylvania during the 2016 legislative session pertaining to carbon emissions and the CPP.

Other measures that address issues arising from the CPP mandate were enacted in Illinois, Washington, West Virginia and Wisconsin.

Several other major energy-related bills were enacted in Arizona, California, Massachusetts, Michigan, Pennsylvania and Utah that addressed a variety of issues, including commissioner qualifications, gas pipeline and safety, consolidated taxes and solar cost recovery issues.

CPP related legislation
Enacted in 2016

State Legislation
District of Columbia B21-0650
Illinois SB 2814
Maryland SB 323
Michigan SB 437
Oregon SB 1547-B
Pennsylvania SB 1195
Rhode Island SB 2185
West Virginia HB 4435
Washington SB 6248
Wisconsin AB 384

Source: RRA, an offering of S&P Global Market Intelligence

Legislation that failed to advance in 2016

In Illinois, legislation that would have required eligible electric utilities to participate in a regional transmission organization ultimately failed to gain traction in the General Assembly. In Missouri, the General Assembly adjourned without passing legislation that would have, among other things, modified the ratemaking paradigm that is in place for the state's electric utilities.

The Maryland governor vetoed legislation that would have required that 25% of electricity sold in Maryland be produced by renewable energy resources by 2020. In Ohio, the governor vetoed legislation that would have lifted the freeze on the state's RPS requirements but would have made compliance optional through 2020. In Virginia, legislation failed to advance through the Senate that would have established a mandatory 25% RPS for all electric energy sold by 2025.

Political landscape

The District of Columbia and legislatures in all states are scheduled to be in session during 2017. The vast majority of legislative sessions begin in January or by the first week in February. In 2017, there will be 33 Republican governors, 16 Democratic governors and one independent governor in office; the Mayor of the District of Columbia is also a Democrat. There are six new governors who have taken office in 2017, as well as one governor who was elected in a special gubernatorial election to serve the remainder of a term after the former governor resigned.

Republicans hold the governorship and majorities in both chambers of the legislature in 24 states, while the Democrats will have full control in six jurisdictions. In 19 states, power in both branches of government is divided between Republicans and Democrats. Nebraska has a nonpartisan, unicameral legislature, while the Council of the District of Columbia is just unicameral.


A Look Ahead: 2017 State Energy Legislative Agendas

Looking ahead, there are several potential energy-related measures that may be considered in 2017, including legislative proposals considered in 2016 and carried into the new year.

As previously mentioned, the governor of Maryland vetoed legislation that would have required that 25% of electricity sold in Maryland be produced by renewable energy resources by 2020. The General Assembly has the ability to consider the bill immediately at the next regular session, which would be in early 2017.

In Missouri, legislation that would allow the Missouri Public Service Commission to implement certain innovative ratemaking mechanisms was introduced following the issuance of a PSC report addressing policies that could be adopted to "improve the way in which the Commission regulates Missouri's investor owned electric utilities." In Ohio, legislation is expected to be introduced that could alter the structure and ratemaking practices of the state's electric industry.

Connecticut and Pennsylvania are expected to introduce legislation that will address the issue of subsidies to nuclear power plants within their respective states. In Kentucky, legislation was introduced that would lift the state's statutory prohibition on nuclear plant construction.

In Montana, legislation was introduced that would eliminate the property tax tracker that allows utilities to automatically adjust rates to account for changes in property taxes. In Rhode Island, legislation was introduced that would cap any increase in electric distribution rates at a certain percentage.

In Washington, legislation was introduced that would modify renewable energy system tax incentives. In Wyoming, a measure was introduced that would establish a minimum procurement requirement for electric utilities from the following eligible generating resources: coal, hydroelectric, natural gas, net metering system, nuclear and oil.

Legislative initiatives being carried over from New Jersey's 2016 legislative session pertain to RPS and the amount of energy required to be produced from solar resources.

A look ahead: 2017 state nonenergy-related legislative agendas

A handful of legislatures will have the opportunity to weigh in on several nonenergy-related legislative measures, which may or may not have an impact on the energy regulatory environment in the future.

In Connecticut, a resolution was introduced in the House of Representatives that would amend the state constitution and place a term limit on the office of the governor. Legislation was introduced in the Indiana Senate that would move the adjournment date for the General Assembly. In Oklahoma, a resolution was introduced that would create a legislative referendum that would be placed on the state ballot to amend the state constitution with respect to the state legislature.