The state legislature is considering a bill that would allow electric distribution companies to enter into power purchase agreements with hydropower facilities for periods of up to 30 years, which would lower the cost of hydropower as the state works toward its clean energy goals.
Senate Bill 382 would also extend the 30-year limit to other Class I renewable energy projects, such as wind power.
Under current law, Connecticut limits the maximum term for such contracts to 20 years. By increasing the length to 30 years, energy suppliers could produce a $15/MWh discount compared to a 20-year contract, according to the advocacy group RENEW Northeast, which supports the bill.
The discount results from the additional 10 years of price certainty, allowing developers to “confidently to amortize their costs over that term while benefiting ratepayers by removing uncertainty in future utility rates,” according to RENEW Northeast.
Hydroelectric operators say the law would help them raise capital to upgrade and maintain infrastructure.
“Using longer contracts to provide stable energy revenues for hydropower resources will help ensure they remain viable,” said Francis Pullaro, executive director of RENEW Northeast, in his testimony. “Maintaining the region’s fleet of small hydropower resources is important if Connecticut is to reach its goal of reducing greenhouse gas emissions to zero by 2040, and do so cost-effectively.”
Department of Energy and Environmental Protection Commissioner Katie Dykes supported the bill noting that the state must achieve at least 45% and 80% reductions in greenhouse gas emissions by 2030 and 2050 under the Global Warming Solutions Act.
“In the state’s most recent greenhouse gas inventory, DEEP concluded that sharp [emissions] reductions are needed to meet the state’s 2030 and 2050 climate goals,” she testified.
Dykes further stated that revenue provided by longer-term contracts for hydroelectric operators may allow hydropower facilities that do not currently meet the Class I standard to “upgrade to attain the current environmental safeguards associated with fish passage as well as meet water quality and flow standards.”
There are more than 5,000 dams in Connecticut, nearly one per square mile, according to the Nature Conservancy. The group supported the bill, but said dams need to be properly maintained because dam failure can cause flooding and damage to downstream and upstream infrastructure, homes, businesses and ecosystems.
The bill was proposed by the Energy and Technology Committee. A public hearing was held on March 14.
