Purpose

• Establish a formal framework for planning, approving, and implementing thermal energy networks (TEN) as an alternative or complement to traditional gas and electric service.
• Align TEN deployments with state goals on emissions reductions and local economic development, including workforce and apprenticeship provisions.
• Update regulatory definitions and authorities to treat TEN service as a regulated utility service, with specific requirements for service planning, customer transition, and cost recovery.

Key Definitions and Scope

• Public utility: Expanded to include entities operating or controlling equipment or facilities that provide TEN or other energy services to the public, with certain exemptions for municipalities, small gas providers, or specific types of fuel sellers.
• Thermal energy network (TEN): A system that delivers thermal energy (hot or cold) to customers, including associated infrastructure and project costs.
• TEN service plan: A utility-submitted plan describing a TEN project, service area, costs, schedule, benefits, and how the project will be carried out and funded.
• Service: Natural, manufactured, or mixed gas and electricity service, or TEN service, including related installation, removal, or repair activities.

TEN Service Plan Requirements

• A TEN service plan must include:
  • Description of the project, service area, and customer base.
  • Estimated project and building costs.
  • Construction schedule.
  • Summary of how priority zones are considered.
  • Efforts to offset costs with incentives at federal, state, or local levels.
  • Expected benefits and economic development impact, including workforce considerations.
  • A plan to promote local jobs using prevailing wage standards, apprenticeships, and bona fide project labor agreements.
  • For plans serving customers currently using gas, a customer transition plan with: identifying affected customers, a timeline to discontinue gas service, and transition to TEN; technical assistance; incentives to offset connection costs; and a communication plan describing project details and customer cost implications. Public meetings must be held at accessible times/locations.
  • Protections for low-income customers from unfavorable retrofitting or operating costs, including plans for stranded gas infrastructure and avoided costs.
  • Any other details the commission determines are necessary.
• A TEN service plan must include a clear process for customer waivers if transition is unduly burdensome or infeasible, ensuring customers are informed about the transition and any available incentives or programs.

Customer Transition and Education Provisions

• Requires explicit transition planning for customers who would move from gas to TEN, including:
  • Identification of affected customers and a realistic transition timeline.
  • Availability of technical assistance to customers opting to transition.
  • A formal transition schedule and information on incentives to help cover retrofit costs.
  • A communication plan detailing project details, timelines, benefits, and cost support for customers.
  • Public education meetings held at accessible times/locations.

Regulation, Oversight, and Process

• The public utility commissions may approve, modify, or reject TEN service plans and must provide notice and an opportunity for public comment.
• An approved TEN service plan must include:
  • A waiver process for customers who cannot or should not transition to TEN.
  • Evaluation of cost effectiveness, considering lifetime costs and potential emissions reductions, with a comparison to gas or electric resource options.
  • Guidelines for decommissioning existing gas infrastructure as a result of the TEN project.
  • Consideration of plans when a TEN service area overlaps with another utility’s service area.
• TENs are subject to the same general consumer protection framework as gas service, including applicable statutes and commission oversight.

Cost Recovery and Economics

• Utilities may recover reasonable and prudent TEN-related costs through general rate cases, subject to commission approval.
• Gas infrastructure costs within TEN-served areas are generally not recoverable unless necessary to ensure safety during decommissioning.
• The commission is encouraged to treat TEN investments as cost-effective when evaluating long-term benefits, including future emissions reductions.

TEN Priority Zones and Siting

• When locating TEN projects, utilities must prioritize zones based on:
  • Whether TEN is more prudent than building new gas infrastructure.
  • Absence of existing piped gas infrastructure.
  • Gas infrastructure nearing end of life or in need of repair.
  • Community interest in TEN projects.
  • Characteristics similar to successful pilot TEN projects or areas defined in state site suitability studies.
• The plan must address siting in areas where multiple priority criteria apply and consider broader regional planning needs.

Gas Infrastructure Decommissioning and Emissions

• Approved TEN projects trigger actions to decommission relevant gas infrastructure, with attention to avoided operational and maintenance costs.
• TENs must contribute to state emissions reductions goals, per the relevant emissions statutes.
• The framework requires evaluating long-term environmental and energy reliability outcomes, including potential lifecycle emissions benefits.

Exemptions and Public Utility Scope

• The bill narrows or clarifies who is considered a public utility, with exemptions for certain small-scale or municipal arrangements, and for certain early-stage or specialty providers.
• Municipalities or small providers can seek exemption under specific conditions, with the city able to rescind exemption, after which regulation applies.

Consumer Protections and Public Involvement

• TEN service protections mirror existing gas service protections, ensuring safety, reliability, and consumer rights.
• Public education and engagement are emphasized to ensure customers understand project impacts, benefits, and costs.

Significance and Potential Impacts

• Creates a formal, regulator-approved pathway to design and deploy thermal energy networks as a primary or supplementary energy infrastructure.
• Signals a shift from traditional gas-centric planning to integrated TEN planning, with an emphasis on wage standards, apprenticeships, and local job creation.
• Establishes a framework for phasing out gas in targeted areas while protecting customers, particularly low-income households, from undue financial burdens.
• Expands regulatory oversight and introduces long-term cost recovery considerations tied to environmental and economic benefits.

Relevant Terms - thermal energy network (TEN) - TEN service plan - public utility - gas infrastructure decommissioning - transition plan - customer waiver - prevailing wage - apprenticeships - project labor agreements - building costs - project costs - cost recovery - emissions reductions (state emissions goals) - priority zones - site suitability - public education meetings - stranded gas infrastructure - incentives (federal/state/local) - low-income protections - transition assistance - notice and comment (regulatory process)