Committee discusses on-site power purchase agreement restrictions, lays bill over for further review

Committee members reviewed a committee substitute for Senate Bill 763 that would impose criteria on on-site power purchase agreements (PPAs) and laid the measure over for consideration at a later meeting.

The substitute applies to PPAs governing on-site devices designed to meet the electric needs of a retail customer on the property where the device is located (for example, rooftop solar). Under the substitute a PPA may not exceed five years in duration (though it may be renewed), must contractually guarantee a total cost per kilowatt-hour that is less than the rate offered by the serving public electric utility at the start of the agreement and for each year of the agreement, must provide on-site power or access to a backup source sufficient to meet the property's demand for at least 48 hours in the event of a utility outage, and must require a third party to inspect meters at the outset and then no less than once per year or per each three-year period thereafter with reporting of findings to the customer.

Committee counsel acknowledged some ambiguity in the substitute's phrasing. Members asked whether "public entity" referred to a school or the on-site energy provider; counsel said the term may be imprecise and suggested that the phrase could be clarified. Sponsor Senator Flamingo said the intent was to ensure public schools and similar entities entering PPAs understand the contract and the prospective rate and have protections against surprise increases. "So long as you had fair dealings and everything, you would know, and if the utility ... was going to give them a better rate they would have an informed contract," the sponsor said.

Committee members expressed concerns that the five-year cap might prevent customers from achieving long-term amortization savings often associated with longer contracts, and questioned whether 48-hour on-site backup storage is commonly available. Counsel said existing PPAs would need to conform to the substitute's terms if it becomes law.

The chair said the bill will be held over for the committee's next meeting for further review and potential modification.