Georgia Legislative and Regulatory Update

Peter K. Floyd, Esq. Electric Cities General Counsel

Alston & Bird, LLP Electric Cities Annual Meeting Reynolds Plantation, Greensboro, GA March 30, 2011 Legislative and Regulatory Update

. Who I am and Who I’m Not

. 2011 Ga. Legislation That Made Crossover Day

. 2011 Ga. Legislation That Didn’t Make Crossover Day

. Misc. Recent Ga. Legislation

. Ga. Territorial Act Update Who I Am and Who I’m Not (www.alston.com) Or, why is this guy up here talking… . Atlanta Headquarters with 850+ attorneys . Attorneys ranked among the best in the U.S. and the world . Strong practices in energy and infrastructure development . Public and private finance . International construction & government contracts practice . Tax Expertise (Intl., Fed., State & Local) . Represent: Ga. state and local governments, public and private owners, engineering and design firms, contractors and subcontractors. . Extensive Experience with: public finance, commercial construction, tax, grants and incentives, energy regulation, hospital-medical office building projects, college and university projects, retail and hospitality projects, sporting venues, industrial plants and facilities. Who I Am and Who I’m Not (www.alston.com) Or, why is this guy up here talking…

. Help track and interpret legislation and regulation for Electric Cities, MEAG Power and the Gas Authority, among other general counsel/asst. GC duties.

. Note: I’m not trying to cover everything. There are way too may things relevant cities generally with all of the different hats you where.

. I’m currently following over 75 different bills in the Ga. General Assembly. I’ll just address electric utility related highlights.

. I am not a “lobbyist”, so I won’t be much help regarding the latest Gold Dome or PSC dirt.

. We don’t want to see how the sausage was made anyway…

Georgia Legislative and Regulatory Update

. Who I am and Who I’m Not

. 2011 Ga. Legislation That Made Crossover Day

. 2011 Ga. Legislation That Didn’t Make Crossover Day

. Misc. Recent Ga. Legislation

. Ga. Territorial Act Update 2011 Ga. Legislation That Made Crossover Day

. This generally means that these bills can still be acted on this year.

. April 14th is the currently scheduled final day. 2011 Ga. Legislation That Made Crossover Day

. SB 9 - Georgia Energy Freedom Act; cap and trade system; permit Governor to delay implementation; comprehensive assessment

. Representatives: Mitch Seabaugh (R), 28th District, (R), 31st District, Barry Loudermilk (R), 52nd District, Charlie Bethel (R), 54th District, Rick Jeffares (R), 17th District, (R), 37th District

. Senate Committee: Natural Resources and Environment . House Committee: Natural Resources and Environment

. Summary: Relates to air pollution control, so as to permit the Governor to delay implementation of the requirements of any federal program to implement a cap and trade system or any other program to address greenhouse gas emissions or motor vehicle fuel economy until a comprehensive assessment of such program can be made an 2011 Ga. Legislation That Made Crossover Day d the Governor finds that the implementation will benefit the citizens of Georgia; to provide for legislative intent and to direct the Attorney General to undertake certain litigation under certain circumstances

. Status: March 7, 2011 - Senate Passed/Adopted; March 10, 2011 - House Second Readers 2011 Ga. Legislation That Made Crossover Day

. SB 61 - Commerce; provide incandescent light bulbs manufactured in Georgia not exported from the state shall not be subject to federal regulation

. Representatives: Barry Loudermilk (R), 52nd District, Chip Rogers (R), 21st District, Judson Hill (R), 32nd District, (R), 56th District, Mitch Seabaugh (R), 28th District, (R), 51st District . Senate Committee: Agriculture and Consumer Affairs . House Committee: Science and Technology . Summary: Provide that incandescent light bulbs manufactured in the State of Georgia and not exported from the state shall not be subject to federal regulation; to state legislative findings; to provide for lawful manufacture, possession, and use of such light bulbs . Status: March 10,2011 - Senate Passed/Adopted; March 10, 2011 - House Second Readers 2011 Ga. Legislation That Made Crossover Day

. HB 387 (385, 386 & 385) - Revenue and taxation; revenue structure; comprehensive revision

. Representatives: Mickey Channell (R), 116th District; Larry O`Neal (R), 146th District; Jan Jones (R), 46th District; (R), 137th District . House Committee: Special Joint Committee on Georgia Revenue Structure . Summary: Provides for comprehensive revision of the revenue structure of the State of Georgia; to implement the recommendations of the 2010 Special Council on Tax Reform and Fairness for Georgians, relating to fiscal bills generally . Status: March 1, 2011 - House Second Readers . Special rules: crossover deadline doesn’t apply and must be an up or down vote after it leaves committee

. Note: Prohibition on future franchise agreement for cable and telecom excludes several things including pole attachment agreement. At GMA’s request, I have offered a few comments to make that stronger. 2011 Ga. Legislation That Made Crossover Day

. SB 160 - Elections; public utility corporations; political campaigns

. Representatives: Don Balfour (R), 9th District; George Hooks (D), 14th District; Cecil Staton (R), 18th District; Hardie Davis (D), 22nd District; Jack Murphy (R), 27th District; Freddie Powell Sims (D), 12th District . Senate Committee: Ethics . House Committee: Governmental Affairs . Summary: Relating to campaign contributions, so as to provide that a public utility corporation, expressly including EMCs, shall be allowed to make contributions to political campaigns; to prohibit regulated entities from making contributions to certain elected executive officers or candidates, including PSC . Status: March 10, 2011 – Senate Passed/Adopted; March 14, 2011 - House Second Readers Georgia Legislative and Regulatory Update

. Who I am and Who I’m Not

. 2011 Ga. Legislation That Made Crossover Day

. 2011 Ga. Legislation That Didn’t Make Crossover Day

. Misc. Recent Ga. Legislation

. Ga. Territorial Act Update 2011 Ga. Leg. That Didn’t Make Crossover Day

. They’re dead for 2011, but will live again in 2012

. Or, could live again as an amendment to a bill that made it passed crossover day 2011 Ga. Leg. That Didn’t Make Crossover Day

. HB 316 - Electric membership corporations; meetings open and public; provide

. Representatives: (R), 49th District; Mike Jacobs (R), 80th District; (R), 179th District; B.J. Pak (R), 102nd District; (R), 41st District; (R), 149th District . House Committee: Energy, Utilities & Telecommunications . Summary: Relating to directors and officers of electric membership corporations, so as to provide that meetings of such directors or officers shall be subject to provisions relating to open and public meetings; to provide that records of such organizations shall be subject to public inspection 2011 Ga. Leg. That Didn’t Make Crossover Day . HB 86 – Sales and use tax; energy for manufacturing; provide exemption

. Representatives: Roger Williams (R), 4th District; (R), 152nd District; Tom Dickson (R), 6th District; Allen Peake (R), 137th District; (R), 42nd District; Tom Weldon (R), 3rd District . House Committee: Ways & Means . Summary: Provide for an exemption regarding the sale or use of energy for manufacturing . Status: January 31, 2011 - House Second Readers

. Rolled into the comprehensive tax reform bill (HB 387)

. Note: This is why we watch so many bills. Bills can be amended to add new things even after crossover day and some legislators get trickier every year. 2011 Ga. Leg. That Didn’t Make Crossover Day

. Portfolio Standard Goals for Renewable Energy: HB 515 by Rep. (D) relating to public utilities would encourage each electric service provider to establish renewable energy sources energy portfolio standard goals on a scale beginning at one-half of one percent of annual net electricity sales by December 31, 2013 and increasing to seven percent of annual net electricity sales by December 31, 2020. The bill would provide for a renewable energy credits trading program and would authorize GEFA. Status: House Energy, Utilities & Telecommunications Committee . HB 516 by Rep. Karla Drenner (D) also related to public utilities and contains some of the same provisions as HB 515. However, it differs in that the PSC would be required to establish renewable energy sources energy portfolio standard goals for electric service providers to reach on an annual basis. Such goals would not exceed 12 percent of annual net electricity sales. The PSC would also be authorized to provide incentives to encourage electric service providers to exceed the energy portfolio standard goals established by the PSC. Status: House Energy, Utilities and Telecommunications Committee . Purchase of Energy from a Customer Generator: HB 520 by Rep. Don Parsons (R) relating to requirements to purchase energy from a customer generator and safety standards and regulations would change Cogen and Dist. Gen Act regarding the amount of energy an electric service provider is required to purchase from an eligible customer generator and by increasing the cumulative generating capacity of all renewable energy sources from 0.2 to 2.5 percent of the utility's annual peak demand in the previous year. Status: House Energy, Utilities & Telecommunications Committee 2011 Ga. Leg. That Didn’t Make Crossover Day

. Prohibit Covenants in Planned Subdivisions: SB 99 by Senator (D) to prohibit covenants for a planned subdivision and a property owner's association which infringe upon a lot owner's right to install solar collector panels, photovoltaic arrays, solar lights, and skylights. Status: Senate Judiciary Committee. . Energy Saving Plans: HB 497 by Rep. Karla Drenner (D) relating to integrated resource planning for certain electric suppliers (GPC) so as to provide for energy savings plans to optimize the use of demand-side capacity options. Status: House Energy, Utilities & Telecom Committee . We are monitoring closely this theme of proposed renewable and efficiency mandates. 2011 Ga. Leg. That Didn’t Make Crossover Day

. Public Service Commission: Several legislative proposals have been introduced with regard to the terms of office and election of members of the Georgia Public Service Commission: . HB 154 by Rep. Quincy Murphy (D) relating to election of members from respective districts. . HR 152 by Rep. Craig Gordon (D) relating to change of composition and terms. . HB 216 by Rep. Roger Williams (R) would change the selection of the chairperson of the commission from the requirement of a unanimous vote to a majority of the membership of the commission. 2011 Ga. Leg. That Didn’t Make Crossover Day . Several Resolutions Dropped in the Hopper close to Crossover Day

. HR 598 - Joint Study Committee on Renewable Energy Industries in Georgia; create

. HR 692 – Urge boards of education; implement renewable energy systems

. HR 693 - Residential developers and builders; offer solar energy system install; urge

. HR 694 – Create House Hydropower Study Committee; create 2011 Ga. Leg. That Didn’t Make Crossover Day Misc. 2011 Legislation

. HB 429 - Local Government Infrastructure Financing Authority Act by Rep. Jay Powell (R), 171st District, to create the Local Government Infrastructure Financing Authority and the County Infrastructure Financing Authority, so as to provide for comprehensive regulation of local government infrastructure financing (vehicle for GMA/ACCG COPs financing program, but could possibly be used for utility facility finance) . HB 556 - Integrity in Public Proceedings Act; enact by Rep. Joe Wilkinson (R), 52nd District, to provide requirements, standards, and restrictions applicable to persons and entities that desire to intervene in bond validation proceedings and to attorneys that have been sanctioned by a court or that have been determined by a court to have engaged in unethical conduct for purposes of bond validation proceedings and for purposes of legal actions involving issues regarding the valuation of property for purposes of assessing property taxes if such issues relate to the issuance of bonds by a public body, and for the imposition of triple damages in certain cases Georgia Legislative and Regulatory Update

. Who I am and Who I’m Not

. 2011 Ga. Legislation That Made Crossover Day

. 2011 Ga. Legislation That Didn’t Make Crossover Day

. Misc. Recent Ga. Legislation

. Ga. Territorial Act Update Property Assessed Clean Energy (PACE) Bonds

. Legislation in Georgia and 14 other states . Local gov. issues bonds to create loan pool . Local gov. makes loans to private building owners for energy-saving or renewable energy retrofits . Property taxes or utility bill on retrofitted buildings are increased by amount necessary to repay loan . Loans are backed by property-tax or utility lien on retrofitted buildings . No increase for nonparticipating residents . Owner can couple this with Guaranteed Energy Savings Performance Contracting (ESPCs) Georgia’s Version of PACE . House Bill 1388, enacted in 2010, amended legislation related to certain Georgia development authorities to permit bond financing for the installation at residential, commercial, industrial or other qualifying property of: . renewable energy systems, . energy efficiency or conservation improvements, and . water efficiency or conservation improvements. . Development authorities do not have the power to tax, but could contract with local governments to collect as part of utility bill (water, sewer, gas or electric) and establish a utility lien on improved property.

. Notes: The Federal Housing Financing Agency (FHFA) issued a statement in July 2010 concerning the senior lien status associated with most PACE programs. In response to the FHFA statement, most local PACE programs have been suspended until further clarification is provided. . Not aware of this statute having been used yet. But, I’m happy to help a local gov. try it out. Georgia ESPC Legislation

. Constitutional prohibition limited certain types of multi-year contracts for Ga. Governmental Units

. Guaranteed Energy Savings Performance Contracting Act of 2010 and Constitutional Amendment 4

. Governmental Units

. State government agencies . Colleges and universities . Counties and municipalities . Public school districts

. Contract for up to 20 years – solves the one year contract limit applicable to many GA gov. units

. ESCO guarantees that cost savings or revenue increases will meet or exceed project cost within 20 years

. SB 113 has been introduced to clarify that this Act doesn’t modify any existing muni powers to do these transactions Georgia ESPC Legislation

. “Energy conservation measure” means a program, or facility alteration, or technology upgrade designed to reduce energy, water, waste-water, or other consumption or operating costs. The term may include, without limitation: . Insulation, windows, doors, energy control systems, HVAC, lighting, water and sewer. . Training program. . A program to reduce energy costs through rate adjustments, load shifting to reduce peak demand, or use of alternative suppliers* as otherwise provided by law. . Renewable generation systems owned by the governmental unit, such as solar photovoltaic, solar thermal, wind, and other tech.*

* Must understand and comply with Georgia Territorial Electric Service Act of 1973 and Georgia Cogeneration and Distributed Generation Act of 2001. I have another presentation on these Acts if anyone would like a copy. The ESPC Act requires notice to utility providers of ESPCs. Financing Option

. May combine many incentives and structures, but complex

. Incentives may have conflicting requirements

. ESCO financing – lease purchase or installment sale

. Direct funding – independent project or as part of larger project

. Public finance – tax-exempt bonds, tax-exempt lease obligations

. Tax credits – some transactions permits sharing of ESCO tax savings Georgia Legislative and Regulatory Update

. Who I am and Who I’m Not

. 2011 Ga. Legislation That Made Crossover Day

. 2011 Ga. Legislation That Didn’t Make Crossover Day

. Misc. Recent Ga. Legislation

. Ga. Territorial Act Update