On February 7, 2012, Georgia State Senator Buddy Carter (R-Pooler, Dist. 1) introduced SB 401, which seeks to clarify the purpose of the Georgia Cogeneration and Distributed Generation Act of 2001 (“CoGen Act”) and remove artificial barriers to renewable energy development in the state.
At the request of representatives and business leaders in the renewable energy industry, SGR attorneys Steve O’Day and Jessica Lee Reece prepared the initial draft of the revised Act. The bipartisan bill is also sponsored by Ronnie Chance (R-Tyrone, Dist. 16), Jason Carter (D-Decatur, Dist. 42), Tommie Williams (R-Lyons, Dist. 19), Chip Rogers (R-Woodstock, Dist. 21) and Doug Stoner (D-Smyrna, Dist. 6).
In passing the CoGen Act in 2001, the Georgia General Assembly found that it was in the public interest to encourage private investment in renewable energy, stimulate economic growth, and enhance diversification of energy resources. Yet, since its enactment, many utilities have argued that, based on a law from the 1970s that was passed to enable equitable distribution of electric distribution lines in the State, financing mechanisms that promote investment in alternative energy—including power purchase agreements—are not legal under Georgia law. The position taken by the utilities has stymied investment in solar power—and the accompanying economic growth and job production—so that only minimal solar power development has occurred in Georgia, while other states are enjoying huge investments of money and creation of jobs in solar energy.
Yet, since the enactment of the CoGen Act, many utilities have argued that, based on a law from the 1970s ensuring equitable distribution of transmission lines, certain financing mechanisms that promote investment in alternative energy—including power purchase agreements (“PPAs”)—are not legal under Georgia law.
Across the country, the PPA is the preferred form of financing for renewable energy projects. Under a typical PPA, a developer installs a system on a customer’s premises and retains ownership of the system, and the customer makes monthly payments to the developer that are calculated based on the amount of electricity generated. A PPA allows the customer to choose renewable energy without any upfront costs or maintenance risks, and provides the developer flexibility in allocating tax and other financial benefits that are attractive to private investors.
SB 401 was introduced to clarify the legality of a full range of financing tools for renewable energy in Georgia, including PPAs.
The bill would also remove existing caps on the size of individual projects, as well as add biomass, municipal solid waste, landfill gas, and hydropower as eligible resources. SB 401 also prohibits unreasonable ad hoc charges for connecting with the utility system and provides that charges for metering services must be “commercially reasonable.”
SB 401 is currently assigned to the Natural Resources Committee for review; its Chairman is Senator Ross Tolleson of District 20, a district that includes Dublin, the home of international solar products manufacturer MAGE solar.
For more information, please contact Steve O’Day (soday@sgrlaw.com) or Jessica Lee Reece (jreece@sgrlaw.com).
For a complete copy of the bill, please visit http://legis.ga.gov/legislation/en-US/Display/20112012/SB/401.