Report 2021 Legislative Energy Trends

Nuclear Energy

The past year proved notable in state nuclear energy policy on several important fronts. States considered efforts to retain the existing fleet of nuclear reactors, explored policies to support advanced nuclear development, and enacted policies that—even if not explicitly supportive—at least open the door to nuclear power playing a role in achieving state clean energy targets.

At the same time, a variety of proposed nuclear power projects took shape through collaborative partnerships between the U.S. Department of Energy (DOE) and industry, including announcements regarding the development of advanced reactor demonstration projects in Tennessee, Washington and Wyoming.

Support for Existing Nuclear

The most immediately impactful development involves support for existing nuclear reactors. With natural gas and renewables driving power prices down over the past decade, nuclear plants have struggled to compete in regions with organized wholesale electricity markets. Since 2013, more than 10 reactors totaling close to 9 GW in combined capacity have been shut down prematurely, in many cases due to economic considerations.

In order to support clean energy goals and jobs, since 2016 at least five states have enacted policies to keep existing nuclear power plants operating. The most common policy, known as zero emissions credits (ZECs), provides direct payment for every megawatt-hour (MWh) of carbon-free power generated by qualifying nuclear power plants. The Illinois legislature was the first to enact a ZECs policy (2016), while Ohio was the last (2019). Over the last year, both states acted again. Ohio repealed most of the enabling ZECs legislation due to a bribery scandal, but Illinois expanded on its nuclear supports as a central pillar of SB 2408.

In 2016, Illinois provided $235 million per year in ZECs to support two struggling nuclear plants. In 2021, Illinois’ Climate and Equitable Jobs Act built on that existing program to extend almost $700 million over five years to three additional nuclear plants. Having proven effective across several states, ZECs also formed the basis for a new federal program to prevent early retirements for existing nuclear. The Civil Nuclear Energy Credit program, part of the bipartisan $1.2 billion Infrastructure Investment and Jobs Act, will provide up to $6 billion in support for nuclear reactors that have been operating in the red. The infrastructure package also includes a $3 billion carve-out for advanced nuclear—another topic of interest to states in recent years.

Support for Advanced Nuclear

Following the passage of Wyoming’s innovative HB 74 (enacted, 2020), which targeted retired coal units for redevelopment through small modular reactors (SMRs), a number of states have considered ways to attract new nuclear industries. Nebraska’s LB 84 (enacted) extends existing incentives for renewable energy under the ImagiNE Nebraska Act to apply to companies that build advanced nuclear reactors. The Missouri House passed HB 261, a bill that would provide an exception to the state’s ban on construction work in progress (CWIP) financing, which helps utilities finance the construction of major projects by allowing them to recover costs from ratepayers along the way. The exception would apply to advanced nuclear and renewable facilities of 200 MW capacity or larger. The bill did not pass the Senate in 2021, but has been reintroduced as HB 1684 for the 2022 session.

The Montana legislature took action on two fronts. In adopting SJR 3, the legislature decided to study the feasibility of replacing certain coal-fired units with advanced nuclear generation. In enacting HB 273, the state legislature repealed a state law that required citizens to vote on the approval of any new nuclear power project in the state—a change that could make it easier to develop new nuclear. In doing so, Montana joined several states in opening the door to nuclear power.

This trend has continued into 2022. Indiana enacted SB 271, which seeks to support the development of SMRs in the state, in February. The new law directs the state PUC to develop rules regarding the construction and operation of SMRs at retiring coal and natural gas facilities, in addition to offering some financial incentives for public utilities to recover costs for the development of these facilities.

Opening the Door to Nuclear

There are now 12 states with restrictions on the construction of new nuclear power facilities, but that number has decreased in recent years as states revisit these long-standing policies. In 2021, Montana enacted HB 273, while West Virginia enacted SB 4 early in the 2022 session. Each bill repealed restrictions on the construction of new nuclear power facilities, opening the door to new nuclear. Kentucky and Wisconsin have repealed similar laws in recent years.

A trend that favors nuclear power in a less direct way has been the shift in how states have approached clean energy development requirements. More than half of states have established an RPS to promote renewable energy development. However, at least seven states have expanded these policies in recent years to include additional clean resources—including nuclear—that qualify for meeting state requirements. North Carolina and Oregon left the door open to nuclear power as an option for utilities to meet emissions reduction targets under new laws enacted in 2021.

In 2021, Maryland, Virginia and West Virginia passed measures that wrap nuclear—either directly or indirectly—into state clean energy policies. While Maryland’s governor vetoed SB 460, Virginia enacted SB 1284 to establish a state clean energy policy that opens the door to carbon-free resources like nuclear. Meanwhile, each chamber of the West Virginia legislature adopted a resolution recognizing the importance of clean energy to the state’s future, economic diversification and remaining a leader in energy production. Nuclear power was one of the clean energy technologies included.

Transportation Electrification

Support for transportation electrification continued to increase during the 2021 legislative session, with action taken in states across the country. Some previous year trends, including incentives for EV charging infrastructure and legislation concerning EV registration fees, continued into 2021.

However, new issues have come to the forefront as well. Perhaps most notable has been a focus in 2021 on expanding public EV charging infrastructure and increasing access for renters and those living in multi-unit dwellings. New measures to collect road maintenance fees from EV owners to offset gas tax revenues that will be lost from increased vehicle fuel efficiency and growing EV adoption have also continued to gain traction in 2021. Road use charges and per-kilowatt-hour (kWh) taxes on the electricity used for EV charging both received significant attention this year.

EV Infrastructure Expansion, Public Charging Access

States across the country have started working on ways to expand EV infrastructure beyond the single-family garage to multi-unit dwellings and office buildings, public parking facilities, and along travel corridors. As federal support for these activities increases, this trend is also likely to continue in 2022.

Other states have moved in other ways to facilitate the expansion of EV infrastructure. Continuing a trend from 2020, Kansas (HB 2145), North Dakota (SB 2091), and South Carolina (SB 304) exempted EV charging suppliers from regulation by the state PUC, allowing suppliers more flexibility to earn revenue from their equipment. California, under AB 970, will now deem applications for EV charger installations complete if they are not denied or deemed incomplete – with an explanation of all deficiencies – within 5-10 days. Maryland HB 110 prohibits apartments, condo associations, and similar organizations from banning or un- duly restricting EV charging installation, removing a hurdle for multi-unit dwelling owners.

Some states have begun explicitly requiring builders and/or state agencies to include EV charging infrastructure in newly constructed buildings and parking facilities. At least 9 states have passed laws directly requiring builders to include—or at least offer—EV charging equipment in new construction. Some of these states enacted or expanded new construction requirements in 2021: New Jersey, Oregon, Virginia, Washington, and Washington, D.C.

New Jersey SB 3223 simplifies the review process for EV charger installations at existing fuel retailers and other buildings, establishes minimum numbers of EV parking and “make-ready” parking spaces at new multi-unit dwellings, and requires the development of a model land use ordinance to facilitate local charging development. Other legislation from New Jersey, AB 1653, encourages charger installation in redevelopment projects, with hopes of improving access for underserved areas. Virginia HB 2001 requires local governments and state agencies to include EV charging in major renovations and most new construction of government buildings. Washington (HB 1287) and Oregon (HB 2180) enacted new laws requiring updates to the state building code that will require a certain percentage of parking at new buildings to be wired for EV charging, while California acted through regulation to require EV chargers in all new construction.

Rhode Island HB 5031 requires state agencies to develop a plan for statewide EV charging infrastructure to expand accessibility. Vermont enacted HB 433 to create a pilot program for EV charger installation at multiunit dwellings, prioritizing non-profit-owned and affordable housing units.

Fleets and HD/Commercial Vehicles

Continuing action from 2020, two more states adopted California’s low emission vehicle and zero emission vehicle (LEV/ZEV) standards in 2021 – Virginia through statute and Minnesota through regulation. New Mexico and Nevada also started the process in 2021 to adopt these standards. States often own or lease large numbers of vehicles and many are trying to lower emissions by transitioning their fleets. To date, 14 states have formally adopted California’s standards under Section 177 of the Clean Air Act.

California implemented an Advanced Clean Trucks (ACT) rule in 2020. The rule aims to speed up the electrification of medium-and heavy-duty vehicles like commercial trucks, with increasing ZEV truck sales targets starting in 2024. Since then, other states have moved this direction: Massachusetts, New Jersey, New York, Oregon, and Washington adopted the ACT rule via regulation in the latter half of 2021. Several other states, including Colorado, Connecticut, Illinois, Maine, and Vermont, are considering adopting the rule as well.

California enacted SB 372 in October 2021, which makes additional financing tools and other support available to help medium-and heavy-duty fleet owners transition to zero-emission vehicles. Hawaii HB 552 lays the groundwork for 100% clean ground transportation in the state, and sets a goal of a ZEV state fleet by 2035. It also tasks the state DOT and Energy Office with developing electrification strategies. Maryland SB 137 also focuses on state-owned fleets, prohibiting the Maryland Transit Agency from purchasing non-ZEV buses. New Jersey SB 1010 allows local governments to issue bonds to help transition fleets to EVs. Look for states to take further action on this in 2022.

New Infrastructure Revenue Mechanisms: Road Usage Charges/EV Fees & Taxes

As states address the expected impacts of EV adoption on already-declining gas tax revenues, alternative methods of raising road maintenance revenue are being explored, with a couple in particular gaining traction in 2021.

Fourteen state or regional pilots have received federal grants to explore road use charge (RUC) or vehicle miles traveled (VMT) systems. There is some funding for RUC pilots in the federal infrastructure bill as well that could be used in 2022. Only a few states fully operate RUCs, and they are usually voluntary. However, momentum is building with multiple states committing to feasibility studies and pilot programs in 2021. California, Oklahoma, Oregon, Utah, Virginia, and Washington all enacted legislation in 2021 to establish or expand RUC programs and studies.

At least three states considered legislation in 2021 to tax electricity consumed at public EV charging stations. Oklahoma enacted HB 2234, which sets a new 3-cents-per-kWh tax on electricity used for EV charging at public charging stations. The tax does not apply to private residential charging. Nevada (SB 384) and Minnesota (SB 1602) each considered but did not pass legislation that would have placed a kWh tax on electricity from both private and public charging equipment. Wyoming has introduced a similar bill for 2022, while Vermont has been studying the impacts and feasibility of a per-kWh tax. It is likely that more action could be seen in other states during 2022 as lawmakers look for ways to address the expected de- cline in gas tax revenues and fill gaps in road infrastructure funding.

Increasingly, states are also creating their own dedicated funding pools and programs for public EV infrastructure. Arkansas SB 632 creates a statewide EV infrastructure grant program and a dedicated fund for the program with monies from various sources approved by the legislature. The new law also expressly aims to take advantage of incoming federal funding. Mississippi SB 2598 also created a new EV Infrastructure Fund in the State Treasury to receive and disburse federal funding. Colorado SB 260 created a dedicated “community access enterprise” to implement grant, loan, or rebate programs for EV infrastructure expansion across the state, funded largely by revenue bonds and fees collected by the enterprise as allowed under state law. Hawaii HB 1142 redirected some existing environment and energy-related tax revenues into a fund specifically for EV charging system rebates. Oklahoma HB 2234 will send all EV fee revenues to a dedicated “DRIVE” Fund until 2027, after which 15% of EV fee revenue will go to the counties and 85% to the Fund. The DRIVE fund will be used to supplement state road and bridge funding and help build out EV infrastructure, with county funds deposited in county highway accounts.

Energy Efficiency

States continued to focus on policies designed to reduce energy consumption, with a growing focus on energy affordability and energy cost burden. Energy efficiency programs for larger, non-residential buildings, such as commercial properties and schools, also became more prominent in 2021. Legislatures in at least 28 states, the District of Columbia, and Puerto Rico considered over 600 pieces of legislation relating to energy efficiency last year. Nearly 90 bills were enacted across 20 of these states and territories. Aside from efficiency mandates, financial incentives for efficient buildings were a common tool in 2021 to reduce energy use, especially in the building sector.

Colorado HB 1286 and Utah HB 131 require large building owners and state facilities, respectively, to collect and report energy usage data to help improve energy efficiency performance. Maine SB 184 provided funding and other support to help schools implement efficiency measures and ultimately become carbon neutral. New Jersey’s SB 3995 established an energy efficiency stimulus fund for schools and small businesses, while New Mexico HB 15 created new sustainable building tax credits. Minnesota HB 2110 creates a new loan account within the state treasury to help fund efficiency improvements in state buildings. Massachusetts SB 9 is a wide-ranging piece of legislation that establishes a road map to a net-zero economy, including energy efficient and net-zero buildings. Maine (LD 340), Montana (SB 147) and Tennessee (SB 795) each established Commercial Property Assessed Clean Energy (C-PACE) programs, while Kansas considered a similar measure.

As many households still struggle with utility debt and high energy costs due to the economic disruption associated with the COVID-19 pandemic, states have continued efforts to reduce energy use and utility bills through low-income energy efficiency and weatherization programs. For example, Massachusetts SB 9 updates state appliance efficiency standards as part of its broader focus. Several other pieces of legislation also passed in 2021 to increase appliance efficiency standards: Nevada AB 383, Maine LD 940, Oregon HB 2062, and Rhode Island SB 339 and HB 5966.

More specifically targeted to low- and moderate-income households, Connecticut (SB 356) and Oregon (HB 2842) created new grant programs to help install energy efficiency upgrades for low-income households and renters. Colorado increased funding for its weatherization assistance program through an appropriation (SB 231) and enacted a bill (SB 246) requiring utility electrification plans and setting aside funding for low-income households. California extended eligibility for some of its existing efficiency programs to residents at or under 200% of the federal poverty level, making assistance available to more low- and moderate-income families. Virginia HB 2227 does not mandate efficiency measures itself, but does seek to more closely align state building codes with any current and future updates to the ICC’s energy conservation code.

Energy Resilience

The past several years have witnessed an uptick in state legislative action aimed at hardening energy infrastructure against natural disasters. Following some of the most destructive years for natural disasters in U.S. history, states have been working to make vital energy services more resilient to stronger, more severe weather events, including wildfires, hurricanes, tornadoes and winter storms. The past year was no exception, with the U.S. experiencing 20 billion-dollar disasters causing losses totaling $145 billion.

Broadly, these new laws require enhanced planning from state agencies and utilities, promote technologies that maintain service during outages, and invest in hardening infrastructure against localized weather threats.

Planning and Preparedness

States pursued two primary tracks as they worked to build preparedness into state policy. The first involved requirements for state agencies. California transferred the state’s wildfire preparedness and mitigation mission into a central agency (AB 9), while Hawaii required the state Office of Planning to work with each state agency to identify existing and planned facilities and infrastructure that are vulnerable to sea-level rise, flooding and other natural hazards (HB 243). Oregon enacted SB 762, which requires the state PUC to regularly convene workshops for electric utilities and transmission operators to share information and best practices related to wildfire prevention and preparedness. Meanwhile, Washington HB 1168 requires utilities to share best practices related to fire mitigation efforts.

The second track involves planning requirements for utilities. In 2021, two states moved to bolster planning requirements to ensure electric utilities have secured sufficient generating capacity to meet peak loads reliably. Indiana enacted HB 1520, requiring utilities to submit annual planning reserve margin re- ports to the state PUC. The PUC is tasked with evaluating those reports and determining whether each utility has met its obligations—and if not, require that utilities contract for or construct the necessary re- sources. North Dakota’s SB 2313 requires the state’s electric utilities to submit integrated resource plans to the state PUC, which can value baseload and load-following resources like coal and natural gas higher than variable resources like wind and solar. The PUC is also granted authority to require action or levy a fine for utilities that fail to meet the minimum requirements.

A number of states also strengthened utility planning requirements focused on common regional threats, such as wildfires, hurricanes or floods. Nevada expanded on a previously enacted wildfire planning requirement for utilities with the passage of SB 14, which requires the state to provide guidance to help new generating resources comply with vulnerability assessments mandated under new planning re- requirements. New Jersey’s SB 2607 requires municipalities to identify critical facilities that must always be maintained and operational.

California enacted SB 533 to require electric utilities to identify circuits that have a high frequency of be- ing “deenergized”—a term used to describe a planned power outage to reduce the risk of utility equipment sparking a fire. The utilities must report on measures taken to reduce the need for future deenergization events, including replacing, hardening or burying portions of the circuit underground.

California also defined “deenergization events” in state statute as planned power outages to reduce the risk of utility equipment sparking a fire. The newly enacted bill (SB 52) also outlined requirements for utilities to notify customers and public officials. Similarly, Arkansas enacted HB 1557 to require the state’s electric utilities to directly notify local governments around planned power outages and other emergency measures. The law also requires utilities to develop emergency plans for at-risk customers to help them manage outages and weather events.

Microgrids and Backup Power

Microgrids and backup power are two key methods of helping vulnerable individuals and communities maintain vital services through outages. While several states have recently taken action regarding back- up power requirements for certain facilities, the past year was particularly notable for microgrids. These systems can operate in tandem to maintain electric service to critical loads, with or isolated from the grid, during outage events. In 2021, states considered nearly 60 bills related to microgrids, with at least 14 bills enacted.

Maine HB 782 was the most substantial of these, directing the state PUC to develop standards, tariffs and interconnection procedures for microgrid proposals. It also directs the PUC to approve microgrids that are determined to be in the public interest using these new rules. This type of standardization is considered key to expanding microgrid development by establishing clear pathways and predictable revenue to potential developers. Adding to this, Maine enacted HB 1230, which created the Maine Clean Energy and Sustainability Accelerator, a fund to support the development of a wide array of clean energy projects and infrastructure, including microgrids.

Connecticut, Minnesota, New Jersey, New Mexico and Oregon also established funds or set aside funding either directed specifically at microgrids or included microgrids under the list of qualifying projects.

Finally, Tennessee became the fourth state to include microgrids under the list of projects that qualify under state commercial property assessed clean energy financing (C-PACE) laws. C-PACE is a finance mechanism that allows property owners to finance the up-front cost of certain energy projects by repaying them through fees applied to their property taxes. Connecticut, Illinois and Washington also include microgrids under C-PACE programs, while Pennsylvania considered a bill to do so last year.

Hardening Infrastructure

Hardening grid infrastructure—making it more resilient to the destructive force of wind, water, fire and ice— costs money. These projects may include undergrounding electric lines, replacing susceptible poles, pursuing flood mitigation projects or winterizing vital components. In the 2010s, the costs associated with these investments has often been a barrier to legislative action. However, that has started to change in recent years.

In 2021, several states enacted legislation to overcome some of those financial obstacles. While New Jersey, Oregon, Virginia, Washington and Wisconsin set aside funding that could be used for grid-hardening projects, a handful of other states established state-run enterprises to administer grants or low-cost bond programs geared toward hardening or rebuilding energy infrastructure.

Colorado created a Natural Disaster Mitigation Grant Program (HB 1208) to establish a long-term, consistent source of funding to support local communities in developing resilient infrastructure. The grant program will be funded through a fee assessed on insurance companies that operate in the state.

Louisiana and Texas expanded the role of state enterprises that administer low-cost financing through securitization and bond issuance. Louisiana’s SB 223 authorized the Louisiana Utilities Restoration Corporation to issue storm recovery bonds that may be used by the state’s electric utilities as a low-cost financing option to rebuild after disasters and pursue grid-hardening projects aimed at protecting utility infrastructure before future disasters occur. Projects financed through those bonds may not be recovered through customer rates. Texas’ HB 1510 similarly expanded low-cost financing through a state authority to finance future-oriented infrastructure-hardening projects.

New Mexico HB 245 clarifies that distribution system-hardening projects designed to protect substations and reduce outages are eligible to receive funding under a law enacted in 2020 to incentivize and assist with financing grid modernization projects.

Energy Storage

The growth in energy storage legislation over the past several years has been extraordinary. In 2018, around 80 measures related to energy storage were introduced in state legislatures, with 17 bills enacted. In 2021, NCSL tracked just under 300 measures related to energy storage, of which 60 became law. The growth in legislative interest mirrors real-world deployment, as policymakers and utilities look to capitalize on the unique characteristics that energy storage offers the grid, whether as a complimentary resource to help integrate renewable energy or for its potential to offer grid-stabilizing services and backup power.

Most of the state action sought to encourage the development of new energy storage capacity through financial incentives or regulatory changes. At least nine states—California, Colorado, Indiana, Maryland, Maine, New Hampshire, Oregon, South Carolina and Virginia—enacted legislation to provide financial incentives to energy storage developers. Indiana’s SB 383 provides a sales tax exemption for utility scale battery storage systems, while Arizona (HB 2153), Colorado (SB 20), New Hampshire (SB 102) and Virginia (HB 2006) established other tax exemptions for energy storage technologies. 

Maryland (HB 517) and Maine (HB 1230a) established or expanded state programs to provide financial support to clean energy projects, including energy storage.

On the regulatory side, seven states enacted nine bills aimed at easing the regulatory burdens on energy storage developers. Maine (SB 361) and New Hampshire (SB 91) directed their state PUCs to adopt rules that streamline interconnection processes for energy storage projects, while Colorado (HB 1324) authorized the state PUC to review and approve utility applications for innovative low-emissions technologies, including energy storage. Meanwhile, Virginia enacted two bills (HB 2148 and HB 2201) that aim to facilitate the siting, review, permitting and inspection requirements for small renewable projects paired with energy storage.

Texas at least partially addressed some restrictions on the use of energy storage by transmission and distribution (T&D) utilities with the enactment of SB 415. Under state law, energy storage is classified as generation, which T&D utilities are prohibited from owning in Texas. In other states, storage has been used to avoid costly infrastructure upgrades on the transmission and distribution grids by managing congestion and system needs more efficiently—an approach known as non-wires alternatives. The new law allows T&D utilities to pursue energy storage as a cost-saving alternative by allowing T&D utilities to lease storage systems from third parties and recover costs.

A more direct approach to energy storage development has come in the form of state mandates and targets. At least 10 states proposed to establish new or increase existing energy storage targets in 2021, though only two states ultimately enacted these measures—Connecticut and Maine.

Connecticut’s SB 952 sets three energy storage development goals that culminate at 1,000 MW by 2030. The new law also directs the state PUC to develop programs to incentivize and facilitate development for all types of projects. Maine enacted SB 213, which established a state goal of developing 300 MW by 2025 and 400 MW by 2030, with subsequent goals to be set by the state Energy Office following 2030.

Nine states have set energy storage targets: California, Connecticut, Maine, Massachusetts, Nevada, New Jersey, New York, Oregon and Virginia.

States also considered policies to capitalize on the resilience benefits of energy storage, with at least seven states considering the application of energy storage for microgrids and backup power. New Jersey (AB 2374) and Oregon (HB 2021) each enacted measures to increase funding opportunities for community resilience projects, including energy storage and microgrids.

The storage market is currently dominated by lithium-ion batteries, which are often limited to four-hour discharges—notably limited when it comes to days-long events that strain the grid. To address this shortfall and expand the market offerings, several states have begun exploring ways to develop “long-duration” energy storage—a suite of technologies that can discharge over the span of anywhere from 10 hours to weeks.

California built on prior enacted legislation with the enactment of SB 423, which requires the state Energy Commission to incorporate power system resources that can, individually or in combination, deliver electricity with high availability for the duration of multiday events and facilitate the integration of renewables on the grid. Meanwhile, Colorado’s HB 1052 includes pumped hydroelectric facilities—which tend to offer long-duration discharge—under the list of resources that qualify under the state’s RPS.

Energy Sector Cybersecurity

State legislatures considered at least 46 measures related to the cybersecurity of energy systems in 2021, a jump from the 35 measures introduced in 2020 but still down from the 50 measures seen in 2019. Of the measures introduced in 2021, a dozen passed. Even with several high-profile cyber-attacks on energy systems underlining the growing threat—such as the Colonial Pipeline ransomware attack that led to a massive drop in fuel supplies on the East Coast—the topic has not seen substantial growth in state legislation in recent years.

Even so, the policies under consideration by states have matured in that time. These measures most often related to cybersecurity reporting and information-sharing requirements for utilities, exemptions to open records laws for utility cybersecurity disclosures and the creation of new criminal offenses related to cyber-crimes targeting critical infrastructure.

Georgia enacted HB 156, requiring government agencies and utilities to report any cyber-attacks to the state director of Emergency Management and Homeland Security, while also exempting certain cyber-security disclosures from public release. Kansas, North Dakota, Oklahoma and Vermont provided similar open records exemptions, which are intended to prevent utility cyber vulnerabilities from being released publicly.

North Dakota’s SB 2313 requires the state’s electric utilities to submit annual reports to the state PUC regarding cybersecurity preparedness, assessments of emerging threats and steps taken to improve their cybersecurity posture.

Finally, Texas enacted SB 2116, prohibiting contracts or other agreements related to the state’s critical infrastructure with certain foreign-owned companies. The prohibitions—which apply most directly to companies headquartered in or owned by individuals from China, Iran, North Korea or Russia—relate to the energy sector and cybersecurity systems.

Energy Workforce

As the U.S. navigates the clean energy transition, issues facing the energy workforce have been at the forefront. The two primary issues are the displacement of workers in the fossil fuel industry and the development of a clean energy workforce. These workforce issues are multifaceted and overlap with a variety of other issues facing the energy sector and the broader economy, including energy justice, education, and economic development. These issues have become even more apparent as the country manages the COVID-19 pandemic and clean energy development continues to expand.

Legislatures were active in passing economic and workforce development bills in 2021. Some larger economic development bills included specific provisions regarding the energy workforce. For example, New Jersey AB 4 is a general economic recovery bill that provides tax credits and other incentives for renewable energy developments that create jobs for the state’s energy workforce. Similarly, California SB 7 allows the governor to fast-track development projects, including renewable energy generation and clean energy manufacturing projects. While the law does not explicitly address workforce transition issues, it is designed to streamline and promote jobs and training programs in the clean energy industry.

Some states also enacted legislation specifically targeted at the development of a clean energy workforce. Most notably, Illinois’ SB 2408 included numerous provisions designed to help displaced fossil fuel workers and establish a clean energy workforce for the state.

The Illinois bill creates the Energy Transition Assistance Fund and allocates funds to support state workforce development and transition. Additionally, the act creates a Clean Jobs Workforce Network Hub program, which establishes 13 hub sites aimed at leveraging community-based organizations to provide resources, information and support for workers to enter the clean energy sector.

The law also includes a section referred to as the Displaced Energy Workers Bill of Rights. It includes benefits for displaced workers, such as advanced notice of plant or mine closures, education for displaced workers on available assistance programs and resources, consultation with workers on various employment and educational opportunities for them, training and career counseling services and financial and retirement planning services.

A few other states enacted legislation regarding energy workforce development in 2021. Colorado enacted HB 1290, which provided additional funding to the Office of Just Transition. The bill provided $8 million to fund grants supported by the Just Transition Cash Fund and an additional $7 million to new coal transition worker assistance programs. Colorado also enacted HB 1149 which is aimed at promoting energy sector career pathways in higher education.

California SB 162 established the Community Economic Resilience Fund to provide grants aimed at resolving economic and workforce issues resulting from COVID-19 and the transition to carbon neutrality. These economic development grants will provide relief to displaced energy workers by funding training programs, supporting regional workforce initiatives, and promoting growth and innovation in key industries. California SB 589 amends an existing law requiring a state assessment of necessary electric vehicle charging infrastructure, along with the workforce development and training resources needed to meet the state’s EV goals.

While not directly related to workforce development, two states enacted legislation to support a state “Climate Corps” for volunteers, youths, and others to contribute to climate, energy, and environmental projects. Maine enacted HB 533 seeking an assessment of service projects and recommendations on how to best implement the Maine Climate Corps program. Hawaii enacted HB 1176 which establishes a Green Jobs Youth Corps program to promote service projects and provide work and training to program participants.

Energy Justice & Equity

Energy justice, environmental justice, and equity issues all made headlines in 2021 and many communities, organizations and legislators are bringing these issues to the forefront of the energy policy discussion. Energy justice refers to the process of achieving equity in both the social and economic participation in the energy system and focuses on alleviating disproportionate burdens on communities –typically communities comprised of working class, indigenous, minority, and historically disenfranchised people—by making energy more affordable, accessible and responsibly managed.

The Biden administration has been vocal recently about its support for energy justice. President Biden announced the Justice40 Initiative that attempts to address equity and justice issues related to the clean energy transition and the environment. The initiative promises to deliver at least 40% of the overall benefits from federal investments in climate and clean energy to disadvantaged communities. The initiative outlines how programs related to climate change, clean energy, transportation and others can be leveraged to positively impact disadvantaged communities.

Energy affordability and access is at the heart of energy justice. Low to moderate income households are considered the most at risk of not having affordable access to energy with Black, Latino, and Native American households paying significantly higher proportions of their income on energy compared to white households. Programs like LIHEAP—the Low-Income Home Energy Assistance Program—have been leveraged to alleviate this disparity.

Some states also enacted new utility bill payment assistance programs in 2021, such as Percentage of Income Payment Plans (PIPP). These plans allow low-moderate income customers to pay a fixed percentage of their income in monthly energy or utility costs rather than being charged at a retail rate. Rhode Island’s HB 5809 establishes that customers below 150% of the federal poverty level who receive assistance through LIHEAP will not pay more than 4% of their annual gross household income for electricity. Illinois enacted similar legislation, SB 265, where eligible customers will not pay more than 6% of their income on gas and electric utility bills. Colorado’s HB 1105 bolstered the state’s low-income utility payment assistance programs. Two other Colorado bills—SB 272 and SB 1266—consider how the state’s clean energy transition would impact “disproportionally impacted communities” and bring energy and environmental justice issues to the forefront.

The growing awareness of energy justice issues has led states to attempt to address these issues by weaving equity considerations into broader energy policies. These larger clean energy policy bills are beginning to consider the impacts these policies have on disadvantaged communities. For instance, equity and justice was a component of recent state energy efficiency plans in Massachusetts and a rooftop solar program in Nevada.

In 2019, New York enacted SB 6599, which revamped the state’s RPS to ensure disadvantaged communities receive 40% of the overall benefits of spending on clean energy programs and projects as part of the energy transition. In 2020, Virginia enacted SB 851, which made similar commitments to low-income and disadvantaged communities.

In 2021, Oregon’s emissions standards legislation (HB 2021) contained numerous provisions concerning equity and environmental justice. For instance, utilities under the legislation must convene a Community Benefits and Impacts Advisory Group that includes representatives from environmental justice communities and low-income ratepayers to assess the community benefits and impacts of the utility’s clean energy plan. Furthermore, the act’s Community Renewable Investment Program is tasked with providing direct benefits to disadvantaged communities in the form of energy resilience, economic development, energy cost savings and involvement in the siting, planning, and evaluation of community renewable projects.

Investments in disadvantaged communities can help the energy transition be more equitable. Washington SB 5126 established the state’s emissions trading market. Proceeds from the auction of emissions allowances are designated to be directed toward environmental justice communities and tribal nations. The Environmental Justice Council in charge of distributing the funds must ensure that 35% of investments are made in ways that benefit the most vulnerable communities.

Addressing the Coronavirus Pandemic

The impacts of the coronavirus pandemic on the energy sector, like most aspects of American life, were still prevalent throughout 2021. Emergencies can have far-reaching impacts throughout the economy, including impacts to the energy sector. State governments responded and adapted in necessary ways to ensure that energy service was largely uninterrupted and that states were prepared for future emergencies. In doing so, states considered various policies related to government authority during emergencies, the impacts on critical sectors and workers and what protections they would receive, and the financial implications for consumers and utilities.

Legislative Oversight of Executive Power

In the initial stages of the COVID-19 pandemic, state governments realized that a unified and consistent state-wide approach was necessary to address myriad issues created by the pandemic. As such, many of the early actions and orders came from the state executive branch under the governor’s emergency authority. However, as the pandemic continued much longer than many initially anticipated, state legislatures looked to restrict the governor’s authority and set limits on executive power.

For example, Kentucky SB 1 includes restrictions on the governor’s emergency powers that are generally applicable to executive orders issued under emergency declarations. The bill limits the term of the governor’s emergency orders to 30 days unless specifically requested by local government. Similarly, Utah SB 195 provides a state of emergency may be declared by the governor, but expires 30 days after issuance unless the legislature terminates or extends the emergency declaration by joint resolution. Despite these legislative restrictions and oversight, most state legislatures also recognized the importance of a swift and unified state response during the initial stages of an emergency and preserved the governors’ emergency powers during the first 120 days of emergency response.

Essential Worker Designation

Most workers in the energy industry were designated as “essential critical infrastructure workers” during the pandemic emergency. Other systems critical to the energy sector are also considered “essential” during times of emergency. These include, but are not limited to, the electric grid systems, grid control room operators, natural gas networks, gas pipeline and transmission systems, renewable energy generation, and manufacturing and construction industry essential to energy systems.

At least 43 states and Washington, D.C., issued “essential worker designations” during the COVID-19 emergency. As the emergency response to the pandemic wanes, many state legislatures have considered codifying essential worker designations and establishing safety procedures, benefits and priority access to PPE, testing and vaccinations for essential workers.

Hawaii HB 643 (pending, carried over to 2022 regular session) adds a definition of “essential worker” to the state’s emergency management statute and adds protections for those workers so their work is not disrupted. The legislation would include workers employed by a business or service in the energy sector.

Other recent essential worker legislation is designed to provide benefits to those designated as “essential workers,” which often includes energy workers during periods of emergency. Maryland HB 581 mandates that employers provide safety protocols and equipment, subject to availability, for essential workers and allow essential workers to take “public health emergency sick leave” if a worker is sick or symptomatic.

New York is considering two pieces of legislation, SB 640 (pending, January 2021) and SB 519 (pending, January 2021), which would establish an “essential workers bill of rights” and provide essential workers with hazard pay during states of emergency. Energy employers would be required to provide PPE to workers at no cost to the employee and notify workers of potential exposure to COVID-19. The bills would require certain large employers to provide their essential employees with hazard pay and cover costs of childcare or health care if the employees were exposed to health and safety risks during work assignments

Disconnection Moratoriums and Bill Payment Assistance

A U.S. Census Household Pulse Survey in July 2021 found over 80 million Americans were having trouble paying bills like rent and utilities during the COVID pandemic. In 2020 and into 2021, many state legislatures considered establishing and extending utility disconnection moratoriums to protect individuals and families from losing access to essential services during hardships.

For example, several states in 2021 extended moratoriums or other protections first enacted during 2020. Some of these came from the executive branch pursuant to legislative COVID measures or existing disaster laws. Others originated in the legislature. For instance, New York passed legislation in May 2021 that extended utility shutoff moratoriums through Dec. 21, 2021. Indiana extended its moratorium until 90 days after the disaster declaration ended. Most of these actions were limited to the duration of their states’ COVID-19 emergency declarations, and expired by the end of 2021, but a couple of states proposed bills extending protections into the future for vulnerable groups. Washington HB 1490, which was carried over from 2021 for consideration in 2022, would permanently extend the state’s moratorium on disconnections for low-income and disabled residents.

Several state legislatures have expanded access and funding for payment assistance programs to reduce customers’ energy burden or have required utilities to offer repayment plans to customers facing financial hardship. Oregon HB 2739, which caps monthly utility payments for low-income customers, requires utilities to collect fees to fund low-income assistance programs, and expands eligibility for COVID-related programs to those at or below 80% of the area median income. New Mexico, meanwhile, considered but did not pass HB 206 in 2021 to require utilities to offer repayment plans and possible debt forgiveness to COVID-impacted customers. Several other states have tied utility payments directly to income levels, discussed in the Energy Justice section of this report.

Grid Modernization & Utility Regulation

Several states enacted legislation in 2021 seeking to harness new technologies and concepts to modernize the grid, leverage market opportunities and shift long-standing regulatory paradigms. These policies seek to accomplish a variety of outcomes, from enabling more dynamic energy management systems to facilitating market participation and shifting the focus of state regulation.

Maine enacted HB 1237 to explore the development of a statewide online energy data platform that could be used to implement new demand management programs. The law directs the state PUC to evaluate the potential for this type of platform, which would allow customers, utilities and third parties to access energy data that could be used to develop and implement programs to enhance efficiency, distributed generation, energy storage, and transmission and distribution improvements. The law emphasizes consumer privacy, requiring data to be aggregated and stripped of personally identifiable information.

Minnesota also worked to offer more demand management programs and other services to reduce costs and optimize energy use through the enactment of its Energy Conservation and Optimization Act (HB 164). The new law encourages utilities to offer programs to incentivize fuel-switching and building retrofitting, utilize rate design to manage demand, and develop programs to change market and consumer behavior. The programs are to be designed to maximize customer benefits—with an emphasis on low-income households—and optimize infrastructure to incorporate renewable energy.

Meanwhile, Illinois, North Carolina and Washington enacted measures to shift the focus of utility regulation away from a cost-of-service model to one that’s focused on achieving desired outcomes. Each state moved toward performance-based regulation (PBR) and multiyear rate plans (MYRPs), which jointly work to break the link between—or decouple—utility power sales and revenue. The idea is to better align utility interests with those of the state and customers.

Under the existing regulatory framework, utilities earn the bulk of their revenue through rates paid by customers based on power consumption—a model that somewhat perversely encourages greater consumption rather than efficiency and other demand-reduction measures. To decouple, PBR ties revenue to the utility’s ability to achieve outcomes—such as integration of renewable energy, enhanced reliability, affordability, demand-side management or customer satisfaction. The utility’s performance is regularly measured over a multiyear period against those performance objectives; if the utility has achieved the desired outcomes its revenue increases, while its revenue decreases if it falls short.

While Illinois, North Carolina and Washington each moved the needle on PBR and MYRPs, several differences exist between the policies. Illinois has tried to move its utilities toward PBR regulation through prior-enacted legislation, though the legislature determined those measures had come up short. As part of its comprehensive energy package (SB 2408), lawmakers took a more decisive step toward PBR by directing the state PUC to establish a PBR framework for electric utilities that serve over 500,000 customers. The framework is to be designed with a focus on the following objectives:

• Decarbonization
• Affordability and customer satisfaction
• Improved system reliability
• Integration of renewable and distributed energy resources
• Workforce diversification
• Addressing energy and environmental justice issues

North Carolina HB 951 introduced PBR by allowing—but not requiring—electric utilities to apply for a performance-based MYRP. The law establishes many of the parameters to be used by the state PUC, including the requirement for an “earnings sharing mechanism” to ensure that customers share in any surplus earnings.

Washington SB 5295 establishes a requirement that all gas and electric utilities must file a performance-based MYRP proposal during every rate case before the state PUC. It requires the state PUC to develop a policy statement through stakeholder consultation, which clarifies what the state is looking for under this new regulatory paradigm. The new law also includes significant requirements around programs to assist and address long-standing energy burdens faced by low-income customers.

Finally, in the Western U.S., momentum continues to grow around the development of a regional transmission organization (RTO) to manage the high-voltage transmission grid and operate a regional wholesale electricity market. While around two-thirds of electricity in the U.S. is now served through RTOs, the Southeast and West are the exceptions.

However, there has been a growing interest in developing or expanding RTOs in these regions due to the potential for RTOs to more efficiently and effectively manage the grid and expand access to new markets. One recent study funded by the U.S. Department of Energy proposed that a single Western RTO could result in up to $2 billion in annual benefits by 2030. Another study by the Colorado Public Utilities Commission concluded the state’s utilities could save up to $230 million annually and effectively meet the state’s clean energy goals through participation in an RTO.

IIn 2021, Colorado (SB 72) and Nevada (SB 448) required utilities in those states to join an RTO by 2030, while Oregon (SB 589) required the state Department of Energy to establish a public process to investigate the potential benefits and drawbacks of requiring the state’s utilities to join an RTO. Montana SJR 33 also commissioned a study to examine the state electric grid’s capacity requirements, including the role that regional markets and RTO participation could play.

Fossil Fuels

The past year continued a divergent trend in state action around fossil fuels. On the one hand, several states with clean energy goals continued to pursue policies to shift away from the use of fossil fuels, particularly the use of coal. On the other, several states with economies tied to fossil fuel production enacted policies aimed at preserving the use of fossil fuels, particularly the use of coal.

Additionally, at least 17 states moved over the past year to preempt municipalities from restricting the use of natural gas or other fuels in new buildings.

Divergence on Coal

Many clean energy policies haven’t set deadlines for the closure of fossil-fired generation, instead allowing the clean energy requirements to serve as de facto phaseouts. However, Virginia moved in 2020 to require the closure of most coal-fired power by 2024, and two newly enacted laws in Illinois and North Carolina also establish deadlines for the closure of fossil-fired generation.

Illinois’ new clean energy law (SB 2408) requires coal plants owned by the state’s investor-owned utilities to shut down by 2030. The remaining coal plants and all gas-fired plants are required to shut down by 2045. It also sets aside $500 million to help convert some coal facilities to solar farms, while funding job retraining and educational programs to help displaced coal industry workers.

North Carolina’s HB 951 requires the state PUC to identify “sub-critical” coal-fired facilities for early retirement and authorizes the securitization of costs associated with those closures. This has been a fairly popular method for states looking to limit customer exposure to stranded assets as utilities elect to close uneconomic coal facilities prior to their planned date of retirement. Colorado, New Mexico and Montana were three of the first states to allow for the securitization of costs associated with early coal retirements in 2019. This past year, Indiana (SB 386), Kansas (HB 2072) and North Carolina (HB 951) did the same, while similar measures passed each chamber in Missouri (SB 202) and Minnesota (SB 972). The Missouri bill ultimately failed due to adjournment, while the Minnesota bill carried over to the current session and remains in conference committee.

Alternatively, a handful of states enacted policies aimed at preserving coal-fired power plants, along with the associated jobs, tax base and other economic contributions. North Dakota enacted several relevant measures in 2021, including providing the coal industry with exemptions to certain taxes (HB 1412), limiting state regulation of coal-fired power plants (SB 2237) and providing for a study on lignite coal industry insurance (SB 2287). North Dakota also encouraged research and development of technologies to reduce carbon emissions from coal-fired plants through a Clean Sustainable Energy Fund (HB 1452) and by adopting ing a resolution that expresses the legislature’s support for CCS technologies (SCR 4012).

Arkansas enacted HB 1665, which encourages the state PUC to promote the continued use of existing generation through the end of its useful life. The PUC is directed to evaluate the useful life of existing generating units in the state on a three-year rolling basis, and to express the commission’s determination of whether continued operation of such units was in the public interest.

Meanwhile, Wyoming HB 166 creates a presumption against the retirement of coal-and natural gas-fired generation, which utilities must rebut to retire such generating units. The new law also eliminates cost-recovery for new electric generation intended to replace retired coal-or gas-fired generation. The state also took aim at policies in other states that might affect Wyoming’s coal industry by creating a fund to fight those policies in court. HB 207 set aside $1.2 million to commence and prosecute lawsuits against other states and other states’ agencies that enact or enforce laws, regulations or other actions that impede Wyoming’s ability to export coal or cause the early retirement of coal-fired generation in Wyoming.

Building Electrification and Natural Gas Bans

As states and utilities consider methods of electrifying sectors that have traditionally been served by other energy sources, there has been a degree of predictable backlash to these initiatives. The movement to electrify heating and cooking systems in buildings is one recent example.

Several states and localities worked to enable building electrification in 2021. California AB 137 directs the Energy Commission to develop an initiative to support new, all-electric residential construction. Another bill, California SB 68, requires the Energy Commission to disseminate guidance and best practices to overcome barriers to building electrification, including model electrification plans and permit applications to streamline the process. It also provides funding for research into technologies that will reduce costs of electrification and its overall benefits to ratepayers and the state’s energy goals.

Massachusetts HB 3313 also aims to lower barriers to electrification by guaranteeing energy customers the right to connect distributed energy resources like rooftop solar or storage systems onto the grid, and ensuring prompt interconnection. It also caps how much a customer can be charged for interconnection, with any excess recoverable through the company’s rate base. New Mexico’s HB 15 provides additional tax bonuses for fully-electric construction, in addition to those mentioned under energy efficiency.

Looking forward, states may consider more legislation or regulations that would promote or even require new construction to be fully electrified. However, this trend is also playing out at the local level and sparking conflict between some state and local governments.

In 2019, Berkeley, Calif., became the first local government to prohibit the use of natural gas in new buildings as part of its emissions reduction policies. Since then, several local governments across the country have moved to enact similar policies. These policies most often ban natural gas hookups in new construction for multi-dwelling apartment buildings and commercial buildings, requiring buildings to electrify heating, cooking and other appliances. Those in favor of the bans argue that electric heating and appliances are more efficient and reduce emissions. Most recently, New York City banned natural gas hook-ups in new buildings and New York Gov. Kathy Hochul has put her support behind a statewide gas ban for new buildings.

However, these prohibitions have led to a different kind of prohibition as state legislators in some states moved to preempt this type of action by municipal governments, arguing they unfairly burden low-and middle-income residents by limiting access to cheaper resources. Four states—Arizona, Louisiana, Oklahoma and Tennessee—enacted new laws in 2020 that preempt local governments from restricting the use of natural gas and other fuels in new construction. This past year, another 17 states passed this type of legislation, though North Carolina Gov. Roy Cooper vetoed HB 220, saying it would undermine the state’s transition to clean energy and strip local governments of their rightful authority. Twenty states have enacted “fuel choice” laws.

Perhaps threading the needle on this issue, Colorado enacted a new Clean Heat Standard (SB 264), which requires the state’s gas distribution utilities to reduce emissions 4% by 2025 and 22% by 2030. Under this innovative new policy, gas utilities have a variety of options to achieving the required emissions reductions, including efficiency measures, electrification and the incorporation of renewable natural gas and hydrogen.