THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY ERICKSON, MUSTO, O'PAKE, WOZNIAK, LEACH, ALLOWAY AND WONDERLING, MARCH 19, 2009

REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, MARCH 19, 2009  

AN ACT

Amending the act of November 30, 2004 (P.L.1672, No.213),

entitled, "An act providing for the sale of electric energy

generated from renewable and environmentally beneficial

sources, for the acquisition of electric energy generated

from renewable and environmentally beneficial sources by

electric distribution and supply companies and for the powers

and duties of the Pennsylvania Public Utility Commission,"

further providing for definitions and for alternative energy

portfolio standards; and providing for carbon dioxide

sequestration network.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definition of "alternative energy sources"

and "Tier II alternative energy source" in section 2 of the act

of November 30, 2004 (P.L.1672, No.213), known as the

Alternative Energy Portfolio Standards Act, are amended by

adding paragraphs and the section is amended by adding

definitions to read:

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Alternative energy sources."  The term shall include the

following existing and new sources for the production of

electricity:

* * *

(14)  Advanced coal combustion with limited carbon

emissions, which means the production of electric power from

a generation facility that:

(i)  Is fueled by coal or gas derived from an

advanced coal gasification plant.

(ii)  Captures, either in the advanced coal

gasification plant or in the electrical generation

facility, and permanently sequesters at least the

following amount of all carbon dioxide produced:

(A)  40% from June 1, 2015 to May 31, 2019.

(B)  60% from June 1, 2019 to May 31, 2024.

(C)  90% from June 1, 2024 and thereafter.

(D)  The requirement under clause (C) shall be

waived if commercially proven and project-financeable

technology is not available.

(iii)  Has been designed to accommodate the required

additional processing equipment to produce power with a

maximum of 1,000 pounds of carbon dioxide emissions per

megawatt hour.

* * *

"Carbon dioxide sequestration network."  Geological

subsurface formations within this Commonwealth with suitable cap

rock, sealing faults and anticline used by the Department of

Conservation and Natural Resources for the permanent storage of

carbon dioxide from advanced coal combustion with limited carbon

emissions plants or other sources within this Commonwealth along

with the facilities necessary to transport the carbon dioxide

from the surface to the subsurface formations and monitor the

permanent storage of the carbon dioxide in subsurface

formations. The term shall not include use of the carbon dioxide

for enhanced resource recovery.

* * *

"DCNR."  The Department of Conservation and Natural Resources

of the Commonwealth.

* * *

"Enhanced resource recovery."  The use of carbon dioxide

injection or other techniques for increasing the amount of oil,

natural gas or coal bed methane extracted from geologic

formations.

* * *

"Tier II alternative energy source."  Energy derived from:

* * *

(8)  Advanced coal combustion with limited carbon

emissions.

* * *

Section 2.  Section 3(a),(b),(c), (f) and (g) of the act,

amended July 17, 2007 (P.L.114, No.35), are amended and the

section is amended by adding subsections to read:

Section 3.  Alternative energy portfolio standards.

(a)  General compliance and cost recovery.--

(1)  From the effective date of this act through and

including the 15th year after enactment of this act and each

year thereafter, the electric energy sold by an electric

distribution company or electric generation supplier to

retail electric customers in this Commonwealth shall be

comprised of electricity generated from alternative energy

sources and in the percentage amounts as described under

subsections [(b) and (c)] (b), (c) and (c.1).

(2)  Electric distribution companies and electric

generation suppliers shall satisfy both requirements set

forth in subsections [(b) and (c)] (b), (c) and (c.1),

provided, however, that an electric distribution company or

an electric generation supplier shall be excused from its

obligations under this section to the extent that the

commission determines that force majeure exists.

(3)  All costs for:

(i)  the purchase of electricity generated from

alternative energy sources, including the costs of the

regional transmission organization, in excess of the

regional transmission organization real-time locational

marginal pricing, or its successor, at the delivery point

of the alternative energy source for the electrical

production of the alternative energy sources; and

(ii)  payments for alternative energy credits,in both

cases that are voluntarily acquired by an electric

distribution company during the cost recovery period on

behalf of its customers shall be deferred as a regulatory

asset by the electric distribution company and fully

recovered, with a return on the unamortized balance,

pursuant to an automatic energy adjustment clause under

66 Pa.C.S. § 1307 (relating to sliding scale of rates;

adjustments) as a cost of generation supply under 66

Pa.C.S. § 2807 (relating to duties of electric

distribution companies) in the first year after the

expiration of its cost-recovery period. After the cost-

recovery period, any direct or indirect costs for the

purchase by electric distribution of resources to comply

with this section, including, but not limited to, the

purchase of electricity generated from alternative energy

sources, payments for alternative energy credits, cost of

credits banked, payments to any third party

administrators for performance under this act and costs

levied by a regional transmission organization to ensure

that alternative energy sources are reliable, shall be

recovered on a full and current basis pursuant to an

automatic energy adjustment clause under 66 Pa.C.S. §

1307 as a cost of generation supply under 66 Pa.C.S. §

2807.

(b)  Tier I and solar photovoltaic shares.--

(1)  Two years after the effective date of this act, at

least 1.5% of the electric energy sold by an electric

distribution company or electric generation supplier to

retail electric customers in this Commonwealth shall be

generated from Tier I alternative energy sources. Except as

provided in this section, the minimum percentage of electric

energy required to be sold to retail electric customers from

alternative energy sources shall increase to 2% three years

after the effective date of this act. The minimum percentage

of electric energy required to be sold to retail electric

customers from alternative energy sources shall increase by

at least 0.5% each year so that at least 8% of the electric

energy sold by an electric distribution company or electric

generation supplier to retail electric customers in that

certificated territory in the 15th year after the effective

date of this subsection is sold from Tier I alternative

energy resources.

(1.1)  After the 15th year of the effective date of this

subsection, the minimum percentage of electric energy

required to be sold to retail electric customers from Tier I

alternative energy sources is:

(i)  10% for June 1, 2021, through May 31, 2022.

(ii)  12% for June 1, 2022, through May 31, 2023.

(iii)  14% for June 1, 2023, through May 31, 2024.

(iv)  16% for June 1, 2024, through May 31, 2025.

(v)  18% for June 1, 2025, through May 31, 2026.

(vi)  20% for June 1, 2026, and thereafter.

(2)  The total percentage of the electric energy sold by

an electric distribution company or electric generation

supplier to retail electric customers in this Commonwealth

that must be sold from solar photovoltaic technologies is:

(i)  0.0013% for June 1, 2006, through May 31, 2007.

(ii)  0.0030% for June 1, 2007, through May 31, 2008.

(iii)  0.0063% for June 1, 2008, through May 31,

2009.

(iv)  0.0120% for June 1, 2009, through May 31, 2010.

(v)  0.0203% for June 1, 2010, through May 31, 2011.

(vi)  0.0325% for June 1, 2011, through May 31, 2012.

(vii)  0.0510% for June 1, 2012, through May 31,

2013.

(viii)  0.0840% for June 1, 2013, through May 31,

2014.

(ix)  0.1440% for June 1, 2014, through May 31, 2015.

(x)  0.2500% for June 1, 2015, through May 31, 2016.

(xi)  0.2933% for June 1, 2016, through May 31, 2017.

(xii)  0.3400% for June 1, 2017, through May 31,

2018.

(xiii)  0.3900% for June 1, 2018, through May 31,

2019.

(xiv)  0.4433% for June 1, 2019, through May 31,

2020.

(xv)  0.5000% for June 1, 2020, [and thereafter.] 

through May 31, 2021.

(xvi)  0.9000% for June 1, 2021, through May 31,

2022.

(xvii)  1.3000% for June 1, 2022, through May 31,

2023.

(xviii)  1.7000% for June 1, 2023, through May 31,

2024.

(xix)  2.1000% for June 1, 2024, through May 31,

2025.

(xx)  2.5000% for June 1, 2025, through May 31, 2026.

(xxi)  3.000% for June 1, 2026, and thereafter.

(3)  Upon commencement of the beginning of the 6th

reporting year, and every five years thereafter, the

commission shall undertake a review of the compliance by

electric distribution companies and electric generation

suppliers with the requirements of this act. The review shall

also include the status of alternative energy technologies

within this Commonwealth and the capacity to add additional

alternative energy resources. The commission shall use the

results of this review to recommend to the General Assembly

additional compliance goals beyond year [15] 21. The

commission shall work with the department in evaluating the

future alternative energy resource potential.

(4)  As of May 31, 2021, and thereafter, 50% of electric

energy from solar photovoltaic technologies supplied to

retail customers shall be generated from solar photovoltaic

systems located within this Commonwealth in meeting the

requirements of paragraph (2).

(c)  Tier II share.--Of the electrical energy required to be

sold from alternative energy sources identified in Tier II, the

percentage that must be from these technologies is for:

(1)  Years 1 through 4 - 4.2%.

(2)  Years 5 through 9 - 6.2%.

(3)  Years 10 through 14 - [8.2%] 11.2%.

(4)  Years 15 and thereafter - [10.0%] 13.0%.

(c.1)  Retail sales from advanced coal combustion.--The total

electric energy sold by an electric distribution company or

electric generation supplier to retail electric customers in

this Commonwealth that shall be sold from advanced coal

combustion with limited carbon emissions is all of the electric

energy available from advanced coal combustion with limited

carbon emissions up to a maximum of 3.0% of the total electric

energy sold by an electric distribution company or electric

generation supplier to retail electric customers in this

Commonwealth for the reporting period which begins June 1, 2015,

and for each reporting period thereafter pursuant to subsection

(c). If at any time on or after June 1, 2015, the network

provided for under section 8.1, or other network permitted to

permanently sequester carbon dioxide, is not available to

receive carbon dioxide for sequestration through no fault of an

advanced coal combustion with limited carbon emissions facility,

a facility need not sequester carbon dioxide in order to

generate alternative energy credits provided the facility is

capable of capturing to the department's satisfaction the amount

of carbon dioxide required by paragraph (14)(ii) of the

definition of "alternative energy sources" in section 2.

(c.2)  Force majeure.--On or after December 31, 2015, if the

commission determines that construction of an advanced coal

combustion with limited carbon emissions facility has not been

commenced, this determination shall constitute force majeure,

and electric distribution companies and electric generation

suppliers shall be excused from all or part of their obligation

under subsection (c.1), as determined by the commission.

(c.3)  Long-term contracts.--Upon review and approval of the

commission, an electric distribution company may enter into a

long-term contract of up to 25 years to purchase the energy,

capacity or alternative energy credits of an advanced coal

combustion with limited carbon emissions facility. The contract

shall provide for cost recovery of costs associated with carbon

capture, including, but not limited to, any fees charged by the

Department of Conservation and Natural Resources pursuant to

section 8.1(b) with regard to the carbon dioxide sequestration

network. The commission shall determine that the contract is

reasonable, taking into consideration the following:

(1)  The price of the energy purchased under the long-

term contract.

(2)  The price of capacity purchased under the long-term

contract.

(3)  The price of alternative energy credits, provided

that the cost of an alternative energy credit purchased from

advanced coal combustion with limited carbon emissions shall

not exceed $45 per megawatt hour (MWh).

(4)  Prior to the effective date of the contract, the

value of any carbon emission credits or other credits that

the seller obtains from the advanced coal combustion with

limited carbon emissions facility.

(5)  After the effective date of the contract, the value

of any additional Federal or State carbon credits, allowances

or other financial benefits shall be reflected in the price

of the resource in a manner which recognizes savings to

customers and does not reduce the economic return to the

seller, provided that the seller demonstrates that it has

made a commercially reasonable effort to distribute any

economic incentives it has realized to electric distribution

companies. A contract approved by the commission under this

subsection shall be deemed to meet the requirements of 66

Pa.C.S. § 2807(e) (relating to duties of electric

distribution companies).

* * *

(f)  Alternative compliance payment.--

(1)  At the end of each program year, the program

administrator shall provide a report to the commission and to

each covered electric distribution company showing their

status level of alternative energy acquisition.

(2)  The commission shall conduct a review of each

determination made under subsections [(b) and (c)] (b), (c)

and (c.1). If, after notice and hearing, the commission

determines that an electric distribution company or electric

generation supplier has failed to comply with subsections

[(b) and (c)] (b), (c) and (c.1), the commission shall impose

an alternative compliance payment on that company or

supplier.

(3)  The alternative compliance payment, with the

exception of the solar photovoltaic share compliance

requirement set forth in subsection (b)(2), shall be $45

times the number of additional alternative energy credits

needed in order to comply with subsection (b) or (c).

(4)  [The alternative compliance payment for the solar

photovoltaic share shall be 200% of the average market value

of solar renewable energy credits sold during the reporting

period within the service region of the regional transmission

organization, including, where applicable, the levelized up-

front rebates received by sellers of solar renewable energy

credits in other jurisdictions in the PJM Interconnection,

L.L.C. transmission organization (PJM) or its successor.] The

alternative compliance payment for the solar photovoltaic

alternative share shall be established by the commission in

an amount and for a period of years necessary to promote the

market for solar photovoltaic alternative energy credits. The

alternative compliance payment for the solar photovoltaic

share may vary over the time period established by the

commission but shall be at least 200% of the average market

value for solar photovoltaic alternative energy credits sold

within the service region of the PJM Interconnection, L.L.C.

transmission organization in the year prior to the

establishment of the alternative compliance payment schedule.

The commission shall review the solar photovoltaic

alternative compliance payment schedule at least once per

year and shall establish an alternative compliance payment

schedule for additional years as needed to promote the market

for solar photovoltaic alternative energy credits.

(5)  The commission shall establish a process to provide

for, at least annually, a review of the alternative energy

market within this Commonwealth and the service territories

of the regional transmission organizations that manage the

transmission system in any part of this Commonwealth. The

commission will use the results of this study to identify any

needed changes to the cost associated with the alternative

compliance payment program. If the commission finds that the

costs associated with the alternative compliance payment

program must be changed, the commission shall present these

findings to the General Assembly for legislative enactment.

(g)  Transfer to sustainable development funds.--

(1)  Notwithstanding the provisions of 66 Pa.C.S. §§ 511

(relating to disposition, appropriation and disbursement of

assessments and fees) and 3315 (relating to disposition of

fines and penalties), alternative compliance payments imposed

pursuant to this act shall be paid into Pennsylvania's

Sustainable Energy Funds created under the commission's

restructuring orders under 66 Pa.C.S. Ch. 28 (relating to

restructuring of electric utility industry). Alternative

compliance payments shall be paid into a special fund of the

Pennsylvania Sustainable Energy Board, established by the

commission under Docket M-00031715, and made available to the

Regional Sustainable Energy Funds under procedures and

guidelines approved by the Pennsylvania Energy Board.

(2)  The alternative compliance payments shall be

utilized solely for projects that will increase the amount of

electric energy generated from alternative energy resources

for purposes of compliance with subsections [(b) and (c)]

(b), (c) and (c.1).

* * *

Section 3.  The act is amended by adding a section to read:

Section 8.1.  Carbon dioxide sequestration network.

(a)  Establishment of network.--DCNR shall develop and

operate a carbon dioxide sequestration network utilizing

appropriate geologic formations and facilities on State forest

land or as otherwise acquired by DCNR for the purposes set forth

in this subsection. DCNR may acquire, on behalf of the

Commonwealth, geologic formations and facilities required for

the carbon dioxide sequestration network by purchase, gift,

lease or condemnation. The carbon dioxide sequestration network

shall only be utilized to store carbon dioxide generated within

this Commonwealth.

(b)  Fees.--DCNR shall collect reasonable fees from entities

that transport to or through, deposit in or otherwise utilize

the carbon dioxide sequestration network. DCNR shall enter into

agreements with the entities establishing the terms and

conditions for use of the carbon dioxide sequestration network

and the payment of appropriate fees prior to the transport of

any carbon dioxide into the carbon dioxide sequestration

network. Fees shall be established to recover the total cost,

less any nonreimbursable Federal funding, of developing and

operating the carbon dioxide sequestration network. Recoverable

costs shall include, but are not limited to, the cost to acquire

or obtain the right to use geologic formations or facilities

required for the carbon dioxide sequestration network,

construction costs, insurance costs and other costs to operate

and maintain the network.

(c)  Establishment of fund.--There is established in the

State Treasury a Carbon Sequestration Fund. The Carbon

Sequestration Fund shall be a nonlapsing fund and the money

deposited into this fund is specifically appropriated to DCNR to

carry out the purposes of this section at the discretion of the

Secretary of Conservation and Natural Resources.

(d)  Permitting requirements.--The department shall develop

regulations necessary to permit the siting and operation of the

carbon dioxide sequestration facility authorized by this

section. The regulations shall include, but not be limited to,

the following:

(1)  Risk assessment.

(2)  Geologic site characterization including, but not

limited to, modeling and verification of fluid movement.

(3)  Corrective action.

(4)  Well construction, operation and mechanical

integrity testing.

(5)  Monitoring and site closure.

No carbon dioxide may be accepted for sequestration until all

applicable permits have been approved.

(e)  Operation.--

(1)  DCNR may enter into contracts for the development

and operation of the carbon dioxide sequestration network.

DCNR or its contractor shall evaluate the requirements for

safe operation of the carbon dioxide sequestration network

including, but not limited to, geologic site

characterization, modeling and verification of fluid

movement, well construction, mechanical integrity testing,

monitoring, corrective action and site closure. No carbon

dioxide may be accepted for sequestration until all

applicable permits have been approved.

(2)  Prior to commencement of operation of the carbon

dioxide sequestration network and periodically thereafter,

DCNR or its contractor shall assess the risks associated with

the operation. DCNR and the Department of General Services

shall determine the appropriate method to insure the

operation of the carbon dioxide sequestration network and

shall insure the operation as deemed appropriate.

(f)  Title to carbon dioxide and immunity.--

(1)  All right, title and interest in and to carbon

dioxide delivered to the property line of the

Commonwealth-owned lands or other lands upon which the

Commonwealth's carbon dioxide sequestration network is

located by the advanced coal combustion with limited carbon

emission facilities that, individually or collectively, first

meet the maximum requirements of section 3(c.1) as determined

by the department, shall be transferred to the Commonwealth

and the Commonwealth shall accept and receive all the right,

title and interest in and to such carbon dioxide, including,

but not limited to, any liabilities associated with the

carbon dioxide, current or future environmental benefits,

marketing claims, associated voluntary or compliance-based

emissions allocations or offsets, but not alternative energy

credits provided by section 3(e).

(2)  Upon and after transfer and conveyance of carbon

dioxide as provided under paragraph (1), the owner of an

advanced coal combustion plant with limited carbon emissions

shall be immune from liabilities regarding the storage of

carbon dioxide within and the release, escape or migration of

carbon dioxide from the Commonwealth's carbon dioxide

sequestration network and subsurface storage site.

Section 4.  This act shall take effect immediately.