THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY HUGHES, TARTAGLIONE AND FERLO, JUNE 14, 2011

REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, JUNE 14, 2011  

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 making a related repeal.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definition of "force majeure" in section 2 of

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

Alternative Energy Portfolio Standards Act, amended July 17,

2007 (P.L.114, No.35), is amended 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:

* * *

"Force majeure."  Upon its own initiative or upon a request

of an electric distribution company or an electric generator

supplier, the Pennsylvania Public Utility Commission, within 60

days, shall determine if alternative energy resources are

reasonably available in the marketplace in sufficient quantities

for the electric distribution companies and electric generation

suppliers to meet their obligations for that reporting period

under this act. The commission shall declare a force majeure for

any reporting period if it determines the price of available

alternative energy credits exceeds the cost of applicable

alternative energy compliance payments established under this

act. The commission shall not declare a force majeure for any

reporting period based solely on the price of alternative energy

credits if the alternative energy credit prices are less than

the cost of applicable alternative compliance payments

established under this act. In making this determination, the

commission shall consider whether electric distribution

companies or electric generation suppliers have made a good

faith effort to acquire sufficient alternative energy to comply

with their obligations. Such good faith efforts shall include,

but are not limited to, banking alternative energy credits

during their transition periods, seeking alternative energy

credits through competitive solicitations and seeking to procure

alternative energy credits or alternative energy through long-

term contracts. In further making its determination, the

commission shall assess the availability of alternative energy

credits in the Generation Attributes Tracking System (GATS) or

its successor and the availability of alternative energy credits

generally in Pennsylvania and other jurisdictions in the PJM

Interconnection, L.L.C. regional transmission organization (PJM)

or its successor. The commission may also require solicitations

for alternative energy credits as part of default service before

requests of force majeure can be made. If the commission further

determines that alternative energy resources are not reasonably

available in sufficient quantities in the marketplace for the

electric distribution companies and electric generation

suppliers to meet their obligations under this act, then the

commission shall modify the underlying obligation of the

electric distribution company or electric generation supplier or

recommend to the General Assembly that the underlying obligation

be eliminated. Commission modification of the electric

distribution company or electric generation supplier obligations

under this act shall be for that compliance period only.

Commission modification shall not automatically reduce the

obligation for subsequent compliance years. If the commission

modifies the electric distribution company or electric

generation supplier obligations under this act, the commission

may require the electric distribution company or electric

generation supplier to acquire additional alternative energy

credits in subsequent years equivalent to the obligation reduced

due to a force majeure declaration if the commission determines

that sufficient alternative energy credits exist in the

marketplace.

* * *

Section 2.  Section 3(b), (c), (e)(7) and (12), (f), (g) and

(h) of the act, amended July 17, 2007 (P.L.114, No.35), are

amended and the section is amended by adding a subsection to

read:

Section 3.  Alternative energy portfolio standards.

* * *

(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.] The minimum percentage of electric energy

required to be sold to retail electric customers from Tier I

alternative energy sources is:

(i)  1.5013% for June 1, 2006, through May 31, 2007.

(ii)  1.503% for June 1, 2007, through May 31, 2008.

(iii)  2.0063% for June 1, 2008, through May 31,

2009.

(iv)  2.512% for June 1, 2009, through May 31, 2010. 

(v)  3.0203% for June 1, 2010, through May 31, 2011.

(vi)  3.5504% for June 1, 2011, through May 31, 2012.

(vii)  4.0752% for June 1, 2012, through May 31,

2013.

(viii)  4.6218% for June 1, 2013, through May 31,

2014.

(ix)  5.4516% for June 1, 2014, through May 31, 2015.

(x)  6.05% for June 1, 2015, through May 31, 2016.

(xi)  6.66% for June 1, 2016, through May 31, 2017.

(xii)  7.25% for June 1, 2017, through May 31, 2018.

(xiii)  7.87% for June 1, 2018, through May 31, 2019. 

(xiv)  8.75% for June 1, 2019, through May 31, 2020.

(xv)  9.72% for June 1, 2020, through May 31, 2021.

(xvi)  10.85% for June 1, 2021, through May 31, 2022.

(xvii)  12.15% for June 1, 2022, through May 31,

2023.

(xviii)  13.45% for June 1, 2023, through May 31,

2024.

(xix)  15.00% for June 1, 2024, and thereafter.

(1.1)  The commission shall comply with the requirements

of 66 Pa.C.S. § 2814 (relating to additional alternative

energy sources) by annually increasing the percentage share

of Tier I alternative energy sources required to be sold by

an electric distribution company or electric generation

supplier under paragraph (1) to reflect any new alternative

energy source provided for by 66 Pa.C.S. § 2814. Any annual

increase will be applied to the next compliance year

requirement.

(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.]

(vi)  0.0504% for June 1, 2011, through May 31, 2012.

(vii)  0.0752% for June 1, 2012, through May 31,

2013.

(viii)  0.1218% for June 1, 2013, through May 31,

2014.

(ix)  0.2016% for June 1, 2014, through May 31, 2015.

(x)  0.3% for June 1, 2015, through May 31, 2016.

(xi)  0.41% for June 1, 2016, through May 31, 2017.

(xii)  0.5% for June 1, 2017, through May 31, 2018.

(xiii)  0.62% for June 1, 2018, through May 31, 2019.

(xiv)  0.75% for June 1, 2019, through May 31, 2020.

(xv)  0.97% for June 1, 2020, through May 31, 2021.

(xvi)  1.35% for June 1, 2021, through May 31, 2022.

(xvii)  1.9% for June 1, 2022, through May 31, 2023.

(xviii)  2.45% for June 1, 2023, through May 31,

2024.

(xix)  3% for June 1, 2024, 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)  Electric energy and alternative energy credits from

solar photovoltaic and solar thermal energy technologies

supplied to retail customers shall be generated from solar

photovoltaic and solar thermal energy systems located within

this Commonwealth in meeting the requirements of paragraph

(2). This paragraph shall apply to all contracts or short-

term purchases made after December 31, 2010.

(5)  Notwithstanding the other provisions of this act,

credits purchased or contracted for prior to the effective

date of this paragraph may be used to demonstrate compliance

under this subsection.

(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%.

* * *

(e)  Alternative energy credits.--

* * *

(7)  An electric distribution company or an electric

generation supplier with sales that are exempted under

subsection (d) may bank credits for retail sales of

electricity generated from Tier I and Tier II sources made

prior to the end of the cost-recovery period and after the

effective date of this act. Bankable credits shall be limited

to credits associated with electricity sold from Tier I and

Tier II sources during a reporting year which exceeds the

volume of sales from such sources by an electric distribution

company or electric generation supplier during the 12-month

period immediately preceding the effective date of this act.

All credits banked under this subsection shall be available

for compliance with subsections (b) and (c) for no more than

[two] four reporting years following the conclusion of the

cost-recovery period.

* * *

(12)  (i)  Unless a contractual provision explicitly

assigns alternative energy credits in a different manner,

the owner of the alternative energy system or a customer-

generator owns any and all alternative energy credits

associated with or created by the production of electric

energy by such facility or customer, and the owner or

customer shall be entitled to sell, transfer or take any

other action to which a legal owner of property is

entitled to take with respect to the credits.

(ii)  This paragraph shall apply to all alternative

energy credits created pursuant to this act.

(f)  Market Development and Long-Term Contracting.--

(1)  The commission shall promote the development of

alternative energy through the adoption of alternative energy

credit procurement rules that ensure market diversity,

competition and a reliable supply of alternative energy

credits to all electric distribution companies and electric

generation suppliers. These rules shall include, but are not

limited to, long-term contracts for alternative energy

credits and electric distribution company procurement of

alternative energy credits at the request of competitive

retail suppliers.

(2)  These rules shall require that each winning bid be

selected solely on the least cost alternative energy credit

offered and shall award contracts on a pay-as-bid basis. For

purposes of this subsection, the term "pay-as-bid" shall mean

winning bidders are paid according to their bid price and not

a single clearing price.

(3)  The commission shall determine that each procurement

under this subsection is competitive based on its standard

protocols for determining competitiveness. If it is

determined that a procurement event was not competitive, the

commission shall set a date for another procurement event

which, in the case of the first procurement event, shall take

place no later than 180 days after the initial procurement

event and, in the case of the second procurement event, shall

take place no later than one year after the initial

procurement event.

(4)  The commission shall require procurement of

qualifying Tier I alternative energy credits, other than

solar energy credits, subject to the following terms:

(i)  The first procurement for 25% of the following

compliance year obligations under subsection (b), for a

contract period of at least ten years, shall be conducted

no later than 120 days after the effective date of this

subsection.

(ii)  The second procurement for an additional 25% of

the following compliance year obligations under

subsection (b), for a contract period of at least ten

years, shall be conducted no later than December 31,

2011.

(iii)  Alternative energy credits from resources

eligible to participate under these procurement rules

shall have an in-service date as of the effective date of

this section or later and shall be located in this

Commonwealth.

(5)  The commission shall require procurement of

qualifying solar energy alternative energy credits subject to

the following terms:

(i)  The process shall recognize that different

procurement approaches are necessary based on the size of

the solar energy systems used to serve residential,

commercial and government customers.

(ii)  Aggregation of solar energy resources shall be

used for solar energy systems with a nameplate capacity

of no greater than 200 kilowatts and may be used for

other resources.

(iii)  Financial security requirements imposed on

solar developers and other sellers not render solar

energy projects financially infeasible.

(iv)  Contract periods for procurement mandated under

this subsection shall be at least ten years and shall be

subject to the following:

(A)  The first procurement for at least 55% of

the following compliance year obligation under

subsection (b) shall be conducted no later than 120

days after the effective date of this subsection.

(B)  The second procurement for at least 45% of

the compliance obligation under subsection (b) for

the following compliance year shall be conducted no

later than December 31, 2011.

(C)  The third procurement for at least 30% of

the compliance obligation under subsection (b) for

the following compliance year shall be conducted no

later than December 31, 2012.

(D)  The fourth procurement for at least 25% of

the compliance obligation under subsection (b) for

the following compliance year shall be conducted no

later than December 31, 2013.

(E)  The fifth procurement for at least 20% of

the compliance obligation under subsection (b) for

the following compliance year shall be conducted no

later than December 31, 2014.

(F)  For each compliance year commencing with

June 1, 2015, the procurement of at least 15% of the

compliance obligation under subsection (b) shall be

conducted no later than December 31 of the year

preceding that compliance year.

(v)  Upon commencement of the compliance year ending

May 31, 2015, and thereafter in conjunction with the

reviews required under subsection (b)(3), the commission

shall undertake a review of the procurement processes

under this subsection, the compliance by electric

distribution companies and electric generation suppliers

with the requirements of this act and the overall market

conditions. The commission shall use the results of this

review to determine whether to modify the procurement

processes established in accordance with this subsection.

[(f)] (g)  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). 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) in the

absence of force majeure, 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 alternative

share shall be set at $450 per megawatt hour (MWh) per year

beginning January 1, 2011, and the amount shall be reduced by

3% each year thereafter.

(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)] (h)  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).

[(h)] (i)  Nonseverability.--The provisions of subsection (a)

are declared to be nonseverable. If any provision of subsection

(a) is held invalid, the remaining provisions of this act shall

be void.

Section 3.  Repeals are as follows:

(1)  The General Assembly declares that the repeal under

paragraph (2) is necessary to effectuate the amendment of

section 3(e)(12) of the act.

(2)  Section 3.1 of the act of July 17, 2007 (P.L.114,

No.35), entitled "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 the

definitions of 'alternative energy credit,' 'customer-

generator,' 'force majeure,' 'net metering,' and 'Tier I

alternative energy source,' for alternative energy portfolio

standards, for portfolio requirements in other states and for

interconnection standards for customer-generator facilities,"

is repealed.

Section 4.  The following shall apply:

(1)  The amendment of section 3(e)(12) of the act shall

apply to all alternative energy credits created under the act

on or after the effective date of this section, regardless of

when any underlying contract for the purchase of electric

energy or other products from the generator that qualifies as

an alternative energy system was executed.

(2)  Notwithstanding 66 Pa.C.S. §§ 508 (relating to

powers of the commission to vary, reform and revise

contracts) and 2102 (relating to approval of contracts with

affiliated interests), the Pennsylvania Public Utility

Commission may modify contracts or disallow costs of

alternative energy credit contracts under this act only when

the party seeking recovery of the costs of these contracts

is, after hearing, found to be at fault for the following:

(i)  not complying with the commission-approved

alternative energy credit procurement rules; or

(ii)  fraud, collusion or market manipulation with

regard to these contracts.

(3)  Notwithstanding the other provisions of this act,

alternative energy credits acquired or contracted for prior

to the effective date of this section may be used to

demonstrate compliance under this act.

Section 5.  This act shall take effect immediately.