The Pennsylvania Public Utility Commission (PUC or Commission) recently proposed a Policy Statement on Combined Heat and Power (CHP) to promote and advance the development of CHP systems and facilities in Pennsylvania.[1]

The United States Department of Energy also actively tracks CHP Deployment, promotes CHP, and facilitates CHP development.[2]

CHP Systems

Combined Heat & Power systems, also known as cogeneration, apply multiple technologies to generate electricity and useful thermal energy in a single, integrated system more efficiently than conventional generation.[3]  Heat that is normally wasted in conventional generation is recovered as useful energy under a CHP system approach, thereby avoiding the losses that would otherwise be incurred from separate power generation. By integrating power and thermal generation, CHP systems can provide economic, environmental, and energy system infrastructure benefits.[4]  CHP is used in steel, chemical, paper, and petroleum-refining industries, and in universities, hospitals, and light manufacturing industries like food and pharmaceuticals.

Pennsylvania PUC Policy Statement

The PUC Proposed Policy Statement seeks to (1) promote CHP investments; (2) encourage electric distribution companies (“EDCs”) and natural gas distribution companies (“NGDCs”) to incorporate CHP into their energy efficiency and resiliency plans and marketing plans; (3) encourage the use of tariffs governing interconnection and standby rates for owners/operators of CHP facilities; and (4) promote special natural gas rates for owners/operators of CHP facilities.

The Commission explained that CHP benefits include increased energy efficiency and conservation, reduced energy costs through reductions in peak demand and mitigation of price volatility, reduced air emissions, improved grid reliability, increased diversification of generation resources, increased economic development, increased national security (due to power generation diversification), and increased natural gas distribution service for customers.

The Commission contends that CHP can serve as a comprehensive measure for consideration by EDCs as part of their requirements under Pennsylvania’s Act 129 Energy Efficiency & Conservation programs.[5]  Accordingly, the Commission now proposes requiring all jurisdictional EDCs and NGDCs to submit biennial reports to the Commission that detail the efforts of the utilities to support the development of CHP, especially with respect to food supply, hospitals, nursing homes, water and wastewater facilities, and government services.  Those reports will discuss energy efficiency benefits and projections of reduced costs for customers.  The utilities will also need to provide information on interconnection processes and fees and distribution charges that “recognize costs but provide flexibility for owners and operators of CHP facilities.”[6]

Timeline

The Commission’s Proposed Policy Statement order was published in the Pennsylvania Bulletin on April 16, 2016.  Public comments are due on May 31st.  Reply comments are due on June 27th.  After analysis of the comments, the Commission will issue a Final Order, thereby effectuating the CHP Policy Statement.

Questions on CHP and the PUC Policy Statement?

If any energy end users and customers are interested in CHP or have any questions or concerns regarding the Commission’s Proposed Policy Statement on Combined Heat and Power, please feel free to contact us at your convenience.


McNees Wallace & Nurick LLC

[1] See PUC Proposes Policy Statement on Combined Heat and Power, Press Release (Feb. 25, 2016), available at http://www.puc.state.pa.us/about_puc/press_releases.aspx?ShowPR=3665.

[2] See http://www.energy.gov/eere/amo/chp-deployment.

[3] See http://aceee.org/topics/combined-heat-and-power-chp.

[4] See id.

[5] See Energy Efficiency and Conservation Program, Docket No. M-2014-2424864, at page 61 (entered Aug. 20, 2015).

[6] Joint Motion Re Proposed Policy Statement on Combined Heat and Power, at page 5 (Feb. 25, 2016), available at http://www.puc.pa.gov//pcdocs/1418181.pdf.