In our November 6, 2017 post, Amy York alerted readers to the impact of Act 40 (an omnibus spending bill passed by the Pennsylvania Legislature on October 30, 2017) on the state’s Alternative Energy Portfolio Standards (AEPS).  AEPS requires Electric Distribution Companies (EDC) and Electric Generation Suppliers (EGS) to procure a portion of the electricity they sell from alternative energy resources, including solar.

Traditionally, EDCs and EGSs have been able to meet this requirement by purchasing solar energy sourced anywhere in the regional transmission grid.  Act 40 limits the solar AEPS requirements to solar generation physically located in Pennsylvania.  As indicated in our November 6 blog post, this could eventually eliminate over 80% of currently-qualified solar generation and increase the price of solar renewable energy credits (SRECs) in Pennsylvania.

With the ink of Act 40 already dry, it now falls to the Pennsylvania Public Utility Commission to determine how to implement the Act – especially its “grandfathering” provisions.  A broad interpretation could permanently allow out-of-state solar generators that are already certified to sell SRECs in Pennsylvania to continue to do so.  It could provide a temporary grandfathered status to out-of-state solar generators that were not certified before October 30, 2017, but nonetheless had a contract to provide SRECs in Pennsylvania.  Finally, it could allow for “banked” out-of-state SRECs to still count toward Pennsylvania requirements.

In contrast, the Commission could take a narrow interpretation of the Act.  In that case, all grandfathering would be temporary—only for the duration of existing contracts.  An out-of-state solar generator without both Pennsylvania certification and an executed contract before October 30, 2017, would likely receive no grandfathering status.  It is unclear whether “banked” SRECs from non-grandfathered facilities would continue to count toward Pennsylvania requirements.

On December 21, 2017, the Public Utility Commission (PUC) issued a Tentative Implementation Order to provide its tentative interpretation of the new AEPS rules and to ask for comments.  The Commission’s proposed interpretation is broad, allowing permanent grandfathering status for currently-certified out-of-state solar generators.  However, Commission Chairman Gladys M. Brown and Vice Chairman Andrew G. Place issued a joint statement proposing a narrow interpretation of the Act and seeking comments.

The Commission will accept comments on these issues until February 5, 2018.  Sometime after that date, we expect that the Commission will issue a new Order providing its definitive interpretation.

To learn more about how the Commission’s decision will impact the Pennsylvania SREC market and Pennsylvania electricity prices, please reach out to us and follow this blog.  If your organization is interested in submitting comments to the Commission on this issue, we may be able to help.  Please do not hesitate to contact us.