On November 7, 2018, the Pennsylvania Public Utility Commission’s (“PUC” or “Commission”) Damage Prevention Committee (“DPC”) held its inaugural meeting in Harrisburg, Pennsylvania.  The DPC is a creation of Act 50 of 2017, which enhances Pennsylvania’s Underground Utility Line Protection Law (i.e., the “One Call Law”) to prevent accidental strikes.

Comprised of excavators, utilities, municipalities, and regulators, the DPC operates collectively to review incidents, identify what went wrong, and issue corrective actions (including penalties).  These review sessions are not legal proceedings and are essentially a measure to analyze mistakes and determine what actions will make accidental strikes less likely to occur.  The process for each review is as follows:

  1. The PUC’s investigator requests information from the project owner, facility owner, and excavator regarding the incident.
  2. The PUC’s investigator prepares a report and recommendation for the DPC.
  3. If the incident will be discussed at the meeting, the project owner, facility owner, and excavator receive written notice of the option to participate in the meeting.
  4. The PUC’s investigator provides the DPC with an overview of the incident and provides photos of the damage.
  5. The DPC asks each of the parties involved in the incident to explain what happened and what actions they took. The DPC prefers to hear directly from the parties, rather than from their lawyers.
  6. The DPC decides whether to issue penalties on any of the parties.

The DPC’s initial meeting revealed several key takeaways for utilities, excavators, and other entities:

  1. It’s important for any party served with a notice to appear before the DPC in relation to an incident to consider attending the DPC meeting to present that party’s side of the story and answer questions. Several DPC members noted their disappointment with parties that failed to attend.
  2. If any pipeline hit results in the release of flammable, toxic, or corrosive gas or liquid which endangers life, health, or property, then the excavator must immediately call 911 and notify the facility owner.
  3. The DPC considers whether the parties involved in the incident employed prudent excavation practices.
  4. It’s important that each party take clear photographs of the site where the strike occurred. With the availability of digital cameras, it may be advisable for excavators to take videos of the One Call Markings prior to beginning the project.
  5. It’s critical that each party record in writing any conversations with the other parties about the incident.

The next DPC meeting is December 11, 2018.  If you have any questions about the DPC or other Commission proceedings, please do not hesitate to contact Pam Polacek (ppolacek@mcneeslaw.com) or Aly Hylander (ahylander@mcneeslaw.com).

 

 

 

 

On November 29, 2018, the Pennsylvania General Assembly’s Nuclear Energy Caucus (“NEC”) released the “Bicameral Nuclear Energy Caucus Report” (“Report”) that details the NEC’s findings on nuclear energy issues during the 2017-2018 Legislative Session.  The Report finds that Pennsylvania’s five nuclear plants provide numerous benefits, including supporting jobs, providing zero-emissions energy, moderating electricity prices, and ensuring grid resilience and reliability.[1]  As a result, to avoid adverse “employment, economic, and environmental impacts associated with the premature closures” of Pennsylvania’s nuclear facilities, the Report suggests that Pennsylvania has four options to determine the future of its nuclear industry:[2]

  1. Do nothing and leave Pennsylvania’s clean energy resources, including its nuclear plants, on a trajectory to early retirement – effectively allowing PJM to dictate the mix of resources serving Pennsylvania.
  2. Modify AEPS (or establish a ZEC program) to put nuclear generation on equal footing with other zero-emission electric generation resources in Pennsylvania.
  3. Modify AEPS (or establish a ZEC program) with a “safety valve” mechanism that (depending on the outcome of the FERC proceeding) would allow Pennsylvania to adopt a new capacity construct proposed by FERC that is designed to accommodate state programs to support preferred generation resources.
  4. Establish a Pennsylvania carbon pricing program.

Despite the detail in the report, several questions remain unanswered and issues remain unaddressed:

  1. The Report does not specify the amount of subsidies that nuclear generators should receive. Any policy decision must include an analysis of the costs to consumers and the potential impact on employment and investment in Pennsylvania.
  2. The Report discusses testimony from a portion of the stakeholders (e.g., the nuclear industry, environmental advocates, and organized labor coalitions), but groups that serve as “watchdogs” to ensure that consumers’ costs and interests are considered by the legislature (e.g., the Pennsylvania Energy Consumer Alliance, the Pennsylvania Manufacturers Association, AARP, etc.) were not invited to testify before the NEC. By doing so, the NEC omitted a key stakeholder group that has a different perspective about the potential costs and pitfalls of “saving” the nuclear industry.
  3. The Report relies on a Brattle Group study to support the assertion that nuclear generators moderate electricity prices, thus providing $788 million in reductions to the energy costs of Pennsylvania’s consumers. However, that study assumes that there is no replacement of the retiring nuclear capacity with new generation.  Within the last three years, sufficient natural gas generation has been constructed (or is under construction) to match the entire Pennsylvania nuclear fleet, including those facilities that are not retiring (Susquehanna, Peach Bottom, and Limerick).  In December 2018 alone, Tenaska is scheduled to begin operation of a 925 MW plant in Westmoreland County.
  4. The Report summarily dismisses the fact that consumers paid $10 billion for stranded cost to the generation owners, without recognizing that those subsidies were calculated over the expected lifetime of the project. Once those payments were made, ratepayers were not expected to bear the financial risk that the plants could close.  Providing additional ratepayer subsidies is reneging on the bargain.
  5. Nuclear plants are not “prematurely” retiring – they are retiring because they cannot compete in the market. This is a natural effect of competitive market forces.  Non-competitive fuel sources (e.g., coal, inefficient gas, etc.) should retire from the market while stronger resources prevail.  Any attempt to interfere with these natural market sources will interfere with price signals and thus impact current and future investment in replacement generation.
  6. The Report makes errant assumptions (e.g., assuming that all Pennsylvania nuclear generators will retire) and misstates PJM’s conclusion in its fuel security study, which is still ongoing.

 

We are continuing to review the Report and will provide further updates.  In the interim, if you have any questions, please do not hesitate to contact David Kleppinger (dkleppinger@mcneeslaw.com), Pam Polacek (ppolacek@mcneeslaw.com), Kathy Pape (kpape@mcneeslaw.com), Kathy Bruder (kbruder@mcneeslaw.com), or Aly Hylander (ahylander@mcneeslaw.com).

[1] https://nuclearenergy.pasenategop.com/pennsylvanias-bipartisan-nuclear-energy-caucus-releases-report-detailing-impacts-of-losing-the-states-nuclear-industry-and-provides-options-for-taking-action-in-2019/

[2] Report, p. 30.

Recently, the Pennsylvania Department of Environmental Protection (“DEP”) issued a notice that the final draft of the Finding Pennsylvania’s Solar Future plan (“Solar Plan”) will be released this fall.  After receiving comments from businesses, utilities, nonprofits, academia, and citizens, the DEP will hold another stakeholder meeting on November 15, 2018, to discuss the final Solar Plan and present the draft strategy support guide.

By way of background, the Solar Plan began in 2017 as a statewide planning project led by the DEP’s Energy Programs Office (“EPO”).[1]  The goal of the Solar Plan is to equip Pennsylvania to produce more solar energy.  Specifically, the Solar Plan set a target that 10 percent of retail electric sales will come from in-state solar energy sources by 2030.  The DEP indicates that this 10 percent target is achievable but challenges the “business-as-usual” model and promotes development of a variety of strategies that could be pursued.  Essentially, to meet this 10 percent goal, approximately 11 gigawatts of solar energy must be installed in the State.[2]

In developing the Solar Plan, drafters considered five main strategies:[3]

  • Increasing the Alternative Energy Portfolio Standard (“AEPS”) requirements for solar to 4-8 percent by 2030;
  • Providing customers access to capital, including provision of loan guarantees;
  • Adopting carbon pricing;
  • Creating uniform policies for siting and land use; and
  • Considering tax exemptions that encourage solar deployment and assist solar projects in finding project sponsors with tax equity.

In addition to those core five approaches, the Solar Plan’s authors considered other strategies involving decentralized projects (i.e., solar panels on residences) and grid-scale solar projects.[4]

Stakeholder responses to the draft Solar Plan were varied, with some in support of the Plan and others critical.  Some commenters indicated that the Solar Plan impeded the goals of the Electricity Generation Customer Choice and Competition Act (“Competition Act”) because the Solar Plan proposed to reinstate centralized generation planning beyond what has already occurred with the existing AEPS statue.  In addition, concerns were raised about the costs of implementing strategies proposed in the Solar Plan and how those would be recovered.  While the planning phases for the Solar Plan were funded by a combination of a grant from the Department of Energy (“DOE”) and time and resource investments from DEP and other associated partners, it is unclear what the costs of implementing the Solar Plan’s programs would be or how (and from whom) those costs would be recovered.  Those questions may be answered at the November 15 stakeholder meeting with the release of the final Solar Plan.  In the meantime, if you have any questions regarding the information discussed above, please contact Pamela Polacek (ppolacek@mcneeslaw.com) or Aly Hylander at (ahylander@mcneeslaw.com).

[1] https://www.dep.pa.gov/Business/Energy/OfficeofPollutionPrevention/SolarFuture/Pages/Finding-Pennsylvania%E2%80%99s-Solar-Future.aspx

[2] Id.

[3] Id.

[4] Id.

On April 5, 2018, the Pennsylvania Public Utility Commission (“PUC” or “Commission”) issued a Final Policy Statement Order on Combined Heat and Power (“CHP”).  The Commission seeks to promote and advance the development of CHP systems and facilities in Pennsylvania.  The Commission will require electric distribution companies (“EDCs”) and natural gas distribution companies (“NGDCs”) to file biennially a report that documents the utility’s strategies, programs, and other initiatives in support of CHP.  Importantly, the Final Policy Statement does not require or encourage the public release of CHP project-specific cost or usage data.

Background

In the Final Policy Statement, the PUC affirmed that CHP is an efficient means of generating electric power and thermal energy from a single fuel source, providing cost-effective energy services to commercial and industrial entities like hotels, universities, hospitals, manufacturing, and other businesses.  CHP also provides enhanced reliability for the end-user, improves manufacturing competitiveness, and reduces greenhouse gas emissions.  Other PUC-stated benefits include increased diversification of resources for generating electricity, expansion of natural gas and associated economic development, and increased security due to multiple points of power generation.

In the Final Order, the Commission established a biennial reporting requirement to reduce barriers to the development of CHP in the Commonwealth, such as 1) perceived difficulty in justifying capital investment in CHP; 2) costs of purchasing backup power during planned plant maintenance and unplanned downtime; and 3) lack uniform standards, fees, and procedures for the interconnection of distributed generation technologies.

Funding and Financial Incentives for CHP

The Commission emphasized that mechanisms to promote CHP projects should only apply to cost-effective projects and not uneconomical projects.  Because not all mechanisms for promoting CHP are administered under the Act 129 Energy Efficiency and Conservation program, the Commission expressed openness to other mechanisms but declined to establish new utility-based incentives to encourage CHP.

Creation of PUC CHP Working Group

The Commission ordered its Bureau of Technical Utility Services to initiate a CHP Working Group within 90 days of issuance of the Final Policy Statement Order. The temporary working group will discuss CHP reporting, processes, and related topics.

Definition of CHP in the Policy Statement: 52 Pa. Code § 69.3201

The PUC revised the definition of CHP by incorporating the Department of Energy’s definition, which defines CHP as the concurrent production of electricity or mechanical power and useful thermal energy (heating and/or cooling) from a single source of energy.  CHP is a type of distributed generation located at or near the point of consumption (unlike central station generation).  CHP consists of “a suite of technologies that can use a variety of fuels to generate electricity or power at the point of use, allowing the heat that would normally be lost in the power generation process to be recovered to provide needed heating and/or cooling.”[1]

The Utility Biennial Reports: 52 Pa. Code § 69.3202

In the Final Policy Statement, the Commission determined that CHP project-specific data “will not be reported or released to the public.”[2]  The Commission also emphasized that the reports will “only require the reporting include known information” as utilities will not need to generate or acquire information not known to the utilities.[3]  Further, individual customer information will be kept confidential and proprietary.[4]

All jurisdictional EDCs and NGDCs will report on proposed CHP strategies, programs, and initiatives rather than focus on historic efforts.  The report for both EDCs and NGDCs must include:

  • The utility’s detailed plans to encourage CHP development;
  • Identification of CHP systems interconnected with the utility;
    1. The location, nameplate capacity (MW), and basic operation of each system
    2. Payments made to the utility associated with the CHP interconnection
    3. Estimated projected annual energy and costs savings over life of CHP system
    4. Reliability benefits of CHP system
  • Identification of CHP systems scheduled for interconnection;
  • A discussion of challenges for CHP development;
  • A description of efforts made by the utility to obtain information for the report; and
  • The utility’s CHP system development communication strategy

In addition to the above requirements, EDCs must also report:

  • Interconnection terms and conditions (e.g., efforts to streamline procedures and contracts, dispute resolution, efforts to help larger CHP systems meet applicable interconnection standards, and recent changes to terms and conditions);
  • Monthly usage information regarding electric generation delivered to all customers with CHP;
  • The customer accounts with CHP systems; and
  • Tariffed rates for those customer accounts (including the rate design methodology for each customer, demand, and energy rate element).

NGDCs must also report:

  • Any separate rates for customer accounts with CHP systems;
  • Monthly usage information regarding natural gas delivered to all customers with CHP; and
  • NGDC capital costs incurred and not recovered from CHP customers as well as estimated incremental annual revenues associated with the CHP system interconnection.

PUC Staff Biennial Reports: 52 Pa. Code § 69.3203

The Final Policy Statement requires the Commission’s Bureau of Technical Utility Services to provide a biennial report to the Commission that summarizes and analyzes the EDC/NGDC reports, identifies government agency programs for financial incentives for CHP, and provides recommendations for further developing CHP in Pennsylvania.

Questions on CHP and the PUC Final Policy Statement

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

[1] Final Policy Statement on Combined Heat and Power at p. 12-13, Annex A.

[2] Id. at p. 16, Annex A.

[3] Id. at p at p. 16-17.

[4] Id. at p. 19.

Across much of the United States, the number of municipalities imposing stormwater management fees upon property owners has increased dramatically in recent years.  The rising prevalence of stormwater management fees has predictably led to local and state court challenges by businesses, as non-residential property owners are typically more severely impacted by stormwater management fees in comparison to residential property owners.  Affected businesses have questioned whether parcel-based stormwater fees constitute legitimate fees for services rendered or are simply revenue-generating taxes in disguise.

State courts have issued conflicting rulings on this question.  In the heartland, the Supreme Court of Missouri issued a 2013 decision striking down stormwater management fees and requiring municipalities to fund stormwater management programs through tax revenues.  In the northeast, the Supreme Court of Maine conversely issued a 2012 decision affirming a stormwater management fee program as a fee for services rendered.

It now appears that Pennsylvania jurisdictions will have an opportunity to weigh-in on this critical debate.  In January 2018, the Chester Business Association filed injunctions seeking to block imposition of a stormwater management fee proposed by the Stormwater Authority of Chester.  Similarly, an attorney and property owner in the city of New Castle filed a complaint with the Lawrence County Court of Common Pleas requesting that the court void stormwater management fees to be collected by the New Castle Sanitation Authority.

While the outcome of these cases remains uncertain, any decisions in these jurisdictions may not be dispositive as to rulings in other Pennsylvania jurisdictions, as stormwater management fees are complex and can be developed based on a variety of different models.  For both municipalities and businesses impacted by stormwater management fees, effective stakeholder engagement can ensure that legitimate stormwater management fees serve their intended purpose and avoid overly burdening property owners.  Attorneys at McNees can assist with review, analysis, and if necessary, litigation of stormwater management fees.

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.

On January 5, 2018, the Pennsylvania Public Utility Commission (“PUC” or “Commission”) reserved a public docket to review the impact of the Tax Cuts and Jobs Act, the federal tax reform bill that was signed into law on December 22, 2017, on utilities and companies under the PUC’s jurisdiction.  The PUC has not issued a tentative order or any further guidance or details regarding the scope and objectives of the proceeding.

The Tax Reform Act of 2017 lowers corporate tax rates from 35% to 21%.  Because income taxes are a significant component of a public utility’s revenue requirements, the Commission will be investigating potential means by which to provide the benefits of the Tax Reform Act of 2017 to customers.  Regulators and consumer advocates in other states, including Oklahoma, Kentucky, Michigan, and Montana, have already begun taking steps to investigate the impact of the Tax Reform Act of 2017, including potential refunds or rate reductions for consumers.

We will provide additional information through this blog once the PUC issues more information regarding its proceeding.

On November 8, 2017, Aqua Pennsylvania (“Aqua”) filed a Complaint in the Pennsylvania Court of Common Pleas of Bucks County against the Bucks County Water and Sewer Authority (“BCWSA” or “Authority”), docketed at Case #2017-07215.  Joining Aqua as co-Plaintiff is J. Kevan Busik, a customer and ratepayer of BCWSA.

The Aqua Complaint alleges BCWSA (and ostensibly, all PA Municipal Authorities) has a significant competitive advantage for acquisition of water/sewer systems and seeks redress.  Specifically, the Complaint cites unfair competitive advantage of BCWSA (and other PA Municipal Authorities) in light of its exemption from property taxation, ability to raise capital via the issuance of tax-free bonds, and freedom from the substantial expense associated with regulation.  In addition, it notes that because no regulatory body has oversight of BCWSA to limit its rate setting capability, BCWSA is able to amass funds to give it a competitive advantage.

On an ironic note, the Complaint indicates that neither co-Plaintiff Busik, nor any other current customer of BCWSA, would benefit from acquisition of any other water/wastewater system.

The Complaint cites four separate Counts:

  • Count I seeks Declaratory Judgment requesting a Court Order in favor of the Plaintiffs declaring that, pursuant to the Municipal Authorities Act’s (“MAA”) Noncompetition Clause, BCWSA is prohibited from competing with Aqua (or any other privately owned public utility) that serves the same substantial purpose by bidding on acquiring any water or wastewater provider.
  • Count II seeks Permanent Injunctive Relief that enjoins BCWSA from bidding upon and being competitive with Aqua in the acquisition of any water and/or wastewater provider.
  • Count III seeks Declaratory Judgment declaring BWCSA’s expenditure of revenue generated by its service area to purchase and acquire any water or wastewater provider to be prohibited under the terms of the MAA.
  • Count IV requests Declaratory Judgment declaring BCWSA’s rates unreasonable and invalid under the MAA because of BCWSA’s use of funds to acquire water and wastewater systems rather than solely for providing for payment of expenses, construction, improvement, repair, maintenance, and operation of Authority facilities and properties.

Aqua is a public utility providing water and wastewater services to various Pennsylvania residents and is regulated by the Pennsylvania Public Utility Commission (“PUC”).  BCWSA originally provided water/sewer service to residential, commercial, and industrial customers solely in portions of Bucks County, and only recently expanded its services beyond Bucks County.

Aqua notes that in purchasing and acquiring water/sewer systems from Pennsylvania municipalities, it is specifically bound by provisions of Act 12 of 2016, which sets forth procedural requirements for determining fair market valuation of acquired water and wastewater systems for ratemaking purposes.  BCWSA, in contrast, is not regulated by the PUC for provisions of service, setting of customer rates, or acquisition of new water or wastewater systems.  BCWSA also does not fall under the oversight of any other legislative or regulatory body that can limit rate setting, nor is it constrained by any Act 12 requirements.  BCWSA’s authority and powers are instead set forth, governed, and controlled by the provisions of the MAA.

Aqua’s Complaint further notes that pursuant to MAA, BCWSA is exempt from paying taxes or assessments upon property acquired or used by BCWSA for purposes of performing essential government services.  Similarly, BCWSA is authorized to issue tax-exempt bonds to finance its acquisitions and improvements of municipal water and wastewater systems, and the income from these bonds, including any profits made on the sale of these bonds, are exempt from taxation.  BCWSA’s operating income comes directly from the service revenues it receives from its water and sewer customers.

The Complaint identifies two local prospective sales of water/sewer systems in which both Aqua and BCWSA appear to be enormously interested (Cheltenham Township Sewer System and Exeter Township (Berks County) Wastewater System).  The Complaint also cites, for background purposes, BCWSA’s recent acquisition of the Springfield Sewer System.  BCWSA overcame two competitors – privately owned public utilities – and paid $16,500,100.  Aqua alleges the actual value of the Springfield System was approximately $9 million.

This Complaint will surely receive attention from all Pennsylvania public utilities and Municipal Authorities that have been looking to expand, by acquisition or combination, their water and sewer service territories.

Governor Wolf has signed into law Act No. 40 under HB 118.  This Act, in addition to a number of other matters, adds language to modify the state’s Alternative Energy Portfolio Standards (AEPS).   For your convenience, the actual language from the Bill is included at the end of this post.

The AEPS became effective on Feb. 28, 2005.  It requires that a specific percentage of electricity sold to Pennsylvania retail customers by Electric Distribution Companies (EDC) and Electric Generation Suppliers (EGS) should be obtained from alternative energy resources.  The percentage amounts of electricity covered by the purchase of Tier I, Tier II and Solar Renewable Energy Certificates (SRECs) gradually increases each year through 2021.  By 2021, AEPs mandates that 18% of all electricity will come from alternative energy resources.

The Pennsylvania market for SRECs has been primarily oversupplied for several years.  This is in large part because PA was one of only two states that allowed sites outside of its geographical footprint to provide SRECs to satisfy the PA AEPS requirements. Currently there are a number of solar/photovoltaic sites in other states registered to provide SRECs to PA AEPS.  Below is a chart complied from the publicly available qualified facilities data on the PA PUC’s website:   (http://www.pennaeps.com/reports/)

 

 

You can see in the chart, at the present time, PA has only approximately 19% of the total nameplate capacity of facilities qualified to provide SRECs into the market coming from within its borders.   Despite this, Pennsylvania was the state of origin for 74.1% of the SRECs retired under the AEPS statute in the 2015 Reporting Year.

One of the expectations of restricting geographical eligibility to allow only those sites within the Commonwealth to provide SRECs to satisfy PA’s AEPS is that we will see an increase in the value of PA SRECs.  For reference, the current market price is approximately $5.00/2017 SREC and the alternative compliance payment (ACP) for 2016 was approximately $124/SREC.  In the 2015 Reporting Year, the weighted average credit price was $78.62/2015 SREC.  The ACP is calculated as 200% of the average SREC price paid over the compliance year which runs June to May.  The price impact of the restriction may take a few years to materialize because existing contracts with facilities outside of Pennsylvania are grandfathered.

The second expectation is that some of the in-state PA solar projects that may have previously been shelved due to financial decisions may now become viable.

If you need assistance with these projects, or any other renewable or on-site generation issues, McNees has a team of energy managers, engineers, accountants and attorneys to help you.  Please feel free to contact Amy York (ayork@mcneeslaw.com) or any of our attorneys in the Energy and Environmental Group for more information.

As promised, the actual language from the Bill:

This new language, effective as of the date of the Act, or October 30, 2017, added to AEPS requirements that solar systems satisfy one of the following:

(I) DIRECTLY DELIVER THE ELECTRICITY IT GENERATES TO A RETAIL CUSTOMER OF AN ELECTRIC DISTRIBUTION COMPANY OR TO THE DISTRIBUTION SYSTEM OPERATED BY AN ELECTRIC DISTRIBUTION COMPANY OPERATING WITHIN THIS COMMONWEALTH AND CURRENTLY OBLIGATED TO MEET THE COMPLIANCE REQUIREMENTS CONTAINED UNDER THE “ALTERNATIVE ENERGY PORTFOLIO STANDARDS ACT.”

(II) BE DIRECTLY CONNECTED TO THE ELECTRIC SYSTEM OF AN ELECTRIC COOPERATIVE OR MUNICIPAL ELECTRIC SYSTEM OPERATING WITHIN THIS COMMONWEALTH.

(III) CONNECT DIRECTLY TO THE ELECTRIC TRANSMISSION SYSTEM AT A LOCATION THAT IS WITHIN THE SERVICE TERRITORY OF AN ELECTRIC DISTRIBUTION COMPANY OPERATING WITHIN THIS COMMONWEALTH.

As to what will become of the facilities currently registered outside of the state to provide SRECs, the law says this:

NOTHING UNDER THIS SECTION OR SECTION 4 OF THE “ALTERNATIVE ENERGY PORTFOLIO STANDARDS ACT” SHALL AFFECT ANY OF THE FOLLOWING:

(I) A CERTIFICATION ORIGINATING WITHIN THE GEOGRAPHICAL BOUNDARIES OF THIS COMMONWEALTH GRANTED PRIOR TO THE EFFECTIVE DATE OF THIS SECTION OF A SOLAR PHOTOVOLTAIC ENERGY GENERATOR AS A QUALIFYING ALTERNATIVE ENERGY SOURCE ELIGIBLE TO MEET THE SOLAR PHOTOVOLTAIC SHARE OF THIS COMMONWEALTH’S ALTERNATIVE ENERGY PORTFOLIO COMPLIANCE REQUIREMENTS UNDER THE “ALTERNATIVE ENERGY PORTFOLIO STANDARDS ACT.”

(II) CERTIFICATION OF A SOLAR PHOTOVOLTAIC SYSTEM WITH A BINDING WRITTEN CONTRACT FOR THE SALE AND PURCHASE OF ALTERNATIVE ENERGY CREDITS DERIVED FROM SOLAR PHOTOVOLTAIC ENERGY SOURCES ENTERED INTO PRIOR TO THE EFFECTIVE DATE OF THIS SECTION.

Over the past few weeks, the Pennsylvania House of Representatives and Senate have passed most of the bills that make up the revenue package to fund the previously-passed appropriations in the budget.  Significantly, the proposals endorsed in July by the Senate and the Governor to increase the utility Gross Receipts Tax (“GRT”) on electricity, and to expand the GRT to natural gas service, are not included in the Tax Code portion of the final revenue package.  The final funding package also excludes the Marcellus Shale severance tax and the suggested application of sales tax to commercial storage services (which were very broadly defined).

We will provide more information regarding the entire budget and revenue package at a later date.  In the interim, if you have any questions, please feel free to contact Pam Polacek (717-237-5368) or Kathleen Duffy Bruder (717-237-5318).