PRINTER'S NO. 1666
No. 1201 Session of 2007
INTRODUCED BY GEORGE, DePASQUALE, GERBER, DeWEESE, CONKLIN, GIBBONS, HARHAI, HARKINS, JAMES, JOSEPHS, KORTZ, MAHONEY, MANDERINO, McGEEHAN, MUNDY, M. O'BRIEN, PRESTON, SANTONI, SHIMKUS, STABACK, SURRA, TANGRETTI, THOMAS, VITALI, WALKO, YUDICHAK, CURRY, FREEMAN, McCALL, BENNINGTON, GOODMAN, K. SMITH AND M. SMITH, MAY 24, 2007
REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, MAY 24, 2007
AN ACT 1 Amending Title 66 (Public Utilities) of the Pennsylvania 2 Consolidated Statutes, further providing for the definition 3 of "public utility"; adding a definition of "micro-grid"; 4 further providing for duties of electric distribution 5 companies; and providing for micro-grids. 6 The General Assembly of the Commonwealth of Pennsylvania 7 hereby enacts as follows: 8 Section 1. The definition of "public utility" in section 102 9 of Title 66 of the Pennsylvania Consolidated Statutes is amended 10 to read: 11 § 102. Definitions. 12 Subject to additional definitions contained in subsequent 13 provisions of this part which are applicable to specific 14 provisions of this part, the following words and phrases when 15 used in this part shall have, unless the context clearly 16 indicates otherwise, the meanings given to them in this section: 17 * * *
1 "Public utility."
2 (1) Any person or [corporations] corporation now or
3 hereafter owning or operating in this Commonwealth equipment
4 or facilities for:
5 (i) Producing, generating, transmitting,
6 distributing or furnishing natural or artificial gas,
7 electricity, or steam for the production of light, heat,
8 or power to or for the public for compensation.
9 (ii) Diverting, developing, pumping, impounding,
10 distributing, or furnishing water to or for the public
11 for compensation.
12 (iii) Transporting passengers or property as a
13 common carrier.
14 (iv) Use as a canal, turnpike, tunnel, bridge,
15 wharf, and the like for the public for compensation.
16 (v) Transporting or conveying natural or artificial
17 gas, crude oil, gasoline, or petroleum products,
18 materials for refrigeration, or oxygen or nitrogen, or
19 other fluid substance, by pipeline or conduit, for the
20 public for compensation.
21 (vi) Conveying or transmitting messages or
22 communications, except as set forth in paragraph (2)(iv),
23 by telephone or telegraph or domestic public land mobile
24 radio service including, but not limited to, point-to-
25 point microwave radio service for the public for
26 compensation.
27 (vii) Sewage collection, treatment, or disposal for
28 the public for compensation.
29 (viii) Providing limousine service in a county of
30 the second class pursuant to Subchapter B of Chapter 11
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1 (relating to limousine service in counties of the second 2 class). 3 (2) The term does not include: 4 (i) Any person or corporation, not otherwise a 5 public utility, who or which furnishes service only to 6 himself or itself. 7 (ii) Any bona fide cooperative association which 8 furnishes service only to its stockholders or members on 9 a nonprofit basis. 10 (iii) Any producer of natural gas not engaged in 11 distributing such gas directly to the public for 12 compensation. 13 (iv) Any person or corporation, not otherwise a 14 public utility, who or which furnishes mobile domestic 15 cellular radio telecommunications service. 16 (v) Any building or facility owner/operators who 17 hold ownership over and manage the internal distribution 18 system serving such building or facility and who supply 19 electric power and other related electric power services 20 to occupants of the building or facility. 21 (vi) Electric generation supplier companies, except 22 for the limited purposes as described in sections 2809 23 (relating to requirements for electric generation 24 suppliers) and 2810 (relating to revenue-neutral 25 reconciliation). 26 (vii) Any person or corporation who or which 27 furnishes natural gas produced from alternative sources, 28 including, but not limited to, landfill gas, coal-mine 29 methane or coal-bed methane and synthetic natural gas 30 produced from the gasification of coal or other 20070H1201B1666 - 3 -
1 feedstocks directly to no more than four customers. A 2 person or corporation who or which wishes to furnish 3 natural gas produced from alternative sources to more 4 than four customers and be excluded from this definition 5 must request approval from the commission. The commission 6 shall approve the request if the person or corporation 7 provides a private rather than a public service. 8 (viii) Micro-grids, as that term is defined by 9 section 2803 (relating to definitions). 10 (3) For the purposes of sections 2702 (relating to 11 construction, relocation, suspension and abolition of 12 crossings), 2703 (relating to ejectment in crossing cases) 13 and 2704 (relating to compensation for damages occasioned by 14 construction, relocation or abolition of crossings) and those 15 portions of sections 1501 (relating to character of service 16 and facilities), 1505 (relating to proper service and 17 facilities established on complaint; authority to order 18 conservation and load management programs) and 1508 (relating 19 to reports of accidents), as those sections or portions 20 thereof relate to safety only, a municipal authority or 21 transportation authority organized under the laws of this 22 Commonwealth shall be considered a public utility when it 23 owns or operates, for the carriage of passengers or goods by 24 rail, a line of railroad composed of lines formerly owned or 25 operated by the Pennsylvania Railroad, the Penn-Central 26 Transportation Company, the Reading Company or the 27 Consolidated Rail Corporation. 28 * * * 29 Section 2. Section 2803 of Title 66 is amended by adding a 30 definition to read: 20070H1201B1666 - 4 -
1 § 2803. Definitions. 2 The following words and phrases when used in this chapter 3 shall have the meanings given to them in this section unless the 4 context clearly indicates otherwise: 5 * * * 6 "Micro-grid." A small power generation and distribution 7 network directly serving multiple consumers with the electric 8 generating facility located near or on the same site as the 9 consumers, that may be interconnected to the transmission and 10 distribution system and, if so, operates independently from it. 11 * * * 12 Section 3. Section 2807(e) of Title 66 is amended and the 13 section is amended by adding a subsection to read: 14 § 2807. Duties of electric distribution companies. 15 * * * 16 (e) Obligation to serve.--An electric distribution company's 17 obligation to provide electric service following implementation 18 of restructuring and the choice of alternative generation by a 19 customer is revised as follows: 20 (1) While an electric distribution company collects 21 either a competitive transition charge or an intangible 22 transition charge or until 100% of its customers have choice, 23 whichever is longer, the electric distribution company shall 24 continue to have the full obligation to serve, including the 25 connection of customers, the delivery of electric energy and 26 the production or acquisition of electric energy for 27 customers. 28 (2) At the end of the transition period, the commission 29 shall promulgate regulations to define the electric 30 distribution company's obligation to connect and deliver and 20070H1201B1666 - 5 -
1 acquire electricity under paragraph (3) that will exist at 2 the end of the phase-in period. 3 (3) [If a customer contracts for electric energy and it 4 is not delivered or if a customer does not choose an 5 alternative electric generation supplier, the] 6 (i) The electric distribution company or commission- 7 approved alternative supplier shall acquire [electric 8 energy at prevailing market prices to serve that customer 9 and shall recover fully all reasonable costs.] a 10 portfolio of resources through one or more competitive 11 procurement processes approved by the commission to serve 12 customers who contract for electric energy and do not 13 receive it or to customers who do not choose an 14 alternative electric generation supplier, and shall 15 recover fully all reasonable costs. The competitive 16 procurement process or processes to secure electricity 17 shall be conducted by customer rate class as determined 18 and approved by the commission. The generation rates 19 procured by the competitive procurement process or 20 processes may not allow the cross-subsidization of one 21 customer rate class by another. 22 (ii) In addition to complying with the requirements 23 of the act of November 30, 2004 (P.L.1672, No.213), known 24 as the Alternative Energy Portfolio Standards Act, the 25 resource portfolio acquired pursuant to this paragraph 26 shall be designed to produce the lowest reasonable rates 27 on a long-term basis and shall reflect a diversity of 28 supply-side and demand-side resources, a diversity of 29 fuel types and a prudent mix of long-term, short-term and 30 spot-market purchases. A long-term contract shall be 20070H1201B1666 - 6 -
1 permitted only for newly constructed or proposed to be 2 constructed alternative energy sources, as that term is 3 defined in section 2 of the Alternative Energy Portfolio 4 Standards Act, and new generation resources determined by 5 the commission to be required for reliability as set 6 forth in subparagraph (v). 7 (iii) An electric distribution company or 8 commission-approved alternative supplier may enter into a 9 long-term contract directly with a Tier I alternative 10 energy source, as that term is defined in section 2 of 11 the Alternative Energy Portfolio Standards Act, for 12 electricity, alternative energy credits, or both, without 13 engaging in a commission-approved competitive procurement 14 process. The costs associated with the contract must be 15 consistent with the average cost of Tier I alternative 16 energy credits in other jurisdictions of the PJM 17 Interconnection, L.L.C., regional transmission 18 organization or its successor, accounting for the effect 19 that public subsidies have on the price of the 20 alternative energy credit. The commission shall determine 21 when there is significant competition among Tier I 22 alternative energy sources that the acts authorized by 23 this subpart are no longer necessary. 24 (iv) An electric distribution company or commission- 25 approved alternative supplier shall enter into a contract 26 with energy efficiency and other demand-side resources, 27 instead of electric generation facilities, to meet any 28 increases in energy usage and peak demand so long as the 29 cost of energy efficiency and demand-side resources is 30 less than the cost of electric generation. To the extent 20070H1201B1666 - 7 -
1 that electric generation is necessary to meet additional 2 load growth, the electric distribution company or 3 commission-approved alternative supplier shall make a 4 good faith effort to procure electricity from alternative 5 energy sources specified in the Alternative Energy 6 Portfolio Standards Act. 7 (v) An electric distribution company or commission- 8 approved alternative supplier may enter into a contract 9 approved by the commission to enable the construction of 10 new electric generation resources upon a determination by 11 the commission that new electric generation resources are 12 required to ensure reliability. The commission shall 13 ensure that a contract for new electric generation 14 resources are the lowest cost option for ensuring 15 reliability. 16 (vi) The portfolio of resources acquired pursuant to 17 this subsection shall be acquired separately for 18 residential customers, small business customers and large 19 customers as those customer classes are defined by the 20 commission for each electric distribution company or 21 commission-approved alternative supplier. 22 (vii) For the purposes of this paragraph "long-term 23 contract" shall be defined as a contract length of more 24 than three years. "Short-term contract" shall be defined 25 as a contract length of three years or less. 26 (4) If a customer that chooses an alternative supplier 27 and subsequently desires to return to the local distribution 28 company for generation service, the local distribution 29 company shall treat that customer exactly as it would any new 30 applicant for energy service. 20070H1201B1666 - 8 -
1 (5) No later than January 1, 2011, an electric 2 distribution company or commission-approved alternative 3 supplier shall provide a rate that shall change no more 4 frequently than on an annual basis as the default option for 5 residential and small business customers. 6 (6) One year from the effective date of this paragraph 7 or at the end of the applicable generation rate cap period, 8 whichever is later, an electric distribution company and 9 commission-approved alternative supplier shall offer a time- 10 of-use pilot rate to residential and small business customers 11 voluntarily choosing to be part of the pilot program. An 12 electric distribution and commission-approved alternative 13 supplier shall provide to the commission a description of its 14 time-of-use pilot rate program and shall annually report on 15 the participation in the pilot program and the efficacy of 16 the pilot program in affecting energy demand and consumption. 17 (7) Within six years of the effective date of this 18 paragraph, an electric distribution company shall furnish its 19 customers with technology capable of allowing all customers 20 to participate in pricing programs that reflect time of use. 21 The electric distribution company may recover the net costs 22 associated with technology required to implement time-of-use 23 rates. Cost recovery shall reflect the operating cost savings 24 to the electric distribution company from the introduction of 25 technology to implement time-of-use rates. Customer 26 participation in time-of-use pricing shall be voluntary. 27 (8) By January 1, 2011, or at an electric distribution 28 company or commission-approved alternative supplier's next 29 default service offering, whichever is sooner, the electric 30 distribution company or commission-approved alternative 20070H1201B1666 - 9 -
1 supplier may offer large customers any rate including, but 2 not limited to, a cost-based rate for any duration agreed 3 upon by the electric distribution company or commission- 4 approved alternative supplier and the large customer. 5 Contract rates entered into pursuant to this paragraph shall 6 be subject to review by the commission in order to ensure 7 that no costs related to the rates are borne by other 8 customers or customer classes. 9 (9) The commission shall require an electric 10 distribution company to offer customers the choice of 11 phasing-in over a period of up to three years any generation 12 rate increases resulting from the end of existing generation 13 rate caps which are approved by the commission. 14 (f) Retail electricity surcharge.-- 15 (1) Each electric distribution company shall apply and 16 collect a charge of $0.0005 per kWh for each kWh of retail 17 electricity sold in this Commonwealth and shall pay that 18 charge to the State Treasurer through the Department of 19 Revenue on a quarterly basis within 30 days after the close 20 of the quarter in which collected. 21 (2) Notwithstanding the provisions in paragraph (1), in 22 no event shall the annual payment from any single customer 23 exceed $10,000. 24 (3) The State Treasurer shall transfer all funds 25 received pursuant to this subsection to the Energy 26 Development Fund within 30 days of receipt of the funds. 27 (4) The charge shall appear as a separate charge on the 28 distribution bill of each retail electricity customer. The 29 charge shall be applied beginning 90 days after the effective 30 date of this subsection and shall expire on the 30th 20070H1201B1666 - 10 -
1 anniversary of the date it was first applied. 2 (5) Funds collected under this subsection shall be used 3 by the Pennsylvania Energy Development Authority, 4 Redevelopment Capital Assistance Program and the Ben Franklin 5 Technology Development Authority for the following purposes: 6 (i) To fulfill the obligations of a bond for 7 alternative energy projects, including: 8 (A) Funding for alternative and renewable energy 9 projects, including alternative and renewable 10 transportation fuels. 11 (B) Funding for the purchase of tradable 12 instruments, including, but not limited to, 13 alternative and renewable energy credits. 14 (C) Funding for demand-side management measures 15 for all customer classes, including, but not limited 16 to, energy efficiency building construction, 17 equipment and renovation. 18 (D) Rebates or grants for solar photovoltaic, 19 other solar electric or solar thermal installations. 20 (E) Production grants or rebates to solar 21 equipment manufacturers. 22 (F) Funding for weatherization and other usage 23 reduction measures for low-income electricity and 24 natural gas customers. 25 (G) To acquire, through purchase or otherwise, 26 hold, sell, transfer and redistribute electric power, 27 natural gas, liquid fuel, transportation fuel and any 28 other energy commodity. 29 (2) Reasonable administrative costs associated with 30 utilizing the funds. 20070H1201B1666 - 11 -
1 Section 4. Title 66 is amended by adding a section to read: 2 § 2813. Micro-grids. 3 Customers may have their electricity supplied by micro-grids 4 subject to the following: 5 (1) A micro-grid shall be limited to four customers. 6 Micro-grids seeking to supply electricity to more than four 7 customers may be approved by the commission on a case-by-case 8 basis. The commission shall approve such requests if the 9 micro-grid, while serving more than four customers, provides 10 a private rather than a public service. 11 (2) The commission shall promulgate regulations on the 12 fees related to micro-grid interconnection, standby power and 13 other services related to the reliable and safe functioning 14 of micro-grids. Fees associated with this section shall be 15 the lowest cost necessary to ensure adequate system 16 reliability and safety. 17 (3) Micro-grids may sell power back to the electric 18 transmission and distribution system at the spot or hourly 19 wholesale price of electricity at the nearest appropriate 20 node that is part of the regional transmission organization. 21 Section 5. This act shall take effect immediately. B22L66RLE/20070H1201B1666 - 12 -