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                                                      PRINTER'S NO. 1666

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

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
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     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
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     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
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     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.






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