PRINTER'S NO. 585
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
129
Session of
2015
INTRODUCED BY VITALI, FRANKEL, BRIGGS, BROWNLEE, COHEN,
M. DALEY, KINSEY, McCARTER, O'BRIEN AND THOMAS,
FEBRUARY 23, 2015
REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, FEBRUARY 23, 2015
AN ACT
Amending Title 66 (Public Utilities) of the Pennsylvania
Consolidated Statutes, in restructuring of electric utility
industry, further providing for energy efficiency and
conservation program; and providing for natural gas energy
efficiency and conservation program.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 2806.1(g), (k) and (m) of Title 66 of the
Pennsylvania Consolidated Statutes are amended to read:
§ 2806.1. Energy efficiency and conservation program.
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[(g) Limitation on costs.--The total cost of any plan
required under this section shall not exceed 2% of the electric
distribution company's total annual revenue as of December 31,
2006. The provisions of this paragraph shall not apply to the
cost of low-income usage reduction programs established under 52
Pa. Code Ch. 58 (relating to residential low income usage
reduction programs).]
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(k) Recovery.--
(1) An electric distribution company shall recover on a
full and current basis from customers, through a reconcilable
adjustment clause under section 1307, all reasonable and
prudent costs incurred in the provision or management of a
plan provided under this section. This paragraph shall apply
to all electric distribution companies, including electric
distribution companies subject to generation or other rate
caps.
(2) [Except as set forth in paragraph (3), decreased]
Decreased revenues of an electric distribution company due to
reduced energy consumption or changes in energy demand [shall
not] attributable to the implementation of an energy
efficiency and conservation program required by this section
may be a recoverable cost under a reconcilable automatic
adjustment clause.
(3) Decreased revenue and reduced energy consumption may
be reflected in revenue and sales data used to calculate
rates in a distribution-base rate proceeding filed by an
electric distribution company under section 1308 (relating to
voluntary changes in rates).
* * *
(m) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection:
"Conservation service provider." An entity that provides
information and technical assistance on measures to enable a
person to increase energy efficiency or reduce energy
consumption and that has no direct or indirect ownership,
partnership or other affiliated interest with an electric
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distribution company.
"Electric distribution company total annual revenue."
Amounts paid to the electric distribution company for
generation, transmission, distribution and surcharges by retail
customers.
"Energy efficiency and conservation measures."
(1) Technologies, management practices or other measures
employed by retail customers that reduce electricity
consumption or demand if all of the following apply:
(i) The technology, practice or other measure is
installed on or after the effective date of this section
at the location of a retail customer.
(ii) The technology, practice or other measure
reduces consumption of energy or peak load by the retail
customer.
(iii) The cost of the acquisition or installation of
the measure is directly incurred in whole or in part by
the electric distribution company.
(2) Energy efficiency and conservation measures shall
include solar or solar photovoltaic panels, energy efficient
windows and doors, energy efficient lighting, including exit
sign retrofit, high bay fluorescent retrofit and pedestrian
and traffic signal conversion, geothermal heating,
insulation, air sealing, reflective roof coatings, energy
efficient heating and cooling equipment or systems and energy
efficient appliances and other technologies, practices or
measures approved by the commission.
"Peak demand." The highest electrical requirement occurring
during a specified period. For an electric distribution company,
the term shall mean the sum of the metered consumption for all
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retail customers over that period.
"Quality assurance." All of the following:
(1) The auditing of buildings, equipment and processes
to determine the cost-effectiveness of energy efficiency and
conservation measures using nationally recognized tools and
certification programs.
(2) Independent inspection of completed energy
efficiency and conservation measures completed by third-party
entities to evaluate the quality of the completed measure.
"Real-time price." A rate that directly reflects the
different cost of energy during each hour.
"Time-of-use rate." A rate that reflects the costs of
serving customers during different time periods, including off-
peak and on-peak periods, but not as frequently as each hour.
"Total resource cost test." A standard test that is met if,
over the effective life of each plan not to exceed [15] 20
years, the net present value of the avoided monetary [cost] and
societal costs of supplying electricity is greater than the net
present value of the monetary cost of energy efficiency
conservation measures.
Section 2. Title 66 is amended by adding a section to read:
§ 2806.3. Natural gas energy efficiency and conservation
program.
(a) Program.--The commission shall, by January 15, 2016,
adopt an energy efficiency and conservation program to require
natural gas distribution companies to adopt and implement cost-
effective energy efficiency and conservation plans to reduce
energy demand and consumption within the service territory of
each natural gas distribution company in this Commonwealth. The
program shall include:
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(1) Procedures for the approval of plans submitted under
subsection (b).
(2) An evaluation process, including a process to
monitor and verify data collection, quality assurance and
results of each plan and the program.
(3) An analysis of the cost and benefit of each plan
submitted under subsection (b) in accordance with a total
resource cost test approved by the commission.
(4) An analysis of how the program and individual plans
will enable each natural gas distribution company to achieve
or exceed the requirements for reduction in consumption under
subsection (c).
(5) Standards to ensure that each plan includes a
variety of energy efficiency and conservation measures and
will provide the measures equitably to all classes of
customers.
(6) Procedures to make recommendations as to additional
measures that will enable a natural gas distribution company
to improve its plan and exceed the required reductions in
consumption under subsection (c).
(7) Procedures to require that natural gas distribution
companies competitively bid all contracts with conservation
service providers.
(8) Procedures to review all proposed contracts prior to
the execution of the contract with conservation service
providers to implement the plan. The commission may order the
modification of a proposed contract to ensure that the plan
meets the requirements for reduction in demand and
consumption under subsection (c).
(9) Procedures to ensure compliance with requirements
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for reduction in consumption under subsection (c).
(10) A requirement for the participation of conservation
service providers in the implementation of all or part of a
plan.
(11) Cost recovery to ensure that measures approved are
financed by the same customer class that will receive the
direct energy and conservation benefits.
(b) Duties of natural gas distribution companies.--
(1) (i) By July 1, 2016, each natural gas distribution
company shall develop and file an energy efficiency and
conservation plan with the commission for approval to
meet the requirements of subsection (a) and the
requirements for reduction in consumption under
subsection (c). The plan shall be implemented upon
approval by the commission. The following are the plan
requirements:
(A) The plan shall include specific proposals to
implement energy efficiency and conservation measures
to achieve or exceed the required reductions in
consumption under subsection (c).
(B) A minimum of 10% of the required reductions
in consumption under subsection (c) shall be obtained
from units of Federal, State and local government,
including municipalities, school districts,
institutions of higher education and nonprofit
entities.
(C) The plan shall explain how quality assurance
and performance will be measured, verified and
evaluated.
(D) The plan shall state the manner in which the
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plan will achieve the requirements of the program
under subsection (a) and will achieve or exceed the
required reductions in consumption under subsection
(c).
(E) The plan shall include a contract with one
or more conservation service providers selected by
competitive bid to implement the plan or a portion of
the plan as approved by the commission.
(F) The plan shall include estimates of the cost
of implementation of the energy efficiency and
conservation measures in the plan.
(G) The plan shall include specific energy
efficiency measures for households at or below 150%
of the Federal poverty income guidelines. The number
of measures shall be proportionate to those
households' share of the total energy usage in the
service territory. The natural gas distribution
company shall coordinate measures under this clause
with other programs administered by the commission or
another Federal or State agency. The expenditures of
a natural gas distribution company under this clause
shall be in addition to expenditures made under 52
Pa. Code Ch. 58 (relating to residential low income
usage reduction programs).
(H) The plan shall include a proposed cost-
recovery tariff mechanism, in accordance with section
1307 (relating to sliding scale of rates;
adjustments), to fund the energy efficiency and
conservation measures and to ensure full and current
recovery of the prudent and reasonable costs of the
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plan, including administrative costs, as approved by
the commission.
(I) The natural gas distribution company shall
demonstrate that the plan is cost effective using a
total resource cost test approved by the commission
and provides a diverse cross section of alternatives
for customers of all rate classes.
(J) The plan shall require an annual independent
evaluation of its cost-effectiveness and a full
review of the results of each five-year plan required
under subsection (c)(3) and, to the extent practical,
how the plan will be adjusted on a going-forward
basis as a result of the evaluation.
(K) The plan shall include an analysis of the
natural gas distribution company's administrative
costs.
(ii) A new plan shall be filed with the commission
every five years or as otherwise required by the
commission. The plan shall set forth the manner in which
the company will meet the required reductions in
consumption under subsection (c).
(iii) No more than 2% of funds available to
implement a plan under this subsection shall be allocated
for experimental equipment or devices.
(2) The commission shall direct a natural gas
distribution company to modify or terminate any part of a
plan approved under this section if, after an adequate period
for implementation, the commission determines that an energy
efficiency or conservation measure included in the plan will
not achieve the required reductions in consumption in a cost-
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effective manner under subsection (c).
(3) If part of a plan is modified or terminated under
paragraph (2), the natural gas distribution company shall
submit a revised plan describing actions to be taken to offer
substitute measures or to increase the availability of
existing measures in the plan to achieve the required
reductions in consumption under subsection (c).
(c) Reductions in consumption.--The plans adopted under
subsection (b) shall reduce natural gas consumption as follows:
(1) By May 31, 2018, total annual weather-normalized
consumption of the retail customers of each natural gas
distribution company shall be reduced by a minimum of 1%. The
1% demand reduction in consumption shall be measured against
the natural gas distribution company's expected demand as
forecasted by the commission for June 1, 2016, through May
31, 2017, with provisions made for weather adjustments and
extraordinary demand that the natural gas distribution
company must serve.
(2) By May 31, 2020, the total annual weather-normalized
consumption of the retail customers of each natural gas
distribution company shall be reduced by a minimum of 3%. The
3% demand reduction in consumption shall be measured against
the natural gas distribution company's expected demand as
forecasted by the commission for June 1, 2016, through May
31, 2017, with provisions made for weather adjustments and
extraordinary demand that the natural gas distribution
company must serve.
(3) By May 31, 2020, and every five years thereafter,
the commission shall evaluate the costs and benefits of the
program established under subsection (a) and of approved
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energy efficiency and conservation plans submitted to the
program. The evaluation shall be consistent with a total
resource cost test or a cost-benefit analysis determined by
the commission. If the commission determines that the
benefits of the program exceed the costs, the commission
shall adopt additional required incremental reductions in
consumption.
(d) Commission approval.--
(1) The commission shall conduct a public hearing on
each plan and allow for the submission of recommendations by
the Office of Consumer Advocate and the Office of Small
Business Advocate and by members of the public as to how the
natural gas distribution company could improve its plan or
exceed the required reductions in consumption under
subsection (c).
(2) The commission shall approve or disapprove a plan
filed under subsection (b) within 120 days of submission. The
following shall apply to an order disapproving a plan:
(i) The commission shall describe in detail the
reasons for the disapproval.
(ii) The natural gas distribution company shall have
60 days to file a revised plan to address the
deficiencies identified by the commission. The revised
plan shall be approved or disapproved by the commission
within 60 days.
(e) Penalties.--
(1) The following shall apply for failure to submit a
plan:
(i) A natural gas distribution company that fails to
file a plan under subsection (b) shall be subject to a
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civil penalty of $100,000 per day until the plan is
filed.
(ii) A natural gas distribution company that fails
to file a revised plan under subsection (d)(2)(ii) shall
be subject to a civil penalty of $100,000 per day until
the plan is filed.
(iii) Penalties collected under this paragraph shall
be deposited in the low-income natural gas customer
assistance program of the natural gas distribution
company for the respective service territory.
(2) The following shall apply to a natural gas
distribution company that fails to achieve the reductions in
consumption required under subsection (c):
(i) The natural gas distribution company shall be
subject to a civil penalty not less than $1,000,000 and
not to exceed $20,000,000 for failure to achieve the
required reductions in consumption under subsection (c).
Any penalty paid by a natural gas distribution company
under this subparagraph shall not be recoverable from
ratepayers.
(ii) If a natural gas distribution company fails to
achieve the required reductions in consumption under
subsection (c), responsibility to achieve the reductions
in consumption shall be transferred to the commission.
The commission shall do all of the following:
(A) Implement a plan to achieve the required
reductions in consumption under subsection (c).
(B) Contract with conservation service providers
as necessary to implement any portion of the plan.
(f) Costs.--The commission shall recover from natural gas
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distribution companies the costs of implementing the program
established under this section.
(g) Report.--The following shall apply:
(1) Each natural gas distribution company shall submit
an annual report to the commission relating to the results of
the energy efficiency and conservation plan within each
natural gas distribution service territory. The report shall
include all of the following:
(i) Documentation of program expenditures.
(ii) Measurement and verification of energy savings
under the plan.
(iii) Evaluation of the cost-effectiveness of
expenditures.
(iv) Any other information required by the
commission.
(2) Beginning five years following the effective date of
this section and annually thereafter, the commission shall
submit a report to the Consumer Protection and Professional
Licensure Committee of the Senate and the Consumer Affairs
Committee of the House of Representatives.
(h) Existing funding sources.--Each natural gas distribution
company shall, upon request by any person, provide a list of all
eligible Federal and State funding programs available to
ratepayers for energy efficiency and conservation. The list
shall be posted on the natural gas distribution company's
Internet website.
(i) Recovery.--
(1) A natural gas distribution company shall recover on
a full and current basis from customers, through a
reconcilable adjustment clause under section 1307, all
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reasonable and prudent costs incurred in the provision or
management of a plan provided under this section. This
paragraph shall apply to all natural gas distribution
companies, including natural gas distribution companies
subject to generation or other rate caps.
(2) Decreased revenue of a natural gas distribution
company due to reduced natural gas consumption or a change in
natural gas demand attributable to the implementation of a
natural gas energy efficiency and conservation program
required by this section may be a recoverable cost under a
reconcilable automatic adjustment clause.
(3) Decreased revenue and reduced natural gas
consumption may be reflected in revenue and sales data used
to calculate rates in a distribution-base rate proceeding
filed by a natural gas distribution company under section
1308 (relating to voluntary changes in rates).
(j) Applicability.--This section shall not apply to a
natural gas distribution company with fewer than 100,000
customers.
(k) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection:
"Conservation service provider." An entity that provides
information and technical assistance on measures to enable a
person to increase energy efficiency or reduce energy
consumption and that has no direct or indirect ownership,
partnership or other affiliated interest with a natural gas
distribution company.
"Energy efficiency and conservation measures."
(1) Technologies, management practices or other measures
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employed by retail customers that reduce natural gas
consumption or demand if all of the following apply:
(i) The technology, practice or other measure is
installed on or after the effective date of this section
at the location of a retail customer.
(ii) The technology, practice or other measure
reduces consumption of natural gas by the retail
customer.
(iii) The cost of the acquisition or installation of
the measure is directly incurred in whole or in part by
the natural gas distribution company.
(2) Energy efficiency and conservation measures shall
include solar hot water systems, energy efficient windows and
doors, geothermal heating, insulation, air sealing,
reflective roof coatings, efficient gas heating equipment or
systems and energy efficient appliances and other
technologies, practices or measures approved by the
commission.
"Natural gas distribution company total annual revenue."
Amounts paid to the natural gas distribution company for
commodity, transmission, distribution and surcharges by retail
customers.
"Quality assurance." All of the following:
(1) The auditing of buildings, equipment and processes
to determine the cost-effectiveness of energy efficiency and
conservation measures using nationally recognized tools and
certification programs.
(2) Independent inspection of completed energy
efficiency and conservation measures completed by third-party
entities to evaluate the quality of the completed measure.
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"Total resource cost test." A standard test that is met if,
over the effective life of each plan not to exceed 20 years, the
net present value of the avoided monetary and societal cost of
supplying natural gas is greater than the net present value of
the monetary cost of energy efficiency conservation measures.
Section 3. This act shall take effect in 60 days.
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