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PRINTER'S NO. 3081
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2277
Session of
2024
INTRODUCED BY OTTEN, HOWARD, SAPPEY, SCHLOSSBERG, KINSEY,
HOHENSTEIN, MALAGARI, HILL-EVANS, FIEDLER, DONAHUE, KRUEGER,
D. WILLIAMS, ABNEY, DALEY, CEPEDA-FREYTIZ, BENHAM, GIRAL,
FRIEL, ROZZI, TAKAC, ISAACSON, PASHINSKI, PROKOPIAK, FRANKEL,
WAXMAN, KIM, VITALI, GUENST, SALISBURY, BRIGGS, SHUSTERMAN,
WEBSTER, YOUNG, SIEGEL, KRAJEWSKI, CIRESI, HADDOCK, CONKLIN,
MUNROE, McNEILL, SANCHEZ, DAWKINS, O'MARA, BOROWSKI, PIELLI,
BOYD, KINKEAD, SCOTT, N. NELSON, T. DAVIS, MULLINS, KHAN,
HANBIDGE, BRENNAN, GREEN, SCHWEYER, STEELE, MADDEN, WARREN,
McCLINTON, FREEMAN, BRADFORD, HARRIS AND BIZZARRO,
MAY 8, 2024
REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY,
MAY 8, 2024
AN ACT
Amending the act of November 30, 2004 (P.L.1672, No.213),
entitled "An act providing for the sale of electric energy
generated from renewable and environmentally beneficial
sources, for the acquisition of electric energy generated
from renewable and environmentally beneficial sources by
electric distribution and supply companies and for the powers
and duties of the Pennsylvania Public Utility Commission,"
further providing for definitions; providing for force
majeure; further providing for alternative energy portfolio
standards, for portfolio requirements in other states, for
health and safety standards and for interagency
responsibilities; providing for zero emission credits; and
making editorial changes.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Sections 1 and 2 of the act of November 30, 2004
(P.L.1672, No.213), known as the Alternative Energy Portfolio
Standards Act, are amended to read:
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Section 1. Short title.
This act shall be known and may be cited as the [Alternative
Energy Portfolio] Pennsylvania Reliable Energy Sustainability
Standards Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Advanced reactor. A nuclear fission reactor consistent with
the definition of "advanced nuclear reactor" in 42 U.S.C. §
16271 (relating to nuclear energy). The term includes a small
modular reactor.
["Alternative energy credit." A tradable instrument that is
used to establish, verify and monitor compliance with this act.
A unit of credit shall equal one megawatt hour of electricity
from an alternative energy source. The alternative energy credit
shall remain the property of the alternative energy system until
the alternative energy credit is voluntarily transferred by the
alternative energy system. (Def. amended July 17, 2007, P.L.114,
No.35)
"Alternative energy portfolio standards." Standards
establishing that a certain amount of energy sold from
alternative energy sources is included as part of the sources of
electric generation by electric utilities within this
Commonwealth.
"Alternative energy sources." The term shall include the
following existing and new sources for the production of
electricity:
(1) Solar photovoltaic or other solar electric energy.
(2) Solar thermal energy.
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(3) Wind power.
(4) Large-scale hydropower, which shall mean the
production of electric power by harnessing the hydroelectric
potential of moving water impoundments, including pumped
storage that does not meet the requirements of low-impact
hydropower under paragraph (5).
(5) Low-impact hydropower consisting of any technology
that produces electric power and that harnesses the
hydroelectric potential of moving water impoundments,
provided such incremental hydroelectric development:
(i) does not adversely change existing impacts to
aquatic systems;
(ii) meets the certification standards established
by the Low Impact Hydropower Institute and American
Rivers, Inc., or their successors;
(iii) provides an adequate water flow for protection
of aquatic life and for safe and effective fish passage;
(iv) protects against erosion; and
(v) protects cultural and historic resources.
(6) Geothermal energy, which shall mean electricity
produced by extracting hot water or steam from geothermal
reserves in the earth's crust and supplied to steam turbines
that drive generators to produce electricity.
(7) Biomass energy, which shall mean the generation of
electricity utilizing the following:
(i) organic material from a plant that is grown for
the purpose of being used to produce electricity or is
protected by the Federal Conservation Reserve Program
(CRP) and provided further that crop production on CRP
lands does not prevent achievement of the water quality
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protection, soil erosion prevention or wildlife
enhancement purposes for which the land was primarily set
aside; or
(ii) any solid nonhazardous, cellulosic waste
material that is segregated from other waste materials,
such as waste pallets, crates and landscape or right-of-
way tree trimmings or agricultural sources, including
orchard tree crops, vineyards, grain, legumes, sugar and
other crop by-products or residues.
(8) Biologically derived methane gas, which shall
include methane from the anaerobic digestion of organic
materials from yard waste, such as grass clippings and
leaves, food waste, animal waste and sewage sludge. The term
also includes landfill methane gas.
(9) Fuel cells, which shall mean any electrochemical
device that converts chemical energy in a hydrogen-rich fuel
directly into electricity, heat and water without combustion.
(10) Waste coal, which shall include the combustion of
waste coal in facilities in which the waste coal was disposed
or abandoned prior to July 31, 1982, or disposed of
thereafter in a permitted coal refuse disposal site
regardless of when disposed of, and used to generate
electricity, or such other waste coal combustion meeting
alternate eligibility requirements established by regulation.
Facilities combusting waste coal shall use at a minimum a
combined fluidized bed boiler and be outfitted with a
limestone injection system and a fabric filter particulate
removal system. Alternative energy credits shall be
calculated based upon the proportion of waste coal utilized
to produce electricity at the facility.
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(11) Coal mine methane, which shall mean methane gas
emitting from abandoned or working coal mines.
(12) Demand-side management consisting of the management
of customer consumption of electricity or the demand for
electricity through the implementation of:
(i) energy efficiency technologies, management
practices or other strategies in residential, commercial,
institutional or government customers that reduce
electricity consumption by those customers;
(ii) load management or demand response
technologies, management practices or other strategies in
residential, commercial, industrial, institutional and
government customers that shift electric load from
periods of higher demand to periods of lower demand; or
(iii) industrial by-product technologies consisting
of the use of a by-product from an industrial process,
including the reuse of energy from exhaust gases or other
manufacturing by-products that are used in the direct
production of electricity at the facility of a customer.
(13) Distributed generation system, which shall mean the
small-scale power generation of electricity and useful
thermal energy.
"Alternative energy system." A facility or energy system
that uses a form of alternative energy source to generate
electricity and delivers the electricity it generates to the
distribution system of an electric distribution company or to
the transmission system operated by a regional transmission
organization.]
"Biogas energy." The generation of electricity that uses:
(1) biogas resultant of anaerobic digestion of organic
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material, including yard waste such as grass clippings and
leaves, food waste, animal waste and sewage sludge; or
(2) landfill gas.
"Biomass energy." The generation of electricity that uses:
(1) organic material from a plant that is grown for the
purpose of being used to produce electricity or is protected
by the Federal Conservation Reserve Program (CRP), and
provided that crop production on CRP lands does not prevent
achievement of the water quality protection, soil erosion
prevention or wildlife enhancement purposes for which the
land is primarily set aside; or
(2) any solid nonhazardous, cellulosic waste material
that is segregated from other waste material, such as waste
pallets, crates and landscape or right-of-way tree trimmings
or agricultural sources, including orchard tree crops,
vineyards, grain, legumes, sugar and other crop by-products
or residues.
"Clean hydrogen." Hydrogen produced through a process that
results in a lifecycle greenhouse gas emissions rate of less
than 0.45 kilograms of CO2e per kilogram of hydrogen.
"Coal mine fugitive emissions." Methane gas emitted from an
abandoned or working coal mine.
"Combined heat and power system." A combined heat and power
system installed on a commercial, institutional or industrial
facility site within this Commonwealth that is a qualified
facility under the Public Utility Regulatory Policies Act of
1978 (Public Law 95-617, 92 Stat. 3117) and has an annual
operating efficiency of at least 60% with at least 25% of the
total annual energy output being useful thermal energy. A
combined heat and power system shall qualify as a Tier II PRESS
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energy source for up to 25 megawatts of aggregate electric
nameplate capacity on a site.
"Commission." The Pennsylvania Public Utility Commission.
["Cost-recovery period." The longer of:
(1) the period during which competitive transition
charges under 66 Pa.C.S § 2808 (relating to competitive
transition charge) or intangible transition charges under 66
Pa.C.S. § 2812 (relating to approval of transition bonds) are
recovered; or
(2) the period during which an electric distribution
company operates under a Pennsylvania Public Utility
Commission-approved generation rate plan that has been
approved prior to or within one year of the effective date of
this act, but in no case shall the cost-recovery period under
this act extend beyond December 31, 2010.]
"Customer-generator." A nonutility owner or operator of a
net metered distributed generation system with a nameplate
capacity of not greater than 50 kilowatts if installed at a
residential service or not larger than 3,000 kilowatts at other
customer service locations, except for customers whose systems
are above three megawatts and up to five megawatts who make
their systems available to operate in parallel with the electric
utility during grid emergencies as defined by the regional
transmission organization or where a microgrid is in place for
the primary or secondary purpose of maintaining critical
infrastructure, such as homeland security assignments, emergency
services facilities, hospitals, traffic signals, wastewater
treatment plants or telecommunications facilities, provided that
technical rules for operating generators interconnected with
facilities of an electric distribution company, electric
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cooperative or municipal electric system have been promulgated
by the Institute of Electrical and Electronic Engineers and the
Pennsylvania Public Utility Commission.
"Demand-side management." The management of customer
consumption of electricity or the demand for electricity through
the implementation of:
(1) energy efficiency technologies, management practices
or other strategies in residential, commercial, institutional
or government customers that reduce electricity consumption
by those customers;
(2) load management or demand response technologies,
management practices or other strategies in residential,
commercial, industrial, institutional and government
customers that shift electric load from periods of higher
demand to periods of lower demand; or
(3) industrial by-product technologies consisting of the
use of a by-product from an industrial process, including the
reuse of energy from exhaust gases or other manufacturing by-
products that are used in the direct production of
electricity at the facility of a customer.
"Department." The Department of Environmental Protection of
the Commonwealth.
"Distributed generation system." Small-scale power
generation of electricity, not including combined heat and
power.
"Electric distribution company." The term shall have the
same meaning given to it in 66 Pa.C.S. Ch. 28 (relating to
restructuring of electric utility industry).
"Electric generation supplier." The term shall have the same
meaning given to it in 66 Pa.C.S. Ch. 28 (relating to
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restructuring of electric utility industry).
"Environmental justice area." A geographic area
characterized by increased pollution burden and sensitive or
vulnerable populations based on demographic and environmental
data as identified by the department.
"Force majeure." [Upon its own initiative or upon a request
of an electric distribution company or an electric generator
supplier, the Pennsylvania Public Utility Commission, within 60
days, shall determine if alternative PRESS energy resources are
reasonably available in the marketplace in sufficient quantities
or are likely to be developed in sufficient quantities due to
alternative compliance payments or economics for the electric
distribution companies and electric generation suppliers to meet
their obligations for that reporting period under this act. In
making this determination, the commission shall consider whether
electric distribution companies or electric generation suppliers
have made a good faith effort to acquire sufficient PRESS
alternative energy to comply with their obligations. Such good
faith efforts shall include, but are not limited to, banking
reliable alternative energy credits during their transition
periods, seeking reliable alternative energy credits through
competitive solicitations and seeking to procure reliable
alternative energy credits or PRESS alternative energy through
long-term contracts. In further making its determination, the
commission shall assess the availability of alternative reliable
energy credits in the Generation Attributes Tracking System
(GATS) or its successor and the availability of reliable
alternative energy credits generally in Pennsylvania and other
jurisdictions in the PJM Interconnection, L.L.C. regional
transmission organization (PJM) or its successor. The commission
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may also require solicitations for reliable alternative energy
credits as part of default service before requests of force
majeure can be made. If the commission further determines that
PRESS alternative energy resources are not reasonably available
in sufficient quantities in the marketplace for the electric
distribution companies and electric generation suppliers to meet
their obligations under this act, then the commission shall
modify the underlying obligation of the electric distribution
company or electric generation supplier or recommend to the
General Assembly that the underlying obligation be eliminated.
Commission modification of the electric distribution company or
electric generation supplier obligations under this act shall be
for that compliance period only. Commission modification shall
not automatically reduce the obligation for subsequent
compliance years. If the commission modifies the electric
distribution company or electric generation supplier obligations
under this act, the commission may require the electric
distribution company or electric generation supplier to acquire
additional reliable alternative energy credits in subsequent
years equivalent to the obligation reduced due to a force
majeure declaration if the commission determines that sufficient
reliable alternative energy credits exist in the marketplace.]
The determination made by the commission under section 2.1.
"Fuel cells." A device that converts chemical energy in a
hydrogen-rich fuel directly into electricity, heat and water
without combustion.
"Fusion energy." The product of fusion reactions inside a
fusion device and used to generate electricity.
"Geothermal energy." The utilization of natural heat of the
earth found below the surface of the earth, which is then used
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to generate electricity. The term includes:
(1) A product of geothermal process such as heat,
indigenous steam, pressure, hot water and hot brines, gases
and byproducts.
(2) Energy from a geothermal heating and cooling system.
The term does not include helium, oil, hydrocarbon gas or any
other hydrocarbon substances.
"Geothermal heating and cooling system." A system that:
(1) Exchanges thermal energy from groundwater or a
shallow ground source to generate thermal energy through an
electric geothermal heat pump or a system of electric
geothermal heat pumps interconnected with a geothermal
extraction facility that:
(i) Is a closed loop or a series of closed loop
systems in which fluid is permanently confined within a
pipe or tubing.
(ii) Does not come in contact with the outside
environment or an open loop system in which ground or
surface water is:
(A) circulated in an environmentally safe manner
directly into the facility; and
(B) returned to the same aquifer or surface
water source.
(2) Meets or exceeds the current Federal Energy Star
product specification standards.
(3) Replaces or displaces less efficient space or water
heating systems, regardless of fuel type.
(4) Replaces or displaces less efficient space cooling
systems that do not meet Federal Energy Star product
specification standards.
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(5) Does not feed electricity back to the grid.
"Hydropower." The production of electric power by harnessing
the hydroelectric potential of moving water impoundments,
including pumped storage that does not meet the requirements of
low-impact hydropower.
"Low-impact hydropower." Technology that produces electric
power and harnesses the hydroelectric potential of moving water
impoundments, provided that the incremental hydroelectric
development:
(1) Does not adversely change existing impacts to
aquatic systems.
(2) Meets the certification standards established by the
Low Impact Hydropower Institute and American Rivers, Inc., or
its successors.
(3) Provides an adequate water flow for protection of
aquatic life and for safe and effective fish passage.
(4) Protects against erosion.
(5) Protects cultural and historic resources.
"Lifecycle greenhouse gas emissions." The term shall have
the same meaning as defined in 26 U.S.C. § 45V(c) (relating to
credit for production of clean hydrogen).
"Municipal solid waste." This will include energy from
existing waste to energy facilities which the Department of
Environmental Protection has determined are in compliance with
current environmental standards, including, but not limited to,
all applicable requirements of the Clean Air Act (69 Stat. 322,
42 U.S.C. § 7401 et seq.) and associated permit restrictions and
all applicable requirements of the act of July 7, 1980 (P.L.380,
No.97), known as the Solid Waste Management Act.
"Net metering." The means of measuring the difference
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between the electricity supplied by an electric utility and the
electricity generated by a customer-generator when any portion
of the electricity generated by the [alternative] PRESS energy
[generating] system is used to offset part or all of the
customer-generator's requirements for electricity. [Virtual] The
term includes virtual meter aggregation on properties owned or
leased and operated by a customer-generator and located within
two miles of the boundaries of the customer-generator's property
and within a single electric distribution company's service
territory [shall be eligible for net metering].
"PRESS energy sources." The term shall include existing and
new sources for the production of electricity including Tier I,
Tier II and Tier III PRESS energy sources.
"PRESS energy system." A facility or energy system that uses
a form of PRESS energy source to generate electricity and
delivers the electricity generated to the distribution system of
an electric distribution company or to the transmission system
operated by a regional transmission organization.
"Regional transmission organization." An entity approved by
the Federal Energy Regulatory Commission [(FERC)] that is
created to operate and manage the electrical transmission grids
of the member electric transmission utilities as required under
[FERC] Federal Energy Regulatory Commission Order 2000, Docket
No. RM99-2-000, [FERC] Federal Energy Regulatory Commission
Chapter 31.089 (1999) or any successor organization approved by
the [FERC] Federal Energy Regulatory Commission.
"Reliable energy credit." A tradable instrument that is used
to establish, verify and monitor compliance with this act. A
unit of credit shall equal one megawatt hour of electricity from
a PRESS energy source. The reliable energy credit shall remain
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the property of the reliable energy system until the reliable
energy credit is voluntarily transferred by the reliable energy
system.
"Reliable energy standards." Standards establishing that a
certain amount of energy sold from PRESS energy sources is
included as part of the sources of electric generation by
electric utilities within this Commonwealth.
"Reporting period." The 12-month period from June 1 through
May 31. A reporting year shall be numbered according to the
calendar year in which it begins and ends.
"Retail electric customer." The term shall have the same
meaning given to it in 66 Pa.C.S. Ch. 28 (relating to
restructuring of electric utility industry).
"Small modular reactors." An advanced nuclear reactor with a
rated capacity of less than 300 electrical megawatts that can be
constructed and operated in combination with similar reactors at
a single site.
["Tier I alternative energy source." Energy derived from:
(1) Solar photovoltaic and solar thermal energy.
(2) Wind power.
(3) Low-impact hydropower.
(4) Geothermal energy.
(5) Biologically derived methane gas.
(6) Fuel cells.
(7) Biomass energy.
(8) Coal mine methane.
"Tier II alternative energy source." Energy derived from:
(1) Waste coal.
(2) Distributed generation systems.
(3) Demand-side management.
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(4) Large-scale hydropower.
(5) Municipal solid waste.
(6) Generation of electricity utilizing by-products of
the pulping process and wood manufacturing process, including
bark, wood chips, sawdust and lignin in spent pulping
liquors.
(7) Integrated combined coal gasification technology.]
"Tier I PRESS energy source." Electric energy derived from:
(1) Solar photovoltaic and solar thermal energy.
(2) Wind power.
(3) Low-impact hydropower.
(4) Geothermal energy.
(5) Advanced reactors.
(6) Fusion energy.
(7) Coal mine fugitive emissions.
(8) Biogas energy.
"Tier II PRESS energy source." Electric energy derived from:
(1) Natural gas or coal using 80% clean hydrogen co-
fired blend or equivalent carbon intensity reduction
technologies.
(2) Non-Tier I distributed generation systems.
(3) Demand-side management.
(4) Hydropower.
(5) Fuel cells.
(6) Biomass energy.
(7) Storage resources co-located with a Tier I PRESS
energy source with 10% nameplate capacity available every
hour for a 24-hour period.
(8) Combined heat and power.
(9) Tier I PRESS energy source that meets the
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requirements of section 3(e)(16).
"Tier III PRESS energy source." Electric energy derived
from:
(1) Natural gas or coal using 20% clean hydrogen co-
fired blend or equivalent carbon reduction technologies.
(2) Waste coal.
(3) Municipal solid waste.
(4) Integrated combined coal gasification technology.
(5) Generation of electricity utilizing by-products of
the pulping process, including bark, wood chips, sawdust and
lignin in spent pulping liquors.
(6) Tier I PRESS energy source that meets the
requirements of section 3(e)(16).
"True-up period." The period each year from the end of the
reporting year until September 1.
"Virtual currency." A type of digital unit that is used as a
medium of exchange or a form of digitally stored value. The term
shall be broadly construed to include a digital unit of exchange
that:
(1) has a centralized repository or administrator;
(2) is decentralized and has no centralized repository
or administrator; or
(3) may be created or obtained by computing or
manufacturing effort.
"Waste coal." The combustion of waste coal in a facility:
(1) In which the waste coal was disposed or abandoned
prior to July 31, 1982, or disposed of thereafter in a
permitted coal refuse disposal site regardless of when
disposed of, and used to generate electricity, or such other
waste coal combustion meeting alternate eligibility
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requirements established by regulation.
(2) That uses at a minimum a combined fluidized bed
boiler and is outfitted with a limestone injection system and
a fabric filter particulate removal system.
Reliable energy credits shall be calculated based upon the
proportion of waste coal utilized to produce electricity at the
facility.
"ZEC." A zero emission credit authorized under section 8.1.
Section 2. The act is amended by adding a section to read:
Section 2.1. Force majeure.
(a) Determination of commission.--
(1) Upon its own initiative or upon a request of an
electric distribution company or an electric generator
supplier, the commission shall determine if PRESS energy
resources are reasonably available in the marketplace in
sufficient quantities or are likely to be developed in
sufficient quantities due to alternative compliance payments
or economics for the electric distribution companies and
electric generation suppliers to meet their obligations for
that reporting period under this act.
(2) In making the determination under paragraph (1), the
commission shall consider whether electric distribution
companies or electric generation suppliers have made a good
faith effort to acquire sufficient PRESS energy to comply
with their obligations. The good faith efforts shall include,
but are not limited to, banking reliable energy credits
during their transition periods, seeking reliable energy
credits through competitive solicitations and seeking to
procure reliable energy credits or PRESS energy through long-
term contracts.
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(3) In further making its determination, the commission
shall assess the availability of reliable energy credits in
the Generation Attributes Tracking System (GATS) or its
successor and the availability of reliable energy credits
generally in this Commonwealth and other jurisdictions in the
PJM Interconnection, LLC, regional transmission organization
(PJM) or its successor. The commission may also require
solicitations for reliable energy credits as part of default
service before requests of force majeure can be made.
(b) Modifications of obligations.--
(1) If the commission further determines that PRESS
energy resources are not reasonably available in sufficient
quantities in the marketplace for the electric distribution
companies and electric generation suppliers to meet their
obligations under this act, then the commission shall modify
the underlying obligation of the electric distribution
company or electric generation supplier or recommend to the
General Assembly that the underlying obligation be
eliminated.
(2) Commission modification of the electric distribution
company or electric generation supplier obligations under
this act shall be for that compliance period only. Commission
modification shall not automatically reduce the obligation
for subsequent compliance years.
(3) If the commission modifies the electric distribution
company or electric generation supplier obligations under
this act, the commission may require the electric
distribution company or electric generation supplier to
acquire additional reliable energy credits in subsequent
years equivalent to the obligation reduced due to a force
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majeure declaration if the commission determines that
sufficient reliable energy credits exist in the marketplace.
Section 3. Sections 3, 4, 6 and 7 of the act are amended to
read:
Section 3. [Alternative energy portfolio] Pennsylvania reliable
energy sustainability standards.
(a) General compliance and cost recovery.--
(1) [From the effective date of this act through and
including the 15th year after enactment of this act and each
year thereafter,] Beginning February 28, 2005, the electric
energy sold by an electric distribution company or electric
generation supplier to retail electric customers in this
Commonwealth shall be comprised of electricity generated from
[alternative] PRESS energy sources and in the percentage
amounts as described under subsections (b), [and] (c) and
(c.1).
(2) Electric distribution companies and electric
generation suppliers shall satisfy [both] requirements [set
forth] specified in subsections (b), [and] (c) and (c.1),
provided, however, that an electric distribution company or
an electric generation supplier shall be excused from its
obligations under this section to the extent that the
commission determines that force majeure exists.
(3) All costs for:
(i) the purchase of electricity generated from
[alternative] PRESS energy sources, including the costs
of the regional transmission organization, in excess of
the regional transmission organization real-time
locational marginal pricing, or its successor, at the
delivery point of the [alternative] PRESS energy source
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for the electrical production of the [alternative] PRESS
energy sources; and
(ii) [payments for alternative energy credits, in
both cases that are voluntarily acquired by an electric
distribution company during the cost recovery period on
behalf of its customers shall be deferred as a regulatory
asset by the electric distribution company and fully
recovered, with a return on the unamortized balance,
pursuant to an automatic energy adjustment clause under
66 Pa.C.S. § 1307 (relating to sliding scale of rates;
adjustments) as a cost of generation supply under 66
Pa.C.S. § 2807 (relating to duties of electric
distribution companies) in the first year after the
expiration of its cost-recovery period. After the cost-
recovery period,] any reasonable or prudent direct or
indirect costs for the purchase by electric distribution
of resources to comply with this section, including, but
not limited to, the purchase of electricity generated
from [alternative] PRESS energy sources, payments for
[alternative] reliable energy credits, cost of credits
banked, payments to any third party administrators for
performance under this act and costs levied by a regional
transmission organization to ensure that [alternative]
PRESS energy sources are reliable, shall be recovered on
a full and current basis pursuant to an automatic energy
adjustment clause under 66 Pa.C.S. § 1307 as a cost of
generation supply under 66 Pa.C.S. § 2807.
(b) Tier I and solar photovoltaic shares.--
(1) [Two years after the effective date of this act and
through May 31, 2025,] Beginning February 28, 2007, through
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May 31, 2025, at least 1.5% of the electric energy sold by an
electric distribution company or electric generation supplier
to retail electric customers in this Commonwealth shall be
generated from Tier I [alternative] PRESS energy sources.
Except as provided in this section, the minimum percentage of
electric energy required to be sold to retail electric
customers from [alternative] Tier I PRESS energy sources
shall increase to 2% three years after the effective date of
this act. The minimum percentage of electric energy required
to be sold to retail electric customers from [alternative]
PRESS energy sources shall increase by at least 0.5% each
year so that at least 8% of the electric energy sold by an
electric distribution company or electric generation supplier
to retail electric customers in that certificated territory
in the 15th year after the effective date of this subsection
is sold from [alternative] Tier I PRESS energy resources.
(1.1) Beginning on June 1, 2025, at least 10.7% of
electric energy sold by an electric distribution company or
electric generation supplier to retail electric customers in
this Commonwealth shall be generated from Tier I PRESS energy
sources. Beginning on June 1, 2026, through May 31, 2035, the
minimum percentage of electric energy required to be sold to
retail electric customers from Tier I PRESS energy sources
shall increase by at least 2.7% each year so that at least
35% of the electric energy sold by an electric distribution
company or electric generation supplier to retail electric
customers in that certificated territory is sold from Tier I
PRESS energy resources by May 31, 2035.
(2) The total percentage of the electric energy sold by
an electric distribution company or electric generation
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supplier to retail electric customers in this Commonwealth
that must be sold from solar photovoltaic technologies is:
(i) 0.0013% for June 1, 2006, through May 31, 2007.
(ii) 0.0030% for June 1, 2007, through May 31, 2008.
(iii) 0.0063% for June 1, 2008, through May 31,
2009.
(iv) 0.0120% for June 1, 2009, through May 31, 2010.
(v) 0.0203% for June 1, 2010, through May 31, 2011.
(vi) 0.0325% for June 1, 2011, through May 31, 2012.
(vii) 0.0510% for June 1, 2012, through May 31,
2013.
(viii) 0.0840% for June 1, 2013, through May 31,
2014.
(ix) 0.1440% for June 1, 2014, through May 31, 2015.
(x) 0.2500% for June 1, 2015, through May 31, 2016.
(xi) 0.2933% for June 1, 2016, through May 31, 2017.
(xii) 0.3400% for June 1, 2017, through May 31,
2018.
(xiii) 0.3900% for June 1, 2018, through May 31,
2019.
(xiv) 0.4433% for June 1, 2019, through May 31,
2020.
(xv) 0.5000% for June 1, 2020, [and thereafter]
through May 31, 2030.
(3) Upon commencement of the beginning of the 6th
reporting year, the commission shall undertake a review of
the compliance by electric distribution companies and
electric generation suppliers with the requirements of this
act. The review shall also include the status of
[alternative] PRESS energy technologies within this
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Commonwealth and the capacity to add additional [alternative]
PRESS energy resources. The commission shall use the results
of this review to recommend to the General Assembly
additional compliance goals beyond year 15. The commission
shall work with the department in evaluating the future
[alternative] PRESS energy resource potential.
(c) Tier II share.--Of the electrical energy required to be
sold from [alternative] PRESS energy sources identified in Tier
II, the percentage that must be from these technologies is for:
(1) Years 1 through 4 - 4.2%.
(2) Years 5 through 9 - 6.2%.
(3) Years 10 through 14 - 8.2%.
(4) Years 15 [and thereafter] through 19 - 10.0%.
(5) Beginning on June 1, 2025, through May 31, 2026, the
electrical energy required to be sold from PRESS energy
sources identified in Tier II, the percentage that shall be
from these technologies is 6%.
(6) Beginning June 1, 2026, through May 31, 2034, the
percentage that must be from these technologies shall
increase by 0.5% each year so that at least 10% of the
electric energy is sold from PRESS energy sources identified
in Tier II by May 31, 2034, and each year thereafter.
(c.1) Tier III share.--Of the electrical energy required to
be sold from PRESS energy sources identified in Tier III, the
percentage that must be from these technologies is:
(1) June 1, 2025, through May 31, 2028 - 3.8%.
(2) June 1, 2028, through May 31, 2031 - 4.4%.
(3) June 1, 2031, and thereafter - 5%.
(d) [Exemption during cost-recovery period.--Compliance with
subsections (a), (b) and (c) shall not be required for any
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electric distribution company that has not reached the end of
its cost-recovery period or for electric generation supplier
sales in the service territory of an electric distribution
company that has not reached the end of its cost-recovery
period. At the conclusion of an electric distribution company's
cost-recovery period, this exception shall no longer apply, and
compliance shall be required at the percentages in effect at
that time. Electric distribution companies and electric
generation suppliers whose sales are exempted under this
subsection and who voluntarily sell electricity generated from
Tier I and Tier II sources during the cost-recovery period may
bank credits consistent with subsection (e)(7).] (Reserved).
(e) [Alternative] Reliable energy credits.--
(1) The commission shall establish [an alternative] a
reliable energy credits program as needed to implement this
act. The provision of services pursuant to this section shall
be exempt from the competitive procurement procedures of 62
Pa.C.S. (relating to procurement).
(2) The commission shall approve an independent entity
to serve as the [alternative] reliable energy credits program
administrator. The administrator shall have those powers and
duties assigned by commission regulations. [Such] The powers
and duties shall include, but not be limited to, the
following:
(i) To create and administer [an alternative] a
reliable energy credits certification, tracking and
reporting program. [This program should] The program
shall include, at a minimum, a process for qualifying
[alternative] PRESS energy systems and determining the
manner credits can be created, accounted for, transferred
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and retired.
(ii) To submit reports to the commission at such
times and in such manner as the commission shall direct.
(3) All qualifying [alternative] PRESS energy systems
[must] shall include a qualifying meter to record the
cumulative electric production to verify the advanced energy
credit value. Qualifying meters will be approved by the
commission as defined in paragraph (4).
(4) (i) An electric distribution company or electric
generation supplier shall comply with the applicable
requirements of this section by purchasing sufficient
[alternative] reliable energy credits and submitting
documentation of compliance to the program administrator.
(ii) For purposes of this subsection, one
[alternative] reliable energy credit shall represent one
megawatt hour of qualified [alternative] electric
generation, whether self-generated, purchased along with
the electric commodity or separately through a tradable
instrument and otherwise meeting the requirements of
commission regulations and the program administrator.
(5) The [alternative] reliable energy credits program
shall include provisions requiring a reporting period [as
defined in section 2] for all covered entities under this
act. The [alternative] reliable energy credits program shall
also include a true-up period [as defined in section 2]. The
true-up period shall provide entities covered under this act
the ability to obtain the required number of [alternative]
reliable energy credits or to make up any shortfall of the
[alternative] reliable energy credits they may be required to
obtain to comply with this act. A force majeure provision
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shall also be provided for under the true-up period
provisions.
(6) An electric distribution company and electric
generation supplier may bank or place in reserve
[alternative] reliable energy credits produced in one
reporting year for compliance in either or both of the two
subsequent reporting years, subject to the limitations [set
forth] specified in this subsection and provided that the
electric distribution company and electric generation
supplier are in compliance for all previous reporting years.
[In addition, the] The electric distribution company and
electric generation supplier shall demonstrate to the
satisfaction of the commission that [such] the credits:
(i) were in excess of the [alternative] reliable
energy credits needed for compliance in the year in which
they were generated and that [such] the excess credits
have not previously been used for compliance under this
act;
(ii) were produced by the generation of electrical
energy by [alternative] PRESS energy sources and sold to
retail customers during the year in which they were
generated; and
(iii) have not otherwise been nor will be sold,
retired, claimed or represented as part of satisfying
compliance with alternative or renewable energy portfolio
standards in other states.
[(7) An electric distribution company or an electric
generation supplier with sales that are exempted under
subsection (d) may bank credits for retail sales of
electricity generated from Tier I and Tier II sources made
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prior to the end of the cost-recovery period and after the
effective date of this act. Bankable credits shall be limited
to credits associated with electricity sold from Tier I and
Tier II sources during a reporting year which exceeds the
volume of sales from such sources by an electric distribution
company or electric generation supplier during the 12-month
period immediately preceding the effective date of this act.
All credits banked under this subsection shall be available
for compliance with subsections (b) and (c) for no more than
two reporting years following the conclusion of the cost-
recovery period.]
(8) The commission or its designee shall develop a
registry of pertinent information regarding all available
[alternative] reliable energy credits, credit transactions
among electric distribution companies and electric generation
suppliers, the number of [alternative] reliable energy
credits sold or transferred and the price paid for the sale
or transfer of the credits. The registry shall provide
current information to electric distribution companies,
electric generation suppliers and the general public on the
status of [alternative] reliable energy credits created, sold
or transferred within this Commonwealth.
(9) The commission may impose an administrative fee on
[an alternative] a reliable energy credit transaction. The
amount of this fee may not exceed the actual direct cost of
processing the transaction by the [alternative] reliable
energy credits administrator. The commission [is authorized
to] may utilize up to 5% of the alternative compliance fees
generated under subsection (f) for administrative expenses
directly associated with this act.
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(10) The commission shall establish regulations
governing the verification and tracking of energy efficiency
and demand-side management measures [pursuant to] under this
act, which shall include benefits to all utility customer
classes. When developing regulations, the commission [must]
shall give reasonable consideration to existing and proposed
regulations and rules in existence in the regional
transmission organizations that manage the transmission
system in any part of this Commonwealth. All verified
reductions shall accrue credits starting with the [passage]
enactment of this act.
(11) The commission shall [within 120 days of the
effective date of this act] not later than March 30, 2005,
develop a depreciation schedule for [alternative] reliable
energy credits created through demand-side management, energy
efficiency and load management technologies and shall develop
standards for tracking and verifying savings from energy
efficiency, load management and demand-side management
measures. The commission shall allow for a 60-day public
comment period and shall issue final standards within 30 days
of the close of the public comment period.
(12) Unless a contractual provision explicitly assigns
[alternative] reliable energy credits in a different manner,
the owner of the [alternative] reliable energy system or a
customer-generator owns any and all [alternative] reliable
energy credits associated with or created by the production
of electric energy by such facility or customer, and the
owner or customer shall be entitled to sell, transfer or take
any other action to which a legal owner of property is
entitled to take with respect to the credits.
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(13) No PRESS energy system shall be eligible to sell
reliable energy credits associated with or created by the
production of electric energy subsequently utilized to
generate or produce virtual currency at a facility co-located
with the PRESS energy system, or where a power purchase
agreement commits the offtake of electric energy to a virtual
currency generator or producer. Reliable energy credits may
be sold based upon the proportion of electric energy at the
facility that is not utilized to generate or produce virtual
currency.
(14) An individual generating unit with a nameplate
capacity over 150 megawatts must be located in this
Commonwealth to be eligible for reliable energy credits. The
commission may promulgate a regulation to change the
nameplate capacity for purposes of this paragraph if the
commission determines that a change to the nameplate capacity
is necessary to prevent a force majeure event or the ongoing
imposition of alternative compliance payments due to lack of
availability of reliable energy credits.
(15) No PRESS energy source may be offered to meet the
compliance requirements of more than one tier unless the
source is owned or leased by and located on the grounds of a
school district as defined in section 102 of the act of March
10, 1949 (P.L.30, No.14), known as the Public School Code of
1949. If a PRESS energy source is owned or leased by and
located on the grounds of a school district, a school
district may offer credits from a Tier I PRESS energy source
to meet the compliance requirements of Tier I and either Tier
II or Tier III. A school district may not offer credits to
meet the compliance obligations of more than one tier in any
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year in excess of the school district's requirement for
electricity in the same year.
(16) (i) PRESS energy sources eligible for compliance
requirements in Tier II, Tier III and solar photovoltaic
technologies eligible for compliance requirements under
subsection (b)(2) must meet one of the following
requirements:
(A) directly deliver the electricity generated
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 obligated to meet the compliance
requirements contained under this act;
(B) be directly connected to the electric system
of an electric cooperative or municipal electric
system operating within this Commonwealth;
(C) 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; or
(D) generate electricity at generation units
whose construction and operation is subject to and
complies with permits issued by the department under
the act of January 8, 1960 (1959 P.L.2119, No.787),
known as the Air Pollution Control Act, or the act of
July 7, 1980 (P.L.380, No.97), known as the Solid
Waste Management Act.
(ii) This paragraph shall not be construed to affect
a binding written contract, entered into prior to the
effective date of this paragraph, for the sale and
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purchase of alternative energy credits derived from
alternative energy sources until June 1, 2028.
(iii) Beginning June 1, 2030, 10% of the electric
energy sold by an electric distribution company or
electric generation supplier to retail electric customers
in this Commonwealth and that is used to satisfy Tier I
obligations shall be generated from Tier I PRESS energy
sources that meet one of the requirements of subparagraph
(i). The percentage shall increase by 1% in each
subsequent compliance year through June 1, 2050.
(17) Energy from a geothermal heating and cooling system
is eligible to sell reliable energy credits associated with
or created by the production of energy of the system.
Reliable energy credits from a geothermal heating and cooling
system shall be created based on the amount of energy,
converted from BTUs to kilowatt-hours, that is generated by a
geothermal heating and cooling system for space heating and
cooling or water heating. The commission shall determine the
form and manner in which the reliable energy credits are
verified.
(18) For binding written contracts for the sale and
purchase of alternative energy credits derived from
alternative energy sources entered into prior to the
effective date of this paragraph, the following shall apply
until June 1, 2028:
(i) A Tier I alternative energy source may be
offered for compliance purposes as a Tier I PRESS energy
source.
(ii) A Tier II alternative energy source may be
offered for compliance purposes as a Tier II PRESS energy
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source.
(f) Alternative compliance payment.--
(1) At the end of each program year, the program
administrator shall provide a report to the commission and to
each covered electric distribution company showing their
status level of [alternative] reliable energy acquisition.
(2) The commission shall conduct a review of each
determination made under subsections (b), [and] (c) and
(c.1). If, after notice and hearing, the commission
determines that an electric distribution company or electric
generation supplier has failed to comply with subsections
(b), [and] (c) and (c.1), the commission shall impose an
alternative compliance payment on that company or supplier.
(3) [The] (i) Through May 31, 2025, the alternative
compliance payment, with the exception of the solar
photovoltaic share compliance requirement [set forth]
specified in subsection (b)(2), shall be $45 times the
number of additional [alternative] reliable energy
credits needed in order to comply with subsection (b) or
(c).
(ii) Subject to subparagraph (iii), beginning June
1, 2025, and continuing each year thereafter, the
alternative compliance payment, with the exception of the
solar photovoltaic share compliance requirement specified
in subsection (b)(2), shall be $45 times the number of
additional reliable energy credits needed in order to
comply with subsection (b). The alternative compliance
payment shall be $35 times the number of reliable energy
credits needed in order to comply with subsection (c).
The alternative compliance payment shall be $15 times the
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number of reliable energy credits needed in order to
comply with subsection (c.1).
(iii) Beginning June 1, 2030, and continuing each
year thereafter, the commission may increase the
alternative compliance payment amount applicable in any
tier under this paragraph by up to 15% of the alternative
compliance payment amount from the prior year if the
commission finds that an increased alternative compliance
payment amount would promote the installation of more
PRESS energy systems.
(4) The alternative compliance payment for the solar
photovoltaic share shall be 200% of the average market value
of solar renewable energy credits sold during the reporting
period within the service region of the regional transmission
organization, including, where applicable, the levelized up-
front rebates received by sellers of solar renewable energy
credits in other jurisdictions in the PJM Interconnection,
L.L.C. transmission organization (PJM) or its successor.
(5) The commission shall establish a process to provide
for, at least annually, a review of the [alternative] PRESS
energy market within this Commonwealth and the service
territories of the regional transmission organizations that
manage the transmission system in any part of this
Commonwealth. The commission will use the results of this
study to identify any needed changes to the cost associated
with the alternative compliance payment program. If the
commission finds that the costs associated with the
alternative compliance payment program must be changed, the
commission shall present these findings to the General
Assembly for legislative enactment.
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(g) Transfer to sustainable development funds.--
(1) Notwithstanding the provisions of 66 Pa.C.S. §§ 511
(relating to disposition, appropriation and disbursement of
assessments and fees) and 3315 (relating to disposition of
fines and penalties), alternative compliance payments imposed
pursuant to this act shall be paid into Pennsylvania's
Sustainable Energy Funds created under the commission's
restructuring orders under 66 Pa.C.S. Ch. 28 (relating to
restructuring of electric utility industry). Alternative
compliance payments shall be paid into a special fund of the
Pennsylvania Sustainable Energy Board, established by the
commission under Docket M-00031715, and made available to the
Regional Sustainable Energy Funds under procedures and
guidelines approved by the Pennsylvania Energy Board.
(2) The alternative compliance payments shall be
utilized solely for reliability projects that will increase
the amount of electric energy generated from [alternative
energy resources for purposes of compliance with subsections
(b) and (c).]:
(i) geothermal energy;
(ii) storage resources co-located with a Tier I
PRESS energy source with 10% nameplate capacity available
every hour for a 24-hour period; or
(iii) a Tier I PRESS energy source owned or leased
by and located on the grounds of a school district as
defined in section 102 of the Public School Code of 1949.
(3) No less than 40% of funds shall be dedicated to
reliability projects located in environmental justice areas
under paragraph (2).
(h) Nonseverability.--The provisions of subsection (a) are
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declared to be nonseverable. If any provision of subsection (a)
is held invalid, the remaining provisions of this act shall be
void.
Section 4. Portfolio requirements in other states.
If an electric distribution supplier or electric generation
company provider sells electricity in any other state and is
subject to renewable energy portfolio requirements in that
state, they shall list any such requirement and shall indicate
how it satisfied those renewable energy portfolio requirements.
To prevent double-counting, the electric distribution supplier
or electric generation company shall not satisfy Pennsylvania's
[alternative] reliable energy [portfolio] requirements using
[alternative] PRESS energy used to satisfy another state's
portfolio requirements or alternative energy credits already
purchased by individuals, businesses or government bodies that
do not have a compliance obligation under this act unless the
individual, business or government body sells those credits to
the electric distribution company or electric generation
supplier. Energy derived from [alternative] PRESS energy sources
inside the geographical boundaries of this Commonwealth shall be
eligible to meet the compliance requirements under this act.
Energy derived from [alternative] PRESS energy sources located
outside the geographical boundaries of this Commonwealth but
within the service territory of a regional transmission
organization that manages the transmission system in any part of
this Commonwealth shall only be eligible to meet the compliance
requirements of electric distribution companies or electric
generation suppliers located within the service territory of the
same regional transmission organization. For purposes of
compliance with this act, [alternative] PRESS energy sources
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located in the PJM Interconnection, L.L.C. regional transmission
organization (PJM) or its successor service territory shall be
eligible to fulfill compliance obligations of all Pennsylvania
electric distribution companies and electric generation
suppliers. Energy derived from [alternative] PRESS energy
sources located outside the service territory of a regional
transmission organization that manages the transmission system
in any part of this Commonwealth shall not be eligible to meet
the compliance requirements of this act. Electric distribution
companies and electric generation suppliers shall document that
this energy was not used to satisfy another state's renewable
energy portfolio standards.
Section 6. Health and safety standards.
The department shall cooperate with the Department of Labor
and Industry as necessary in developing health and safety
standards, as needed, regarding facilities generating energy
from [alternative] PRESS energy sources. The department shall
establish appropriate and reasonable health and safety standards
to ensure uniform and proper compliance with this act by owners
and operators of facilities generating energy from [alternative]
PRESS energy sources [as defined in this act].
Section 7. Interagency responsibilities.
(a) Commission responsibilities.--The commission [will]
shall carry out the responsibilities delineated within this act.
The commission also shall, in cooperation with the department,
conduct an ongoing [alternative] PRESS energy resources planning
assessment for this Commonwealth. [This assessment will] The
assessment shall, at a minimum, identify current and operating
[alternative] PRESS energy facilities, the potential to add
future [alternative] PRESS energy generating capacity and the
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conditions of the [alternative] PRESS energy marketplace. The
assessment [will] shall identify needed methods to maintain or
increase the relative competitiveness of the [alternative] PRESS
energy market within this Commonwealth.
(b) Department responsibilities.--The department shall
ensure that all qualified [alternative] PRESS energy sources
meet all applicable environmental standards and shall verify
that [an alternative] a PRESS energy source meets the standards
[set forth] specified in section 2.
(c) Cooperation between commission and department.--The
commission and the department shall work cooperatively to
monitor the performance of all aspects of this act and [will]
shall provide an annual report to the chairman and minority
chairman of the Environmental Resources and Energy Committee of
the Senate and the chairman and minority chairman of the
Environmental Resources and Energy Committee of the House of
Representatives. The report shall include at a minimum:
(1) The status of the compliance with the provisions of
this act by electric distribution companies and electric
generation suppliers.
(2) Current costs of [alternative] PRESS energy on a per
kilowatt hour basis for all [alternative] PRESS energy
technology types.
(3) Costs associated with the [alternative] reliable
energy credits program under this act, including the number
of alternative compliance payments.
(4) The status of the [alternative] PRESS energy
marketplace within this Commonwealth.
(5) Recommendations for program improvements.
Section 4. The act is amended by adding a section to read:
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Section 8.1. Zero emissions credits.
(a) Beneficial nuclear facility.--A nuclear reactor that
provides benefits to this Commonwealth may apply to the
commission for ZECs.
(b) Duty of commission.--After notice and opportunity for a
hearing, the commission shall approve or disapprove an
application submitted under subsection (a) within nine months
after the application is filed, provided that approval may be in
whole or in part and may be subject to limitations and
qualifications as may be deemed necessary and in the public
interest. The limitations shall include, but are not limited to,
a cap of 75,000,000 megawatt-hours of ZECs approved each year.
(c) Price of ZEC.--The price of a ZEC shall be the amount by
which $9 per MWh exceeds 80% of the difference of the gross
receipts of the nuclear reactor for the previous year expressed
as a dollar per MWh, and $31 per MWh. The MWh dollar values
shall be adjusted annually by the commission to reflect changes
in the Consumer Price Index for All Urban Consumers (CPI-U) for
the Pennsylvania, New Jersey, Delaware and Maryland area after
2032. The commission shall transmit a notice of the adjustment
to the Legislative Reference Bureau for publication in the next
available issue of the Pennsylvania Bulletin.
(d) Regulations.--Within 365 days prior to the expiration of
the availability of zero-emission nuclear power production
credits established under section 45U of the Internal Revenue
Code of 1986 (26 U.S.C. § 45U), the commission shall promulgate
regulations to implement the requirements of this section. The
regulations shall include the following:
(1) data submission requirements necessary to evaluate
projected environmental benefits and to verify annual gross
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receipts;
(2) recapture of the allocation of any credit within the
previous three years to a beneficial nuclear reactor that
permanently terminates operations, except in the case of
force majeure.
(e) Ineligibility.--A beneficial nuclear facility shall not
be eligible to receive ZECs during any period in which they are
receiving zero-emission nuclear power production credits
established under section 45U of the Internal Revenue Code of
1986.
(f) Recovery of costs.--If the commission has approved ZECs
under subsection (a) it shall allow the public utility to
recover all prudent and reasonable costs associated with the
credits, provided that the prudent and reasonable costs must be
recovered in accordance with appropriate accounting principles.
(g) Expiration.--This section shall expire 10 years after
the effective date of the regulations promulgated by the
commission under subsection (d).
Section 5. A reference in statute or regulation to
"Alternative Energy Portfolio Standards" shall be deemed a
reference to "Pennsylvania Reliable Energy Sustainability
Standards."
Section 6. This act shall take effect as follows:
(1) The addition of section 3(e)(16)(ii) and (18) of the
act shall take effect immediately.
(2) This section shall take effect immediately.
(3) The remainder of this act shall take effect June 1,
2025.
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