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House of Representatives
Session of 2019 - 2020 Regular Session


Posted: May 28, 2020 09:05 AM
From: Representative Doyle Heffley and Rep. Frank Burns
To: All House members
Subject: Investing in Pennsylvania Energy and Environment: Close AEPS Tier II Border
In the near future, we will be introducing legislation to limit participation in Tier II of the Pennsylvania Alternative Energy Portfolio Standards (AEPS) program to energy sources originating in Pennsylvania. Currently, eligible Tier II resources may originate within Pennsylvania or anywhere in the PJM regional transmission organization (RTO). Pennsylvania is a net electricity exporter, yet our ratepayers are currently subsidizing out-of-state energy facilities, including utility owned resources in other PJM states.
The AEPS Act of 2004 requires that 18 percent of the electricity supplied by Pennsylvania’s electric distribution companies (EDCs) and electric generation suppliers (EGSs) come from alternative energy resources by 2021. EDCs and EGSs can comply with AEPS by procuring Alternative Energy Credits (AECs) from qualified alternative energy resource facilities. AEPS establishes two tiers of eligible energy sources. Tier II sources include new and existing waste coal, distributed generation (DG), demand-side management, large-scale hydro, municipal solid waste, wood pulping and manufacturing byproducts, and integrated gasification combined cycle (IGCC) coal facilities. By 2021, EDCs and EGSs must supply 10 percent from Tier II energy sources.
AEPS was intended to provide economic development opportunities by increasing alternative electricity generation in Pennsylvania. However, in the 2018 AEPS Annual Report, the Pennsylvania Public Utility Commission (PUC) identified a nameplate capacity of 5544.3 MW from out-of-state Tier II resources compared to only 4177.6 MW of capacity from resources located in Pennsylvania. This leads to an oversupply of available credits from outside of Pennsylvania that depresses the value of Tier II AECs and limits the ability of the AEPS program to adequately support Tier II resources located in Pennsylvania.
Since 2008, the average price of Tier II AECs is only $0.25 and has fallen as low as $0.10, whereas during the same timeframe the price for Tier I AECs averaged $8.00 and reached as much as $14.56. The comparatively low price for Tier II credits has failed to incentivize the growth of Tier II resources and instead lead to many existing Tier II resources closing in recent years. For example, four waste coal reclamation-to-energy facilities have closed in the past two years. This industry alone provides $37 million in annual environmental and public use benefits while supporting 3,000 jobs and $615 million in annual economic benefits in Pennsylvania.
Please join us in co-sponsoring this legislation incentiving Pennsylvania-based Tier II alternative energy resources to support jobs and alternative energy production in Pennsylvania and stop ratepayer dollars from continuing to flow to out-of-state resources.

Introduced as HB2633