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Senate of Pennsylvania
Session of 2019 - 2020 Regular Session


Posted: December 3, 2018 12:20 PM
From: Senator Lisa M. Boscola and Sen. Patrick M. Browne
To: All Senate members
Subject: Large Commercial and Industrial Opt-Out of Act 129 (Energy Efficiency & Conservation)
In the near future, we intend to reintroduce SB 805 from the prior legislative session; a bill that will allow large commercial and industrial energy users to voluntarily exit the utility-administered Energy Efficiency and Conservation (EE&C) Plans under Act 129. This opportunity will apply to subsequent phases of the EE&C Plans that may be approved by the Public Utility Commission. The bill strikes an equitable balance among the affected parties through three simple ground rules:

  • customers that opt-out will not be eligible to receive grants or other EE&C Plan benefits during the phase;
  • customers that opt-out will not be required to pay the cost recovery surcharge for the phase; and
  • customers’ energy requirements will be removed from the electric distribution company’s (EDC’s) targets for the approved phase.
The electric distribution companies developed their EE&C Plans after Act 129 was enacted in 2008. Customers of all rate classes have been paying into these plans for over 9 years. During this time, some large commercial and industrial customers have contributed several million dollars to the EE&C Plans. In many instances, this money is being used to subsidize efficiency projects for their competitors.

Many large commercial and industrial customers in Pennsylvania, who provide well over 500,000 good, manufacturing jobs in the Commonwealth, operate energy-intensive processes. As a result, a small change in energy price translates into large changes in cost. That means these customers already have far more motivation to maximize their energy efficiency efforts than any encouragement that might come from the utility-administered EE&C Plans under Act 129. To enhance their business or survive the host of headwinds facing manufacturers since the 1990’s, these large and sophisticated customers have been implementing energy efficiency for years, including many projects that were initiated and completed years prior to Act 129 implementation in anticipation of the expiration of electric rate caps. Because of these realities, the vast majority of these large customers are being forced to participate in EE&C Plans that promise them no benefit while still costing between 2% and 5% of their total electricity spend.

Going forward, it is appropriate to encourage manufacturing in Pennsylvania by removing this needless cost with an amendment to the Public Utility Code that provides large commercial and industrial customers the opportunity to be removed from the EE&C Plans. As of last year, 24 states have mandatory utility-administered EE&C programs, with 13 of them providing larger customers with the ability to opt-out. Large industrial customers in those 13 states now enjoy a competitive advantage over their Pennsylvania rivals. Pennsylvania should level the playing field for our largest employers and do the same.

Time is of the essence, as we are fast approaching the next scheduled Phase IV for the EE&C programs. It is important to act on this now, and we invite you to join us in co-sponsoring this bill.

Introduced as SB129