Share:
Senate Co-Sponsorship Memoranda
Senate of Pennsylvania
Session of 2019 - 2020
Regular Session
MEMORANDUM
| Posted: | June 25, 2020 11:58 AM |
|---|---|
| From: | Senator David G. Argall and Sen. Lisa M. Boscola |
| To: | All Senate members |
| Subject: | Closing AEPS Tier II Border |
| We will soon introduce 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). Although Pennsylvania is a net electricity exporter, our ratepayers are currently subsidizing out-of-state energy facilities, including utility owned resources in other PJM states. Passed in 2014, The AEPS Act requires that 18 percent of the electricity supplied by Pennsylvania’s electric distribution companies (EDCs) and electric generation suppliers (EGSs) comes from alternative energy resources by the year 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. AEPS was developed 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 which in turn depresses the value of Tier II AECs and limits the ability of the AEPS program to adequately support Tier II resources located within our state. 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 led 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 waste coal reclamation-to-energy 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. A similar effort was undertaken in 2017 with the passage of Act 40. Act 40 closed the border to out-of-state solar energy systems in order to help our in-state producers. Please join us in co-sponsoring this legislation to incentivize Pennsylvania-based Tier II alternative energy resources to continue the work that has been done to remediate our environment and support jobs and alternative energy production within our own state borders and stop ratepayer dollars from continuing to flow to out-of-state resources. |