PRINTER'S NO.  1000

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

80

Session of

2009

  

  

INTRODUCED BY VITALI, ROSS, GEORGE, DePASQUALE, HARPER, FREEMAN, M. O'BRIEN, GOODMAN, CREIGHTON, SHAPIRO, MOUL, O'NEILL, MANDERINO, BELFANTI, MELIO, SANTONI, HARHART, READSHAW, GIBBONS, ADOLPH, MENSCH, HORNAMAN, CARROLL, MYERS, JOSEPHS, LENTZ, DeWEESE, CONKLIN, PETRI, GINGRICH, CURRY, DRUCKER AND MURT, MARCH 12, 2009

  

  

REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, MARCH 12, 2009  

  

  

  

AN ACT

  

1

Amending the act of November 30, 2004 (P.L.1672, No.213),

2

entitled, "An act providing for the sale of electric energy

3

generated from renewable and environmentally beneficial

4

sources, for the acquisition of electric energy generated

5

from renewable and environmentally beneficial sources by

6

electric distribution and supply companies and for the powers

7

and duties of the Pennsylvania Public Utility Commission,"

8

further providing for definitions and for alternative energy

9

portfolio standards; and providing for carbon dioxide

10

sequestration network.

11

The General Assembly of the Commonwealth of Pennsylvania

12

hereby enacts as follows:

13

Section 1.  The definition of "alternative energy sources"

14

and "Tier II alternative energy source" in section 2 of the act

15

of November 30, 2004 (P.L.1672, No.213), known as the

16

Alternative Energy Portfolio Standards Act, are amended by

17

adding paragraphs and the section is amended by adding

18

definitions to read:

19

Section 2.  Definitions.

 


1

The following words and phrases when used in this act shall

2

have the meanings given to them in this section unless the

3

context clearly indicates otherwise:

4

* * *

5

"Alternative energy sources."  The term shall include the

6

following existing and new sources for the production of

7

electricity:

8

* * *

9

(14)  Advanced coal combustion with limited carbon

10

emissions, which means the production of electric power from

11

a generation facility that:

12

(i)  Is fueled by coal or gas derived from an

13

advanced coal gasification plant.

14

(ii)  Captures, either in the advanced coal

15

gasification plant or in the electrical generation

16

facility, and permanently sequesters at least the

17

following amount of all carbon dioxide produced:

18

(A)  40% from June 1, 2015 to May 31, 2019.

19

(B)  60% from June 1, 2019 to May 31, 2024.

20

(C)  90% from June 1, 2024 and thereafter.

21

(D)  The requirement under clause (C) shall be

22

waived if commercially proven and project-financeable

23

technology is not available.

24

(iii)  Has been designed to accommodate the required

25

additional processing equipment to produce power with a

26

maximum of 1,000 pounds of carbon dioxide emissions per

27

megawatt hour.

28

* * *

29

"Carbon dioxide sequestration network."  Geological

30

subsurface formations within this Commonwealth with suitable cap

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1

rock, sealing faults and anticline used by the Department of

2

Conservation and Natural Resources for the permanent storage of

3

carbon dioxide from advanced coal combustion with limited carbon

4

emissions plants or other sources within this Commonwealth along

5

with the facilities necessary to transport the carbon dioxide

6

from the surface to the subsurface formations and monitor the

7

permanent storage of the carbon dioxide in subsurface

8

formations. The term shall not include use of the carbon dioxide

9

for enhanced resource recovery.

10

* * *

11

"DCNR."  The Department of Conservation and Natural Resources

12

of the Commonwealth.

13

* * *

14

"Enhanced resource recovery."  The use of carbon dioxide

15

injection or other techniques for increasing the amount of oil,

16

natural gas or coal bed methane extracted from geologic

17

formations.

18

* * *

19

"Tier II alternative energy source."  Energy derived from:

20

* * *

21

(8)  Advanced coal combustion with limited carbon

22

emissions.

23

* * *

24

Section 2.  Section 3(a),(b),(c), (f) and (g) of the act,

25

amended July 17, 2007 (P.L.114, No.35), are amended and the

26

section is amended by adding subsections to read:

27

Section 3.  Alternative energy portfolio standards.

28

(a)  General compliance and cost recovery.--

29

(1)  From the effective date of this act through and

30

including the 15th year after enactment of this act and each

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1

year thereafter, the electric energy sold by an electric

2

distribution company or electric generation supplier to

3

retail electric customers in this Commonwealth shall be

4

comprised of electricity generated from alternative energy

5

sources and in the percentage amounts as described under

6

subsections [(b) and (c)] (b), (c) and (c.1).

7

(2)  Electric distribution companies and electric

8

generation suppliers shall satisfy both requirements set

9

forth in subsections [(b) and (c)] (b), (c) and (c.1),

10

provided, however, that an electric distribution company or

11

an electric generation supplier shall be excused from its

12

obligations under this section to the extent that the

13

commission determines that force majeure exists.

14

(3)  All costs for:

15

(i)  the purchase of electricity generated from

16

alternative energy sources, including the costs of the

17

regional transmission organization, in excess of the

18

regional transmission organization real-time locational

19

marginal pricing, or its successor, at the delivery point

20

of the alternative energy source for the electrical

21

production of the alternative energy sources; and

22

(ii)  payments for alternative energy credits,in both

23

cases that are voluntarily acquired by an electric

24

distribution company during the cost recovery period on

25

behalf of its customers shall be deferred as a regulatory

26

asset by the electric distribution company and fully

27

recovered, with a return on the unamortized balance,

28

pursuant to an automatic energy adjustment clause under

29

66 Pa.C.S. § 1307 (relating to sliding scale of rates;

30

adjustments) as a cost of generation supply under 66

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1

Pa.C.S. § 2807 (relating to duties of electric

2

distribution companies) in the first year after the

3

expiration of its cost-recovery period. After the cost-

4

recovery period, any direct or indirect costs for the

5

purchase by electric distribution of resources to comply

6

with this section, including, but not limited to, the

7

purchase of electricity generated from alternative energy

8

sources, payments for alternative energy credits, cost of

9

credits banked, payments to any third party

10

administrators for performance under this act and costs

11

levied by a regional transmission organization to ensure

12

that alternative energy sources are reliable, shall be

13

recovered on a full and current basis pursuant to an

14

automatic energy adjustment clause under 66 Pa.C.S. §

15

1307 as a cost of generation supply under 66 Pa.C.S. §

16

2807.

17

(b)  Tier I and solar photovoltaic shares.--

18

(1)  Two years after the effective date of this act, at

19

least 1.5% of the electric energy sold by an electric

20

distribution company or electric generation supplier to

21

retail electric customers in this Commonwealth shall be

22

generated from Tier I alternative energy sources. Except as

23

provided in this section, the minimum percentage of electric

24

energy required to be sold to retail electric customers from

25

alternative energy sources shall increase to 2% three years

26

after the effective date of this act. The minimum percentage

27

of electric energy required to be sold to retail electric

28

customers from alternative energy sources shall increase by

29

at least 0.5% each year so that at least 8% of the electric

30

energy sold by an electric distribution company or electric

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1

generation supplier to retail electric customers in that

2

certificated territory in the 15th year after the effective

3

date of this subsection is sold from Tier I alternative

4

energy resources.

5

(1.1)  After the 15th year of the effective date of this

6

subsection, the minimum percentage of electric energy

7

required to be sold to retail electric customers from Tier I

8

alternative energy sources is:

9

(i)  10% for June 1, 2021, through May 31, 2022.

10

(ii)  12% for June 1, 2022, through May 31, 2023.

11

(iii)  14% for June 1, 2023, through May 31, 2024.

12

(iv)  16% for June 1, 2024, through May 31, 2025.

13

(v)  18% for June 1, 2025, through May 31, 2026.

14

(vi)  20% for June 1, 2026, and thereafter.

15

(2)  The total percentage of the electric energy sold by

16

an electric distribution company or electric generation

17

supplier to retail electric customers in this Commonwealth

18

that must be sold from solar photovoltaic technologies is:

19

(i)  0.0013% for June 1, 2006, through May 31, 2007.

20

(ii)  0.0030% for June 1, 2007, through May 31, 2008.

21

(iii)  0.0063% for June 1, 2008, through May 31,

22

2009.

23

(iv)  0.0120% for June 1, 2009, through May 31, 2010.

24

(v)  0.0203% for June 1, 2010, through May 31, 2011.

25

(vi)  0.0325% for June 1, 2011, through May 31, 2012.

26

(vii)  0.0510% for June 1, 2012, through May 31,

27

2013.

28

(viii)  0.0840% for June 1, 2013, through May 31,

29

2014.

30

(ix)  0.1440% for June 1, 2014, through May 31, 2015.

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1

(x)  0.2500% for June 1, 2015, through May 31, 2016.

2

(xi)  0.2933% for June 1, 2016, through May 31, 2017.

3

(xii)  0.3400% for June 1, 2017, through May 31,

4

2018.

5

(xiii)  0.3900% for June 1, 2018, through May 31,

6

2019.

7

(xiv)  0.4433% for June 1, 2019, through May 31,

8

2020.

9

(xv)  0.5000% for June 1, 2020, [and thereafter.] 

10

through May 31, 2021.

11

(xvi)  0.9000% for June 1, 2021, through May 31,

12

2022.

13

(xvii)  1.3000% for June 1, 2022, through May 31,

14

2023.

15

(xviii)  1.7000% for June 1, 2023, through May 31,

16

2024.

17

(xix)  2.1000% for June 1, 2024, through May 31,

18

2025.

19

(xx)  2.5000% for June 1, 2025, through May 31, 2026.

20

(xxi)  3.000% for June 1, 2026, and thereafter.

21

(3)  Upon commencement of the beginning of the 6th

22

reporting year, and every five years thereafter, the

23

commission shall undertake a review of the compliance by

24

electric distribution companies and electric generation

25

suppliers with the requirements of this act. The review shall

26

also include the status of alternative energy technologies

27

within this Commonwealth and the capacity to add additional

28

alternative energy resources. The commission shall use the

29

results of this review to recommend to the General Assembly

30

additional compliance goals beyond year [15] 21. The

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1

commission shall work with the department in evaluating the

2

future alternative energy resource potential.

3

(4)  As of May 31, 2021, and thereafter, 50% of electric

4

energy from solar photovoltaic technologies supplied to

5

retail customers shall be generated from solar photovoltaic

6

systems located within this Commonwealth in meeting the

7

requirements of paragraph (2).

8

(c)  Tier II share.--Of the electrical energy required to be

9

sold from alternative energy sources identified in Tier II, the

10

percentage that must be from these technologies is for:

11

(1)  Years 1 through 4 - 4.2%.

12

(2)  Years 5 through 9 - 6.2%.

13

(3)  Years 10 through 14 - [8.2%] 11.2%.

14

(4)  Years 15 and thereafter - [10.0%] 13.0%.

15

(c.1)  Retail sales from advanced coal combustion.--The total

16

electric energy sold by an electric distribution company or

17

electric generation supplier to retail electric customers in

18

this Commonwealth that shall be sold from advanced coal

19

combustion with limited carbon emissions is all of the electric

20

energy available from advanced coal combustion with limited

21

carbon emissions up to a maximum of 3.0% of the total electric

22

energy sold by an electric distribution company or electric

23

generation supplier to retail electric customers in this

24

Commonwealth for the reporting period which begins June 1, 2015,

25

and for each reporting period thereafter pursuant to subsection

26

(c). If at any time on or after June 1, 2015, the network

27

provided for under section 8.1, or other network permitted to

28

permanently sequester carbon dioxide, is not available to

29

receive carbon dioxide for sequestration through no fault of an

30

advanced coal combustion with limited carbon emissions facility,

- 8 -

 


1

a facility need not sequester carbon dioxide in order to

2

generate alternative energy credits provided the facility is

3

capable of capturing to the department's satisfaction the amount

4

of carbon dioxide required by paragraph (14)(ii) of the

5

definition of "alternative energy sources" in section 2.

6

(c.2)  Force majeure.--On or after December 31, 2015, if the

7

commission determines that construction of an advanced coal

8

combustion with limited carbon emissions facility has not been

9

commenced, this determination shall constitute force majeure,

10

and electric distribution companies and electric generation

11

suppliers shall be excused from all or part of their obligation

12

under subsection (c.1), as determined by the commission.

13

(c.3)  Long-term contracts.--Upon review and approval of the

14

commission, an electric distribution company may enter into a

15

long-term contract of up to 25 years to purchase the energy,

16

capacity or alternative energy credits of an advanced coal

17

combustion with limited carbon emissions facility. The contract

18

shall provide for cost recovery of costs associated with carbon

19

capture, including, but not limited to, any fees charged by the

20

Department of Conservation and Natural Resources pursuant to

21

section 8.1(b) with regard to the carbon dioxide sequestration

22

network. The commission shall determine that the contract is

23

reasonable, taking into consideration the following:

24

(1)  The price of the energy purchased under the long-

25

term contract.

26

(2)  The price of capacity purchased under the long-term

27

contract.

28

(3)  The price of alternative energy credits, provided

29

that the cost of an alternative energy credit purchased from

30

advanced coal combustion with limited carbon emissions shall

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1

not exceed $45 per megawatt hour (MWh).

2

(4)  Prior to the effective date of the contract, the

3

value of any carbon emission credits or other credits that

4

the seller obtains from the advanced coal combustion with

5

limited carbon emissions facility.

6

(5)  After the effective date of the contract, the value

7

of any additional Federal or State carbon credits, allowances

8

or other financial benefits shall be reflected in the price

9

of the resource in a manner which recognizes savings to

10

customers and does not reduce the economic return to the

11

seller, provided that the seller demonstrates that it has

12

made a commercially reasonable effort to distribute any

13

economic incentives it has realized to electric distribution

14

companies. A contract approved by the commission under this

15

subsection shall be deemed to meet the requirements of 66

16

Pa.C.S. § 2807(e) (relating to duties of electric

17

distribution companies).

18

* * *

19

(f)  Alternative compliance payment.--

20

(1)  At the end of each program year, the program

21

administrator shall provide a report to the commission and to

22

each covered electric distribution company showing their

23

status level of alternative energy acquisition.

24

(2)  The commission shall conduct a review of each

25

determination made under subsections [(b) and (c)] (b), (c)

26

and (c.1). If, after notice and hearing, the commission

27

determines that an electric distribution company or electric

28

generation supplier has failed to comply with subsections

29

[(b) and (c)] (b), (c) and (c.1), the commission shall impose

30

an alternative compliance payment on that company or

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1

supplier.

2

(3)  The alternative compliance payment, with the

3

exception of the solar photovoltaic share compliance

4

requirement set forth in subsection (b)(2), shall be $45

5

times the number of additional alternative energy credits

6

needed in order to comply with subsection (b) or (c).

7

(4)  [The alternative compliance payment for the solar

8

photovoltaic share shall be 200% of the average market value

9

of solar renewable energy credits sold during the reporting

10

period within the service region of the regional transmission

11

organization, including, where applicable, the levelized up-

12

front rebates received by sellers of solar renewable energy

13

credits in other jurisdictions in the PJM Interconnection,

14

L.L.C. transmission organization (PJM) or its successor.] The

15

alternative compliance payment for the solar photovoltaic

16

alternative share shall be established by the commission in

17

an amount and for a period of years necessary to promote the

18

market for solar photovoltaic alternative energy credits. The

19

alternative compliance payment for the solar photovoltaic

20

share may vary over the time period established by the

21

commission but shall be at least 200% of the average market

22

value for solar photovoltaic alternative energy credits sold

23

within the service region of the PJM Interconnection, L.L.C.

24

transmission organization in the year prior to the

25

establishment of the alternative compliance payment schedule.

26

The commission shall review the solar photovoltaic

27

alternative compliance payment schedule at least once per

28

year and shall establish an alternative compliance payment

29

schedule for additional years as needed to promote the market

30

for solar photovoltaic alternative energy credits.

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1

(5)  The commission shall establish a process to provide

2

for, at least annually, a review of the alternative energy

3

market within this Commonwealth and the service territories

4

of the regional transmission organizations that manage the

5

transmission system in any part of this Commonwealth. The

6

commission will use the results of this study to identify any

7

needed changes to the cost associated with the alternative

8

compliance payment program. If the commission finds that the

9

costs associated with the alternative compliance payment

10

program must be changed, the commission shall present these

11

findings to the General Assembly for legislative enactment.

12

(g)  Transfer to sustainable development funds.--

13

(1)  Notwithstanding the provisions of 66 Pa.C.S. §§ 511

14

(relating to disposition, appropriation and disbursement of

15

assessments and fees) and 3315 (relating to disposition of

16

fines and penalties), alternative compliance payments imposed

17

pursuant to this act shall be paid into Pennsylvania's

18

Sustainable Energy Funds created under the commission's

19

restructuring orders under 66 Pa.C.S. Ch. 28 (relating to

20

restructuring of electric utility industry). Alternative

21

compliance payments shall be paid into a special fund of the

22

Pennsylvania Sustainable Energy Board, established by the

23

commission under Docket M-00031715, and made available to the

24

Regional Sustainable Energy Funds under procedures and

25

guidelines approved by the Pennsylvania Energy Board.

26

(2)  The alternative compliance payments shall be

27

utilized solely for projects that will increase the amount of

28

electric energy generated from alternative energy resources

29

for purposes of compliance with subsections [(b) and (c)]

30

(b), (c) and (c.1).

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1

* * *

2

Section 3.  The act is amended by adding a section to read:

3

Section 8.1.  Carbon dioxide sequestration network.

4

(a)  Establishment of network.--DCNR shall develop and

5

operate a carbon dioxide sequestration network utilizing

6

appropriate geologic formations and facilities on State forest

7

land or as otherwise acquired by DCNR for the purposes set forth

8

in this subsection. DCNR may acquire, on behalf of the

9

Commonwealth, geologic formations and facilities required for

10

the carbon dioxide sequestration network by purchase, gift,

11

lease or condemnation. The carbon dioxide sequestration network

12

shall only be utilized to store carbon dioxide generated within

13

this Commonwealth.

14

(b)  Fees.--DCNR shall collect reasonable fees from entities

15

that transport to or through, deposit in or otherwise utilize

16

the carbon dioxide sequestration network. DCNR shall enter into

17

agreements with the entities establishing the terms and

18

conditions for use of the carbon dioxide sequestration network

19

and the payment of appropriate fees prior to the transport of

20

any carbon dioxide into the carbon dioxide sequestration

21

network. Fees shall be established to recover the total cost,

22

less any nonreimbursable Federal funding, of developing and

23

operating the carbon dioxide sequestration network. Recoverable

24

costs shall include, but are not limited to, the cost to acquire

25

or obtain the right to use geologic formations or facilities

26

required for the carbon dioxide sequestration network,

27

construction costs, insurance costs and other costs to operate

28

and maintain the network.

29

(c)  Establishment of fund.--There is established in the

30

State Treasury a Carbon Sequestration Fund. The Carbon

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1

Sequestration Fund shall be a nonlapsing fund and the money

2

deposited into this fund is specifically appropriated to DCNR to

3

carry out the purposes of this section at the discretion of the

4

Secretary of Conservation and Natural Resources.

5

(d)  Permitting requirements.--The department shall develop

6

regulations necessary to permit the siting and operation of the

7

carbon dioxide sequestration facility authorized by this

8

section. The regulations shall include, but not be limited to,

9

the following:

10

(1)  Risk assessment.

11

(2)  Geologic site characterization including, but not

12

limited to, modeling and verification of fluid movement.

13

(3)  Corrective action.

14

(4)  Well construction, operation and mechanical

15

integrity testing.

16

(5)  Monitoring and site closure.

17

No carbon dioxide may be accepted for sequestration until all

18

applicable permits have been approved.

19

(e)  Operation.--

20

(1)  DCNR may enter into contracts for the development

21

and operation of the carbon dioxide sequestration network.

22

DCNR or its contractor shall evaluate the requirements for

23

safe operation of the carbon dioxide sequestration network

24

including, but not limited to, geologic site

25

characterization, modeling and verification of fluid

26

movement, well construction, mechanical integrity testing,

27

monitoring, corrective action and site closure. No carbon

28

dioxide may be accepted for sequestration until all

29

applicable permits have been approved.

30

(2)  Prior to commencement of operation of the carbon

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1

dioxide sequestration network and periodically thereafter,

2

DCNR or its contractor shall assess the risks associated with

3

the operation. DCNR and the Department of General Services

4

shall determine the appropriate method to insure the

5

operation of the carbon dioxide sequestration network and

6

shall insure the operation as deemed appropriate.

7

(f)  Title to carbon dioxide and immunity.--

8

(1)  All right, title and interest in and to carbon

9

dioxide delivered to the property line of the

10

Commonwealth-owned lands or other lands upon which the

11

Commonwealth's carbon dioxide sequestration network is

12

located by the advanced coal combustion with limited carbon

13

emission facilities that, individually or collectively, first

14

meet the maximum requirements of section 3(c.1) as determined

15

by the department, shall be transferred to the Commonwealth

16

and the Commonwealth shall accept and receive all the right,

17

title and interest in and to such carbon dioxide, including,

18

but not limited to, any liabilities associated with the

19

carbon dioxide, current or future environmental benefits,

20

marketing claims, associated voluntary or compliance-based

21

emissions allocations or offsets, but not alternative energy

22

credits provided by section 3(e).

23

(2)  Upon and after transfer and conveyance of carbon

24

dioxide as provided under paragraph (1), the owner of an

25

advanced coal combustion plant with limited carbon emissions

26

shall be immune from liabilities regarding the storage of

27

carbon dioxide within and the release, escape or migration of

28

carbon dioxide from the Commonwealth's carbon dioxide

29

sequestration network and subsurface storage site.

30

Section 4.  This act shall take effect immediately.

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