PRINTER'S NO. 215
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
232
Session of
2019
INTRODUCED BY KILLION, LAUGHLIN, KEARNEY, ARGALL, BARTOLOTTA,
BLAKE, BROWNE, DINNIMAN, HUGHES, MENSCH, SANTARSIERO,
SCAVELLO AND SCHWANK, FEBRUARY 7, 2019
REFERRED TO CONSUMER PROTECTION AND PROFESSIONAL LICENSURE,
FEBRUARY 7, 2019
AN ACT
Amending Title 66 (Public Utilities) of the Pennsylvania
Consolidated Statutes, in restructuring of electric utility
industry, further providing for energy efficiency and
conservation program.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 2806.1(b)(1)(i)(G) and (H), (c), (f)(1)
(i) and (ii) and (2)(i), (g), (k) and (m) of Title 66 of the
Pennsylvania Consolidated Statutes are amended, subsection (a)
is amended by adding a paragraph and the section is amended by
adding a subsection to read:
§ 2806.1. Energy efficiency and conservation program.
(a) Program.--The commission shall, by January 15, 2009,
adopt an energy efficiency and conservation program to require
electric distribution companies to adopt and implement cost-
effective energy efficiency and conservation plans to reduce
energy demand and consumption within the service territory of
each electric distribution company in this Commonwealth. The
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program shall include:
* * *
(12) A process convened by the commission where
interested parties can provide input on defining and
quantifying the costs, benefits and other factors to be
utilized in calculating the total resource cost test. The
process shall assure consistency with relevant State energy
policy goals, capture costs and benefits over the lifetime of
energy efficiency program impacts, account for impacts of
energy efficiency programs and assure transparency to
ratepayers.
(b) Duties of electric distribution companies.--
(1) (i) [By July 1, 2009, each] Each electric
distribution company shall develop and file an energy
efficiency and conservation plan with the commission for
approval to meet the requirements of subsection (a) and
the requirements for reduction in consumption under
subsections (c) and (d). The plan shall be implemented
upon approval by the commission. The following are the
plan requirements:
* * *
(G) The plan shall include [specific energy
efficiency measures] reductions in consumption for
households at or below [150%] 200% of the Federal
poverty income guidelines. The [number of measures]
reductions in consumption shall be proportionate to
those households' share of the total energy usage in
the service territory. The electric distribution
company shall coordinate measures under this clause
with other programs administered by the commission or
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another Federal or State agency. The expenditures of
an electric distribution company under this clause
shall be in addition to expenditures made under 52
Pa. Code Ch. 58 (relating to residential low income
usage reduction programs).
(H) The plan shall include a proposed cost-
recovery tariff mechanism, in accordance with
[section 1307 (relating to sliding scale of rates;
adjustments)] subsection (k), to fund the energy
efficiency and conservation measures and to ensure
full and current recovery of the prudent and
reasonable costs of the plan, including
administrative costs, as approved by the commission.
* * *
(c) Reductions in consumption.--The plans adopted under
subsection (b) shall reduce [electric] energy consumption as
follows:
(1) By May 31, 2011, total annual weather-normalized
consumption of the retail customers of each electric
distribution company shall be reduced by a minimum of 1%. The
1% load reduction in consumption shall be measured against
the electric distribution company's expected load as
forecasted by the commission for June 1, 2009, through May
31, 2010, with provisions made for weather adjustments and
extraordinary loads that the electric distribution company
must serve.
(2) By May 31, 2013, the total annual weather-normalized
consumption of the retail customers of each electric
distribution company shall be reduced by a minimum of 3%. The
3% load reduction in consumption shall be measured against
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the electric distribution company's expected load as
forecasted by the commission for June 1, 2009, through May
31, 2010, with provisions made for weather adjustments and
extraordinary loads that the electric distribution company
must serve.
(3) By November 30, 2013, and every five years
thereafter, the commission shall evaluate the costs and
benefits of the program established under subsection (a) and
of approved energy efficiency and conservation plans
submitted to the program. The evaluation shall be consistent
with a total resource cost test or a cost-benefit analysis
determined by the commission. If the commission determines
that the benefits of the program exceed the costs, the
commission shall adopt additional required incremental
reductions in consumption.
* * *
(f) Penalties.--
(1) The following shall apply for failure to submit a
plan:
(i) An electric distribution company that fails to
file a plan under subsection (b) shall be subject to a
civil penalty of not more than $100,000 per day until the
plan is filed.
(ii) An electric distribution company that fails to
file a revised plan under subsection (e)(2)(ii) shall be
subject to a civil penalty of not more than $100,000 per
day until the plan is filed.
* * *
(2) The following shall apply to an electric
distribution company that fails to achieve the reductions in
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consumption required under subsection (c) or (d):
(i) The electric distribution company shall be
subject to a civil penalty [not less than $1,000,000 and
not to exceed $20,000,000] not to exceed $5,000,000 for
failure to achieve the required reductions in consumption
under subsection (c) or (d). Any penalty paid by an
electric distribution company under this subparagraph
shall not be recoverable from ratepayers.
* * *
[(g) Limitation on costs.--The total cost of any plan
required under this section shall not exceed 2% of the electric
distribution company's total annual revenue as of December 31,
2006. The provisions of this paragraph shall not apply to the
cost of low-income usage reduction programs established under 52
Pa. Code Ch. 58 (relating to residential low income usage
reduction programs).]
* * *
(k) Recovery.--
(1) An electric distribution company shall recover on a
full and current basis from customers, through a reconcilable
adjustment clause under section 1307, all reasonable and
prudent costs incurred in the provision or management of a
plan provided under this section. This paragraph shall apply
to all electric distribution companies, including electric
distribution companies subject to generation or other rate
caps.
[(2) Except as set forth in paragraph (3), decreased
revenues of an electric distribution company due to reduced
energy consumption or changes in energy demand shall not be a
recoverable cost under a reconcilable automatic adjustment
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clause.]
(2.1) An electric distribution company may recover
decreased revenues due to reduced energy consumption or
changes in energy demand through a full revenue decoupling
mechanism. Upward rate adjustments as a result of a full
revenue decoupling mechanism may not be greater than 2% of
rates approved in the electric distribution company's most
recent base rate case.
(3) Decreased revenue and reduced energy consumption may
be reflected in revenue and sales data used to calculate
rates in a distribution-base rate proceeding filed by an
electric distribution company under section 1308 (relating to
voluntary changes in rates).
(k.1) Incentives.--
(1) An energy efficiency and conservation plan filed by
an electric distribution company under this section may
include a financial incentive mechanism for the electric
distribution company. Payment and design of a financial
incentive authorized in the plan is subject to the approval
of the commission. The total amount of a financial incentive
earned shall not exceed the lesser of the following amounts:
(i) ten percent of the net benefits experienced by
the electric distribution company's customers as a result
of implementation of the energy efficiency and
conservation plan; or
(ii) eight percent of the electric distribution
company's actual expenditures on energy efficiency
conservation programs for the year.
(2) The commission shall issue guidelines for financial
incentive mechanisms under this section. The total amount of
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a financial incentive shall be based upon quantifiable
reductions in energy consumption and may consider the time,
location and load shifting value of energy saved and the
extent to which savings directly benefit customers at or
below 200% of Federal poverty income guidelines.
* * *
(m) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection:
"Conservation service provider." An entity that provides
information and technical assistance on measures to enable a
person to increase energy efficiency or reduce energy
consumption and that has no direct or indirect ownership,
partnership or other affiliated interest with an electric
distribution company.
["Electric distribution company total annual revenue."
Amounts paid to the electric distribution company for
generation, transmission, distribution and surcharges by retail
customers.]
"Energy efficiency and conservation measures."
(1) Technologies, management practices or other measures
employed by retail customers that reduce [electricity] energy
consumption or demand if all of the following apply:
(i) The technology, practice or other measure is
installed on or after the effective date of this section
at the location of a retail customer.
(ii) The technology, practice or other measure
reduces consumption of energy or peak load by the retail
customer.
(iii) The cost of the acquisition or installation of
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the measure is directly incurred in whole or in part by
the electric distribution company.
(2) [Energy efficiency and conservation measures shall
include] The term includes solar or solar photovoltaic
panels, energy efficient windows and doors, energy efficient
lighting, including exit sign retrofit, high bay fluorescent
retrofit and pedestrian and traffic signal conversion,
geothermal heating, insulation, air sealing, reflective roof
coatings, energy efficient heating and cooling equipment or
systems and energy efficient appliances, smart connected
thermostats and other technologies, practices or measures
approved by the commission.
(3) The term includes up to one-third of the energy
savings and reductions resulting from energy efficiency
building codes, provided that:
(i) The electric distribution company played a
direct role in achieving the savings and reductions
through program implementation.
(ii) The savings and reductions are quantified and
reported through an independent measurement and
evaluation study.
(iii) The savings and reductions are commensurate
with the direct role that the electric distribution
company played to achieve the savings and reductions.
(4) The term includes measures that increase electricity
consumption due to fuel switching provided that:
(i) The measures reduce total energy consumption at
the premises, including energy from gas, coal, oil,
biomass and other fuels. Calculations used to determine
the total reduction in energy shall be subject to
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approval by the commission.
(ii) The reductions in energy consumption are not
directly related to transportation or transportation
infrastructure.
(iii) The measures meet a total resource cost test
approved by the commission.
"Full revenue decoupling mechanism." A rate mechanism that
adjusts or reconciles authorized distribution rates or revenues
for differences, whether positive or negative, between revenues
approved in a base rate case and actual revenues, including, but
not limited to, customer adjustments or other adjustments, such
as collars or caps, deemed appropriate by the commission.
"Peak demand." The highest electrical requirement occurring
during a specified period. For an electric distribution company,
the term shall mean the sum of the metered consumption for all
retail customers over that period.
"Quality assurance." All of the following:
(1) The auditing of buildings, equipment and processes
to determine the cost-effectiveness of energy efficiency and
conservation measures using nationally recognized tools and
certification programs.
(2) Independent inspection of completed energy
efficiency and conservation measures completed by third-party
entities to evaluate the quality of the completed measure.
"Real-time price." A rate that directly reflects the
different cost of energy during each hour.
"Time-of-use rate." A rate that reflects the costs of
serving customers during different time periods, including off-
peak and on-peak periods, but not as frequently as each hour.
"Total resource cost test." [A standard test that is met if,
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over the effective life of each plan not to exceed 15 years, the
net present value of the avoided monetary cost of supplying
electricity is greater than the net present value of the
monetary cost of energy efficiency conservation measures.] A
standard test that is met if, over the effective life of the
energy efficiency and conservation measures, the net present
value of the avoided cost of supplying utility service,
including the cost of generation, transmission and distribution
of electricity, gas, water and other nonenergy benefits, is
greater than the net present value of the incremental monetary
cost of the energy efficiency and conservation measures.
Nonenergy benefits considered in the test shall be quantifiable
and directly related to a program or service. The value of
avoided cost may include the time, location or load shifting
value of the energy efficiency and conservation measures.
Section 2. In addition to the requirement under section
2806.1(b)(1)(ii), the commission may require an electric
distribution company to file a new plan which meets the
requirements of this act.
Section 3. This act shall take effect in 60 days.
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