act-2008-0-129•Pennsylvania Act 2008-129 — PUBLIC UTILITY CODE (66 PA.C.S.) - OMNIBUS AMENDMENTS
Pennsylvania Act 2008-129 — PUBLIC UTILITY CODE (66 PA.C.S.) - OMNIBUS AMENDMENTS
act-2008-0-1292008 Pa. Act 129Law
Act text
PUBLIC UTILITY CODE (66 PA.C.S.) - OMNIBUS AMENDMENTS
Act of Oct. 15, 2008, P.L. 1592, No. 129 Cl. 66
Session of 2008
No. 2008-129
HB 2200
AN ACT
Amending Title 66 (Public Utilities) of the Pennsylvania
Consolidated Statutes, further providing for director of
operations, secretary, employees and consultants; repealing
provisions relating to office of trial staff; further
providing for bureaus and offices; providing for other
bureaus, offices and positions; further providing for
electric utility definitions; providing for energy efficiency
and conservation program and for energy efficiency and
conservation; further providing for duties of electric
distribution companies and for market power remediation; and
providing for procurement, for additional alternative energy
sources and for carbon dioxide sequestration network.
The General Assembly recognizes the following public policy
findings and declares that the following objectives of the
Commonwealth are served by this act:
(1) The health, safety and prosperity of all citizens of
this Commonwealth are inherently dependent upon the
availability of adequate, reliable, affordable, efficient and
environmentally sustainable electric service at the least
cost, taking into account any benefits of price stability
over time and the impact on the environment.
(2) It is in the public interest to adopt energy
efficiency and conservation measures and to implement energy
procurement requirements designed to ensure that electricity
obtained reduces the possibility of electric price
instability, promotes economic growth and ensures affordable
and available electric service to all residents.
(3) It is in the public interest to expand the use of
alternative energy and to explore the feasibility of new
sources of alternative energy to provide electric generation
in this Commonwealth.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 305(a) of Title 66 of the Pennsylvania
Consolidated Statutes is amended to read:
§ 305. Director of operations, secretary, employees and
consultants.
(a) Director of operations.--The commission may appoint a
director of operations who shall serve at the pleasure of the
commission and shall be responsible for the day-to-day
administration and operation of the bureaus and offices of the
commission, except that the director of operations shall have
responsibility for the [Office of Trial Staff] prosecutorial
function only with regard to administrative matters.
* * *
Section 1.1. Section 306 of Title 66 is repealed:
[§ 306. Office of Trial Staff.
(a) General rule.--The Office of Trial Staff to the
Pennsylvania Public Utility Commission is hereby created. The
Director of Trial Staff, who shall be the chief prosecutor of
the commission, shall be appointed by the commission and hold
office at its pleasure. The commission shall assign a permanent
staff of such legal, technical and other employees of the
commission as may be required for the proper conduct of the work
of the Office of Trial Staff. Employees assigned to the Office
of Trial Staff shall be under the supervision of the Director of
Trial Staff and shall not be assigned to any duties other than
with the Office of Trial Staff, except as the commission may on
a temporary case-by-case basis permit where the performance of
such other duties will not represent, or create the appearance
of, a conflict of interest. The commission may designate
employees of the Office of Trial Staff to serve as deputies to
the Director of Trial Staff. The Director of Trial Staff may
recommend persons for consideration by the commission as
employees under his supervision. Attorneys assigned to the
Office of Trial Staff may be removed by the commission only for
good cause. The compensation of the Director of Trial Staff and
the employees under his supervision shall be fixed by the
commission. The Director of Trial Staff shall report and be
responsible directly to the commission, provided that the
Director of Trial Staff shall be responsible to the commission
through the Director of Operations only for purposes of
administrative matters.
(b) Power and duties.--
(1) The Office of Trial Staff shall be responsible for
and shall assist in the development of, challenge of and
representation on the record of all matters in the public
interest in all commission proceedings except those involving
transportation, safety, eminent domain, siting, service
issues having no impact on rates and ability to pay, provided
that the Director of Trial Staff may petition the commission
or may be directed by the commission to intervene to protect
the public interest in any proceeding involving
transportation, safety, eminent domain, siting, service
issues having no impact on rates and ability to pay. To
assist in carrying out his powers and duties under this
section, the Director of Trial Staff shall supervise the
activities of the Office of Trial Staff in all commission
proceedings in which he participates. If the Director of
Trial Staff is of the opinion that the initiation of a
proceeding is necessary to protect the public interest, he
shall request that the commission initiate the appropriate
proceeding. When he participates in a commission proceeding,
it shall be the duty and responsibility of the Director of
Trial Staff to prosecute in that proceeding.
(2) In addition to any other responsibility conveyed
upon it by the commission, the Office of Trial Staff shall
submit a report to the commission recommending whether the
commission should enter upon a hearing in order to
investigate the justness and reasonableness of a tariff filed
pursuant to section 1308 (relating to voluntary changes in
rates), to suspend the effectiveness of such tariff, to allow
such tariff to be suspended by operation of law or to allow
temporary rates pursuant to section 1310 (relating to
temporary rates). The report:
(i) shall recommend only the initial action which
the commission should take and shall not contain an
opinion as to the portion of a proposed rate increase
which appears to be just and reasonable, unless the
report includes a finding that the proposed rate increase
appears to be just and reasonable in its entirety;
(ii) shall be released to the public if the report
recommends that no hearings need to be held regarding the
proposed tariff or that the proposed tariff should not be
suspended, and may be released to the public in other
circumstances when, in the opinion of the commission,
such release would be in the public interest;
(iii) shall be considered only as an indication of
the Office of Trial Staff's opinion regarding whether
there should be a hearing on the proposed tariff or
whether the proposed tariff should be suspended; and
(iv) shall not be considered as evidence of the
Office of Trial Staff's opinion regarding the justness
and reasonableness of any proposed tariff in any
subsequent commission proceeding.
(3) Except for the duties set out in paragraph (2),
neither the Director of Trial Staff nor any employee whom the
Director of Trial Staff supervises shall communicate with the
commission, an administrative law judge or any other employee
of the commission who is deciding or advising in the decision
in an on-the-record proceeding, whether contested or
uncontested, as defined in section 332(c) (relating to
procedures in general), except through the practice and
procedure available to all parties to commission
proceedings.]
Section 1.2. Section 308(a)(2) and (4), (b), (c), (e), (f)
and (g) of Title 66 are amended to read:
§ 308. Bureaus and offices.
(a) Enumeration.--There shall be established within the
commission the following bureaus and functions:
* * *
[(2) Bureau of Conservation, Economics and Energy
Planning.]
* * *
[(4) Office of Special Assistants.]
(b) Law Bureau.--The Law Bureau shall be a multifunction
legal staff, consisting of a prosecutory function, an advisory
function, a representational function and an enforcement
function. The Director of the Law Bureau shall be the chief
counsel of the commission and shall serve at the pleasure of the
commission. The commission may also, from time to time, appoint
such assistant counsel to the commission as may be required for
the proper conduct of the work of the Law Bureau. Assistant
counsel may be removed by the commission only for good cause.
The Law Bureau shall advise the commission on any and all
matters. No counsel shall in the same case or a factually
related case perform duties in the prosecutory and advisory
functions, if such performance would represent a conflict of
interest. Except for litigation referred to the Attorney General
or other appropriate outside counsel, the Law Bureau solely
shall be responsible to represent the commission upon appeals
and other hearings in the courts of common pleas and in the
Commonwealth Court, Supreme Court or other courts of this
Commonwealth or in any Federal court or agency and in actions
instituted to recover penalties and to enforce regulations and
orders of the commission. [No member of the Law Bureau shall
participate in any prosecutory function in any matter] If
necessary to protect the public interest, the Law Bureau,
pursuant to its prosecutorial function, may initiate and
participate in proceedings before the commission unless directed
by the commission to do so in a proceeding involving
transportation, safety, eminent domain, siting, service issues
having no impact on rates or ability to pay or assist the Office
of Trial Staff in carrying out the duties of the Office of Trial
Staff, nor shall any member of the Law Bureau receive assistance
from the Office of Trial Staff in the performance of his duties.
Except as provided in this section, the Law Bureau may receive
assistance from any other bureau or office of the commission as
determined to be necessary.
[(c) Bureau of Conservation, Economics and Energy
Planning.--The Bureau of Conservation, Economics and Energy
Planning shall conduct studies and research all matters within
the commission's jurisdiction and advise the commission of the
results thereof in order to enable the commission to provide
prospective regulation in the best interest of all parties
concerned. Such studies and research shall include long range
forecasting of energy needs and development; research into the
use of new, efficient and economic methods of energy production;
the review of the efficiency of the present generating systems
operated within this Commonwealth; and the development of an
effective program of energy conservation. The commission shall
require all electric and gas public utilities subject to its
jurisdiction to file with it an annual conservation report which
shows the plans and progress achieved on programs of energy
conservation. The commission shall, by rule, prescribe
guidelines for the form and manner of such annual conservation
report which report shall describe the current and proposed
programs of each such utility designed to educate and encourage
its customers in the optimum, effective and efficient use by
them of electric and gas energy. The report shall include an
accounting of the monetary and personnel resources actually or
proposed to be expended or devoted to and the actual or
anticipated results of such programs. The bureau shall review
all proposals for electric and gas public utility plant
expansion and shall submit for consideration of the commission
its findings on what impact, if any, the electric and gas public
utility plant expansion will have on rates charged by the public
utility.]
* * *
[(e) Office of Special Assistants.--The Office of Special
Assistants shall be a support staff which shall be responsible
to assist in the preparation of commission orders and shall
perform such other advisory duties as may be required of it by
the commission. No member of the Office of Special Assistants
shall participate in any prosecutory function in any matter
before the commission. No member of the Office of Special
Assistants shall assist the Office of Trial Staff in carrying
out the duties of the Office of Trial Staff, nor shall any
member of the Office of Special Assistants receive assistance
from the Office of Trial Staff in the performance of his duties.
Except as provided in this section, the Office of Special
Assistants may receive assistance from, or provide assistance
to, any other bureau or office of the commission as determined
to be necessary.
(f) Other bureaus and offices.--The commission shall
establish such bureau or bureaus to perform such duties as the
commission may prescribe regarding all matters respecting rates
of public utilities and all matters respecting common carriers
and contract carriers. The establishment of these bureaus shall
not be construed to prohibit the commission from establishing
any additional bureaus which the commission finds necessary to
protect the interests of the people of this Commonwealth. The
bureaus may perform such other duties not inconsistent with law
as the commission may direct.
(g) Staff testimony.--Members of the staff of the
commission, except for the Office of Special Assistants, shall
appear and present testimony in any proceeding before the
commission when called by the commission, the chief counsel, the
Director of Trial Staff or any of the parties to the proceeding.
In addition to any cross-examination by the Office of Trial
Staff as provided in section 306 (relating to Office of Trial
Staff) or the chief counsel, any member of the commission staff
who participates in the analysis, review and conclusions in any
proceedings before the commission may, in the discretion of the
Office of Trial Staff or the chief counsel and with the consent
of the presiding officer, cross-examine any witness presented by
the parties to the proceeding at the public hearing.]
Section 1.3. Title 66 is amended by adding a section to
read:
§ 308.2. Other bureaus, offices and positions.
(a) Establishment of other bureaus, offices and positions.--
In addition to the specific bureaus established in this part,
the commission may establish other bureaus, offices and
positions to perform the following functions:
(1) Review and provide advice regarding applications,
petitions, tariff filings and other matters filed with the
commission.
(2) Provide advice, review exceptions and prepare orders
regarding matters to be adjudicated.
(3) Conduct financial reviews, earnings analyses and
other financial studies.
(4) Conduct economic research, forecasting, energy
conservation studies, cost studies and other economic studies
related to public utilities.
(5) Monitor industry markets to detect anticompetitive,
discriminatory or other unlawful conduct.
(6) Insure adequate maintenance, safety and reliability
of utility networks.
(7) Insure adequate service quality, efficiency and
availability at just and reasonable rates.
(8) Conduct financial, management, operational and
special audits.
(9) Provide consumer information, consumer protection
and informal resolution of complaints.
(10) Insure adequate safety, insurance, fitness and
other requirements relevant to transportation utilities.
(11) Take appropriate enforcement actions, including
rate proceedings, service proceedings and allocation
proceedings, necessary to insure compliance with this title,
commission regulations and orders.
(12) Perform other functions the commission deems
necessary for the proper work of the commission.
(b) Prohibition on commingling of functions.--A commission
employee engaged in a prosecutory function may not, in that
matter or a factually related matter, provide advice or
assistance to a commission employee performing an advisory
function as to that matter.
Section 1.4. Section 2803 of Title 66 is amended by adding
definitions to read:
§ 2803. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Bilateral contract." An agreement, as approved by the
commission, reached by two parties, each acting in its own
independent self-interest, as a result of negotiations free of
undue influence, duress or favoritism, in which the electric
energy supplier agrees to sell and the electric distribution
company agrees to buy a quantity of electric energy at a
specified price for a specified period of time under terms
agreed to by both parties, and which follows a standard industry
template widely accepted in the industry or variations thereto
accepted by the parties. Standard industry templates may include
the EEI Master Agreement for physical energy purchases and sales
and the ISDA Master Agreement for financial energy purchases and
sales.
* * *
"Default service provider." An electric distribution company
within its certified service territory or an alternative
supplier approved by the commission that provides generation
service to retail electric customers who:
(1) contract for electric power, including energy and
capacity, and the chosen electric generation supplier does
not supply the service; or
(2) do not choose an alternative electric generation
supplier.
* * *
Section 2. Title 66 is amended by adding sections 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
program shall include:
(1) Procedures for the approval of plans submitted under
subsection (b).
(2) An evaluation process, including a process to
monitor and verify data collection, quality assurance and
results of each plan and the program.
(3) An analysis of the cost and benefit of each plan
submitted under subsection (b) in accordance with a total
resource cost test approved by the commission.
(4) An analysis of how the program and individual plans
will enable each electric distribution company to achieve or
exceed the requirements for reduction in consumption under
subsections (c) and (d).
(5) Standards to ensure that each plan includes a
variety of energy efficiency and conservation measures and
will provide the measures equitably to all classes of
customers.
(6) Procedures to make recommendations as to additional
measures that will enable an electric distribution company to
improve its plan and exceed the required reductions in
consumption under subsections (c) and (d).
(7) Procedures to require that electric distribution
companies competitively bid all contracts with conservation
service providers.
(8) Procedures to review all proposed contracts prior to
the execution of the contract with conservation service
providers to implement the plan. The commission may order the
modification of a proposed contract to ensure that the plan
meets the requirements for reduction in demand and
consumption under subsections (c) and (d).
(9) Procedures to ensure compliance with requirements
for reduction in consumption under subsections (c) and (d).
(10) A requirement for the participation of conservation
service providers in the implementation of all or part of a
plan.
(11) Cost recovery to ensure that measures approved are
financed by the same customer class that will receive the
direct energy and conservation benefits.
(b) Duties of electric distribution companies.--
(1) (i) By July 1, 2009, 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:
(A) The plan shall include specific proposals to
implement energy efficiency and conservation measures
to achieve or exceed the required reductions in
consumption under subsections (c) and (d).
(B) A minimum of 10% of the required reductions
in consumption under subsections (c) and (d) shall be
obtained from units of Federal, State and local
government, including municipalities, school
districts, institutions of higher education and
nonprofit entities.
(C) The plan shall explain how quality assurance
and performance will be measured, verified and
evaluated.
(D) The plan shall state the manner in which the
plan will achieve the requirements of the program
under subsection (a) and will achieve or exceed the
required reductions in consumption under subsections
(c) and (d).
(E) The plan shall include a contract with one
or more conservation service providers selected by
competitive bid to implement the plan or a portion of
the plan as approved by the commission.
(F) The plan shall include estimates of the cost
of implementation of the energy efficiency and
conservation measures in the plan.
(G) The plan shall include specific energy
efficiency measures for households at or below 150%
of the Federal poverty income guidelines. The number
of measures 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
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), 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.
(I) The electric distribution company shall
demonstrate that the plan is cost effective using a
total resource cost test approved by the commission
and provides a diverse cross section of alternatives
for customers of all rate classes.
(J) The plan shall require an annual independent
evaluation of its cost-effectiveness and a full
review of the results of each five-year plan required
under subsection (c)(3) and, to the extent practical,
how the plan will be adjusted on a going-forward
basis as a result of the evaluation.
(K) The plan shall include an analysis of the
electric distribution company's administrative costs.
(ii) A new plan shall be filed with the commission
every five years or as otherwise required by the
commission. The plan shall set forth the manner in which
the company will meet the required reductions in
consumption under subsections (c) and (d).
(iii) No more than 2% of funds available to
implement a plan under this subsection shall be allocated
for experimental equipment or devices.
(2) The commission shall direct an electric distribution
company to modify or terminate any part of a plan approved
under this section if, after an adequate period for
implementation, the commission determines that an energy
efficiency or conservation measure included in the plan will
not achieve the required reductions in consumption in a cost-
effective manner under subsections (c) and (d).
(3) If part of a plan is modified or terminated under
paragraph (2), the electric distribution company shall submit
a revised plan describing actions to be taken to offer
substitute measures or to increase the availability of
existing measures in the plan to achieve the required
reductions in consumption under subsections (c) and (d).
(c) Reductions in consumption.--The plans adopted under
subsection (b) shall reduce electric 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
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.
(d) Peak demand.--The plans adopted under subsection (b)
shall reduce electric demand as follows:
(1) By May 31, 2013, the weather-normalized demand of
the retail customers of each electric distribution company
shall be reduced by a minimum of 4.5% of annual system peak
demand in the 100 hours of highest demand. The reduction
shall be measured against the electric distribution company's
peak demand for June 1, 2007, through May 31, 2008.
(2) By November 30, 2013, the commission shall compare
the total costs of energy efficiency and conservation plans
implemented under this section to the total savings in energy
and capacity costs to retail customers in this Commonwealth
or other costs determined by the commission. If the
commission determines that the benefits of the plans exceed
the costs, the commission shall set additional incremental
requirements for reduction in peak demand for the 100 hours
of greatest demand or an alternative reduction approved by
the commission. Reductions in demand shall be measured from
the electric distribution company's peak demand for the
period from June 1, 2011, through May 31, 2012. The
reductions in consumption required by the commission shall be
accomplished no later than May 31, 2017.
(e) Commission approval.--
(1) The commission shall conduct a public hearing on
each plan and allow for the submission of recommendations by
the Office of Consumer Advocate and the Office of Small
Business Advocate and by members of the public as to how the
electric distribution company could improve its plan or
exceed the required reductions in consumption under
subsections (c) and (d).
(2) The commission shall approve or disapprove a plan
filed under subsection (b) within 120 days of submission. The
following shall apply to an order disapproving a plan:
(i) The commission shall describe in detail the
reasons for the disapproval.
(ii) The electric distribution company shall have 60
days to file a revised plan to address the deficiencies
identified by the commission. The revised plan shall be
approved or disapproved by the commission within 60 days.
(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 $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 $100,000 per day until the
plan is filed.
(iii) Penalties collected under this paragraph shall
be deposited in the low-income electric customer
assistance program of the energy distribution company for
the respective service territory.
(2) The following shall apply to an electric
distribution company that fails to achieve the reductions in
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 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.
(ii) If an electric distribution company fails to
achieve the required reductions in consumption under
subsection (c) or (d), responsibility to achieve the
reductions in consumption shall be transferred to the
commission. The commission shall do all of the following:
(A) Implement a plan to achieve the required
reductions in consumption under subsection (c) or
(d).
(B) Contract with conservation service providers
as necessary to implement any portion of the plan.
(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).
(h) Costs.--The commission shall recover from electric
distribution companies the costs of implementing the program
established under this section.
(i) Report.--The following shall apply:
(1) Each electric distribution company shall submit an
annual report to the commission relating to the results of
the energy efficiency and conservation plan within each
electric distribution service territory. The report shall
include all of the following:
(i) Documentation of program expenditures.
(ii) Measurement and verification of energy savings
under the plan.
(iii) Evaluation of the cost-effectiveness of
expenditures.
(iv) Any other information required by the
commission.
(2) Beginning five years following the effective date of
this section and annually thereafter, the commission shall
submit a report to the Consumer Protection and Professional
Licensure Committee of the Senate and the Consumer Affairs
Committee of the House of Representatives.
(j) Existing funding sources.--Each electric distribution
company shall, upon request by any person, provide a list of all
eligible Federal and State funding programs available to
ratepayers for energy efficiency and conservation. The list
shall be posted on the electric distribution company's Internet
website.
(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
clause.
(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).
(l) Applicability.--This section shall not apply to an
electric distribution company with fewer than 100,000 customers.
(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
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
the measure is directly incurred in whole or in part by
the electric distribution company.
(2) Energy efficiency and conservation measures shall
include 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 and other technologies, practices or
measures approved 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,
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.
§ 2806.2. Energy efficiency and conservation.
(a) Registry.--The commission shall, by March 1, 2009,
establish a registry of approved persons qualified to provide
conservation services to all classes of customers. In order to
be included in the registry, a conservation service provider
must meet experience and other qualifications determined by the
commission.
(b) Application.--The commission shall develop an
application for registration under subsection (a) and may charge
a reasonable registration fee.
Section 3. Section 2807(e) of Title 66 is amended and the
section is amended by adding subsections to read:
§ 2807. Duties of electric distribution companies.
* * *
(e) Obligation to serve.--[An electric distribution
company's] A default service provider's obligation to provide
electric generation supply service following [implementation of
restructuring and the choice of alternative generation by a
customer] the expiration of a generation rate cap specified
under section 2804(4) (relating to standards for restructuring
of electric industry) or a restructuring plan under section
2806(f) (relating to implementation, pilot programs and
performance-based rates) is revised as follows:
(1) While an electric distribution company collects
either a competitive transition charge or an intangible
transition charge or until 100% of its customers have choice,
whichever is longer, the electric distribution company shall
continue to have the full obligation to serve, including the
connection of customers, the delivery of electric energy and
the production or acquisition of electric energy for
customers.
[(2) At the end of the transition period, the commission
shall promulgate regulations to define the electric
distribution company's obligation to connect and deliver and
acquire electricity under paragraph (3) that will exist at
the end of the phase-in period.
(3) If a customer contracts for electric energy and it
is not delivered or if a customer does not choose an
alternative electric generation supplier, the electric
distribution company or commission-approved alternative
supplier shall acquire electric energy at prevailing market
prices to serve that customer and shall recover fully all
reasonable costs.]
(3.1) Following the expiration of an electric
distribution company's obligation to provide electric
generation supply service to retail customers at capped
rates, if a customer contracts for electric generation supply
service and the chosen electric generation supplier does not
provide the service or if a customer does not choose an
alternative electric generation supplier, the default service
provider shall provide electric generation supply service to
that customer pursuant to a commission-approved competitive
procurement plan. The electric power acquired shall be
procured through competitive procurement processes and shall
include one or more of the following:
(i) Auctions.
(ii) Requests for proposal.
(iii) Bilateral agreements entered into at the sole
discretion of the default service provider which shall be
at prices which are:
(A) no greater than the cost of obtaining
generation under comparable terms in the wholesale
market, as determined by the commission at the time
of execution of the contract; or
(B) consistent with a commission-approved
competition procurement process. Any agreement
between affiliated parties shall be subject to review
and approval of the commission under Chapter 21
(relating to relations with affiliated interests). In
no case shall the cost of obtaining generation from
any affiliated interest be greater than the cost of
obtaining generation under comparable terms in the
wholesale market at the time of execution of the
contract.
(3.2) The electric power procured pursuant to paragraph
(3.1) shall include a prudent mix of the following:
(i) Spot market purchases.
(ii) Short-term contracts.
(iii) Long-term purchase contracts, entered into as
a result of an auction, request for proposal or bilateral
contract that is free of undue influence, duress or
favoritism, of more than four and not more than 20 years.
The default service provider shall have sole discretion
to determine the source and fuel type. Long-term purchase
contracts under this subparagraph may not constitute more
than 25% of the default service provider's projected
default service load unless the commission, after a
hearing, determines for good cause that a greater portion
of load is necessary to achieve least cost procurement.
This subparagraph shall not apply to contracts executed
under paragraph (5).
(3.3) The commission may determine that a contract is
required to be extended for a longer term of up to 20 years,
if the extension is necessary to ensure adequate and reliable
service at least cost to customers over time.
(3.4) The prudent mix of contracts entered into pursuant
to paragraphs (3.2) and (3.3) shall be designed to ensure:
(i) Adequate and reliable service.
(ii) The least cost to customers over time.
(iii) Compliance with the requirements of paragraph
(3.1).
(3.5) Except as set forth in paragraph (5)(ii), the
provisions of this section shall apply to any type of energy
purchased by a default service provider to provide electric
generation supply service, including energy or alternative
energy portfolio standards credits required to be purchased
under the act of November 30, 2004 (P.L.1672, No.213), known
as the Alternative Energy Portfolio Standards Act. The
commission shall apply paragraph (3.4) to comparable types of
energy sources.
(3.6) The default service provider shall file a plan for
competitive procurement with the commission and obtain
commission approval of the plan considering the standards in
paragraphs (3.1), (3.2), (3.3) and (3.4) before the
competitive process is implemented. The commission shall hold
hearings as necessary on the proposed plan. If the commission
fails to issue a final order on the plan within nine months
of the date that the plan is filed, the plan shall be deemed
to be approved and the default service provider may implement
the plan as filed. Costs incurred through an approved
competitive procurement plan shall be deemed to be the least
cost over time as required under paragraph (3.4)(ii).
(3.7) At the time the commission evaluates the plan and
prior to approval, in determining if the default electric
service provider's plan obtains generation supply at the
least cost, the commission shall consider the default service
provider's obligation to provide adequate and reliable
service to customers and that the default service provider
has obtained a prudent mix of contracts to obtain least cost
on a long-term, short-term and spot market basis and shall
make specific findings which shall include the following:
(i) The default service provider's plan includes
prudent steps necessary to negotiate favorable generation
supply contracts.
(ii) The default service provider's plan includes
prudent steps necessary to obtain least cost generation
supply contracts on a long-term, short-term and spot
market basis.
(iii) Neither the default service provider nor its
affiliated interest has withheld from the market any
generation supply in a manner that violates Federal law.
(3.8) Notwithstanding sections 508 (relating to power of
the commission to vary, reform and revise contracts) and 2102
(relating to approval of contracts with affiliated
interests), the commission may modify contracts or disallow
costs only when the party seeking recovery of the costs of a
procurement plan is, after hearing, found to be at fault for
the following:
(i) not complying with the commission-approved
procurement plan; or
(ii) the commission of fraud, collusion or market
manipulation with regard to these contracts.
(3.9) The default service provider shall have the right
to recover on a full and current basis, pursuant to a
reconcilable automatic adjustment clause under section 1307
(relating to sliding scale of rates; adjustments), all
reasonable costs incurred under this section and a
commission-approved competitive procurement plan.
(4) If a customer that chooses an alternative supplier
and subsequently desires to return to the local distribution
company for generation service, the local distribution
company shall treat that customer exactly as it would any new
applicant for energy service.
(5) (i) Notwithstanding paragraph [(3)] (3.1), the
electric distribution company or commission-approved
alternative supplier may, in its sole discretion, offer
large customers with a peak demand of 15 megawatts or
greater at one meter at a location in its service
territory any negotiated rate for service at all of the
customers' locations within the service territory for any
duration agreed upon by the electric distribution company
or commission-approved alternative supplier and the large
customer. The commission shall permit, but shall not
require, an electric distribution company or commission-
approved alternative supplier to provide service to large
customers under this paragraph. Contract rates entered
into under this paragraph shall be subject to review by
the commission in order to ensure that all costs related
to the rates are borne by the parties to the contract and
that no costs related to the rates are borne by other
customers or customer classes. If no costs related to the
rates are borne by other customers or customer classes,
the commission shall approve the contract within 90 days
of its filing, or it shall be deemed approved by
operation of law upon expiration of the 90 days.
Information submitted under this paragraph shall be
subject to the commission's procedures for the filing of
confidential and proprietary information.
(ii) For purposes of providing service under this
paragraph to customers with a peak demand of 20 megawatts
or greater at one meter at a location within that
distribution company's service territory, an electric
distribution company that has completed its restructuring
transition period as of the effective date of this
paragraph may, in its sole discretion, acquire an
interest in a generation facility or construct a
generation facility specifically to meet the energy
requirements of the customers, including the electric
requirements of the customers' other billing locations
within its service territory. The electric distribution
company must commence construction of the generation
facility or contract to acquire the generation interest
within three years after the effective date of this
paragraph, except that the electric distribution company
may add to the generation facilities it commenced
construction or contracted to acquire after this three-
year period to serve additional load of customers for
whom it commenced construction or contracted to acquire
generation within three years. Nothing in this paragraph
requires or authorizes the commission to require an
electric distribution company to commence construction or
acquire an interest in a generation facility. The
electric distribution company's interest in the
generation facility it built or contracted to acquire
shall be no larger than necessary to meet peak demand of
customers served under this subparagraph. During times
when the customer's demand is less than the electric
distribution company's generation interest, the electric
distribution company may sell excess power on the
wholesale market. At no time shall the costs associated
with the generating facility interests be included in
rate base or otherwise reflected in rates. The generation
facility interests shall not be commission-regulated
assets.
(6) A default service plan approved by the commission
prior to the effective date of this section shall remain in
effect through its approved term. At its sole discretion, the
default service provider may propose amendments to its
approved plan that are consistent with this section, and the
commission shall issue a decision whether to approve or
disapprove the proposed amendments within nine months of the
date that the amendments are filed. If the commission fails
to issue a final order within nine months, the amendments
shall be deemed to be approved and the default service
provider may implement the amendments as filed.
(7) The default service provider shall offer residential
and small business customers a generation supply service rate
that shall change no more frequently than on a quarterly
basis. All default service rates shall be reviewed by the
commission to ensure that the costs of providing service to
each customer class are not subsidized by any other class.
(f) Smart meter technology and time of use rates.--
(1) Within nine months after the effective date of this
paragraph, electric distribution companies shall file a smart
meter technology procurement and installation plan with the
commission for approval. The plan shall describe the smart
meter technologies the electric distribution company proposes
to install in accordance with paragraph (2).
(2) Electric distribution companies shall furnish smart
meter technology as follows:
(i) Upon request from a customer that agrees to pay
the cost of the smart meter at the time of the request.
(ii) In new building construction.
(iii) In accordance with a depreciation schedule not
to exceed 15 years.
(3) Electric distribution companies shall, with customer
consent, make available direct meter access and electronic
access to customer meter data to third parties, including
electric generation suppliers and providers of conservation
and load management services.
(4) In no event shall lost or decreased revenues by an
electric distribution company due to reduced electricity
consumption or shifting energy demand be considered any of
the following:
(i) A cost of smart meter technology recoverable
under a reconcilable automatic adjustment clause under
section 1307(b), except that decreased revenues and
reduced energy consumption may be reflected in the
revenue and sales data used to calculate rates in a
distribution rate base rate proceeding filed under
section 1308 (relating to voluntary changes in rates).
(ii) A recoverable cost.
(5) By January 1, 2010, or at the end of the applicable
generation rate cap period, whichever is later, a default
service provider shall submit to the commission one or more
proposed time-of-use rates and real-time price plans. The
commission shall approve or modify the time-of-use rates and
real-time price plan within six months of submittal. The
default service provider shall offer the time-of-use rates
and real-time price plan to all customers that have been
provided with smart meter technology under paragraph
(2)(iii). Residential or commercial customers may elect to
participate in time-of-use rates or real-time pricing. The
default service provider shall submit an annual report to the
price programs and the efficacy of the programs in affecting
energy demand and consumption and the effect on wholesale
market prices.
(6) The provisions of this subsection shall not apply to
an electric distribution company with 100,000 or fewer
customers.
(7) An electric distribution company may recover
reasonable and prudent costs of providing smart meter
technology under paragraph (2)(ii) and (iii), as determined
by the commission. This paragraph includes annual
depreciation and capital costs over the life of the smart
meter technology and the cost of any system upgrades that the
electric distribution company may require to enable the use
of the smart meter technology which are incurred after the
effective date of this paragraph, less operating and capital
cost savings realized by the electric distribution company
from the installation and use of the smart meter technology.
Smart meter technology shall be deemed to be a new service
offered for the first time under section 2804(4)(vi). An
electric distribution company may recover smart meter
technology costs:
(i) through base rates, including a deferral for
future base rate recovery of current basis with carrying
charge as determined by the commission; or
(ii) on a full and current basis through a
reconcilable automatic adjustment clause under section
1307.
(g) Definition.--As used in this section, the term "smart
meter technology" means technology, including metering
technology and network communications technology capable of
bidirectional communication, that records electricity usage on
at least an hourly basis, including related electric
distribution system upgrades to enable the technology. The
technology shall provide customers with direct access to and use
of price and consumption information. The technology shall also:
(1) Directly provide customers with information on their
hourly consumption.
(2) Enable time-of-use rates and real-time price
programs.
(3) Effectively support the automatic control of the
customer's electricity consumption by one or more of the
following as selected by the customer:
(i) the customer;
(ii) the customer's utility; or
(iii) a third party engaged by the customer or the
customer's utility.
Section 4. Section 2811 of Title 66 is amended by adding a
subsection to read:
§ 2811. Market power remediation.
* * *
(e.1) Market misconduct.--
(1) If an electric distribution company or any of its
affiliated companies or any company that an electric
distribution company has purchased generation from is found
guilty of market manipulation, exercising market power or
collusion by the Federal Energy Regulatory Commission or any
Federal or State court or, if an electric distribution
company or any one of its affiliated companies or any company
that an electric distribution company has purchased
generation from settles a claim of market manipulation,
exercising market power or collusion that is brought by a
regional transmission operator's market monitoring unit, the
Federal Energy Regulatory Commission or another entity, the
commission:
(i) Shall direct the electric distribution company
to take any and all reasonable action to quantify the
effect of the market misconduct upon Pennsylvania
ratepayers.
(ii) Following public hearing on the matter and a
finding of public interest, may direct the electric
distribution company to take any and all reasonable legal
action, including the filing of a lawsuit as may be
necessary, to recover the quantified damages which shall
be used to recompense Pennsylvania ratepayers affected by
the market misconduct.
(2) If the electric distribution company fails to pursue
reasonable action to quantify or seek recovery of damages for
Pennsylvania ratepayers affected by market manipulation, the
exercise of market power or collusion, the commission is
authorized, following notice and an opportunity of the
electric distribution company to comply or contest, to assess
a civil penalty, which shall not be recovered in rates, of
not more than $10,000 per day for failure or neglect to obey
an order of the commission, the continuance of the failure or
neglect being a separate offense.
(3) Any monetary damages recovered by the electric
distribution company shall be paid to affected Pennsylvania
ratepayers in the form of a credit to their electric bills or
as refunds.
(4) The provisions of this subsection shall be held to
be in addition to and not in substitution for or limitation
of any other provision of this title.
* * *
Section 5. Title 66 is amended by adding sections to read:
§ 2813. Procurement of power.
Except as provided under the act of November 30, 2004
(P.L.1672, No.213), known as the Alternative Energy Portfolio
Standards Act, the commission may not order a default service
provider to procure power from a specific generation supplier,
from a specific generation fuel type or from new generation
only.
§ 2814. Additional alternative energy sources.
(a) Alternative energy sources.--The term "alternative
energy sources" as defined under section 2 of the act of
November 30, 2004 (P.L.1672, No.213), known as the Alternative
Energy Portfolio Standards Act, shall also include low-impact
hydropower consisting of any technology that produces electric
power and that harnesses the hydroelectric potential of moving
water impoundments if one of the following applies:
(1) (i) the hydropower source has a Federal Energy
Regulatory Commission licensed capacity of 21 megawatts
or less; and
(ii) the license for the hydropower source was
issued by the Federal Energy Regulatory Commission on or
prior to January 1, 1984, and held on July 1, 2007, in
whole or in part by a municipality located wholly within
this Commonwealth or by an electric cooperative
incorporated in this Commonwealth.
(2) The incremental hydroelectric development:
(i) does not adversely change existing impacts to
aquatic systems;
(ii) meets the certification standards established
by the Low Impact Hydropower Institute and American
Rivers, Inc., or their successors;
(iii) provides an adequate water flow for protection
of aquatic life and for safe and effective fish passage;
(iv) protects against erosion; and
(v) protects cultural and historic resources.
(b) Biomass.--The term "biomass energy" as defined under
section 2 of the Alternative Energy Portfolio Standards Act
shall also include the generation of electricity utilizing by-
products of the pulping process and wood manufacturing process,
including bark, wood chips, sawdust and lignins in spent pulping
liquors. Electricity from biomass energy under this subsection
generated inside this Commonwealth shall be eligible as a Tier I
alternative energy source. Electricity from biomass energy under
this subsection generated outside this Commonwealth shall be
eligible as a Tier II alternative energy source.
(c) Increase in Tier I.--The commission shall at least
quarterly increase the percentage share of Tier I alternative
energy sources required to be sold by an electric distribution
company or electric generation supplier under section 3(b)(1) of
the Alternative Energy Portfolio Standards Act to reflect any
new biomass energy or low-impact hydropower resources that
qualify as a Tier I alternative energy source under this
section. No new resource qualifying as biomass energy or low-
impact hydropower under this section shall be eligible to
generate Tier I alternative energy credits until the commission
has increased the percentage share of Tier I to reflect these
additional resources.
§ 2815. Carbon dioxide sequestration network.
(a) Assessment.--
(1) By April 1, 2009, the department shall complete a
study to identify suitable geological formations, including
sites within or in proximity to the Medina, Tuscarora or
Oriskany Sandstone formation for the location of a State
network.
(2) By June 1, 2009, the department, in consultation
with the commission, shall hire one or more independent
experts pursuant to 62 Pa.C.S. Pt. I (relating to
Commonwealth Procurement Code), as necessary, to conduct an
assessment of the following:
(i) Estimates of capital requirements and
expenditures necessary for the establishment, operation
and maintenance of a State network.
(ii) The collection of data to allow a safety
assessment.
(iii) An assessment of all potential risk to
individuals, property and the environment associated with
the geological sequestration of carbon dioxide in a State
network. The assessment, which shall be completed by
October 1, 2009, shall include an analysis of the
following:
(A) Existing Federal and State regulatory
standards for the storage of carbon dioxide.
(B) Factors contained in the United States
Environmental Protection Agency's Vulnerability
Evaluation Framework for Geologic Sequestration of
Carbon Dioxide (EPA 430-R-08-009, dated July 10,
2008).
(C) The different types of insurance, bonds,
other instruments and recommended levels of insurance
which should be carried by the operator of the State
network during the construction and operation of the
State network.
(D) The availability of commercial insurance.
(E) Models for the establishment of a
Commonwealth fund to provide protection against risk
to be funded by the operator.
(b) Transmission of study and assessment.--
(1) The department shall submit the study conducted
under subsection (a)(1) to the Governor, the chairman and
minority chairman of the Environmental Resources and Energy
Committee of the Senate, the chairman and minority chairman
of the Environmental Resources and Energy Committee of the
House of Representatives and the department no later than May
1, 2009.
(2) The independent expert shall submit the final
assessment under subsection (a)(2) to the Governor, the
chairman and minority chairman of the Environmental Resources
and Energy Committee of the Senate, the chairman and minority
chairman of the Environmental Resources and Energy Committee
of the House of Representatives and the department no later
than November 1, 2009.
(c) Department.--The following shall apply:
(1) The department shall review the assessment submitted
under subsection (a)(2) and all geologic sequestration
requirements associated with a State network, including
geological site characterization, modeling and verification
of fluid movement, corrective action, well construction,
operation, mechanical integrity testing, monitoring and site
closure.
(2) Following the review under paragraph (1), the
department may conduct a pilot project to determine the
viability of establishing a State network in this
Commonwealth.
(d) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection:
"Carbon dioxide sequestration." The storage of carbon
dioxide in a supercritical phase within a geological subsurface
formation such as a deep saline aquifer with suitable cap rock,
sealing faults and anticlines that includes compression,
dehydration and leak detection monitoring equipment and
pipelines to transport carbon dioxide captured by an advanced
coal combustion with limited carbon emissions plant to an
underground storage site. The term shall not include use of the
carbon dioxide for enhanced oil recovery.
"Department." The Department of Conservation and Natural
Resources of the Commonwealth.
"State network." A carbon dioxide sequestration network
established on lands owned by the Commonwealth, or lands on
which the Commonwealth has acquired the right to store carbon
dioxide, that have been designated by the Department of
Conservation and Natural Resources for the storage of carbon
dioxide.
Section 6. This act shall take effect in 30 days.
APPROVED--The 15th day of October, A. D. 2008.
EDWARD G. RENDELL
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