PA Lobbyists may agree that much of the time a “robust” debate leads to a healthy decision. Yet sometimes, when it comes to uber-technical and compartmentalized issues, these conversations can instead deliver severe tension with limited agreement. Both sides are left feeling chided and as if their positions are unheard and unappreciated. This could not be truer when it comes to energy politics in PA.
4 Bills Defined
In the present energy debate in Pennsylvania, there are four bills before the General Assembly that deal with various issues, but collectively all include language to propose change of some sort to our Alternative Energy Portfolio Standards (AEPS) program.
- House Bill 11 (HB11). Proposes to realign present alternative energy providers, adds a Tier 3 for nuclear and move other alternative energy sources from the two existing tiers.
- House Bill 531 (HB531). Proposes to establish a community solar program that targeted to provide benefits to low-income and middle-income customers.
- Senate Bill 510 (SB510). Proposes to realign present alternative energy providers, adds a Tier 3 for nuclear and move other alternative energy sources from the two existing tiers.
- Senate Bill 600 (SB600). Proposes to increase the alternative energy sources to 30 percent. (uncertain of the total context of the bill since it has not been posted 4/17/2019)
Let’s Talk Tiers
As you note above at least two of the four bills (yet to know for certain on Bill 600) mention the AEPS’s defined Tier Structure and propose adding a third Tier to the current program in order to make a special accommodation for nuclear power.
Current Tiers within the program are such:
In Tier 1:
- Solar (photovoltaic and thermal)
- Wind power
- Low Impact hydropower
- Biologically derived methane gas
- Fuel cells
- Geothermal energy
- Biomass energy
- Coal Mine Methane
In Tier 2:
- Waste coal
- Distributed generation system
- Demand side management
- Large-scale hydropower
- Municipal solid Waste
- Generation of electricity pulp related sources
A Bit of History
The standards for this program and the currently outlined tiers were adopted in 2004 in Act 213. The Act identified other sources of non-fossil fuel such as solar (photovoltaic and thermal), wind power, hydropower, geothermal energy and biomass. The Act was designed to promote increased capacity and delivery of these energy sources and provide incentives through Alternative Energy Credits and Solar Renewable Energy Credits (specifically for both solar energy sources) for participation to achieve a whole source energy. Listed in Act 213 were the two tiers that exist today created to differentiate and prioritize the various alternative energy sources. This two-tiered approach allows for higher pays out for certain the more favored deliverables.
Who Gets the Credit?
Let’s get back to the two incentive opportunities:
Alternative Energy Credits (RECs) and Solar Renewable Energy Credits (SRECs).
Both RECs and SRECs are tradable instruments that are used to establish, verify and monitor compliance in the Act; this trading program is operated by a third-party vendor. These two incentitives are paid out by the Electric Distribution Company (EDC) to the alternative energy provider.
In each EDC’s alternative energy portfolio are requirements/goals to meet a certain percentage of its delivered electricity in alternative energy; presently it is 8.5 percent. The EDC may design and deliver its own alternative energy source or pay out credits (RECs and SRECs-that can be banked and sold at any time up to one year of date of payment) to other alternative energy provider to meets its alternative energy portfolio (AEP).
Tier 1 energy sources receive higher credits/payouts as compared to Tier 2. The higher benefited credits in Tier 1 are designed to incent the more desired alternative energy delivery systems.
3 Certainties to Note
- Each of the proposed legislation will change the AEPS and restructure incentives for alternative energy sources within the tiers; thus, rewriting Act 213 and changing the shape of its current impact.
- Nuclear energy added to the AEPs, will cost near or exceed $500 million annually for at least six years – potentially increasing PA ratepayer costs.
- The overall percentage on alternative energy delivery will increase from the present 8.5% to a new legislated percentage that will be higher.
In conclusion, for the next several weeks, there will be challenging, and likely enthusiastic, debates attempting to hammer out language with the goal of a final legislative solution. While we do not have a crystal ball, we expect it will be a moving target with an uncertain result, as we actively participate in the conversation on behalf of a number of stakeholders in the industry.
Our desire will be that the “robust” discussion will yield meaningful and positively impactful results.