Amendments to PA Alternative Energy Regulations, Now Under Review

By Ryan Hamilton

Next Thursday, May 19, Pennsylvania’s Independent Regulatory Review Commission (the “IRRC”) will consider significant amendments to the State’s Alternative Energy Portfolio Standards Act of 2004 (the “Act”). The amendments largely pertain to net metering, interconnection, and portfolio standard compliance provisions, as described in a final rulemaking issued by the PA Public Utility Commission (the “Commission”) on February 11, 2016 (passed by a vote of 3-2). The Commission primarily justifies these revisions as required to ensure default electric service rates are provided at the least cost to customers. These same changes, however, are opposed by renewable energy industry supporters on the basis they are unjustified by data and likely to decrease renewable energy use across the State.

The AEPS Act represents Pennsylvania’s commitment to increasing clean and renewable energy use within the Commonwealth. To do this, the Act establishes escalating targets for the percentage of electricity that must be derived from clean energy sources such as solar, wind, hydro, landfill gas, and others. The obligation falls to electric suppliers to purchase energy generated from these sources. In 2007 electric suppliers were required to obtain 5.7% of electricity from these sources and that percentage gradually increases to 18% by 2021. The Act also provides additional market incentives for encouraging the development of these renewable resources, such as net metering. Net metering requires that excess electricity produced by customer-generators (such as residential and commercial solar owners) will be credited back to those customer-generators at the full retail rate for all energy produced. The amendments currently under consideration by the IRRC, however, would alter the net metering rules in two very significant ways.

First, the Commission’s amendments propose to cap a customer-generator’s ability to obtain retail rates for excess generation at 200% of the customer-generator’s annual electric usage. The Commission argues this amendment is necessary to prohibit merchant-generators (who would not otherwise receive retail rates) from posing as customer-generators. The problem, however, is that the legislature has already clearly addressed this concern by placing a hard cap on net metered systems: 50 kW for residential systems and 3 MW for other customer service locations. Renewable energy advocates such as the Solar Unified Network of Western Pennsylvania claim the amendments will only complicate the process required to qualify for net metering and hinder the State’s efforts at meeting renewable energy goals. (view SUNWPA’s comments to IRRC, here). Further, Commission Chairman Gladys M. Brown, stated that because “the AEPS Act very precisely provides that customer generators may size up to 50 kw for residential systems and up to 3 or 5 MW for non-residential systems, this Commission commits legal error by imposing a different size limitation.” Next week, we will find out whether the IRRC agrees.

The second major proposed amendment would limit the ability of customer-generators to utilize virtual meter aggregation. Generally, a customer-generator will receive credits through net metering for electricity generated “behind the meter.” This most often means that electricity generation and electricity use occur at the same geographic location. Prior to these proposed amendments, however, the Act allowed for virtual meter aggregation, meaning that a customer-generator could generate electricity, place that electricity onto the grid, and receive credit for that generation at a separate location up to two miles away. This is important, especially for farmers who generate electricity by bio-digestion at one location but have a need for electricity to operate farm equipment at another location. It is also important for a solar owner with an electricity need at a location that is unsuitable for generation due to shading or other factors, but an ability to build a solar array at another nearby location. The amendments, however, propose requiring a pre-existing independent load (or historical electricity need) at both locations, in order to qualify for virtual meter aggregation. This amendment would severely limit the opportunities for customer-generators to take advantage of net metering and therefore would again hinder the State’s efforts at meeting renewable energy goals.

The IRRC is now tasked with determining whether the Commission has the statutory authority to promulgate these regulations, whether the proposed amendments conform to the intent of the legislature in enacting the AEPS Act, and whether the changes are based in the public interest. If you would like to submit your own comments to IRRC, you must do so at least 48 hours before the IRRC’s meeting.