2019D04315 04315PWK:EJH 04/0249 #66

AN ACT

I 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,”
B further providing for definitions, for alternative energy
9 portfolio standards, for portfolio requirements in other
10 states, for health and safety standards and for interagency
n responsibilities; and providing for Tier III alternative
12 energy sources credit program and for capacity payments to
13 alternative energy sources.
14 The General Assembly of the Commonwealth of Pennsylvania.

15 hereby enacts as follows:

16 Section 1. The definitions of “alternative energy credit,”

17 “alternative energy sources” and “reporting period” in section 2

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

19 Alternative Energy Portfolio Standards Act, are amended and the

20 section is amended by adding definitions to read:

21 Section 2. Definitions.

22 The following words and phrases when used in this act shall

23 have the meanings given to them in this section unless the

2019D04315 — 1 —
 1 context clearly indicates otherwise:

2 “Alternative energy credit.” As follows:

3 (1) A tradable instrument that is used to establish,

4 verify and monitor compliance with this act.

5 ±21. A unit of credit shall equal one megawatt hour of

6 electricity from an alternative energy source[.] and shall

7 only be used to satisfy the requirement to purchase one of

S the following:

9 Ci) Tier I;

10 (ii) Tier II; or

11 (iii) Tier III alternative energy credits.

12 ±2J The alternative energy credit shall remain the

13 property of the alternative energy system until the

14 alternative energy credit is voluntarily transferred by the

15 alternative energy system.

* * *
16

17 “Alternative energy sources.” The term shall include the

18 following existing and new sources for the production of

19 electricity:

20 (1) Solar photovoltaic or other solar electric energy.

21 (2) Solar thermal energy.

22 (3) Wind power.

23 (4) Large—scale hydropower, which shall mean the

24 production of electric power by harnessing the hydroelectric

25 potential of moving water impoundments, including pumped

26 storage that does not meet the requirements of low—impact

27 hydropower under paragraph (5)

28 (5) Low-impact hydropower consisting of any technology

29 that produces electric power and that harnesses the

30 hydroelectric potential of moving water impoundments,

2019D04315 — 2 —
 1 provided such incremental hydroelectric development:

2 (i) does not adversely change existing impacts to

3 aquatic systems;

4 (ii) meets the certification standards established

S by the Low Impact Hydropower Institute and American

6 Rivers, Inc., or their successors;

7 (iii) provides an adequate water flow for protection

8 of aquatic life and for safe and effective fish passage;

9 (iv) protects against erosion; and

10 (v) protects cultural and historic resources.

11 (6) Geothermal energy, which shall mean electricity

12 produced by extracting hot water or steam from geothermal

13 reserves in the earth’s crust and supplied to steam turbines

14 that drive generators to produce electricity.

15 (7) Biomass energy, which shall mean the generation of

16 electricity utilizing the following:

17 (i) organic material from a plant that is grown for

18 the purpose of being used to produce electricity or is

19 protected by the Federal Conservation Reserve Program

20 (CRP) and provided further that crop production on CRP

21 lands does not prevent achievement of the water quality

22 protection, soil erosion prevention or wildlife

23 enhancement purpcses for which the land was primarily set

24 aside; or

25 (ii) any solid nonhazardous, cellulosic waste

26 material that is segregated from other waste materials,

27 such as waste pallets, crates and landscape or right—of—

28 way tree trirmnings or agricultural sources, including

29 orchard tree crops, vineyards, grain, legumes, sugar and
30 other crop by-products or residues.

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 1 (8) Biologically derived methane gas, which shall

2 include methane from the anaerobic digestion of organic

3 materials from yard waste, such as grass clippings and

4 leaves, food waste, animal waste and sewage sludge. The term
S also includes landfill methane gas.

6 (9) Fuel cells, which shall mean any electrochemical

7 device that converts chemical energy in a hydrogen—rich fuel

8 directly into electricity, heat and water without combustion.

9 (10) Waste coal, which shall include the combustion of

10 waste coal in facilities in which the waste coal was disposed

11 or abandoned prior to July 31, 1982, or disposed of

12 thereafter in a permitted coal refuse disposal site

13 regardless of when disposed of, and used to generate

14 electricity, or such other waste coal combustion meeting

15 alternate eligibility requirements established by regulation.

16 Facilities combusting waste coal shall use at a minimum a

17 combined fluidized bed boiler and be outfitted with a

18 limestone injection system and a fabric filter particulate

19 removal system. Alternative energy credits shall be

20 calculated based upon the proportion of waste coal utilized

21 to produce electricity at the facility.

22 (11) Coal mine methane, which shall mean methane gas

23 emitting from abandoned or working coal mines.

24 (12) Demand—side management consisting of the management

25 of customer consumption of electricity or the demand for

26 electricity through the implementation of:

27 (U energy efficiency technologies, management

28 practices or other strategies in residential, commercial,

29 institutional or government customers that reduce

30 electricity consumption by those customers;

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 1 (ii) load management or demand response

2 technologies, management practices or other strategies in

3 residential, commercial, industrial, institutional and

4 government customers that shift electric load from

5 periods of higher demand to periods of lower demand; or

6 (iii) industrial by—product technologies consisting

7 of the use of a by—product from an industrial process,

8 including the reuse of energy from exhaust gases or other

9 manufacturing by—products that are used in the direct

10 production of electricity at the facility of a customer.

11 (13) Distributed generation system, which shall mean the

12 small—scale power generation of electricity and useful

13 thermal energy.

14 (14) Energy from nuclear fission used to generate

15 electricity.

16 * *

17 “Load serving entity.” An entity or the duly designated

18 agent of an entity, including a load aggregator or power

19 marketer, that has been granted the authority or has an

20 obligation pursuant to State or local law, regulation or

21 franchise to sell electric energy to end—users within the area

22 of the regional transmission organization and is currently

23 serving end-users within that area with electric energy. The

24 term shall include any end—use customer that aualifies under

25 State regulatory rules or a utility retail tariff to manage

26 directly its own supply of electric energy and use of

27 transmission and ancillary services.

* * *
28

29 “Reporting period or reporting year.” The 12-month period

30 from June 1 through May 31. A reporting year shall be numbered

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 1 “Tier III price floor.” The figure, equal to the oroduct of
2 50% and the weighted average once of credits that were retired

3 for Tier I compliance for the reoorting year ending May 31,

4 2017, as reflected in the commission’s 2017 Annual Report of

5 Alternative Energy Portfolio Standards Act of 2004.

6 “Tier III program period.” The period commencing at the

7 beginning of the 14th reporting year of the alternative energy

B credit prooram established under this act or June 1, 2019,

9 whichever is sooner, and each year thereafter.
* * *
10

11 Section 2. Section 3(a), (b) (3), (f), (g) and (h) of the act
12 are amended and the section is amended by adding a subsection to

13 read:

14 Section 3. Mternative energy portfolio standards.

15 (a) General compliance and cost recovery.-—

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

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

18 year thereafter, the electric energy sold by an electric

19 distribution company or electric generation supplier to

20 retail electric customers in this Commonwealth shall be

21 comprised of electricity generated from alternative energy

22 sources and in the percentage amounts as described under

23 subsections (b) and (c)

24 (2) Electric distribution companies and electric

25 generation suppliers shall satisfy both requirements set

26 forth in subsections (b) and (c), provided, however, that an

27 electric distribution company or an electric generation

28 supplier shall be excused from its obligations under this

29 section to the extent that the commission determines that

30 force majeure exists.

2019D04315 — 7 —
 1 (2.1) Beainning June 1, 2019, and each year thereafter,
2 Tier III alternative eneroy credits shall be purchased by

3 electric distribution companies under subsection (c.1),

4 except that an electric distribution company or an electric

5 generation supplier shall be excused from its obliqation

6 under this section to the extent that the commission

7 determines that force ma-eure exists.

8 (3) All costs for:

9 (i) the purchase of electricity generated from Tier

10 I and Tier II alternative energy sources, including the

11 costs of the regional transmission organization, in
12 excess of the regional transmission organization real—

13 time locational marginal pricing, or its successor, at

14 the delivery point of the alternative energy source for

15 the electrical production of the alternative energy

16 sources; [and]
17 (ii) payments for Tier I and Tier II alternative

18 energy credits[, in both cases] that are voluntarily

19 acquired by an electric distribution company during the

20 cost recovery period on behalf of its customers shall be

21 deferred as a regulatory asset by the electric

22 distribution company and fully recovered, with a return

23 on the unamortized balance, pursuant to an automatic

24 energy adjustment clause under 66 Pa.C.S. § 1307

25 (relating to sliding scale of rates; adjustments) as a

26 cost of generation supply under 66 Pa.C.S. § 2807

27 (relating to duties of electric distribution companies)

28 in the first year after the expiration of its cost—

29 recovery period. After the cost—recovery period, any

30 direct or indirect costs for the purchase by electric

2019D04315 — 8 —
 1 distribution companies of resources to conoly with this

2 section, including, but not limited to, the purchase of

3 electricity generated from Tier I and Tier II alternative

4 energy sources, payments for alternative energy credits,

5 cost of credits banked, payments to any third party

6 administrators for performance under this act and costs

7 levied by a regional transmission organization to ensure

S that Tier I and Tier II alternative energy sources are

9 reliable, shall be recovered on a full and current basis

10 pursuant to an automatic energy adjustment clause under

11 66 Pa.C.S. § 1307 as a cost of generation supply under 66

12 Pa.C.S. § 2807[.]; and

13 (iii) any direct and indirect costs incurred by

14 electric distribution companies to comply with subsection

15 (c.l) and sections 8.1 and 8.2, including. but not

16 limited to, the ourchase of Tier III alternative energy

17 credits shall be recovered on a full and current basis

18 pursuant to an automatic energy adjustment clause under

19 66 Pa.C.S. § 1307.

20 (b) Tier I and solar photovoltaic shares.——

* * *
21

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

23 reporting year, the commission shall undertake a review of

24 the compliance by electric distribution companies and

25 electric generation suppliers with the requirements of this

26 act. The review shall also include the status of alternative

27 energy technologies within this Commonwealth and the capacity

28 to add additional alternative energy resources. The

29 commission shall use the results of this review to recommend

30 to the General Assembly additional compliance goals beyond

2019004315 — 9 —
 1 year 15 for Tier I and Tier IT shares. The commission shall

2 work with the department in evaluating the future alternative

3 energy resource potential.

* * *
4

5 (c.1) Tier III share.——Subect to section 8.1(g) (2), during

6 the Tier III program period, each electric distribution company

7 shall purchase Tier III alternative energy credits egual to the

8 amount of credits available as determined by the commission

9 under section 8.1(d) (1). The obligations of an electric

10 distribution company under this subsection shall not be subiect

11 to the provisions of 66 Pa.C.S. § 2807(e) (3.5) or (3.7).

* * *
12

13 (f) Alternative compliance payment.——

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

15 program administrator shall provide a report to the

16 commission and to each covered electric distribution company

17 showing their status level of alternative energy acquisition.

18 (2) The commission shall conduct a review of each

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

20 (c.1) . If, after notice and hearing, the commission
21 determines that an electric distribution company or electric

22 generation supplier has failed to comply with subsections (b)

23 [and (c)j, (c) and (c.1), exceot as set forth in section

24 8.1(g) (2), the commission shall impose an alternative

25 compliance payment on that electric distribution company or

26 electric generation supplier.

27 (3) The alternative compliance payment, with the

28 exception of the solar photovoltaic share compliance

29 requirement set forth in subsection (b) (2) and the Tier III

30 share reguirement set forth in subsection (c.1), shall be $45

2019D04315 — 10 —
 1 times the number of additional alternative energy credits

2 needed in order to comply with subsection (b) or Cc)

-I (4) The alternative compliance payment for the solar

4 photovoltaic share shall be 200% of the average market value

5 of solar renewable energy credits sold during the reporting

6 period within the service region of the regional transmission

7 organization, including, where applicable, the levelized up—

8 front rebates received by sellers of solar renewable energy

9 credits in other jurisdictions in the PJM Interconnection,

10 L.L.C. transmission organization (PJM) or its successor.

11 (4.1) The alternative compliance payment for the Tier

12 III share shall be equal to twice the Tier III alternative

13 energy credit reporting period price for the applicable

reportino period times the number of additional alternative

15 energy credits needed to comply with subsection (c.1)

16 (5) The commission shall establish a process to provide
17 for, at least annually, a review of the alternative energy
18 market within this Commonwealth and the service territories

19 of the regional transmission organizations that manage the

20 transmission system in any part of this Commonwealth. The

21 commission will use the results of this study to identify any

22 needed changes to the cost associated with the alternative

23 compliance payment program. If the commission finds chat the

24 costs associated with the alternative compliance payment

25 program must be changed, the commission shall present these

26 findings to the Genera! Assembly for legislative enactment.

27 (g) Transfer to sustainable development funds.——

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

29 (relating to disposition, appropriation and disbursement of

30 assessments and fees) and 3315 (relating to disposition of

2019D04315 — 11 —
 1 fines and penalties) , alternative compliance payments imposed
2 pursuant to this act for failure to comoly with subsections

3 (b) and (c) shall be paid into Pennsylvania’s Sustainable

4 Energy Funds created under the commission’s restructuring

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

6 electric utility industry) . Alternative compliance payments
7 shall be paid into a special fund of the Pennsylvania

B Sustainable Energy Board, established by the commission under

9 Docket M—00031715, and made available to the Regional

10 sustainable Energy Funds under procedures and guidelines

11 approved by the Pennsylvania Energy Board.

12 (2) The alternative compliance payments for failure to

13 comply with subsections (b) and (c) shall be utilized solely

14 for projects that will increase the amount of electric energy

15 generated from alternative energy resources for purposes of

16 compliance with subsections (b) and (c)

17 (3) Alternative compliance payments imposed under this

18 act for failure to comply with subsection (c.1) shall be paid

19 as follows:

20 (i) fifty percent consistent with paragraphs (1) and

21 (2); and

22 (ii) fifty percent to the commission to distribute

23 to Tier III alternative energy sources that qualify as a

24 Tier III alternative energy source under section 8.1 for

25 Tier III alternative energy credits that were otherwise

26 not purchased due to the failure to comply with

27 subsection (c.1) in an amount egual to each source’s

29 pronortional amount of credits that were not purchased

29 durina that reporting year.

30 (h) Nonseverability.—-The provisions of subsection [(a)] jj

20l9D04315 — 12 —
 1 (1) , (2) , (3) (i) and (ii) are declared to be nonseverable. If
2 any provision of subsection [(a) is] (a) (1) , (2) , (3) (i) and
3 (ii) are held invalid, the remaining provisions of this act
4 shall be void.

5 Section 3. Sections 4 and 6 of the act are amended to read:

6 Section 4. Portfolio requirements in other states.

7 If an electric distribution [supplier] company or electric

8 generation [company] supplier provider sells electricity in any

9 other state and is subject to [renewable] alternative energy
10 portfolio requirements in that state, they shall list any such
11 requirement and shall indicate how it satisfied those

12 [renewable] alternative energy portfolio requirements. To

13 prevent double—counting, the electric distribution [supplier]

14 company or electric generation [company] supølier shall not

15 satisfy Pennsylvania’s alternative energy portfolio requirements

16 using alternative energy used to satisfy another state’s

17 portfolio requirements or alternative energy credits already

18 purchased by individuals, businesses or government bodies that

19 do not have a compliance obligation under this act unless the

20 individual, business or government body sells those credits to

21 the electric distribution company or electric generation

22 supplier. Energy derived from alternative energy sources inside

23 the geographical boundaries of this Commonwealth shall be

24 eligible to meet the compliance requirements under this act.

25 Energy derived from alternative energy sources located outside

26 the geographical boundaries of this Commonwealth but within the

27 service territory of a regional transmission organization that

28 manages the transmission system in any part of this Commonwealth

29 shall only be eligible to meet the compliance requirements of

30 electric distribution companies or electric generation suppliers

2019004315 — 13 —
 1 located within the service territory of the same regional

2 transmission organization. For purposes of compliance with this

3 act, alternative energy sources located in the PJM

4 Interconnection, L.L.C. regional transmission organization (PJN)

S or its successor service territory shall be eligible to fulfill

6 compliance obligations of all Pennsylvania electric distribution

7 companies and electric generation suppliers. Energy derived from

8 alternative energy sources located outside the service territory

9 of a regional transmission organization that manages the

10 transmission system in any part of this Coronwealth shall not

11 be eligible to meet the compliance requirements of this act.

12 Electric distribution companies and electric generation

13 suppliers shall document that this energy was not used to

14 satisfy another state’s [renewable] alternative energy portfolio

15 standards.

16 Section 6. Health and safety standards.

17 The department shall cooperate with the Department of Labor

18 and Industry as necessary in developing health and safety

19 standards, as needed, regarding facilities generating energy

20 from alternative energy sources. The department shall establish

21 appropriate and reasonable health and safety standards to ensure

22 uniform and proper compliance with this act by owners and

23 operators of facilities generating energy from alternative

24 energy sources as defined in this act. Alternative energy

25 sources fueled by nuclear fission shall continue to comply with

26 health and safety standards established by Federal regulatory

27 aaencies.

28 Section 4. Section 7 of the act is amended by adding a

29 subsection to read:

30 Section 7. Interagency responsibilities.

2019D04315 — 14 —
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 1 (ii) the carbon dioxide emissions would increase as

2 a result of electricity consumed in this Commonwealth;

3 and

4 (iii) the ability of Pennsylvania to maintain or

5 decrease existing levels of carbon monoxide, lead,
6 ground—level ozone, particulate matter, nitrogen oxide or

7 sulfur dioxide is reduced.

8 (3) On or after January 1, 2017, the alternative energy

9 source:

10 (i) regardless of the Tier III alternative energy

11 source’s location, did not receive tax exemptions,

12 deferrals, exclusions, allowances, payments, credits,

13 deductions or reimbursements from any other state

14 calculated in whole or in part using a metric that

15 provides value for emissions not produced by the

16 alternative energy source;

17 (ii) is not wholly owned by a municipal or

18 cooperative corporation or a group, association or

19 consortium of those corporations; and

20 (iii) did not at any point during the Tier III

21 program recover some or all of the capital or operating

22 costs of the resource through cost—based rates regulated

23 by a state.

24 (b) Qualification process.——The commission shall establish a

25 Tier III alternative energy source gualification process within

26 180 days of the effective date of this section. An alternative

27 energy source seeking to participate in the Tier III program

28 shall file written notice of at least all of the following:

29 (1) The source’s gualifications as a Tier III

30 alternative energy source.

2019004315 — 16 —
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 1 (1) The written notice required under subsection (b)

2 shall be filed with the commission no later than 270 days

3 after the start of either of the following:

4 (j) The first Tier III program period for Tier III

5 sources derived from nuclear fission.

6 (ii) Each Tier III reporting period after the first

7 Tier III program year for Tier III sources other than

8 Tier III sources derived from nuclear fission.

9 (2) The written notice shall be transmitted to the

10 Legislative Reference Bureau for publication in the

11 Pennsylvania Bulletin in the first available issue following

12 the filing of the written notice.

13 (3) Comments in response to the notice shall be filed

14 with the commission no later than 20 days after the

15 publication of the notice.

16 (4) Reply comments shall be filed with the commission

17 within 10 days of the close of the initial comment period.

18 (d) Availability of Tier III credits.——

19 (1) The commission shall determine the number of Tier III

20 credits available at the beginning of the first Tier III

21 program period as being equal to approximately 50% of the

22 total number of megawatt hours of electricity distributed by

23 electric distribution companies in this Commonwealth, net of

24 system losses, for the latest calendar year reported in the

25 Electric Power Outlook edition published on the effective

26 date of this paragraph.

27 (2) The commission shall then determine, at the beginning

28 of each Tier III reporting year, the amount of Tier III

29 credits available to Tier III alternative energy sources

30 derived from nuclear fission by setting the Tier III capacity

2019004315 — 18 —
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 1 Commonwealth, then each Tier III alternative energy

2 source shall be paid for the source’s prorated share of

3 Tier III credits. Tier III alternative energy credits

4 available that exceed the sum of the Tier III shares for

5 all electric distribution companies in this Commonwealth

6 shall be retired. A Tier III alternative energy source’s

7 prorated share shall be a percentage egual to the sum of

8 the Tier III shares for all electric distribution

9 companies in this Commonwealth divided by the sum of Tier

10 III alternative energy credits available from all Tier

11 III alternative energy sources.

12 (3) Credits purchased by an electric distribution

13 company may not be transferred, sold or assigned to any other

14 entity and may not be utilized to fulfill future obligations

15 under this act.

16 (h) Suspension of generation of a Tier III alternative

17 energy source.—-A designated Tier III alternative energy source

18 shall be excused from the source’s commitment to generate

19 electricity for the time period committed to under subsection

20 (b) (4) and shall no longer receive Tier III alternative energy

21 credits if one of the following occurs:

22 (1) The designated Tier III alternative energy source

23 suspends or ceases generation, despite the designated Tier

24 III alternative energy source’s reasonable efforts to

25 continue generation, due to an event beyond its control. The

26 designated Tier III alternative energy source shall no longer

27 be excused from performance, and payment of Tier III

28 alternative credits shall resume, after conclusion of such an

29 event.

30 (2) The Commonwealth enacts a new law imposing a

2019D04315 — 21 —
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 1 the amount received under subsection (g) (2) and section
2 3(g) (3) (ii).

3 (ii) If the Tier III alternative energy source

4 ceases generation following the second reporting period,

5 80% of the amount received under subsection (g) (2) and

6 section 3(g) (3) (ii).

7 (iii) If the Tier III alternative energy source

8 ceases generation following the third reporting period,

9 60% of the amount received under subsection (g) (2) and

10 section 3(g) (3) (ii).

11 (iv) If the Tier III alternative energy source

12 ceases generation following the fourth reporting period,

13 40% of the amount received under subsection (g) (2) and

14 section 3(g) (3) (ii)

15 (v) If the Tier III alternative energy source ceases

16 generation following the fifth reporting period, 20% of

17 the amount received under subsection (g) (2) and section

18 3(g) (3) (ii).

19 (3) Nothing in this subsection shall be construed to

20 reguire an entity, other than the malority owner, that has an

21 ownership interest that is less than 15% in a Tier III

22 alternative energy source to refund payments received under

23 subsection (g) (2) or section 3(g) (3) (ii).

24 (4) For purposes of this subsection, if the ownership of

25 a Tier III alternative energy source changes during the term

26 of a six—year comitment to participate in the Tier III

27 program, the obligation of the former owner to refund

28 payments received under subsection (g) (2) and section 3(g) (3)
29 (ii) shall be transferred by covenant to the new owner.

30 (5) For the purposes of the calculation of the refund

2019D043l5 — 23 —
 1 under paragraph (2) the amount owed by a Tier III

2 alternative energy source owner shall be calculated based

3 solely on the amount of credits produced by each Tier III

4 alternative energy source and may not apply to additional

5 Tier III alternative energy sources owned by the same entity

6 and participating in the Tier III program.

7 (6) The commission has the following powers:

8 (i) Issue an order requiring the Tier III

9 alternative energy source to refund the amount it owes

10 under this subsection. This subparagraph includes:

11 (A) stating the exact amount to be refunded as

12 directed by the commission;

13 (B) setting the reasonable time within which

14 payments shall be made; and

15 (C) making findings upon pertinent questions of

16 fact.

17 (ii) Provide a mechanism for a return of the refund

18 from the Tier III alternative energy source to each

19 electric distribution company for purposes of

20 distribution to its customers. This subparagraph

21 includes:

22 (A) determining the amount to be returned to an

23 electric distribution company’s proportional share of

24 the total payments made by all electric distribution

25 companies for the purchase of Tier III credits for

26 the reporting periods during its most recent time

27 period committed to under subsection (b) (4) ; and

28 (B) determining the amount to be refunded to the

29 electric distribution company’s customers as a result

30 of the cost recovery under section 3(a) (3) (iii) for

2019004315 — 24 —
 1 the customer costs associated with the reporting

2 periods during the Tier III alternative energy

3 source’s most recent time period committed to under

4 subsection (b) (4)

5 Li) Tier III alternative energy source audits.——

6 (1) The commission shall, annually or on a periodic

7 basis as determined by the commission, conduct an audit of

8 each Tier III alternative energy source participating in the

9 Tier III program. Any audit directed by the commission shall

10 commence 180 days following any payments to a Tier III

11 alternative energy source under subsection (q) (2) . The

12 commission shall solicit input from the Department of

13 Environmental Protection as needed in the conduct of the

14 audit. The commission audit shall confirm through the audit

15 process whether each alternative energy source meets all of

16 the qualifying reguirements under subsections (a) and (b)

17 The subject areas of the audit shall include all of the

18 following:

19 (i) Whether the alternative energy source is

20 interconnected with the regional transmission

21 organization.

22 (ii) The effect of cessation of generation of

23 electricity or failure to operate on air emissions

24 standards as contained in subsection (a) (2)

25 (iii) Confirmation that the alternative energy

26 source did not, regardless of the alternative energy

27 source’s location, receive tax exemptions, deferrals,

28 exclusions, allowances, payments, credits, deductions or

29 reimbursements from any other state calculated in whole

30 or in part using a metric that provides value for

2019D04315 — 25 —
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 1 House of Representatives;

2 (iv) the chairperson and minority chairperson of the

3 Consumer Protection and Professional Licensure Committee

4 of the Senate; and

5 (v) the chairperson and minority chairperson of the

6 Consumer Affairs Committee of the House of

7 Representatives.

8 (k) Administrative expenses.——

9 (1) In addition to any assessments authorized by 66

10 Pa.C.S. § 510 (relating to assessment for regulatory expenses

11 upon public utilities) . the commission may impose an

12 assessment on the payments to Tier III alternative energy

13 sources.

14 (2) The assessment under paragraph (1) may not exceed 1%

15 of the value of all credits sold for each Tier III reporting

16 period for costs associated with the administration of the

17 Tier III program.

18 Section 8.2. Capacity payments to alternative energy sources.

19 (a) Election to participate in fixed resource reguirement

20 program.——If permitted by the Federal Energy Regulatory

21 Commission, the commission shall create and administer a program

22 in which alternative energy systems may opt to supply and be

23 paid for capacity through a means other than the centralized

24 base residual auction for capacity operated by the regional

25 transmission organization. As permitted by the Federal Energy

26 Regulatory Commission, the program shall include:

27 (1) establishing a process through which an alternative

28 energy system is permitted to notify the regional

29 transmission organization, consistent with reguirements

30 approved by the Federal Energy Regulatory Commission, of the

20l9D04315 — 27 —
 1 decision to opt out of the centralized base residual auction

2 for capacity and sell its capacity through other mechanisms;

3 (2) providing any determinations reguired by the

4 regional transmission organization with respect to such

5 alternative energy systems, including a calculation of the

6 commensurate amount of customer load that will not

7 participate in the centralized base residual auction for

B capacity as a result of the alternative energy system’s

9 decision to sell its capacity though other mechanisms, which,

10 if consistent with reguirements approved by the Federal

11 Energy Regulatory Commission, shall be calculated pro rata

12 across all load serving entities in this Commonwealth; and

13 (3) subiect to approval by the Federal Energy Regulatory

14 Commission, the amount paid for the capacity of each such

15 alternative energy system that opts out of the regional

16 transmission organization centralized base residual auction

17 for capacity for each applicable reporting period shall be

18 egual to the generation capacity of the system as determined

19 in accordance with regional transmission organization

20 reguirements multiplied by the locational delivery area price

21 established by the regional transmission organization in the

22 base residual auction for capacity, or as determined in

23 accordance with a successor mechanism approved by the Federal

24 Energy Regulatory Commission, for the location in which the

25 system is located.

26 (b) Payments.——If the regional transmission organization

27 does not operate a settlement mechanism under which alternative

28 energy systems that make elections under subsection (a) can

29 receive payments from regional transmission organization load

30 serving entities, the commission shall calculate the total

2019D04315 — 28 —
 1 amount due to each system under subsection (a) (3) and notify
2 each electric distribution company of its share of that amount

3 based upon the electric distribution company’s pro rata share of

4 the electric energy sold to retail electric customers in this

5 Commonwealth during the applicable reporting period. Each

6 electric distribution company shall pay the amount to each

7 alternative energy system under subsection (a) (3) , as determined

8 by the commission.

9 (c) Timing.——The commission shall create the program under

10 subsections (a) and (b) within 180 days after the later to occur
11 of:

12 (1) the effective date of this subsection; or

13 (2) the date on which the regional transmission
14 organization rules that allow alternative energy systems to

15 opt out of the centralized base residual auction are accepted

16 or approved by the Federal Energy Regulatory Commission.

17 Section 6. This act shall take effect June 1, 2019, or

18 immediately, whichever is sooner.

2019D04315 — 29 —