NOTICES
Statewide Sustainable Energy Board
[33 Pa.B. 4263] Public Meeting held
August 7, 2003Commissioners Present: Terrance J. Fitzpatrick, Chairperson; Robert K. Bloom, Vice Chairperson; Aaron Wilson, Jr.; Glen R. Thomas; Kim Pizzingrilli
Statewide Sustainable Energy Board; Doc. No. M-00031715
Final Order By the Commission:
Background
By order entered on July 1, 1999, this Commission announced the creation of an autonomous Statewide board to provide oversight, guidance and technical assistance to the regional sustainable energy boards, which were established to assist in the management of the sustainable energy funds provided for in the electric restructuring proceedings.1 As we noted, the institution of these funds marked a significant step in establishing Pennsylvania as a National leader in the development of renewable and clean energy technologies.
Through a Tentative Order adopted on April 10, 2003, we sought to further define the role of the Statewide board, what we named the Pennsylvania Sustainable Energy Board (PASEB), to help ensure that Pennsylvania continues as a leader in the development of renewable and clean energy technologies. Specifically, we sought comment on numerous aspects of PASEB, including its composition, its duties and functions with respect to oversight of the regional funds and its role in developing a ''best business practices'' model for the regional funds. Comments were due on or before May 27, 2003. Reply comments were due on or before June 11, 2003.
The Commission received comments from the four regional funds. Although the comments were filed individually on behalf of each fund, we note that the comments were very similar in nature. We also received comments from the Eric Joseph Epstein, Lawrence G. Spielvogel, Inc. and Emanon Partners, LLC. Lawrence G. Spielvogel, Inc. filed reply comments as well.
Comments of the Regional Funds
One fund requests that the Office of Executive Director (OED) member on the Statewide board be a nonvoting member. That way, the appropriate balance between State agency and fund membership that exists with only eight voting members remains in place and is not weighted in favor of the State agencies. In addition, the funds request flexibility in scheduling the annual meeting. According to the funds, this would allow PASEB to change the date of the annual meeting, where appropriate, without having to amend the order.
The four funds also commented on reporting requirements. The funds recommend replacing the two semiannual reports due from each fund with: (1) a half-year report; and (2) an annual report from each fund. The half-year report would cover the period from January 1st through June 30th and would be due no later than August 15th. The annual report would cover the entire calendar year and would be due February 15th. Written copies of the reports would be filed with the Commission and PASEB members and the reports would be posted on the Commission's and each fund's websites. The funds agree that the annual report to be compiled by PASEB should serve as a summary of the activities of the regional funds. According to the funds, this can be accomplished by extracting information from the funds' annual reports and consolidating the information into a single summary.
In addition, the four funds recommend that PASEB, in conjunction with the fund administrators, develop a standard format for a project matrix. One version would be proprietary and would be shared only with PASEB members, the fund administrators and the Commission. This version would provide certain information about the status of fund projects but according to one fund, would not include reasons for approval or denial. These entities would sign a proprietary agreement prior to obtaining this information. The other version would be nonproprietary and made available to the public.
All four funds oppose a requirement that they provide reasons for project denials. They are concerned about potential liability if required to issue public reports stating that a particular applicant was denied because of a technically deficient project, a poor credit rating, outstanding litigation, regulatory troubles or any other problem that was identified in the technical and financial due diligence review of an application.
Finally, all four funds believe that PASEB is an appropriate forum to address a ''best business practices'' model. However, the funds note that the model should not denote uniformity in policies and procedures. In some cases, the funds add that a model should recognize any structural differences between the funds.
Comments of Eric Joseph Epstein (filed individually)
Mr. Epstein is President of the Sustainable Energy Fund of Central Eastern Pennsylvania and was a signatory to the restructuring settlement of Pennsylvania Power and Light. Mr. Epstein supports the ''body and spirit'' of the tentative order, although he seeks clarification and modification of several issues in the tentative order: (1) who decided the composition of the Statewide board and what criteria was used to select its members; (2) there is no discernable format, structure or provision for governance; and (3) there is no mention of a public education campaign to apprise consumers of the importance of the Statewide board.
To remedy these perceived deficiencies, Mr. Epstein proposes that: (1) the Commission create a justification statement relating to the board's composition, which includes criteria for selection and allows for public input; (2) the Commission articulate or mandate an operating protocol that includes governance; (3) the Commission require biannual bill stuffers in English and Spanish as well as a dedicated Commission website and public outreach campaign to ensure that those being assessed a monthly tariff are dutifully apprised of their investment; (4) the Commission create a Memorandum of Understanding between the Statewide board and each fund; (5) the board develop a Statewide working definition of the terms ''sustainable'' and ''renewable''; and (6) the Commission develop a post-settlement mailing/service list with the input from all four funds and the signatory parties.
Comments of Lawrence G. Spielvogel, Inc.
Mr. Spielvogel wants ratepayers to have access to information regarding the operations of the four funds. Specifically, Mr. Spielvogel requests that the semiannual and annual reports be posted on the Commission's website and that there be notice and public hearings where ratepayers can question or comment on the reports. Mr. Spielvogel also wants after-the-fact, independent review and accounting of past fund expenditures to determine if the monies were spent prudently, properly and wisely. In addition, Mr. Spielvogel wants as many ratepayer representatives appointed by the Governor as there are from the State agencies.
In his reply comments, Mr. Spielvogel asserts that there is no legal or business justification to keep confidential information about application denials. He claims that applicants in advance are aware that their applications are public information. Mr. Spielvogel cites to several advantages of making this information public. With access to this information, applicants can avoid applying for projects that are not likely to be approved, while access to such information will also improve the content of the applications.
Comments of Emanon Partners, LLC
Emanon wants the Statewide board to ensure that funding from the funds is allocated to all viable renewable energy projects, including biomass, not just wind and solar. Emanon allegedly was told by the four funds that they do not consider biomass to be renewable energy. Emanon wants the Statewide board to require that the regional funds report, in a consistent manner, the use of the funds they manage. The report should include: sources and uses of funds and summaries of grant and loan activity, including recipients and amounts.
Discussion
As noted in our Tentative Order, the regional funds appear to have formed a close working relationship with each other. This close relationship is evident with the day-to-day communications between the funds that routinely occur about specific projects/general issues and the quarterly and annual meetings that are held. This close working relationship has produced the desired level of coordination and communication envisioned by a Statewide board. Nevertheless, we reiterate that PASEB will only enhance this close working relationship between the regional funds.
Composition of PASEB
PASEB currently consists of nine representatives. PASEB consists of one representative from each of the following Commonwealth agencies: the Commission, the Department of Environmental Protection (DEP), the Department of Community and Economic Development (DCED) and the Office of Consumer Advocate (OCA). PASEB also consists of a representative from the Pennsylvania Environmental Council (PEC) and a representative from each regional board.2 By this Order, the Commission's representative will be from the OED, assisted by Commission staff from the Law Bureau and the Bureau of Conservation, Economics and Energy Planning. However, to maintain the appropriate balance between the private and governmental interests, the Commission's representative shall be a nonvoting member except to the extent that a vote is necessary to break a tie.
By this Order, we are requiring that PASEB establish by-laws, which shall be submitted to the Commission for approval within 1 year from the date that this Order is published in the Pennsylvania Bulletin. The by-laws will articulate the internal rules of governance under which PASEB will operate. The by-laws will, inter alia, provide details on the types, terms, election, authority and duties of any members and the specific duties of an Administrator who will be designated by PASEB. The Administrator will provide support services and staff to enable PASEB to carry out its responsibilities. By spelling out the rights and duties of the various parties within the corporate structure of PASEB and the rules under which the board will operate, the by-laws will help ensure that the statewide board operates in an orderly and efficient manner.
Annual Meeting
We contemplate that PASEB will continue to play a key role in the Commission's oversight process of the regional boards. To that end, one of the primary responsibilities of PASEB will be to conduct an annual meeting to update the relevant Commonwealth agencies and other interested groups3 on the status of the four regional boards. The annual meeting shall tentatively take place in May of each year, unless otherwise changed by PASEB when appropriate. The annual forum will provide updates on the market status of sustainable energy technologies and projects, will update on the progress of the regional funds in achieving their missions and will provide an avenue for the regional boards to seek advice and support as well as to collaborate on larger projects that may be of interest to the collective funds.
Reporting Requirements
To begin, the individual regional funds will continue to submit half-year and annual reports with the Secretary's Bureau, consistent with their by-laws previously approved by the Commission and with their current practice. However, the reporting timeframes and the date of submission shall be universal to all four funds. The half-year report shall cover the period from January 1st through June 30th and shall be due on or before August 15th. The annual report shall cover the entire calendar year and shall be due no later than February 15th. Written copies of the reports shall be filed with the Commission and PASEB members, and the reports will be posted on the Commission's and each fund's websites. Thus, the reports will be available for public review, and the website postings should satisfy the commentors' request for public documentation about the funds.
In addition, PASEB will play a critical role in reporting as it will serve as an information conduit between the four regional boards and the Commission. First, PASEB, in conjunction with the regional fund administrators, shall produce an annual report to the Commission. The PASEB annual report will be due by April 30th of each year with copies available for the other relevant Commonwealth agencies and the public. The report will summarize the activities of the regional funds for the prior year. PASEB can accomplish this by providing a summary of extracted information from the semiannual and annual reports submitted by each fund. The report will be posted on the Commission's website.
In addition, PASEB, in conjunction with the fund administrators, will develop a standard format for a proprietary project matrix to be shared only with PASEB members, the fund administrators and the Commission. For approved projects, the matrix shall include the organization by name, an address, a description of the project, the status of the project, the amount requested and the amount approved. For denied projects, the matrix shall include a generic description of the request, a description of the project, the amount requested, whether the project was denied by the administrator or the board and a general reason for the denial. The general reasons for denials are, inter alia, failure to meet the mission statement, not technically feasible and/or economically viable, and other. The project matrix shall be updated every 6 months.
Given the sensitive nature of the information relating to project approvals and denials, we do not deem it necessary to require the funds to provide more specific information about project denials. Access to general information about project denials will allow us to adequately fulfill our regulatory duties4 without compromising the confidentiality concerns of the funds. Moreover, we do not deem it necessary to provide the general public with access to a nonproprietary version of the project matrix. We believe that the half-year and annual reports of the funds and PASEB's annual report, which will all be posted on the Commission's website, are sufficient to provide the public with adequate notice about the activities of the regional funds and PASEB.
We also note that Commission staff will continue to monitor the quarterly meetings conducted by each of the regional funds and report back to the Commission as warranted. We contemplate that this monitoring process will also help keep the Commission apprised of the various projects and proposals brought before the four regional boards.
Development of a ''Best Practices'' Business Model
PASEB will also promote greater uniformity of the business processes with each of the regional funds. Upon review of the responses to staff's data request issued on October 3, 2002, the Commission notes that there appears to be a discrepancy between each of the funds' business processes. In view of these discrepancies, PASEB will create a ''best business practices'' model to cover processes such as the application process, the reconsideration/appeal of denial process and a code of conduct, among other things. While taking into account that certain structural differences exist between the funds, we envision that this ''best business practices'' model will serve as a uniform guide for each of the four funds. PASEB is to develop this ''best business practices'' model within 1 year of the date that this Order is published in the Pennsylvania Bulletin.
Finally, the Commission notes that it expressly reserves the right to revisit organizational and operational issues of the Statewide board, when appropriate, particularly if a more formal centralized structure for handling common tasks becomes necessary at some point in the future; Therefore,
It Is Ordered That:
1. PASEB provide oversight, guidance and technical assistance to the regional sustainable energy boards in Pennsylvania, consistent with this Final Order.
2. PASEB conduct an annual meeting to update the appropriate Commonwealth agencies and other interests on the market status of sustainable energy technologies and projects, the progress of the regional funds in achieving their missions and to seek advice and support, consistent with this Final Order.
3. PASEB submit an annual report to the Commission summarizing the activities of the four regional funds, consistent with this Final Order.
4. PASEB develop a proprietary project matrix to be submitted to the regional fund administrators, PASEB members and the Commission with updates to occur on a semiannual basis, consistent with this Final Order.
5. This Order be published in the Pennsylvania Bulletin.
6. PASEB establish by-laws, which shall be submitted to the Commission for approval within 1 year from the date that this Final Order is published in the Pennsylvania Bulletin, consistent with this Final Order.
7. PASEB develop a ''best practices'' model to serve as a guide for the business practices of the funds and submit the proposed model for approval to the Commission within 1 year from the date that this Final Order is published in the Pennsylvania Bulletin.
JAMES J. MCNULTY,
Secretary
[Pa.B. Doc. No. 03-1678. Filed for public inspection August 22, 2003, 9:00 a.m.] _______
1 The four regional funds are the PECO Energy Sustainable Development Fund, the Sustainable Energy Fund of Central Eastern PA, the GPU Sustainable Energy Fund (now the Met-Ed/Penelec Sustainable Energy Fund) and the West Penn Power Sustainable Energy Fund.
2 We note that the composition of the board arose out of the electric restructuring settlements. The entities selected to participate as members on the Statewide board were viewed as the relevant industry and regulatory players at the time. Moreover, the membership composition was thought to strike the appropriate balance between the public and private sector interests. We further note that each entity has the authority to select its own representative.
3 The relevant agencies include the Commission, DEP, DCED and OCA. Other interested groups would include PEC and other energy and environmental interests.
4 As the entity responsible for regulating jurisdictional utilities and, in particular, the funds, it is the Commission, on behalf of the ratepayers, that monitors the activities and expenditures of the fund.
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