STATEMENTS OF POLICY
Title 52--PUBLIC UTILITIES
PENNSYLVANIA PUBLIC UTILITY COMMISSION
[ 52 PA. CODE CH. 69 ]
Interconnection Application Fees
[39 Pa.B. 1676]
[Saturday, April 4, 2009]The Pennsylvania Public Utility Commission (Commission) on February 26, 2009, adopted a final policy statement which establishes standards fees for interconnection in this Commonwealth.
Public Meeting held
February 26, 2009Commissioners Present: James H. Cawley, Chairperson; Tyrone J. Christy, Vice Chairperson; Robert F. Powelson; Kim Pizzingrilli; Wayne E. Gardner
Interconnection Application Fees; M-00051865
Policy Statement By the Commission:
The Commission issued a proposed Policy Statement at this docket on June 26, 2008 (June 26 Order). The proposed Policy Statement set forth a series of standard fees for interconnection applications, reviews of generating facilities and completion of the interconnection underto the Commission's Regulations at 52 Pa. Code §§ 75.21, 75.22, 75.31--75.40 and 75.51. The standard fees established in this Policy Statement will be presumed reasonable. An Electric Distribution Company (EDC) that wishes to deviate from the standard fees set forth in this Policy Statement will be required to file for Commission approval of any such deviation. The EDC will have the burden of proof to establish, in an on the record proceeding, that the proposed deviation is justified. June 26 Order at 3.
The proposed fee structure and levels are based, in part, on the fee schedule established in New Jersey, consistent with the directive set forth in the Alternative Energy Portfolio Standards Act (AEPS) (73 P. S. § 1648.5). There, this Commission is directed to establish interconnection rules ''consistent with rules defined in other states within the service region of the regional transmission organization that manages the transmission system in any part of this Commonwealth.'' The fee structure set forth in this Policy Statement is aligned with the levels of review for interconnection requests in Pennsylvania, Levels 1 through 4. We departed from the New Jersey structure in the Proposed Policy Statement by proposing a flat fee of $250 for Level 1 reviews. New Jersey did not have a fee for Level 1 reviews. June 26 Order at 5. We will revisit the issue of fees for Level 1 reviews in this Opinion and Order.
The balance of the review levels tracked the New Jersey fee structure by providing for a base fee and a per-kW fee tied to the nameplate capacity of the proposed generating facility. For Level 2, the base fee was proposed to be $250 with a per-kW fee of $1 for the nameplate capacity rating of the generating facility. For Level 3, the base fee was proposed to be $350 with a per-kW fee of $2. June 26 Order at 5. We also noted that there are various studies and analyses that may be required in the higher level projects. Again, we adopted the New Jersey model and provided for a cap on hourly charges that would apply to such studies and analyses. Hourly fees for studies and analyses may not exceed $100 per hour for Levels 2 and 3. June 26 Order at 8.
New Jersey does not have a Level 4 review as does Pennsylvania. Because of the nature of a Level 4 review, it could mimic reviews for Level 1, Level 2 or Level 3. Accordingly, we proposed that in those instances, the fee for a Level 4 review would be consistent with the fee levels for the applicable level of review actually performed, even though it is classified as a Level 4 review. For actual Level 4 reviews on larger capacity systems that do not mimic a different review level, we proposed to use the Level 3 review fee structure. June 26 Order at 6.
The June 26 Order and the Annex containing the proposed Policy Statement were published at 38 Pa.B. 4107 (August 2, 2008). Comments to the proposed Policy Statement were received from the Office of Consumer Advocate (OCA), the Department of Environmental Protection (DEP), The Mid-Atlantic Solar Energy Industries Association and The Solar Alliance (collectively, The Solar Alliance), the Energy Association of Pennsylvania (EAP), Duquesne Light Company (Duquesne) and Metropolitan Edison Company and Pennsylvania Power Company (collectively, First Energy).
Initially, we note that those parties which commented specifically on the use of a policy statement for the establishment of interconnection fees favored this approach. In particular, First Energy notes that the use of a policy statement provides for the flexibility needed to review and, if needed, change the various fee structures and levels over time as changing circumstances warrant. First Energy Comments at 2. Each of the parties that filed comments favor a uniform fee approach across the Commonwealth. The structure and level of the fees proposed generated some disagreement among the commenting parties.
Level 1 Reviews
With regard to Level 1 Reviews, The Solar Alliance, the OCA and the DEP all recommended that no fee be charged. These parties commented that New Jersey does not charge a fee and suggested that Pennsylvania should attempt to remain consistent with surrounding states. See such as, The Solar Alliance Comments at 2; OCA Comments at 2-4; DEP Comments at 1-2. Interestingly, the The Solar Alliance submitted information regarding existing EDC fees for small generation facilities (up to 40 kW). According to The Solar Alliance, such fees range from flat fees of $35 to $100 for solar photovoltaic (PV) systems and up to $300 for nonsolar PV systems. The Solar Alliance Comments at 2.
Conversely, Duquesne comments that a $250 Level 1 fee will not compensate it for the time necessary to evaluate a Level 1 application through to actual interconnection. Duquesne states that the average Level 1 application will require approximately 8.5 hours of time at an average cost of $80 per hour (including vehicles). Thus, Duquesne states that the average Level 1 application costs approximately $680. Duquesne Comments at 2-3.
The EAP comments that a variety of factors have an impact on solar development. However, the EAP states that it would ''support an application fee of $250 for Level 1, noting the actual costs would be partially subsidized and noting the likelihood that Level 1 applicants will also need to obtain a permit from the local government entity.'' EAP Comments at 7. First Energy supports the EAP Comments. First Energy Comments at 4.
In our view, the DEP and The Solar Alliance have proposed a fair compromise which resolves the discussion around the proposed $250 Level 1 fee and no fee at all in Level 1 applications. The DEP and The Solar Alliance each propose a Level 1 flat fee of $100 if any fee must be imposed. The DEP Comments at 2; Solar Alliance Comments at 2. We also note that the OCA suggested that if any fee must be imposed, the OCA recommends a reduction to some level below the proposed $250. OCA Comments at 4.
We are aware that the EAP, First Energy and Duquesne have expressed concerns that even the proposed amount of $250 will not compensate EDCs for their costs in evaluating Level 1 applications. However, we must balance that assertion with the AEPS directive that we try to remain consistent with neighboring states. In addition, the Level 1 process is expressly designed to be the most simplified interconnection process. These are low capacity, pre-certified systems. Over time, we expect the EDCs and the solar industry to become more familiar with these systems which will result in a reduction in EDC efforts to process these types of applications. As we have stated, because these standardized fees are established through a Policy Statement, we will periodically review the fee levels. If these fee levels require adjustment, we will be able to do so.
Given the AEPS Act's promotion of alternative energy sources, in particular solar based systems, we find that a standard fee for Level 1 applications of $100 is appropriate. We are also persuaded by the OCA, The Solar Alliance and the DEP that the lower fee is necessary to put Pennsylvania on a better footing in comparison to sister states which are also competing for these types of installations. See e.g., OCA Comments at 2-3.
Levels 2 and 3
Our proposed fees for Levels 2 and 3 include a base fee depending on the review level and a per-kW fee based on the nameplate capacity of the generating facility to be interconnected. For Level 2, the base fee proposed was $250 plus $1 per kW of nameplate capacity. For Level 3, the base fee proposed was $350 plus $2 per kW of nameplate capacity. The escalation in fee levels are designed to account for the increasing complexity of Level 2 and then Level 3 reviews.
Our interconnection Regulations also provide that there may be additional studies required at these Levels. For example, our 52 Pa. Code § 75.38(e) provides that additional studies may be required in the event that one or more Level 2 screens were failed by the proposed generator facility. Another example is found in 52 Pa. Code § 75.39(b)(5) relating to Level 3 interconnection feasibility studies. As was done in New Jersey, we provided for a cap on the cost of such studies at no more than $100 per hour. Finally, we noted that in the event that an application did not meet the requirements of the level of review initially sought, the application could be resubmitted under another review procedure and the EDC could impose a fee consistent with the new level of review.
The EAP proposed increasing the base fee for Level 2 applications from $250 to $350. The EAP also proposed increasing the per kW fees for Level 2 applications from $1 per kW to $2 per kW. The EAP also proposed increasing the per kW fees for Level 3 applications from $2 to $3. The EAP stated that its proposed increases ''better reflect actual costs; otherwise all ratepayers would be subsidizing the costs associated with processing interconnection applications . . .'' EAP Comments at 6. The EAP also observes that its proposed fee schedule ''is dramatically lower than those charged by utilities in other jurisdictions and mindful of the fees likely to be charged by municipalities.'' Id. at 10.
The DEP expresses concerns about combining a base fee with an escalating fee on a kW nameplate capacity basis. The DEP states that ''some larger projects may pay base fees that exceed reasonable and prudent costs actually incurred by the EDCs for application review.'' DEP Comments at 2. The DEP suggests that its concerns arise, in part, from the proposed engineering and analyses fee of $100 per hour. The DEP recommends that we revise the fees to institute a cap that allows EDCs to collect no more than reasonable costs actually associated with application review. Alternatively, the DEP suggests that we impose the requirement that EDCs track actual application review time and credit excess application fees to any engineering and interconnection study costs. Id.
The Solar Alliance presents concerns similar to those advanced by the DEP. The Solar Alliance observes that the Level 2 and Level 3 fees in New Jersey are lower than those proposed here. The base fee for Level 2 reviews in New Jersey is $50 and the base fee for Level 3 reviews is $100. The Solar Alliance states that it is more concerned with the per kW fee. The Solar Alliance suggests that a cap of $500 be placed on the per kW nameplate capacity charge if the application involves inverter equipment which meets the IEE 1547 and UL 1741 standards. If additional review is required, the Solar Alliance suggests that the $100 per hour charge could apply at that point provided that the Customer-generator receives an estimate of those fees in advance. Solar Alliance Comments at 2-3.
The Solar Alliance also requests that clarification be made regarding application fees in the event an application is resubmitted under a different level of review. The Solar Alliance requests that it be made clear that the EDC would be permitted to charge only the incremental cost of the second review, not a full application fee. In the event that a higher fee was initially imposed than actually required under the resubmitted level, the EDC should refund the incremental difference. Solar Alliance Comments at 3-4.
We find that the fee structure and levels proposed for Levels 2 and 3 are appropriate at this point in time. We are mindful of the example provided by The Solar Alliance in which a 3 MW solar PV project submitted under a Level 3 application would result in a $6,350 application fee. Although the resulting fee appears large, it must be viewed in perspective. A 3 MW solar PV installation is an extremely large project which may, or may not, be interconnected at the distribution level. We do not find, at this point in time, that a $6,350 application fee for a 3 MW capacity plant is unreasonable. We note that The Solar Alliance does not supply information regarding the overall cost of the installation and the size of the application fee in relationship to that cost. It is highly doubtful that such an application fee would be considered an impediment to such a project. The Solar Alliance has presented no information which would suggest that is the case.
We do agree with The Solar Alliance and the DEP that certain clarifications should be made. First, concern has been expressed with regard to the $100 hourly cap for engineering and other studies. We emphasize that the $100 per hour fee is a cap and consistent with the New Jersey fee schedule. It is to be hoped that charges will be less than that figure, but they can be no more. The Policy Statement should not be viewed as setting engineering and study fees at $100 per hour. We also note that our Regulations expressly provide for good faith estimates when higher levels of engineering studies are required before a customer-generator agrees to such studies. See e.g., 52 Pa. Code § 75.39(b)(5) (relating to Level 3 Reviews).
We are also persuaded that, in those instances when an application is resubmitted under a different level, the EDC should be entitled to recover only the additional incremental cost of the second review, not a full application fee. This would include a refund of an incremental amount due to an initial application fee that is higher than the application fee at the resubmitted level.
We have considered the various comments that suggest tracking of costs and crediting application fees toward such costs before moving to the per-kW charge. We have also considered the comments which propose a cap on the per-kW charge. However, those application fee structures are in line with the New Jersey fee structure and are an integral aspect of uniform charges. Other than evaluation studies for higher level reviews, for which good faith estimates are required, the fees stated herein permit Customer-generators and their vendors to know what the project application fees will be up front. Over time, we expect that the evaluation studies themselves will become fairly well established with substantial uniformity in cost as all parties become familiar with them. It is also expected that, as more and more studies are performed, the cost should decrease as more information and data will be available from prior studies. Again, we would expect to obtain information on that aspect of the application fees as this Policy Statement is examined in the future.
Level 4 Reviews
As we stated in the June 26 Order, Level 4 Reviews will be conducted in a variety of circumstances. In those instances when a Level 4 application is processed using the Level 1, Level 2 or Level 3 review process, the fees set forth for those particular review levels shall apply. No fee shall be assessed for an area network impact study conducted under 52 Pa. Code § 75.40. A Level 4 application reviewed under 52 Pa. Code § 75.40(d) (relating to Level 4 interconnection review) shall be subject to a base fee of $350 plus $2 per kW of the nameplate capacity rating of the customer-generator's facility. If an application is denied because it does not meet the requirements of a Level 4 review, and the applicant resubmits the application under another review procedure in accordance with the Commission's Regulations, the EDC may impose a fee representing the incremental costs for the resubmitted application consistent with the fees established for the new level of review. This is consistent with our discussion of Level 2 and Level 3 reviews, previously.
Based on the foregoing discussion, the Commission will establish the following standard fee schedule for interconnection applications in this Commonwealth:
Level 1--flat fee of $100. If an application is denied because it does not meet the requirements of a Level 1 review, and the applicant resubmits the application under another review procedure in accordance with the Commission's Regulations, the EDC may impose a fee for the incremental expense attributable to the resubmitted application, consistent with the fees established for the new level of review.
Level 2--base fee of $250 plus $1 per kW of the nameplate capacity rating of the Customer-generator's facility, plus the cost of any minor modifications to the EDC's distribution system or additional review if required under 52 Pa. Code § 75.38. Costs for such minor modifications or additional review shall be based on EDC estimates and shall be subject to review by the Commission at the request of either party. Costs for engineering work done as part of any additional review shall not exceed $100 per hour. If an application is denied because it does not meet the requirements of a Level 2 review, and the applicant resubmits the application under another review procedure in accordance with the Commission's Regulations, the EDC may impose a fee for the incremental expense attributable to the resubmitted application, consistent with the fees established for the new level of review.
Level 3--base fee of $350 plus $2 per kW of the nameplate capacity rating of the Customer-generator's facility, plus the cost of any feasibility studies, system impact studies and/or facilities studies required under 52 Pa. Code § 75.39. Costs for engineering work done as part of a feasibility study, system impact study or facilities study shall not exceed $100 per hour. If the EDC must install facilities in order to accommodate the interconnection of the Customer-generator facility, the cost of such facilities shall be the responsibility of the Customer-generator. If an application is denied because it does not meet the requirements of a Level 3 review, and the applicant resubmits the application under another review procedure in accordance with the Commission's Regulations, the EDC may impose a fee for the incremental expense attributable to the resubmitted application consistent with the fees established for the new level of review.
Level 4--in those instances when a Level 4 application is processed using the Level 1, Level 2 or Level 3 review process, the fees set forth in those particular review levels shall apply. No fee shall be assessed for an area network impact study conducted under 52 Pa. Code § 75.40. A Level 4 application reviewed under 52 Pa. Code § 75.40(d) shall be subject to a base fee of $350 plus $2 per kW of the nameplate capacity rating of the Customer-generator's facility. If an application is denied because it does not meet the requirements of a Level 4 Review, and the applicant resubmits the application under another review procedure in accordance with the Commission's Regulations, the EDC may impose a fee for the incremental expense attributable to the resubmitted application consistent with the fees established for the new level of review.
Conclusion
Based on the foregoing discussion, we will adopt this Policy Statement regarding standard fees for interconnection in Pennsylvania; Therefore,
It Is Ordered That:
1. The amendments to Chapter 69 (relating to general orders, policy statements and guidelines on fixed utilities) as set forth in Annex A are adopted.
2. The Secretary shall submit this order and Annex A to the Governor's Budget Office for review of fiscal impact.
3. The Secretary shall certify this order and Annex A and deposit them with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin.
4. The Policy Statement shall become effective upon publication in the Pennsylvania Bulletin.
5. A copy of thiso order shall be posted on the Commission's public Internet domain and served on the Office of Consumer Advocate, the Office of Small Business Advocate, and all participants in the Commission's Interconnection Standards Working Group.
6. The contact persons for this matter are Greg Shawley, Bureau of Conservation, Economics and Energy Planning, (717) 787-5369 (technical) and H. Kirk House, Office of Special Assistants, (717) 772-8495 (legal).
By the Commission
JAMES J. MCNULTY,
Secretary(Editor's Note: Title 52 of the Pa. Code is amended by adding a statement of policy in §§ 69.2101--69.2103 to read as set forth at 38 Pa.B. 4107 (August 2, 2008); and by adding § 69.2104 to read as set forth in Annex A.
For a notice relating to this Statement of Policy, see 39 Pa.B. 1657 (April 4, 2009).)
Fiscal Note: 57-263. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 52. PUBLIC UTILITIES
PART I. PUBLIC UTILITY COMMISSION
Subpart C. FIXED SERVICE UTILITIES
CHAPTER 69. GENERAL ORDERS
POLICY STATEMENTS AND GUIDELINES ON FIXED UTILITIES
INTERCONNECTION APPLICATION FEES § 69.2104. Interconnection application fees.
The following fee structures and fees will be deemed appropriate for use by electric distribution companies when processing interconnection applications filed under §§ 75.21, 75.22, 75.31--75.40 and 75.51 (relating to interconnection standards):
(1) Level 1 applications. If an application is denied because it does not meet the requirements of a Level 1 review, and the applicant resubmits the application under another review procedure in accordance with this title, the electric distribution company may impose a fee for the incremental expense attributable to the resubmitted application consistent with the fees established for the new level of review.
(2) Level 2 applications. Base fee of $250 plus $1 per kW of the nameplate capacity rating of the customer-generator's facility, plus the cost of any minor modifications to the electric distribution company's distribution system or additional review if required under § 75.38 (relating to Level 2 interconnection review). Costs for minor modifications or additional review must be based on electric distribution company estimates and must be subject to review by the Commission at the request of either party. Costs for engineering work done as part of any additional review should not exceed $100 per hour. If an application is denied because it does not meet the requirements of a Level 2 review, and the applicant resubmits the application under another review procedure in accordance with this title, the electric distribution company may impose a fee for the incremental expense attributable to the resubmitted application consistent with the fees established for the new level of review.
(3) Level 3 applications. Base fee of $350 plus $2 per kW of the nameplate capacity rating of the customer-generator's facility, plus the cost of any feasibility studies, system impact studies or facilities studies required under § 75.39 (relating to Level 3 interconnection review). Costs for engineering work done as part of a feasibility study, system impact study or facilities study should not exceed $100 per hour. If the electric distribution company must install facilities to accommodate the interconnection of the customer-generator facility, the cost of the facilities shall be the responsibility of the customer-generator. If an application is denied because it does not meet the requirements of a Level 3 review, and the applicant resubmits the application under another review procedure in accordance with this title, the electric distribution company may impose a fee for the incremental expense attributable to the resubmitted application consistent with the fees established for the new level of review.
(4) Level 4 applications. In those instances when a Level 4 application is processed using the Level 1, Level 2 or Level 3 review process, the fees set forth for those particular review levels should apply. A fee may not be assessed for an area network impact study conducted under § 75.40 (relating to Level 4 interconnection review). A Level 4 application reviewed under § 75.40(d) should be subject to a base fee of $350 plus $2 per kW of the nameplate capacity rating of the customer-generator's facility. If an application is denied because it does not meet the requirements of a Level 4 review, and the applicant resubmits the application under another review procedure in accordance with this title, the electric distribution company may impose a fee for the incremental expense attributable to the resubmitted application consistent with the fees established for the new level of review.
[Pa.B. Doc. No. 09-627. Filed for public inspection April 3, 2009, 9:00 a.m.]
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