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PA Bulletin, Doc. No. 07-1898

PROPOSED RULEMAKING

PENNSYLVANIA PUBLIC UTILITY COMMISSION

Request for Comments on Revisions to the Net Metering and Interconnection Regulations at 52 Pa. Code Chapter 75 to Conform with the Language of Act 35 of 2007; Doc. Nos. M-00051865, L-00050174 and L-00050175

[37 Pa.B. 5597]
[Saturday, October 20, 2007]

   On July 17, 2007, Governor Edward Rendell signed Act 35 of 2007 (Act 35) into law.1 This Act 35 amended several sections of the Alternative Energy Portfolio Standards Act (AEPS) (73 P. S. §§ 1648.1--1648.8), including those relating to the definition of customer generators, the reconciliation mechanism for surplus energy supplied through net metering and the price to be paid for such surplus energy. Specifically, these changes included the following:

   *  Revising the definition of ''customer generator'' to increase the capacity limit on nonresidential projects from 1 to 3 megawatts generally, and from 2 to 5 megawatts for those projects that operate in parallel with the grid;

   *  Revising the definition of ''net metering'' to include a restriction on virtual meter aggregation; and

   *  Revising 73 P. S.§ 1648.5 to require that customer-generators be compensated for excess generation on an annual basis at the ''full retail value for all energy produced,'' as opposed to the current monthly basis at the avoided wholesale cost rate.

   The Commission previously promulgated regulations relating to net metering and interconnection at 52 Pa. Code Chapter 75 (relating to alternative energy portfolio standards), that became effective upon publication 36 Pa.B. 7562 (December 16, 2006). The enactment of Act 35 of 2007 requires corresponding changes to the following definitions contained in 52 Pa. Code § 75.1: ''Act,'' ''Alternative energy credit,'' ''Customer-generator,'' ''Force majeure'' and ''Tier I alternative energy source.'' Changes also are required for the definitions of ''Net metering'' and ''Virtua'' ''metering aggregation'' contained in 52 Pa. Code § 75.12 (relating to definitions). Also, Act 35's amendment of section 5 of the AEPS, 71 P. S. § 1648.5, will require changes to 52 Pa. Code §§ 75.13(d) and (f) (relating to general provisions) and 75.12.

   While a majority of the previously--referenced changes to the Commission's regulations merely involve replacing existing language with language contained in Act 35, some of these changes raise new issues that had not been previously considered. Specifically, several issues are raised by Act 35's requirement that ''excess generation from net-metered customer-generators shall receive full retail value for all energy produced on an annual basis.'' Some of the new issues raised that may require comment are as follows:

   *  What is the meaning of ''full retail value for all energy produced''? Act 35 does not specifically define this term. The term could be interpreted as meaning the fully bundled retail rate for generation, transmission, distribution, and any applicable transition charges. Alternatively, given the Legislature's use of the terms ''excess generation'' and ''energy'' it also could be interpreted as being limited to the generation component of the retail rate.

   *  What are the projected costs associated with these competing interpretations, that is, given a projected level of net metered generation (kwh), what are the projected costs to the remaining customers of an EDC if net-metered customer-generators receive × cents per kwh versus y cents per kwh?

   *  How should any residual stranded cost charges be treated in the annual reconciliation?

   *  Are there any additional issues to be addressed by moving the reconciliation of excess energy from a monthly to an annual basis?

   *  Act 35 does not define the phrase ''annual basis.'' Does this phrase mean a calendar year, fiscal year or does it correspond with the AEPS compliance period of June 1 through May 31?

   *  Should demand charges for distribution, transmission and generation services paid by net metered customers be adjusted? If so, should each component of the demand charge be adjusted to reflect the net flow of energy through a net meter? How should the adjustments be calculated?

   *  Should the Commission provide monthly credits for net metered accounts, and carry over monthly excess generation to the next billing month, with any remaining excess energy (where total annual generation of energy exceeds total annual usage) cashed out at the end of the year? Alternatively, do the metering regulations only provide for annual compensation for excess generation in any month?

   By Secretarial Letter dated July 26, 2007, the Commission notified interested parties that the Commission will promptly begin the process of revising its net metering and interconnection regulations at 52 Pa. Code Chapter 75, to reflect the requirements of Act 35 of 2007. In the Secretarial Letter, the Commission indicated that, because Act 35 became effective immediately, its provisions must be given immediate effect while the rules are being revised. The Commission also concluded that all electric distribution companies must apply the new compensation standard for net metering customers beginning with the first full billing period after July 17, 2007, the effective date of Act 35.

   Due to the fact that Act 35 became effective on July 17, 2007, that some EDCs have AEPS compliance requirements that must be met as of May 31, 2008, and that a majority of the required changes merely involve language changes to make the regulations consistent with Act 35, the Commission seeks to expedite the process for revising the existing net metering and interconnection regulations. The Commission seeks comments on how the Act 35 amendments to AEPS should be reflected in the Commission's regulations at 52 Pa. Code Chapter 75.2

   An original and 15 copies of any written comments referencing the docket numbers previously shall be submitted to the Pennsylvania Public Utility Commission, Attn.: Secretary, P. O. Box 3265, Harrisburg, PA 17105. Comments shall be submitted within 30 days of the publication of this Secretarial Letter in the Pennsylvania Bulletin. Reply comments may be filed 20 days thereafter.

JAMES J. MCNULTY,   
Secretary

[Pa.B. Doc. No. 07-1898. Filed for public inspection October 19, 2007, 9:00 a.m.]

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1  Act 35 is available through a link at the Commission's AEPS web page at http://www.puc.state.pa.us/electric/electric_alt_energy.aspx.

2 Note that the comments requested in this secretarial letter are separate and apart from the comments requested in the September 13, 2007 secretarial letter regarding the rulemaking at Docket No. L-00060180. While both letters request comments regarding the effect the 2007 amendment to AEPS has on Commission regulations, the September 13th letter sought comments related to the proposed regulations published in the 36 Pa.B. 6289 (October 14, 2006). This letter seeks comments related to the Commission's existing regulations in Chapter 75 of Title 52.


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