NOTICES

PENNSYLVANIA PUBLIC
UTILITY COMMISSION

Implementation of Act 40 of 2017

[48 Pa.B. 111]
[Saturday, January 6, 2018]

Public Meeting held
December 21, 2017

Commissioners Present: Gladys M. Brown, Chairperson, joint statement follows; Andrew G. Place, Vice Chairperson, joint statement follows; Norman J. Kennard; David W. Sweet; John F. Coleman, Jr.

Implementation of Act 40 of 2017; M-2017-2631527

Tentative Implementation Order

By the Commission:

 On October 30, 2017, Governor Wolf signed into law Act 40 of 2017, which amends the Administrative Code, 71 P.S. §§ 1 et seq. Act 40, inter alia, establishes geographical limits on solar photovoltaic (solar PV) systems that qualify for the solar PV share requirement of the Alternative Energy Portfolio Standards (AEPS) Act, 73 P.S. §§ 1648.1 et seq. The Pennsylvania Public Utility Commission's (Commission) administrative responsibilities for implementing the provisions of Act 40 are contained within Section 11.1 of Act 40. In general, Section 11.1 amends Article XXVIII of The Administrative Code of 1929 (relating to the powers and duties of the Pennsylvania Public Utility Commission) by adding section 2804 (relating to the AEPS Act). This Tentative Implementation Order provides the Commission's proposed interpretation as well as implementation of Section 11.1 of Act 40 and seeks comment from the public and industry with respect to this interpretation and implementation.

Discussion

A. Section 2804(1)

 This Section creates a limitation to Section 4 of the AEPS Act, 73 P.S. § 1648.4, which established, inter alia, that energy derived from alternative energy sources (AESs) inside the geographical boundaries of Pennsylvania shall be eligible to meet compliance requirements under the AEPS Act. Section 1648.4 also provides that energy derived from AESs located outside the geographical boundaries of the Commonwealth but within the service territory of a regional transmission organization (RTO) that manages the transmission system in any part of Pennsylvania shall be eligible to meet the AEPS Act compliance requirements of electric distribution companies (EDCs) or electric generation suppliers (EGSs) located within the service territory of the same RTO. Finally, Section 1648.4 provides that AESs located in the PJM Interconnection, L.L.C. RTO (PJM) or its successor service territory shall be eligible to fulfill the AEPS Act compliance obligations of all EDCs and EGSs. See 73 P.S. § 1648.4.

Section 2804(1) specifically states the following:

(1) Notwithstanding Section 4 of the Act of November 30, 2004 (P.L. 1672, No. 213), known as the ''Alternative Energy Portfolio Standards Act,'' in order to qualify as an alternative energy source eligible to meet the photovoltaic share of this Commonwealth's compliance requirements under the ''Alternative Energy Portfolio Standards Act'' and to qualify for solar renewable alternative energy portfolio credits, each solar photovoltaic system must do one of the following:

(i) Directly deliver the electricity it generates to a retail customer of an electric distribution company or to the distribution system operated by an electric distribution company operating within this Commonwealth and currently obligated to meet the compliance requirements contained under the ''Alternative Energy Portfolio Standards Act.''

(ii) Be directly connected to the electric system of an electric cooperative or municipal electric system operating within this Commonwealth.

(iii) Connect directly to the electric transmission system at a location that is within the service territory of an electric distribution company operating within this Commonwealth.

 Section 2804(1) modifies Section 4 of the AEPS Act to exclude solar PV sources located outside of Pennsylvania from qualifying as an AES eligible to generate power and solar renewable alternative energy portfolio credits (SRECs) eligible to be used to meet the solar PV share requirement. Section 2804(1) introduces a new undefined term, ''solar renewable alternative energy portfolio credit.'' The Commission proposes to interpret this term as identifying SRECs eligible to meet the AEPS Act solar PV share requirements found in Section 3(b)(2) of the AEPS Act, 73 P.S. § 1648.3(b)(2).

 We note that Act 40 did not amend or otherwise revise the definitions of Alternative Energy Credit, Alternative Energy Source or Tier I Alternative Energy Source found in Section 2 of the AEPS Act, 73 P.S. § 1648.2. Significantly, Section 2804(4) specifically defines ''Alternative Energy Source'' as the term ''Alternative Energy Sources'' is defined in Section 2 of the AEPS Act. Furthermore, Section 2804(1) only modifies Section 4 of the AEPS Act, 73 P.S. § 1648.4 and only refers to the solar PV share requirement. Accordingly, as solar PV has been and still is a Tier I AES that was eligible to meet the Tier I non-solar PV share requirements, the Commission proposes to interpret this section as permitting any solar PV system meeting the geographic requirements of Section 4, 73 P.S. § 1648.4, as continuing to be eligible to generate Tier I alternative energy credits (AECs) eligible to be used to meet the Tier I non-solar PV share requirements in Section 3(b)(1) of the AEPS Act, 73 P.S. § 1648.3(b)(1).

B. Section 2804(1)(i)

 This subsection provides two scenarios where solar PV will qualify to generate energy and SRECs eligible to be used by EDCs and EGSs to meet the solar PV share requirements. The first scenario that qualifies is a solar PV generation source that directly delivers its power to an EDC's retail customer. The Commission proposes to interpret this section as applying to solar PV systems physically connected to an EDC's customer's internal electric system, such as a roof mounted solar PV array.

 The second scenario that qualifies is a solar PV generation source that directly delivers its power to the distribution system operated by an EDC that has an obligation to meet the AEPS Act compliance requirements. The Commission proposes to interpret this provision as applying to solar PV systems physically interconnected to an EDC's distribution system.

C. Section 2804(1)(ii)

 This subsection addresses the scenario where a solar PV system is directly connected to the electric system of an electric cooperative or municipal electric system operating within Pennsylvania. The Commission proposes to interpret this subsection as permitting solar PV systems physically connected to a Pennsylvania electric cooperative's or municipal electric system's distribution network to qualify to generate energy and SRECs eligible to be used by EDCs and EGSs to meet the solar PV share requirements.

D. Section 2804(1)(iii)

 This subsection addresses the scenario where a solar PV system is directly connected to the electric transmission system at a location that is within the service territory of an EDC. The Commission proposes to interpret this subsection as permitting solar PV systems physically connected to an EDC's transmission system within the EDC's service territory to qualify to generate energy and SRECs eligible to be used by EDCs and EGSs to meet the solar PV share requirements. This would include utility scale solar PV systems that are physically interconnected to an EDC's transmission system within the EDC's service territory and operating under PJM rules as a wholesale generator.

E. Implementation of Section 2804(1)

 To differentiate solar PV systems that qualify to generate energy and SRECs eligible to be used by EDCs and EGSs to meet the solar PV share requirements from solar PV systems that do not, the Commission proposes to have the Alternative Energy Credit Program Administrator (AEC Program Administrator) work with PJM-GATS to modify the Pennsylvania certification number it assigns to solar PV systems. Specifically, systems that qualify to generate SRECs will be assigned a certification number in the following format: PA-NNNNNN-SUN-I. Whereas solar PV systems that only qualify to generate Tier I non-solar AECs will be assigned a certification number in the following format: PA-NNNNNN-NSTI-I.

F. Section 2804(2)(i)

 This section sets forth a condition to which Section 2804(1) does not apply. Specifically, Section 2804(2)(i) states the following:

(2) Nothing under this section or section 4 of the ''Alternative Energy Portfolio Standards Act'' shall affect any of the following:

(i) A certification originating within the geographical boundaries of this commonwealth granted prior to the effective date of this section of a solar photovoltaic energy generator as a qualifying alternative energy source eligible to meet the solar photovoltaic share of this Commonwealth's alternative energy portfolio compliance requirements under the ''Alternative Energy Portfolio Standards Act.''

 This subsection addresses the scenario where a solar PV system had received a Pennsylvania certification as an AES eligible to meet the solar PV share requirement prior to October 30, 2017, the effective date of Section 2804. The Commission proposes to interpret this subsection to grandfather solar PV AESs certified as a Pennsylvania AES before October 30, 2017, as continuing to qualify to generate energy and SRECs eligible to be used by EDCs and EGSs to meet the solar PV share requirements.

 The Commission proposes to interpret the language ''a certification originating within the geographical boundaries of this Commonwealth'' as a reference to systems certified by the Commission's AEC Program Administrator in accordance with 52 Pa. Code §§ 75.62, 75.63 & 75.64. These systems received a unique Pennsylvania certification number that identifies them as a Pennsylvania qualifying alternative energy source eligible to meet the solar PV share requirements. We note that many systems may also qualify for certification in another state's renewable portfolio standards program and receive a unique certification number for that state as well, thus, many systems may have multiple state certification numbers. Accordingly, this subsection, as the Commission proposes to interpret it, precludes a solar PV system that does not meet the Section 2804(1) requirements and was certified in another state, but not in Pennsylvania prior to October 30, 2017, from being qualified to generate energy and SRECs eligible to be used by EDCs and EGSs to meet the solar PV share requirements in Pennsylvania. The Commission, however, as noted above, proposes to interpret Act 40 as permitting such systems to be certified as a Tier I non-solar alternative energy resource eligible to be used by EDCs and EGSs to meet the Tier I non-solar requirements.

 As proposed above, solar PV systems that were certified as a Pennsylvania AES in accordance with 52 Pa. Code §§ 75.62, 75.63 & 75.64, prior to October 30, 2017, will be identified by the following certification number format: PA-NNNNNN-SUN-I. Whereas solar PV systems that only qualify to generate Tier I non-solar AECs will be assigned a certification number in the following format: PA-NNNNNN-NSTI-I.

 We note that currently, the program administrator has 30 days from the date a complete AES application is received to provide written notice as to whether the system qualifies as an AEPS Act AES. If a system is found to qualify as an AEPS Act AES, the system qualification date can be the date the complete application was received by the program administrator. See 52 Pa. Code § 75.63(i).¹ The Commission seeks comments on whether completed solar PV system applications that were received before October 30, 2017, but not approved by the program administrator until after October 30, 2017, should be grandfathered in as a solar PV AES eligible to meet the solar PV share requirements, as their certification date would be the date the completed application was received.

G. Section 2804(2)(ii)

 This section sets forth a condition to which Section 2804(1) does not apply. Specifically, Section 2804(2)(ii) states the following:

(2) Nothing under this section or section 4 of the ''Alternative Energy Portfolio Standards Act'' shall affect any of the following:

* * * * *

(ii)  Certification of a solar photovoltaic system with a binding written contract for the sale and purchase of alternative energy credits derived from solar photovoltaic energy sources entered into prior to the effective date of this section.

 This subsection addresses the scenario where a binding written contract for the sale and purchase of AECs derived from a solar PV source was entered into prior to October 30, 2017. The Commission proposes to interpret this subsection as permitting the AEC Program Administrator to certify a solar PV system that does not meet the provisions of Section 2804(1) and was not certified prior to October 30, 2017, to qualify to generate energy and SRECs eligible to be used by EDCs and EGSs to meet the solar PV share requirements under the following conditions:

 (1) There is a binding written contract entered into prior to October 30, 2017.

 (2) The contract is for the sale and purchase of the alternative energy credits generated by a solar PV system that is not already certified in Pennsylvania.

 (3) The solar PV system does not meet the requirements of § 2804(1).

 The Commission further proposes to limit the certification to the duration of the contract. For example, if the contract was for the purchase of AECs for 24 months, from June 1, 2017 through May 31, 2019, the certification to qualify to generate energy and SRECs eligible to be used by EDCs and EGSs to meet the solar PV share requirements would end on June 1, 2019 and be transferred to a Tier I non-solar certification. Under this example, the credits generated prior to June 1, 2019 and transferred to an EDC or EGS would continue to be eligible to meet the solar PV share requirements in accordance with 52 Pa. Code § 75.69 (relating to the banking of alternative energy credits).

H. Section 2804(3)

 This section provides that contracts entered into or renewed on or after October 30, 2017, the effective date of Section 2804, are subject to the provisions of Section 2804(1). The Commission proposes to interpret this subsection as limiting the eligibility of systems certified under the contract exception in Subsection 2804(2)(ii) to the duration of the contract for the sale and purchase of AECs when it was entered into prior to October 30, 2017. A solar PV system owner cannot extend its eligibility through a renewal of the original contract or subsequent contracts. At the end of the contract entered into prior to October 30, 2017, the solar PV system would be re-certified as a Tier I non-solar alternative energy resource. The Commission, however, proposes that the AECs generated and transferred to the EDC or EGS prior to the re-certification would continue to be eligible to meet the solar PV share requirement in accordance with 52 Pa. Code § 75.69 (relating to the banking of alternative energy credits).

I. Implementation of Section 2804(3)

 To implement this provision, the Commission proposes that any solar PV system seeking to be eligible to generate SRECs that was not certified prior to October 30, 2017, and that does not meet the requirements of 2804(1), must submit a copy of the binding written contract for the sale and purchase of AECs, and any additional information requested by the AEC Program Administrator, along with its application for alternative energy system qualification in accordance with 52 Pa. Code § 75.62. The AEC Program Administrator will make the determination as to whether the system qualifies to generate energy and SRECs eligible to be used by EDCs and EGSs to meet the solar PV share requirements and the duration of that qualification. When the contract ends the AEC Program Administrator shall re-certify the system as a Tier I non-solar alternative energy source. The decision by the AEC Program Administrator may be appealed consistent with 52 Pa. Code § 5.44 (relating to petitions for reconsideration from actions of the staff).

J. Section 2804(4)

 Section 2804(4) provides that the terms ''Alternative Energy Source'' and ''Electric Distribution Company'' maintain their respective definitions as set forth in Section 2 of the AEPS Act. As such, the Commission believes solar PV systems not meeting Section 2804(1) requirements or the exceptions thereto in Section 2804(2) can still generate credits eligible to meet the Tier I non-solar share requirements.

Conclusion

 This Tentative Implementation Order outlines the key portions of Act 40 that the Commission is required to administer and seeks comment from the public and industry with regard to how these provisions are interpreted and implemented; Therefore,

 It Is Ordered That:

 1. The Commission hereby seeks comments on its proposed interpretation and implementation of Section 11.1 of Act 40 of 2017.

 2. A copy of this order be served on all jurisdictional electric distribution companies, all licensed electric generation suppliers, the Bureau of Investigation and Enforcement, the Office of Consumer Advocate and the Office of Small Business Advocate.

 3. A copy of this Order shall be published in the Pennsylvania Bulletin and posted on the Commission's website at www.puc.state.pa.us.

 4. Written comments referencing Docket No. M-2017-2631527 be submitted within 30 days of publication in the Pennsylvania Bulletin to the Pennsylvania Public Utility Commission, Attn: Secretary, 400 North Street, Harrisburg, PA 17120. Comments may also be filed electronically through the Commission's e-File System.

 5. The Office of Competitive Market Oversight shall electronically send a copy of this Order to all persons on the contact list for the Committee Handling Activities for Retail Growth in Electricity.

 6. The contact persons for Tentative Implementation Order are Kriss Brown, Assistant Counsel, Law Bureau, kribrown@pa.gov, (717) 787-4518 and Darren Gill, Bureau of Technical Utility Services, dgill@pa.gov, (717) 783-5244.

ROSEMARY CHIAVETTA, 
Secretary

Joint Statement of Chairperson Gladys M. Brown and Vice Chairperson Andrew G. Place

 Before the Commission today is the Tentative Implementation Order (TIO) regarding Act 40 of 2017. Act 40, signed by Governor Wolf on October 30, 2017, inter alia, amends the qualifications to certify Tier I solar photovoltaic share facilities under Pennsylvania's Alternative Energy Portfolio Standards (AEPS) Act. Today the Commission issues this TIO to guide the AEPS marketplace toward compliance, and seeks comment on the Commission's proposed interpretations. We wish to highlight the Commission's tentative interpretations of Sections 2804(2)(i) and 2804(2)(ii). These read:

(2) Nothing under this section or section 4 of the ''Alternative Energy Portfolio Standards Act'' shall affect any of the following:

(i) A certification originating within the geographical boundaries of this Commonwealth granted prior to the effective date of this section of a solar photovoltaic energy generator as a qualifying alternative energy source eligible to meet the solar photovoltaic share of this Commonwealth's alternative energy portfolio compliance requirements under the ''Alternative Energy Portfolio Standards Act.''

(ii) Certification of a solar photovoltaic system with a binding written contract for the sale and purchase of alternative energy credits derived from solar photovoltaic energy sources entered into prior to the effective date of this section.

 The TIO interprets these sections in the following manner. First, all facilities receiving a certification from Pennsylvania's AEPS Administrator to generate Tier I solar share renewable energy credits (SRECs) before October 30, 2017 be grandfathered into future certification compliance. When interpreting the phrase ''[a] certification originating within the geographical boundaries of this Commonwealth. . .'' the TIO appears to focus on the origin of the certification, i.e. from the Pennsylvania Administrator, as opposed to the location of the facility.

 Second, in alignment with the interpretation proposed above, the Commission's TIO also proposes to interpret 2804(2)(ii) of the Act to read that any solar facility not otherwise AEPS certified which has entered into a purchase and sale contract for SRECs before October 30, 2017 may obtain Tier I solar photovoltaic share certification by providing the Commission proof of that contract and its provisions related to SREC purchase and sale. This interpretation is based on a textual review of Act 40 language. There is no limiting language as it relates to certification, or lack thereof, or to location for the buyer or seller of the SRECs.

 While the Commissions' interpretations, as outlined in the TIO, reflect a strict textual review, we acknowledge that such implementation may run counter to the intent of the provisions in Act 40. Numerous iterations of legislation have been proposed over previous General Assembly sessions aiming to ''close the borders'' in a manner ''similar to many neighboring states.''² Here the TIO only proposes to close the borders on a going forward basis, commencing on the date Act 40 was enacted. Review of the current supply and demand for AEPS qualifying Tier I solar share credits and capacity indicates that grandfathering all out-of-state solar facilities may result in, at best, a negligible impact on in-state solar development and SREC prices.³ Such an outcome would fail to achieve the potential intentions of the General Assembly to foster economic development in the state, to support environmental stewardship, and to instill electric reliability. Failure to effectuate the intentions of the General Assembly would conflict with the principles of statutory construction. The Rules of Statutory Construction at 1 Pa.C.S. § 1921(a) provide that:

(a) The object of all interpretation and construction of statutes is to ascertain and effectuate the intention of the General Assembly. Every statute shall be construed, if possible, to give effect to all its provisions.

 Therefore, in an effort to inform the record of this proceeding, we issue the following supplemental interpretations for comment.

 Sections 2804(2)(i)—Here we propose to interpret the phrase ''[a] certification originating within the geographical boundaries of this Commonwealth. . .'' as a facility located within Pennsylvania having received an AEPS Tier I solar photovoltaic share certification.

 2804(2)(ii)—Here we propose to interpret this section to only permit out-of-state facilities already certified as AEPS Tier I Solar Photovoltaic that have entered into a contract with a Pennsylvania electric distribution company, electric generation supplier serving Pennsylvania customers, load serving entity, electric cooperative, or municipal cooperative, for the sale of SRECs may maintain certification until the expiration of the contract.

 Banked SRECs—The proposed supplemental interpretations above inherently require that we address the status of banked SRECs from previously certified out-of-state facilities. We respectfully ask parties to address the handling of such SRECs.

 We look forward to all interested parties' comments on the TIO and these supplemental implementation proposals. We hope these comments will help frame the Commission's understanding of the General Assembly's true intentions for this section of Act 40.

GLADYS M. BROWN, 
Chairperson

ANDREW G. PLACE, 
Vice Chairperson

[Pa.B. Doc. No. 18-35. Filed for public inspection January 5, 2018, 9:00 a.m.]

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¹  Section 75.63(i) of the Commission's regulations states ''[a]n alternative energy system may begin to earn alternative energy credits on the date a complete application is filed with the administrator, provided that a meter or inverter reading is included with the application.'' 52 Pa. Code § 75.63(i).

²  See Co-Sponsorship Memoranda from Senator Mario M. Scavello and Senator David G. Argall, posted December 8, 2016, Subject Heading ''Solar Energy Credits Legislation,'' referring to SB 1346 from 2015-2016 session and SB 404 from the 2016-2017 session. Also, see proposed House Bill 1580 prime sponsored by Representative Chris Ross during the 2011-2012 session.

³  See the Commission's 2016 Annual Report on AEPS—issued November of 2017.

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