Pennsylvania Marijuana Grower Industry Must Be Energy Savvy

The energy-intensive marijuana industry is having a significant impact on electricity usage in states where it is legalized.  Some states worry that this drastic increase in electricity demand will negatively impact both their infrastructure and carbon footprint while increasing costs. Some state and local governments have reacted to these electricity usage impacts by implementing new taxes, fees, and other regulatory measures.  However, the naturally energy-intensive process for growing marijuana is sometimes exacerbated by each state’s own regulations.  For instance, Pennsylvania, which legalized medical marijuana in 2016, requires growers to contain their entire grow operation indoors.  While the Pennsylvania Act is specific about how growers must run their operations, this Act is frighteningly silent on how Pennsylvania will cope with the corresponding energy drain on local infrastructure or on how such increase in electricity usage might impact Pennsylvania’s carbon footprint.  But whether Pennsylvania, or any other state, has considered the impact of these energy issues or not, it is absolutely critical for every marijuana grower to consider the impact its energy consumption has on its overall operation.  To reduce operating costs and hence gain a competitive advantage, marijuana operators, especially grower/processors, should seek ways to reduce both the price of energy and the amount they use.  Pennsylvania’s energy industry provides a plethora of creative ways to achieve both of these goals and more.

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The Uncertain Future of Net Metering in Pennsylvania


     On June 2, 2016 the Independent Regulatory Review Commission (“IRRC”) appropriately voted 5-0 to disapprove the Pennsylvania Public Utility Commission’s (“PUC”) attempt to modify its regulations implementing the Alternative Energy Portfolio Standards (“AEPS”) Act, 73 P.S. §§1648.1, et seq.  The IRRC’s rejection was based primarily on its view that the PUC’s proposed regulations would exceed its statutory authority by limiting net-metering of electricity to entities with alternative energy systems sized to generate no more than 200% of their annual consumption.  The IRRC went on to state that if the PUC decides to proceed with the rulemaking by deleting this limit, it “should ensure that other provisions of the regulation do not limit a customer-generator’s ability to net-meter excess generation it produces.”  The IRRC also found that the PUC had failed to show any need for the modifications and suggested that because the PUC’s proposal appeared to be a change in policy of such a substantial nature consultation with the General Assembly was warranted.

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PHMSA Proposes Significant New Regulations Regarding Transmission and Gathering Pipelines


            On March 17, 2016 Pipeline and Hazardous Materials Safety Administration (PHMSA) released a 549 page Notice of Proposed Rulemaking (NPRM) that significantly changes regulations for transmission lines and imposes regulations on previously unregulated gathering lines carrying, inter alia, natural gas and petroleum products. 

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PUC Streamlines Gas Cost Rate Filings for Small Gas Companies


            The Pennsylvania Public Utility Commission (PUC) recently issued a final rule making order concerning recovery of fuel costs by gas utilities at Docket No. L-2013-2346923.  The full order can be found here:  http://www.pabulletin.com/secure/data/vol46/46-4/110.html  The Order is designed to simplify and streamline information and procedures for small gas utilities (gross intrastate operating revenues of $40 million or less) when submitting gas cost rate (GCR) filings with the PUC. 

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Water and Natural Gas Remain High on EPA’s New and Expanded National Enforcement Initiatives




On February 18, 2016, EPA Announced its Triennial National Enforcement Initiatives (“Initiatives”).  The EPA issues these Initiatives once every three years in order to help “focus time and resources on national pollution problems” according to Cynthia Giles, assistant administrator for enforcement and compliance assurance at EPA.  The latest round of Initiatives will begin on October 1, 2016 and once again will list natural gas producers and water authorities as targets for EPA inspections and enforcement.

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U.S. Supreme Court weighs in on line between FERC and States when it comes to demand response programs.


Yesterday the U.S. Supreme Court in a majority decision reversed the D.C. Circuit Court of Appeals’ decision and determined that a regional transmission organization’s (RTO) demand response program compensation comes under FERC’s jurisdiction. A demand response program is when, during high electricity demand, customers of electricity are paid not to use electricity. These demand response programs serve to lower electricity prices and increase the reliability of the electric grid. Center to the present issue is FERC’s issuance of Order No. 745 (Order 745). Order 745 requires market operators to pay the same price to demand response providers for conserving energy as to the generators for making energy. The D.C. Circuit Court held that FERC lacked authority to issue the order because Order 745 would directly regulate retail electricity rates. The D.C. Circuit Court also held that FERC’s demand response compensation scheme was arbitrary and capricious under the Administrative Procedure Act. The U.S. Supreme Court disagreed.

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Second Time is the Charm for Natural Gas Supplier Parties!

In a binding poll of the issues taken at its September 17, 2015 Public Meeting, the Pennsylvania Public Utility Commission (“PUC”) unanimously voted in support of the Natural Gas Supplier Parties’ (“NGS Parties”) request to modify the way Columbia Gas of Pennsylvania (“Columbia”) refunds back to customers’ their share of off-system sales revenue. 

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Columbia seeks yet another rate increase


Almost one year to the day from its 2014 rate increase filing, Columbia Gas of Pennsylvania is back before the Pennsylvania Public Utility Commission seeking an additional $46 million in revenue.

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Governor Extends Driving Hours to Assist in Delivery of Heating Oil and Propane



Despite high demand due to persistent cold weather, heating oil and propane will continue to flow to Pennsylvania homes due in part to the extension of the drivers’ hours-of-operation exemption issued by the Governor’s Office.

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“Tip Letter” and Records Related to Investigation Leading to PUC-Approved Settlement Not Subject to Disclosure


The PUC is not required to disclose a utility employee’s “tip letter” or other records relating to an investigation of the utility’s practices where the documents are not considered by the Commissioners when approving the resulting settlement. 

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PA Utility Eminent Domain Exercise Not Limited to “Absolute Necessity”

In a 5-2 en banc opinion issued December 22, the Commonwealth Court flatly rejected the notion that a utility must prove “absolute necessity” before resorting to condemnation.  Affirming the PUC’s grant of PPL Electric’s application to exercise its eminent domain power to acquire rights-of-way and easements over the private lands of protestants to construct a new eleven-mile transmission line across the Susquehanna River and a related substation, the Court reaffirmed prior case law adopting an easier hurdle for would-be utility condemnors.  As the Court reasoned:  “Under Protestants’ proposed standard, utilities could only seek approval … when a problem is looming and the resolution is ‘absolutely necessary.’  Utilities would essentially have to wait until an existing system fails before seeking approval of a project.  Not only would this approach be impractical and unrealistic, it would actually pose a danger to the health, safety and welfare of the public.”  Hess v. Pennsylvania Public Utility Commission, 1370 C.D. 2013 (December 22, 2014) (en banc).

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PA Supreme Court Upholds Narrow Application of the Service Point Doctrine to Impose Duty to Warn of Danger on Customer Premises Where Utility Has Actual or Constructive Knowledge of Danger


In a 4-2 decision,[1] the Pennsylvania Supreme Court upheld a Superior Court decision overturning the trial court and denying Duquesne Light summary judgment on the issue of whether a utility has a duty to warn a customer of potential danger on the customer’s side of the service point where the utility has taken affirmative action to restore service and has actual or constructive knowledge of such danger.  Alderwoods, Inc. v. Duquesne Light Co., No. 12 WAP 2013 (Pa. December 15, 2014).  The case arose from a fire caused by an electrical panel in the basement of Alderwoods’ funeral home after Duquesne restored service to the premises by making substantial repairs to a utility pole downed by a car crash outside the funeral home.   Slip op. at 2. 

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What does the future hold for Pennsylvania’s competitive energy markets?


As the PA PUC embarks on its investigation of the natural gas markets, what evidence can we discern about how the agency sees competitive energy markets and how those markets should evolve?

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NIMBYs and Environmental Groups Win First Round Before PUC Against Sunoco Pipeline


Sunoco’s proposed Mariner East pipeline that would transport natural gas liquids (NGLs) from Pennsylvania’s rich Marcellus Shale production in Western Pennsylvania to processing plants in southeastern Pennsylvania, received a blow from Pennsylvania Public Utility Commission ALJs on July 23, 2014.

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PUC Divested Of Remaining Marcellus Zoning Duties


In Robinson Township v. Commonwealth, 83 A.3d 901(Pa. 2013) the Pennsylvania Supreme Court invalidated key provisions of Act 13, the statute that removed from local zoning control the power to regulate oil and gas operations through restrictions on the placement and operation of  oil and gas facilities.  The Court remanded to the Commonwealth Court to consider whether other provisions of Act 13, including provisions that give the PUC power to review local zoning ordinances and withhold impact fees, remain viable.

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PUC POISED TO ACCEPT COMMENTS ON NATURAL GAS COMPETITION

The PUC’s deadline of December 12, 2013, to receive comments from interested parties on the current state of competitiveness of the natural gas market in Pennsylvania is drawing near.

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Pennsylvania Public Utility Commission Issues Proposed Rulemaking Order to Revise Evidentiary Criteria for Household Goods in Use Carrier Applicants

On September 12, 2013, The Pennsylvania Public Utility Commission (“Commission”) issued a Proposed Rulemaking Order by which it is recommending revisions to the evidentiary criteria applicable to household goods in use (moving companies) Applicants when they seek authorization to provide service in Pennsylvania.  The revisions recommended by the Commission would ease entry barriers for new Applicants, thereby promoting and encouraging increased competition within Pennsylvania.  It is the Commission’s expectation that increased competition will lead to better prices and enhanced service quality and reliability for Pennsylvania consumers.  

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PUC To Consider Revised Labeling Requirements for Electricity Suppliers

The Public Utility Commission (“PUC”) recently issued a Tentative Order in the matter of: The Use of Fixed Price Labels for Products With a Pass-Through Clause, Docket No. M-2013-2362961 (Tentative Order entered May 23, 2013), in which it requested interested parties to comment on what it views as an emerging problem: certain Electric Generation Suppliers (“EGS”) offering products labeled as “fixed price” when the products clearly are “variable price” products.  Comments were filed June 24 and a PUC decision is expected soon.

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STAFF ACTION CAUSES CONTROVERSY IN WHOLESALE MARKETS

In what will likely prove to be a controversial decision, the Staff of the Pennsylvania Public Utility Commission denied the request of First Energy Solutions (FES0 to be the assignee of two default service supply contracts, currently held by BP, for two tranches of supply each with Metropolitan Edison Company and West Penn Power Company. FEs has appealed Staff's action to the Commission itself.

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PUC ISSUES LONG AWAITED END-STATE ORDER

In an effort that is likely to fall short of the expectations of more than a few participants, the Pennsylvania Public Utility Commission (“Commission”) officially shared its vision of the next steps for encouraging more competitive electricity markets in the Commonwealth.

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