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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