Pennsylvania Introduces Legislation Setting Aggressive Renewable Energy Goals

With Pennsylvania voters overwhelmingly in favor of legislation to address climate change (83% according to an August 2020 Global Strategy Group survey) recently introduced legislation could jumpstart Pennsylvania’s transition to a renewable energy future.  Pennsylvania will have two self-imposed goals for its energy future: (1) by 2035 all electricity will be produced from renewable energy sources, and (2) by 2050 all energy consumed in the commonwealth will be from renewable sources.

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RULE 2222: A Good Start in the FERC’s Efforts to Bring Renewables into Wholesale Markets


The purpose of this article is to unpack one of the most recent FERC Orders on alternative energy and discuss the new market opportunities, if any, that it will open to an industry struggling to find a path for broader customer engagement on renewables and demand reduction products.  The Federal Energy Regulatory Commission (“FERC”) latest order has changed the rules for who can participate in the wholesale power markets.  This latest FERC move will allow renewable energy producers as small as homeowners with a roof covered in solar panels or an electric vehicle in the garage, to participate in wholesale markets through aggregation with other smaller scale resources, despite being located on the distribution system. Under prior rules, most of these resources were too small to participate in the wholesale markets.  However, with its Order No. 2222, issued September 18, 2020, FERC changed the opportunities for these smaller users by permitting distributed energy resources (“DER”) to participate as part of an aggregation in wholesale markets operated by Regional Transmission Organizations (“RTO”) and Independent System Operators (“ISO”).  Despite, efforts to alter Order 2222 by Order 2222-A on March 18, 2021, and Order 2222-B on June 17, 2021, Order 2222 remains largely unchanged. 

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Net Metering is Back in Pennsylvania

            The Supreme Court today affirmed the Commonwealth Court’s invalidation of Pennsylvania Public Utility Commission (“PUC” or “Commission”) regulations that had the effect of blocking alternative energy project developments of 5 MW or less that propose to use net metering.  The PUC’s regulation had defined a developer of a net metering project as a “utility”; because the legislature in the PUC-administered Alternative Energy Portfolio Standards Act (“AEPS”), 73 P.S. §§1648.1, et seq. prohibited a “utility” from participating in net metering, the PUC’s regulation made it impossible for an alternative energy project developer from availing itself of net metering, essentially rendering such projects uneconomic. The Independent Regulatory Review Commission (“IRRC”) had voted to disapprove this attempt by the PUC to block developers from using net metering in their projects,[1] but the PUC submitted the regulations for legislative approval anyway, and because the general assembly was not in session, the IRRC process allowed the regulations to become law.

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Supplier Consolidated Billing Revisited

     Back in 2018 I wrote an article explaining all the reasons why supplier consolidated billing (“SBC”) was a good idea.[1]  Then, this morning, I saw an article in Energy Choice Matters, and it provided yet another reason why SBC should be the law.[2]  In the ECM story, the recently announced strategic initiatives of FirstEnergy Corp. (“FE”) were discussed, including an initiative to expand its offerings of products and services other than commodity to its captive electric distribution customers.   The FE press release extolled that these are “products and services that customers want” including energy efficient lighting, smart home products, maintenance, warranty, and home services.  These are all products and services that electric generation suppliers (“EGS”) and natural gas suppliers (“NGS”) provide to their customers and similarly wish to bill along with the commodity charges on a single bill.  The discussion makes it clear that FE believes that the billing relationship with customers is a key means of providing value to customers in the form of desirable products and services conveniently billed along with energy while providing incremental income opportunities for the provider of that commodity.  The article reveals another data point and strengthens the argument for SBC on grounds that not allowing it demonstrates discrimination and lack of fairness.

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Crystal Ball .21

A new year is upon us; and while that may facially seem like a good thing, the continued uncertainty has people anxious.  I feel challenged to consider what issues, concerns, and hot topics are likely to rise the surface in the next twelve months.  With the pandemic still at the top of the news queue most of the time, and with many people still working from home, if they are working at all, picking the possible hot-button issues is no easy task. The trick, if there is one, is to narrow down the range of probable outcomes – in this case, to things that were begun and not finished.  What follows are my predictions for those industries regulated by public utility commissions – and the Pennsylvania Public Utility Commission (“PaPUC”) in particular.

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Revamp of Telemarketer Act Cuts into Robo Calls but Falls Short of Needed Changes


On October 4, 2019, Governor Wolf signed into law Act 73 of 2019, and with it provided some much-needed updates to Pennsylvania’s Telemarketer Registration Act. 73 P.S. 2241, et seq. The changes were more surgical than sweeping and focused on a few key elements.  First, the revisions added a definition of a “business telephone subscriber” and then added business telephone numbers to all of the prohibitions and requirements of the Act.  The short answer here is that whatever requirements once applied only to residential and wireless customers, now also apply to businesses.  The second focus was to add a stand-alone definition of “robocall” and to impose requirements for robocalls.  The changes also include removing the 5-year lifespan of Do Not Call registrations – once you register, you are on the list until you deregister or abandon the line.  Finally, the new law prohibits making telemarketing calls on Legal Holidays.

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Which Pennsylvania utility will be the first to test the waters of alternative Ratemaking?

            After a long, complex path, Pennsylvania has finally arrived as an alternative ratemaking state.  But who will be the first utility to avail itself of the options now available? Both the Wolf administration (“Administration”) and the Public Utility Commission (“Commission”) seem eager to have a test subject, I mean a willing participant, to propose an alternative ratemaking design.  . But there are specific steps a utility must take in order to comply with, and obtain approval from, the Commission.

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Community Solar - Inching Its Way to Pennsylvania

            There have been at least two bills recently introduced in the Pennsylvania General Assembly[1] introducing a new model for expanding the deployment of solar energy production in the Keystone State.  Community Solar is not a technology but rather a business model that allows “community solar organizations” (community-based organizations or for-profit entities), to develop “Community solar facilities” (solar installations no larger than 3 MW under most circumstances) that have “subscribers”  (individuals or businesses who pay a subscription fee to receive a specified percentage of the solar output).  The subscription is transferable and provides a credit on the local electric utility bill for their subscribed portion of the output.  Legislation is required because this arrangement is not contemplated by the current renewables law, the Alternative Energy Portfolio Standards Act (“AEPS Act”), 73 P.S. §§ 1648.1, et seq., or the Electricity Generation Customer Choice and Competition Act (“Choice Act”), 66 Pa. C.S. §§ 2801, et seq.,- creating new obligations for both electric distribution companies (“EDC”) and the Public Utility Commission (“PUC”).

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Why the Skeptics are Wrong about Supplier Consolidated Billing

            The Pennsylvania Public Utility Commission opened a docket[1] this year to examine whether it should encourage or require supplier consolidated billing (“SCB”)[2].  SCB is when competitive energy suppliers, rather than the utility, bill the customer for all the services associated with their energy supply, including the utility’s distribution charges – sort of the opposite of how it happens today.  The reason I suggest that SCB is “sort of” the opposite of how things are done at present, is that when utilities bill and collect for suppliers now, they normally do so under a program called “purchase of receivables” or (“POR”) where the utility bills and collects from the customer and pays the supplier – regardless of whether the customer pays the utility.  The supplier pays a fee for this benefit equal to the utility’s bad debt percentage, which is known as the “POR discount”. For example, if a utility can’t collect 4% of what it charges to customers as a group, suppliers only get 96 cents on the dollar for the product they sell, even if the utility collects a larger percentage of charges to the supplier’s customers, which is often the case.  However, under the proposed SCB, the supplier would be required to remit 100% of charges back to the utility and manage the entire risk of uncollectible debts on its own.

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Is the PUC Preparing to Address Utility Rates in Light of the Recent Tax Cut?

Most US taxpayers are by now conscious of the passage of President Trump’s signature tax legislation which dramatically reduces the corporate tax rate from 35% to 21%.  What many folks may not know is that the rates they pay to their local utility include recovery for the income tax expense of those utilities.  This raises the question that some states, notably Kentucky and Oklahoma, have already begun to address: “How do regulators make sure that utility rates promptly reflect the substantial reduction in tax liability?”  In Oklahoma, the Attorney General has called upon the Oklahoma Corporation Commission to address the tax savings issue which he estimates to total $100 million statewide.  The Kentucky Public Service Commission already has ordered utilities to track their savings due to the tax change and to timely pass these savings on to customers.  Montana and Michigan are taking similar actions. 

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Legislation “Pipeline”

There are three bills before the Pennsylvania General Assembly that could impact basic services that many Pennsylvanians take for granted. All three involve jurisdiction over pipes that run underground in the Commonwealth.  The first two bills before the Pennsylvania General Assembly concern whether the Pennsylvania Public Utility Commission (“PUC”) or the municipalities/authorities will ultimately get to set rates and reasonable service standards for water and sewer service provided by municipalities.  The third bill before the General Assembly came into the spotlight on October 10, 2017 when Rep. Barrar filed a resolution, strongly urging the PUC to deny Laurel Pipeline’s Application to reverse the flow of its Philadelphia-to-Pittsburgh pipeline from the current westerly flow to easterly. 

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IRRC Shoots Down AEPS Regulations a Second Time


When Pennsylvania’s Independent Regulatory Review Commission (“IRRC”) voted unanimously at its June 30, 2016 meeting to disapprove for a second time the Pennsylvania Public Utility Commission’s (“PUC”) recent efforts to modify its regulations implementing the Alternative Energy Portfolio Standards(“AEPS”) Act,[1] it was aware that its action would at most place a speed bump in the PUC’s path, but it disapproved the regulations anyway

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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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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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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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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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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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