The “Alternative Energy Portfolio Standards Act” (Act 213 of 2004) provides for the acquisition and sale of electricity generated from renewable and environmentally beneficial sources.
The act defines “Tier I Alternative Energy Sources” as any of the following:
§ Solar photovoltaic energy
§ Wind power
§ Low-impact hydropower
§ Geothermal energy
§ Biologically derived methane gas
§ Coal mine methane and
§ Fuel cells
§ Biomass energy
“Tier II Alternative Energy Sources” include:
§ Waste coal
§ Large-scale hydropower
§ Municipal solid waste
§ Distributed generation systems
§ Demand side management
§ Generation of electricity using by-products of the pulping process and wood manufacturing process
§ Integrated combined coal gasification technology
§ Two years after the effective date of the act (December 2006), at least 1.5 percent of the electric energy sold by an electric distribution company or electric generation supplier to retail customers in Pennsylvania shall be generated by Tier I alternative energy sources.
§ Three years after the effective date of the act, it shall be 3.0 percent.
§ The percentage shall increase by at least 0.5 percent each year until at least 8 percent of the electric energy sold by an electric distribution company or electric generation supplier to retail customers in Pennsylvania is generated by Tier I alternative energy sources (15 years after the effective date of the act).
Of the electric energy required to be sold from Tier I sources, the percentage that must be sold from photovoltaic technologies is:
§ Years 1 through 4 – 0.0013 percent
§ Years 5 through 9 - 0.0203 percent
§ Years 10 through 14 - 0.2500 percent
§ By year 15 and thereafter – 0.5000 percent
The Tier II share of the electrical energy required to be generated from alternative sources is as follows:
§ Years 1 through 4 - 4.2 percent
§ Years 5 through 9 – 6.2 percent
§ Years 10 through 14 – 8.2 percent
§ Year 15 and thereafter – 10 percent
Compliance with the Tier I and Tier II requirements shall not be required for any electric distribution company that has not reached the end of its cost-recovery period or for electric generation supplier sales in the service territory of an electric distribution company that has not reached the end of its cost-recovery period. At the conclusion of the cost-recovery period, compliance shall be required at the percentages in effect at that time.
The Pennsylvania Public Utility Commission (commission) shall establish an alternative energy credits program. An independent entity shall be approved by the commission to serve as the administrator of the program. The administrator of the program will create a system to certify, track, and report tradable credits. The administrator will also perform audits and verify that each electric distribution company or electric generation supplier is in compliance with the program. An electric distribution company or electric generation supplier would be able to purchase sufficient alternative energy credits to comply with the program. One credit would be worth one-megawatt hour of qualified alternative electric energy. An electric distribution company and electric generation supplier may bank or place in reserve alternative energy credits produced in one reporting year for compliance in either or both of the two subsequent reporting years.
The commission may impose an administrative fee on an alternative energy credit transaction. The amount of the fee may not exceed the actual cost of processing the transaction. The commission is authorized to use 5 percent of the fees generated to administrative expenses associated with the act.
If the commission determines that an electric distribution company or electric generation supplier has failed to comply the requirements for alternative energy credits, the commission shall impose an alternative compliance payment on that company or supplier. The alternative compliance payment shall be $45 times the number of additional alternative energy credits needed to comply. The alternative compliance payment for the solar photovoltaic share shall be 200 percent of the average market value of solar renewable energy credits sold during the reporting period. The alternative compliance payments are to be paid into Pennsylvania’s Sustainable Energy Funds (created under the legislation that restructured the electric utility industry) and used for projects that increase the amount of electric energy generated from alternative energy sources.
Rural electric cooperatives operating in Pennsylvania shall offer to its retail customers a voluntary program of energy efficiency and demand-side management to comply with the requirements of the act.
The Department of Environmental Protection shall ensure that all qualified alternative energy sources meet all applicable environmental standards. The commission and the department shall provide an annual report to the Senate and House Environmental Resources and Energy committees.