2019003520 03/08/19 #66 AN ACT Amending the act of November 30, 2004 (P.L.1672, No.213), entitled, "An act providing for the sale of electric energy generated from renewable and environmentally beneficial sources, for the acquisition of electric energy generated from renewable and environmentally beneficial sources by electric distribution and supply companies and for the powers and duties of the Public Utility Commission," further providing for definitions, for alternative energy portfolio standards, for portfolio requirements in other states, for health and safety standards and for interagency responsibilities; and providing for Tier alternative energy sources and for capacity payments to alternative energy sources. The General Assembly of the Commonwealth of hereby enacts as follows: Section 1. The definitions of "alternative energy credit," "alternative energy sources," "force majeure" and "reporting period" in section 2 of the act of November 30, 2004 No.213), known as the Alternative Energy Portfolio Standards Act, are amended and the section is amended by adding definitions to read: Section 2. Definitions. The following words and phrases when used in this act shall 2019D03520 1 have the meanings given to them in this section unless the context clearly indicates otherwise: "Alternative energy credit." A tradable instrument that is used to establish, verify and monitor compliance with this act. A unit of credit shall equal one megawatt hour of electricity from an alternative energy source and shall only be used to satisfy the requirement to purchase Tier I, Tier II or Tier alternative energy credits. The alternative energy credit shall remain the property of the alternative energy system until the alternative energy credit is voluntarily transferred by the alternative energy system. ir'k-k "Alternative energy sources." The term shall include the following existing and new sources for the production of electricity: (1) Solar photovoltaic or other solar electric energy. (2) Solar thermal energy. (3) Wind power. (4) Large?scale hydropower, which shall mean the production of electric power by harnessing the hydroelectric potential of moving water impoundments, including pumped storage that does not meet the requirements of low?impact hydropower under paragraph (5). (5) Low?impact hydropower COnsisting of any technology that produces electric power and that harnesses the hydroelectric potential of moving water impoundments, provided such incremental hydroelectric development: does not adversely change existing impacts to aquatic systems; (ii) meets the certification standards established 2019DO3520 - 2 the Low Impact Hydropower Institute and American Rivers, Inc., or their successors; provides an adequate water flow for protection of aquatic life and for safe and effective fish passage; (iv) protects against erosion; and protects cultural and historic resources. (6) Geothermal energy, which shall mean electricity produced by extracting hot water or steam from geothermal reserves in the earth's crust and supplied to steam turbines that drive generators to produce electricity. (7) Biomass energy, which shall mean the generation of electricity utilizing the following: organic material from a plant that is grown for the purpose of being used to produce electricity or is protected by the Federal Conservation Reserve Program (CRP) and provided further that crop production on CRP lands does not prevent achievement of the water quality protection, soil erosion prevention or wildlife enhancement purposes for which the land was primarily set aside; or (ii) any solid nonhazardous, cellulosic waste material that is segregated from other waste materials, such as waste pallets, crates and landscape or right?of? way tree trimmings or agricultural sources, including orchard tree crops, vineyards, grain, legumes, sugar and other crop by?products or residues. (8) Biologically derived methane gas, which shall include methane from the anaerobic digestion of organic materials from yard waste, such as grass clippings and leaves, food waste, animal waste and sewage sludge. The term 2019D03520 - 3 - LAM also includes landfill methane gas. (9) Fuel cells, which shall mean any electrochemical device that converts chemical energy in a hydrogen?rich fuel directly into electricity, heat and water without combustion. (10) Waste coal, which shall include the combustion of waste coal in facilities in which the waste coal was disposed or abandoned prior to July 31, 1982, or disposed of thereafter in a permitted coal refuse disposal site regardless of when disposed of, and used to generate electricity, or such other waste coal combustion meeting alternate eligibility requirements established by regulation. Facilities combusting waste coal shall use at a minimum a combined fluidized bed boiler and be outfitted with a limestone injection system and a fabric filter particulate removal system. Alternative energy credits shall be calculated based upon the proportion of waste coal utilized to produce electricity at the facility. (11) Coal mine methane, which shall mean methane gas emitting from abandoned or working coal mines. (12) Demand?side management consisting of the management of customer consumption of electricity or the demand for electricity through the implementation of: energy efficiency technologies, management practices or other strategies in residential, commercial, institutional or government customers that reduce electricity consumption by those customers; (ii) load management or demand response technologies, management practices or other strategies in residential, commercial, industrial, institutional and government customers that shift electric load from 2019DO3520 4 - periods of higher demand to periods of lower demand; or industrial by-product technologies consisting of the use of a by?product from an industrial process, including the reuse of energy from exhaust gases or other manufacturing by?products that are used in the direct production of electricity at the facility of a customer. (l3) Distributed generation system, which shall mean the small?scale power generation of electricity and useful thermal energy. (14) Energy from nuclear fission used to generate electricity. 'k 1k 1% "Force majeure." Upon its own initiative or upon a request of an electric distribution company or an electric generator supplier, the Public Utility Commission, within 60 days, shall determine if alternative energy resources are reasonably available in the marketplace in sufficient quantities for the electric distribution companies and electric generation suppliers to meet their obligations for that reporting period under this act. In making this determination, the commission shall consider whether electric distribution companies or electric generation suppliers have made a good faith effort to acquire sufficient alternative energy to comply with their obligations. Such good faith efforts shall include, but are not limited to, banking alternative energy credits during their transition periods, seeking alternative energy credits through competitive solicitations and seeking to procure alternative energy credits or alternative energy through long?term contracts. In further making its determination, the commission shall assess the availability of alternative energy credits in 2019DO3520 - 5 the Generation Attributes Tracking System (GATS) or its successor and the availability of alternative energy credits generally in and other jurisdictions in [the PJM Interconnection, L.L.C. regional transmission organization (PJM) or its successor] EQM. The commission may also require solicitations for alternative energy credits as part of default service before requests of force majeure can be made. If the commission further determines that alternative energy resources are not reasonably available in sufficient quantities in the marketplace for the electric distribution companies and electric generation suppliers to meet their obligations under this act, then the commission shall modify the underlying obligation of the electric distribution company or electric generation supplier or recommend to the General Assembly that the underlying obligation be eliminated. Commission modification of the electric distribution company or electric generation supplier obligations under this act shall be for that compliance period only. Commission modification shall not automatically reduce the obligation for subsequent compliance years. If the commission modifies the electric distribution company or electric generation supplier obligations under this act, the commission may require the electric distribution company or electric generation supplier to acquire additional alternative energy credits in subsequent years equivalent to the obligation reduced due to a force majeure declaration if the commission determines that sufficient alternative energy credits exist in the marketplace. "Load?serving entities." As follows: (1) Entities or the duly designated agents of the entities, including load aqgregators or power marketers, 2019DO3520 - 6 - DOM that: serve end users within the PJM region; and (ii) have been granted the authority or have an obligation under a State law, local ordinance, regulation or franchise to sell electric energy to end users located within the PJM region. (2) The term shall include end use customers that qualify under State rules or utility retail tariffs to manage directly their own supply of electric power and energy and use of transmission and ancillary services. The PJM Interconnection, L.L.C. regional transmission organization or its successor. ["Reporting period."] "Reporting period" or "reporting year." The 12?month period from June 1 through May 31. A reporting year shall be numbered according to the calendar year in which it begins and ends. ir-k-k "Tier I projected price." The Tier I projected price shall equal the average of the Tier I futures price for the current reporting year and the subsequent two reporting years. For the purposes of calculating the Tier I projected price, the Tier I futures price for each reporting year shall be the average of the closing price on each trade date during the calendar year that ends immediately prior to the start of the current reporting year for alternative energy credits that are eligible to meet the Tier I renewable energy requirement in this Commonwealth. "Tier alternative energy credit reporting period price." 2019D03520 7 follows: (1) Except as provided under paraqraph (2), the Tier alternative enerqy credit reportinq period price shall be determined by the commission 60 days before the start of each reportinq year. (2) For the first reportinq period for the Tier proqram, the commission may determine the Tier alternative enerqy credit reporting period price no later than 60 days after the start of the reportinq year. (3) The Tier alternative enerqy credit reportinq period price shall be equal to the Tier I projected price and shall not be less than the Tier price floor or qreater than the Tier price cap. "Tier alternative enerqv source." A zero?emission alternative enerqv source that: (1) Is derived from: Solar photovoltaic and solar thermal enerqy. (ii) Wind power. Low?impact hydropower. (iv) Geothermal enerqy. Nuclear fission. (2) Satisfies all of the followinq: The alternative enerqy source is interconnected with capacity injection riqhts within the reqional transmission orqanization with responsibility for this Commonwealth. (ii) If the alternative enerqy source were to cease operation or fail to come in?service, all of the followinq would occur: (A) The ability of this Commonwealth or reqions 2019D03520 - 8 - this Commonwealth to maintain or decrease existinq levels of volatile orqanic compounds or to comply with Federal or State air pollution control proqrams, standards or qoals is reduced. (B) The carbon dioxide emissions that result from electricity consumed in this Commonwealth are neqatively impacted. (C) The ability of this Commonwealth to maintain or decrease existinq levels of carbon monoxide, lead, qround?level ozone, particulate matter, nitroqen oxide or sulfur dioxide is neqatively impacted. (3) On or after January 1, 2017, satisfies any of the following: Reqardless of the alternative enerdy source's location, did not receive tax exemptions, deferralsL exclusions, allowances, payments, credits, deductions or reimbursements from another state calculated in whole or in part usinq a metric that provides value for emissions not produced by the alternative enerqy source. (ii) Is not wholly owned by a municipal or cooperative corporation or a qroup, association or consortium of a municipal or cooperative corporations. Did not, at any point during the Tier proqram, recover some or all of the capital or operatinq costs of the resource throuqh cost?based rates requlated by a state. "Tier price cap." As follows: (1) Except as provided under paraqraph (2), the Tier price cap shall be initially equal to the product of 65% and the weiqhted averaqe price of credits that were retired for 2019D0352O 9 DOM Tier I compliance for the reportinq year endinq May 31, 2017, as reflected in the commission's 2017 Annual Report of Alternative Enerqy Portfolio Standards Act of 2004. (2) If the Commonwealth participates in a Statewide emissions fee proqram or a reqional multistate qreenhouse qas proqram, the initial Tier 111 price cap shall be adiusted annually by the ratio of the averaqe price for allowances under the proqram for the previous reportinq year in price per ton divided by $15 per ton. "Tier 111 price floor." As follows: (1) Except as provided under paraqraph (2), the Tier 111 price floor shall be initially equal to the product of 50% and the weiqhted averaqe price of credits that were retired for Tier I compliance for the reportinq year endinq May 31. 2017, as reflected in the commission's 2017 Annual Report of Alternative Enerqy Portfolio Standards Act of 2004. (2) If the Commonwealth participates in a Statewide emissions fee proqram or a reqional multistate Greenhouse qas proqram, the initial Tier price floor shall be adjusted annually by the ratio of the averaqe price for allowances under the proqram for the previous reportinq year in price per ton divided by $15 per ton. "Tier proqram." The period commencinq at the beqinninq the 14th reportinq year on June 1, 2019, to May 31, 2020. 'Jr Section 2. Section and of the act are amended and the section is amended by adding a subsection to read: Section 3. Alternative energy portfolio standards. General compliance and cost recovery.-- 2019D03520 10 (1) From the effective date of this act through and including the 15th year after enactment of this act and each year thereafter, the electric energy sold by an electric distribution company or electric generation supplier to retail electric customers in this Commonwealth shall be comprised of electricity generated from alternative energy sources and in the percentage amounts as described under subsections and (2) Electric distribution companies and electric generation suppliers shall satisfy both requirements set forth in subsections and provided, however, that an electric distribution company or an electric generation supplier shall be excused from its obligations under this section to the extent that the commission determines that force majeure exists. (2.1) Beginning June 1, 2019, and each year thereafter, Tier alternative energy credits shall be purchased by electric distribution companies as described under subsection provided, however, that an electric distribution company shall be excused from its obligations under this section to the extent that the commission determines that force majeure exists. (3) All costs for: the purchase of electricity generated from Tier I and Tier II alternative energy sources, including the costs of the regional transmission organization, in excess of the regional transmission organization real? time locational marginal pricing, or its successor, at the delivery point of the alternative energy source for the electrical production of the alternative energy 20191303520 11 sources; and (ii) payments for Tier I and Tier 11 alternative energy credits[, in both_casesl that are voluntarily acquired by an electric distribution company during the cost recovery period on behalf of its customers shall be deferred as a regulatory asset by the electric distribution company and fully recovered, with a return on the unamortized balance, pursuant to an automatic energy adjustment clause under 66 1307 (relating to sliding scale of rates; adjustments) as a cost of generation supply under 66 2807 (relating to duties of electric distribution companies) in the first year after the expiration of its cost- recovery period. After the cost-recovery period, any direct or indirect costs for the purchase by electric distribution companies of resources to comply with this section, including, but not limited to, the purchase of electricity generated from Tier I and Tier II alternative energy sources, payments for alternative energy credits, cost of credits banked, payments to any third party administrators for performance under this act and costs levied by a regional transmission organization to ensure that Tier I and Tier II alternative energy sources are reliable, shall be recovered on a full and current basis pursuant to an automatic energy adjustment clause under 66 1307 as a cost of generation supply under 66 2807. (4) Any direct and indirect costs incurred by electric distribution companies to comply with subsection and sections 8.1 and 8.2, including, but not limited to, the 2019D03520 - 12 purchase of Tier alternative energy credits and payments to any third?party administrators for performance under this act shall be recovered on a full and current basis pursuant to a nonbypassable adjustment clause under 66 1307. Tier I and solar photovoltaic shares.?? (1) Two years after the effective date of this act, at least 1.5% of the electric energy sold by an electric distribution company or electric generation supplier to retail electric customers in this Commonwealth shall be generated from Tier I alternative energy sources. Except as provided in this section, the minimum percentage of electric energy required to be sold to retail electric customers from alternative energy sources shall increase to 2% three years after the effective date of this act. The minimum percentage of electric energy required to be sold to retail electric customers from alternative energy sources shall increase by at least 0.5% each year so that at least 8% of the electric energy sold by an electric distribution company or electric generation supplier to retail electric customers in that certificated territory in the 15th year after the effective date of this subsection is sold from Tier I alternative energy resources. (2) The total percentage of the electric energy sold by an electric distribution company or electric generation supplier to retail electric customers in this Commonwealth that must be sold from solar photovoltaic technologies is: 0.0013% for June 1, 2006, through May 31, 2007. (ii) 0.0030% for June 1, 2007, through May 31, 2008. 0.0063% for June 1, 2008, through May 31, 2009. 2019D03520 - 13 - (iv) 0.0120% for June 1, 2009, through May 31, 2010. 0.0203% for June 1, 2010, through May 31, 2011. (vi) 0.0325% for June 1, 2011, through May 31, 2012. (vii) 0.0510% for June 1, 2012, through May 31, 2013. 0.0840% for June 1, 2013, through May 31, 2014. (ix) 0.1440% for June 1, 2014, through May 31, 2015. 0.2500% for June 1, 2015, through May 31, 2016. (xi) 0.2933% for June 1, 2016, through May 31, 2017. (xii) 0.3400% for June 1, 2017, through May 31, 2018. 0.3900% for June 1, 2018, through May 31, 2019. (xiv) 0.4433% for June 1, 2019, through May 31, 2020. (xv) 0.5000% for June 1, 2020, and thereafter. (3) Upon commencement of the beginning of the 6th reporting year, the commission shall undertake a review of the compliance by electric distribution companies and electric generation suppliers with the requirements of this act. The review shall also include the status of alternative energy technologies within this Commonwealth and the capacity to add additional alternative energy resources. The commission shall use the results of this review to recommend to the General Assembly additional compliance goals beyond year 15 for Tier I and Tier II shares. The commission shall work with the department in evaluating the future alternative energy resource potential. 2019DO3520 - 14 - Tier share.-- (1) Durinq the Tier proqram, electric distribution companies shall purchase Tier alternative enerqy credits equal to 50% of the total electric enerqy, net of system losses, sold in a reportinq period in a service territory by the electric distribution companies and electric qeneration suppliers in accordance with section Notwithstandinq any other provision of law, the obligations of electric distribution companies under this subsection shall not be subject to 66 or (3.7). Nothinq in this subsection shall be construed to obliqate an electric distribution company to purchase electric enerqy from a Tier alternative enerqy source. (2) This subsection shall expire after an effective cost of carbon emissions exists in this Commonwealth that is equal to no less than an averaqe of $15 per ton over three consecutive reportinq periods as a result of the enactment of a Statewide emissions fee proqram or_participation by the Commonwealth in a regional multistate qreenhouse qas proqram. (3) Upon the enactment of a Statewide emissions fee proqram or participation by the Commonwealth in a reqional multistate qreenhouse qas proqram, the commission shall submit a notice to the Leqislative Reference Bureau for publication in the Bulletin. (4) This subsection shall expire on the date the notice under paraqraph (3) is published in the Bulletin. ?Jr Alternative energy credits.?- (1) The commission shall establish an alternative energy 2019D0352O - 15 - credits program as needed to implement this act. The provision of services pursuant to this section shall be exempt from the competitive procurement procedures of 62 (relating to procurement). (2) The commission shall approve an independent entity to serve as the alternative energy credits program administrator. The administrator shall have those powers and duties assigned by commission regulations. Such powers and duties shall include, but not be limited to, the following: To create and administer an alternative energy credits certification, tracking and reporting program. This program should include, at a minimum, a process for qualifying alternative energy systems and determining the manner credits can be created, accounted for, transferred and retired. (ii) To submit reports to the commission at such times and in such manner as the commission shall direct. (3) All qualifying alternative energy systems must include a qualifying meter to record the cumulative electric production to verify the [advanced] alternative energy credit value. Qualifying meters will be approved by the commission as defined in paragraph (4). (4) An electric distribution company or electric generation supplier shall comply with the applicable requirements of this section by purchasing sufficient alternative energy credits and submitting documentation of compliance to the program administrator. (ii) For purposes of this subsection, one alternative energy credit shall represent one megawatt hour of qualified alternative electric generation, 2019D03520 - l6 - whether self-generated, purchased along with the electric commodity or separately through a tradable instrument and otherwise meeting the requirements of commission regulations and the program administrator. (5) The alternative energy credits program shall include provisions requiring a reporting period as defined in section 2 for all covered entities under this act. The alternative energy credits program shall also include a true?up period as defined in section 2. The true-up period shall provide entities covered under this act the ability to obtain the required number of alternative energy credits or to make up any shortfall of the alternative energy credits they may be required to obtain to comply with this act. A force majeure provision shall also be provided for under the true-up period provisions. (6) An electric distribution company and electric generation supplier may bank or place in reserve Tier I and Tier II alternative energy credits produced in one reporting year for compliance in either or both of the two subsequent reporting years, subject to the limitations set forth in this subsection and provided that the electric distribution company and electric generation supplier are in compliance for all previous reporting years. In addition, the electric distribution company and electric generation supplier shall demonstrate to the satisfaction of the commission that such credits: were in excess of the alternative energy credits needed for compliance in the year in which they were generated and that such excess credits have not previously been used for compliance under this act; 2019D03520 l7 (JUN (ii) were produced by the generation of electrical energy by alternative energy sources and sold to retail customers during the year in which they were generated; and have not otherwise been nor will be sold, retired, claimed or represented as part of satisfying compliance with alternative or renewable energy portfolio standards in other states. (7) An electric distribution company or an electric generation supplier with sales that are exempted under subsection may bank credits for retail sales of electricity generated from Tier I and Tier II sources made prior to the end of the cost?recovery period and after the effective date of this act. Bankable credits shall be limited to credits associated with electricity sold from Tier I and Tier II sources during a reporting year which exceeds the volume of sales from such sources by an electric distribution company or electric generation supplier during the 12?month period immediately preceding the effective date of this act. All credits banked under this subsection shall be available for compliance with subsections and for no more than two reporting years following the conclusion of the cost- recovery period. (8) The commission or its designee shall develop a registry of pertinent information regarding all available alternative energy credits, credit transactions among electric distribution companies and electric generation suppliers, the number of alternative energy credits sold or transferred and the price paid for the sale or transfer of the credits. The registry shall provide current information 2019D03520 - 18 - electric distribution companies, electric generation suppliers and the general public on the status of alternative energy credits created, sold or transferred within this Commonwealth. (9) The commission may impose an administrative fee on an alternative energy credit transaction. The amount of this fee may not exceed the actual direct cost of processing the transaction by the alternative energy credits administrator. The commission is authorized to utilize up to 5% of the alternative compliance fees generated under subsection for administrative expenses directly associated with this act. (10) The commission shall establish regulations governing the verification and tracking of energy efficiency and demand-side management measures pursuant to this act, which shall include benefits to all utility customer classes. When developing regulations, the commission must give reasonable consideration to existing and proposed regulations and rules in existence in the regional transmission organizations that manage the transmission system in any part of this Commonwealth. All verified reductions shall accrue credits starting with the passage of this act. (ll) The commission shall within 120 days of the effective date of this act develop a depreciation schedule for alternative energy credits created through demand?side management, energy efficiency and load management technologies and shall develop standards for tracking and verifying savings from energy efficiency, load management and demand?side management measures. The commission shall allow for a 60?day public comment period and shall issue final 2019DO3520 l9 standards within 30 days of the close of the public comment period. (12) Unless a contractual provision explicitly assigns alternative energy credits in a different manner, the owner of the alternative energy system or a customer?generator owns any and all alternative energy credits associated with or created by the production of electric energy by such facility or customer, and the owner or customer shall be entitled to sell, transfer or take any other action to which a legal owner of property is entitled to take with respect to the credits. Alternative compliance payment.-? (1) At the end of each program year, the program administrator shall provide a report to the commission and to each covered electric distribution company showing their status level of alternative energy acquisition. (2) The commission shall conduct a review of each determination made under subsections [and]L and If, after notice and hearing, the commission determines that an electric distribution company or electric generation supplier has failed to comply with subsections [and]_L and as applicable, the commission shall impose an alternative compliance payment on that electric distribution company or electric generation supplier. (3) The alternative compliance payment, with the exception of the solar photovoltaic share compliance requirement set forth in [subsection] subsections agg_ (QL1), shall be $45 times the number of additional alternative energy credits needed in order to comply with subsection or 2019D03520 2O - (JUN (4) The alternative compliance payment for the solar photovoltaic share shall be 200% of the average market value of solar renewable energy credits sold during the reporting period within the service region of the regional transmission organization, including, where applicable, the levelized up? front rebates received by sellers of solar renewable energy credits in other jurisdictions in the PJM [Interconnection, L.L.C. transmission organization (PJM) or its successor.] region. (4.1) The alternative compliance payment for the Tier share shall be 200% of the Tier alternative energy credit reporting period price for the applicable reporting period times the number of additional alternative energy credits needed in order to comply with subsection (5) The commission shall establish a process to provide for, at least annually, a review of the alternative energy market within this Commonwealth and the service territories of the regional transmission organizations that manage the transmission system in any part of this Commonwealth. The commission will use the results of this study to identify any needed changes to the cost associated with the alternative compliance payment program. If the commission finds that the costs associated with the alternative compliance payment program must be changed, the commission shall present these findings to the General Assembly for legislative enactment. Transfer to sustainable development funds.-- (1) Notwithstanding the provisions of 66 511 (relating to disposition, appropriation and disbursement of assessments and fees) and 3315 (relating to disposition of fines and penalties), alternative compliance payments imposed 2019D0352O 21 1 pursuant to this act for failure to comply with subsections 2 and shall be paid into Sustainable 3 Energy Funds created under the commission's restructuring 4 orders under 66 Ch. 28 (relating to restructuring of 5 electric utility industry). Alternative compliance payments 6 shall be paid into a special fund of the 7 Sustainable Energy Board, established by the commission under 8 Docket and made available to the Regional 9 Sustainable Energy Funds under procedures and guidelines 10 approved by the Energy Board. 11 (2) The alternative compliance payments for failure to 12 comply with subsections and shall be utilized solely 13 for projects that will increase the amount of electric energy 14 generated from alternative energy resources for purposes of 15 compliance with subsections and 16 (3) The alternative compliance payments for failure to 17 comply with subsection shall be divided as follows: 18 Fifty percent shall be paid consistent with 19 paragraphs (1) and (2). 20 (ii) Fifty percent shall be utilized by the 21 alternative energy credits program administrator to pay 22 Tier alternative energy sources for Tier 23 alternative energy credits that were otherwise not 24 purchased due to the failure to comply with subsection 25 26 27 Section 3. Sections 4 and 6 of the act are amended to read: 28 Section 4. Portfolio requirements in other states. 29 If an electric distribution [supplier] company or electric 3O generation company [provider] supplier sells electricity in any 2019DO3520 - 22 - other state and is subject to renewable energy portfolio requirements in that state, they shall list any such requirement and shall indicate how it satisfied those renewable energy portfolio requirements. To prevent double?counting, the electric distribution [supplierl company or electric generation company shall not satisfy alternative energy portfolio requirements using alternative energy used to satisfy another state's portfolio requirements or alternative energy credits already purchased by individuals, businesses or government bodies that do not have a compliance obligation under this act unless the individual, business or government body sells those credits to the electric distribution company or electric generation supplier. Energy derived from alternative energy sources inside the geographical boundaries of this Commonwealth shall be eligible to meet the compliance requirements under this act. Energy derived from alternative energy sources located outside the geographical boundaries of this Commonwealth but within the service territory of a regional transmission organization that manages the transmission system in any part of this Commonwealth shall only be eligible to meet the compliance requirements of electric distribution companies or electric generation suppliers located within the service territory of the same regional transmission organization. For purposes of compliance with this act, alternative energy sources located in [the PJM regional transmission organization (PJM) or its successor] Bg?Ls service territory shall be eligible to fulfill compliance obligations of all electric distribution companies and electric generation suppliers. Energy derived from alternative energy sources located outside the service territory of a regional 2019DO3520 23 transmission organization that manages the transmission system in any part of this Commonwealth shall not be eligible to meet the compliance requirements of this act. Electric distribution companies and electric generation suppliers shall document that this energy was not used to satisfy another state's renewable energy portfolio standards. Section 6. Health and safety standards. The department shall cooperate with the Department of Labor and Industry as necessary in developing health and safety standards, as needed, regarding facilities generating energy from Tier I and Tier II alternative energy sources. The department shall establish appropriate and reasonable health and safety standards to ensure uniform and proper compliance with this act by owners and operators of facilities generating energy from Tier I and Tier II alternative energy sources as defined in this act. Section 4. Section 7 of the act is amended by adding a subsection to read: Section 7. Interagency responsibilities. Enforcement.??In addition to any powers expressly specified under this act, the commission may enforce the provisions of this act in accordance with the commission's regulations and orders and the commission may modify or rescind the regulations or orders. Nothing in this subsection shall be construed to exclude any authority which the commission would otherwise have under this act or 66 (relating to public utilities}. Section 5. The act is amended by adding sections to read: Section 8.1. Tier alternative energy sources. 2019D0352O 24 Participation.??An alternative enerqy source seekinq to apply for participation in the Tier program shall file a written notice with the commission. The written notice shall contain all of the followinq informationThe alternative enerqy source's qualifications as a Tier alternative enerqy source. (2) The estimated qeneration of the alternative enerqy resources consistent with subsection (3) The alternative enerqy source's commitment to sell the entire output of the alternative enerqy source as Tier credits for at least six reportinq periods with the commission no later than 90 days after the start of the first Tier proqram reportinq period. The provisions of subsection shall apply for the entire first reportinq period if the alternative enerqy source is desiqnated as a Tier alternative enerqy source by the commission. Review.?? The alternative enerqy source shall submit the notice filed under subsection to the Leqislative Reference Bureau for publication in the Bulletin in the first available issue after filinq the notice with the commission. Any comments in response to the notice filed under subsection shall be submitted no later than 20 days after the notice isgpublished in the Bulletin and any reply comments shall be submitted no later than 10 days after the initial comments are submitted. (2) The commission shall review each notice filed under subsection and all comments submitted under this paraqraph and rank each applicant for participation in the Tier proqram from first to last based on how well the 2019D03520 25 alternative enerqy source satisfies the criteria specified under this act. No later than 90 days after reviewinq each notice filed under subsection the commission shall select the applicants that will participate in the Tier proqram accordinq to their rankinq. Beqinninq with the top? ranked applicant and continuinq in rank order, the commission shall select applicants up to the point at which the combined sum of meqawatt hours of estimated qeneration by all selected applicants equals approximately 50% of the total number of meqawatt hours of electricity distributed by electric distribution companies in this Commonwealth, net of system losses, for the latest calendar year reported in the most recent Electric Power Outlook or other report reviewinq the qeneration, transmission and distribution capacity in this Commonwealth published by the commission. For the purposes of this calculation, the estimated qeneration shall be as follows: For existinq alternative enerqy resources fueled by nuclear fission, the estimated qeneration shall be equal to the product of 77% multiplied by 8,760 hours per year multiplied by the nameplate capacity of the plant. (ii) For existinq alternative enerqy resources not fueled by nuclear fission, the estimated qeneration shall be equal to the qeneration output of the resources in the calendar year which concludes immediately prior to the date upon which qualification applications are due. For new alternative enerqy resources, the estimated qeneration is equal to the product of 8,760 hours per year multiplied by the nameplate capacity of the resource multiplied by the average capacity factor of 2019D03520 26 similar existinq resources. (3) The commission shall select the marqinal applicant to participate in the Tier proqram if the addition of 50% of the estimated qeneration produced by the marqinal applicant does not cause the combined sum of meqawatt hours of estimated deneration from all selected applicants, includinq the marqinal unitl to exceed 50% of the total number of meqawatt hours of electricity distributed by electric distribution companies in this Commonwealth in the calendar year which concludes immediately prior to the date upon which qualification applications are due. (4) Once designated as a Tier alternative enerqy source, an alternative enerqy source shall continue to be considered a Tier alternative enerqy source as lonq as the alternative enerqy source continues to meet the criteria specified under this act. Transfers and payments.?? (1) No later than 35 days after the close of each reportinq period, each Tier alternative enerqy source shall transfer all Tier alternative enerqy credits for the reportinq period to the alternative energy credit proqram administrator. The proqram administrator shall hold the Tier alternative enerqy credits on behalf of the Tier alternative enerqy sources for the sole purpose of administerinq the Tier proqram. (2) No later than seven days after all Tier alternative enerqy sources have transferred the credits under paraqraph (1), each electric distribution company shall purchase Tier alternative enerqy credits from the alternative enerqy credit proqram administrator at the Tier 2019D0352O 27 - alternative enerqy credit reportinq period price for the reportinq period to satisfy each electric distribution company's Tier obliqations. (3) No later than seven days after each electric distribution company purchases Tier alternative energy credits under paraqraph (2), the alternative energy credit proqram administrator shall pay each Tier alternative enerqy source for the Tier alternative enerqy credits transferred to the alternative enerqy credit proqram administrator under paraqraph in accordance with the following: If the total quantity of Tier alternative enerqy credits transferred to the alternative enerqy credit program administrator is less than the sum of the Tier shares for all electric distribution companies in this Commonwealth, then each electric distribution company's Tier share for that delivery year shall be each electric distribution company's proportional share of transferred Tier credits. An electric distribution company's proportional share shall be a percentaqe equal to the total electric enerqy sold in a service territory by the electric distribution company and electric qeneration suppliers divided by the total electric enerqy sold by all electric distribution companies and electric qeneration suppliers in this Commonwealth. (ii) If the sum of Tier alternative enerqy credits transferred to the alternative enerqy credit proqram administrator from all Tier alternative enerqy sources is qreater than the sum of the Tier shares for all electric distribution companies in this - 28 - Commonwealth, then each Tier alternative enerqy source shall be paid for each of the Tier alternative enerqy source's prorated share of transferred Tier credits. Tier alternative enerqy credits transferred to the proqram administrator that exceed the sum of the Tier shares for all electric distribution companies in this Commonwealth shall be retired. An alternative enerqy source's prorated share shall be a percentaqe equal to the sum of Tier shares for all electric distribution companies in this Commonwealth divided by the sum of Tier alternative enerqy credits transferred to the proqram administrator from all Tier alternative enerqy sources. Credits purchased by, electric distribution companies may not be transferred, sold or assiqned to any other entity. Suspension of operations.?? (I) A desiqnated Tier alternative enerqy source shall be excused from the desiqnated Tier alternative enerqy source's commitment to operate for at least six reportinq periods and shall no lonqer receive Tier alternative enerqy credits if any of the followinq apply: The designated Tier alternative enerqy source suspends or ceases operations, despite the desiqnated Tier alternative enerqy source's reasonable efforts to continue operations, due to an event beyond the desiqnated Tier alternative enerqy source's control, includinq, but not limited to, acts of God, flood, drouqht, earthquake, storm, fire, liqhtninq, epidemic, war, riot, labor or material shortaqe, sabotaqe or explosion. The desiqnated Tier alternative enerqy 2019DO3520 29 source shall no lonqer be excused from performance and payment of Tier alternative credits after the conclusion of an event specified under this subparaqraph. (ii) The General Assembly enacts a new law imposinq a material new tax, special assessment or fee on the qeneration of electricity, the ownership or leasehold of a qeneratinq unit or the privileqe or occupation of the qeneration, ownership or leasehold of qeneration units by a desiqnated Tier alternative enerqy source. The Conqress of the United States or General Assembly enacts a law that materially reduces the Tier alternative enerqv credit reportinq period price. (iv) The Federal Government or the Commonwealth takes final action relatinq to the provision of Tier alternative enerqv credits that has the effect of eliminatinq a materialgportion of a desiqnated Tier alternative enerqv source's anticipated future revenue, takinq into account the benefits to be provided to a desiqnated Tier alternative enerqv source under the Tier proqram. The desiqnated Tier alternative enerqv source requires capital expenditures in excess of $40,000,000 that were not known or reasonably foreseeable at the time of the submission of the alternative enerqv source's qualifications under subsection as a Tier alternative enerqv source and the capital expenditures are expenditures that a prudent owner or operator of a desiqnated Tier alternative enerqyi source would not undertake. (vi) The United States Nuclear Requlatorv Commission 2019DO3520 30 terminates the desiqnated Tier alternative enerqy source's license. Expiration.-? (I) This section shall expire after an effective cost of carbon emissions exists in this Commonwealth that is equal to no less than an averaqe of $15 per ton over three consecutive reporting periods as a result of the enactment of a Statewide emissions fee proqram or participation by the Commonwealth in a reqional multistate qreenhouse qas proqram. Tier alternative enerqy sources shall receive payments for Tier alternative enerqy credits as provided under subsection for credits qenerated prior to the effective date of the enactment of a Statewide emissions fee proqram or participation by the Commonwealth in a redional multistate qreenhouse qas program. (2) Upon the enactment of a Statewide emissions fee proqram or participation by the Commonwealth in a regional multistate qreenhouse qas proqram, the commission shall submit a notice to the Leqislative Reference Bureau for publication in the Bulletin. This section shall expire on the date the notice under paraqraph (2) is published in the Bulletin. Section 8.2. Capacity payments to alternative enerqy sources. alternative enerqy credits proqram administrator shall establish and administer a proqram in which alternative enerqy systems may opt to supply and be paid for capacity throuqh a means other than the centralized base residual auction for capacity operated by PJM as authorized by the Federal Enerqy Requlatory Commission. The duties of the 2019D03520 - 31 - proqram administrator shall include, but not be limited to, all of the followinq: (1) Establishinq a process by which an alternative enerqy system is permitted to notify PJM, consistent with requirements approved by the Federal Enerqy Requlatorv Commission, of the decision to opt out of the centralized base residual auction for capacity and sell the alternative enerqy system's capacity throuqh other mechanisms. (2) Providinq any determinations required by PJM with respect to an alternative enerqy system, includinq a calculation of the commensurate amount of customer load that will not participate in the centralized base residual auction for capacity as a result of an alternative enerqy system's decision to sell the alternative enerqy system's capacity thouqh other mechanisms. If consistent with requirements approved by the Federal Enerqy Requlatorv Commission, the alternative enerqy system's capacity shall be calculated pro rata across all load?servinq entities in this Commonwealth. Determininq the amount that will be paid for the capacity of an alternative enerqy system that opts out of the centralized base residual auction for capacity for each applicable reportinq period, which shall be equal to the qeneration capacity of the alternative enerqy system as determined in accordance with PJM requirements multiplied by the locational delivery area price established by PJM in the centralized base residual auction for capacity or successor mechanism approved by the Federal Enerqy Requlatorv Commission for the location where the alternative enerqy system is located. Payments.??In the event that PJM does not operate a 2019D0352O 32 - settlement mechanism under which alternative enerqy systems that make elections under subsection can receive payments from load?servinq entities, the alternative enerqy credits proqram administrator shall calculate the total amount due to the alternative enerqy system under subsection and notify the electric distribution company of the electric distribution company's share of the amount based upon the electric distribution company's pro rata share of the electric enerqy sold to retail electric customers in this Commonwealth durinq the applicable reportinq period. No later than seven days after the electric distribution company receives the notice under this subsection, the electric distribution company shall pay the amount to the prooram administrator. The electric distribution company shall then forward the amount due to the alternative enerqy system under subsection alternative enerqy credits proqram administrator shall establish the proqram under subsection within 90 days after the later of the followinq: (1) The effective date of this section. (2) The date when PJM rules that allow alternative enerqy systems to opt out of the centralized base residual auction are authorized by the Federal Enerqy Requlatory Commission. Section 6. This act shall take effect in 60 days. 2019D03520 33 -