Will Pennsylvania “close the border” on solar photovoltaic alternative energy credits?
September 1, 2017
Legislation is being considered by the Pennsylvania General Assembly that would make significant changes to Pennsylvania’s market for solar photovoltaic alternative energy credits.
The legislation (in House-amended Senate Bill 446, Printers No. 1088) would add a new section to the Administrative Code, which would require that only solar photovoltaic systems located within Pennsylvania could be used to satisfy the requirements of Pennsylvania’s Alternative Energy Portfolio Standards Act, 73 P.S. § 1648.1, et seq. (the “AEPS”).
The AEPS requires that a percentage of the electricity supplied by Pennsylvania’s electric distribution companies (“EDCs”) and electric generation suppliers (“EGSs”) come from alternative energy resources. For June 1, 2017 to May 31, 2018, the solar photovoltaic requirement is 0.3400%. 73 P.S. § 1648.3(b)(2). That percentage increases in the following years to 0.3900%, 0.4433% and 0.5000%. Id.
The legislation, if passed, would be a significant change to the market. Currently, the solar photovoltaic systems located in the PJM territory – which includes all or parts of 13 states and the District of Columbia – may be eligible for certification in Pennsylvania. Reportedly, within PJM, only Pennsylvania and Delaware allow systems located outside of the state to register for and participate in its solar photovoltaic market. Limiting the solar systems to Pennsylvania is likely to decrease the number of solar energy credits available for use in Pennsylvania and, accordingly, increase the price of solar energy credits received by solar systems in Pennsylvania.
For now, it remains unclear if Pennsylvania will “close the borders” on solar photovoltaic alternative energy credits. This legislation is in the House Committee on Appropriations. Parts of the legislation will implement the 2017-18 Commonwealth budget, so it is likely to pass (in some form – either with or without the provision on solar credits) by the General Assembly as part of a package of “budget” bills. Once passed in final form by both the House and the Senate, the legislation will be sent to the Governor for his consideration. The Governor, after referring the bill to the Attorney General to certify its legality and constitutionality, can either sign, veto, or take no action on the legislation.
We would note that challenges under the Commerce Clause have been made to solar requirements in other jurisdictions. In 2015, the 10th Circuit upheld challenges to Colorado’s renewable portfolio standards (RPS) that went directly to the RPS itself. Energy & Environmental Legal Institute v. Epel, 793 F.3d 1169 (10th Cir. 2015) cert. denied, 136 S.Ct,. 595 (2015). In addition, it has been reported that, in 2011, Massachusetts entered into a settlement agreement with TransCanada to resolve TransCanada’s challenge to the Massachusetts requirement that a certain percentage of retail electricity come from in-state solar sources. See Anne Havemann, “Surviving the Commerce Clause,” 71 Md. L. Rev. 848 (2012).
If you have any questions, please contact Carl Shultz at (717) 255-3742 – cshultz@eckertseamans.com – or Dan Clearfield at (717) 237-7173 – dclearfield@eckertseamans.com.
This Eckert Seamans Energy and Utilities Blog is intended to keep readers current on matters affecting businesses and is not intended to be legal advice.
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