Pennsylvania acts to “Close the Border” on Solar Photovoltaic Alternative Energy Credits
November 2, 2017
Legislation has been signed by the Governor that will close the border on Pennsylvania’s market for solar photovoltaic alternative energy credits.
The legislation (Act 40 of 2017; House Bill 118, Printers No. 2256) adds 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%, respectively. Id.
Specifically, under Act 40, in order to qualify as an alternative energy source eligible to meet the photovoltaic share of the compliance requirements (and to qualify for solar renewable alternative energy portfolio credits), each solar photovoltaic system must do one of the following:
- Directly deliver the electricity it generates to a retail customer of an EDC or to the distribution system operated by an EDC operating within this Commonwealth and currently obligated to meet the compliance requirements contained under the AEPS act.
- Be directly connected to the electric system of an electric cooperative or municipal electric system operating within this Commonwealth.
- Connect directly to the electric transmission system at a location that is within the service territory of an EDC operating within this Commonwealth.
This provision of Act 40 took effect on October 30, 2017. By its terms, the provision applies to all contracts entered into or renewed on or after October 30th. Admin. Code § 2804(3). But, it also contains a grandfathering provision. Admin. Code § 2804(2). The grandfathering provision provides that nothing in the above-described provision (nor in 73 P.S. § 1648.4) shall affect any of the following:
- A certification originating within the geographical boundaries of this Commonwealth granted prior to the effective date of this section of a solar photovoltaic energy generator as a qualifying alternative energy source eligible to meet the solar photovoltaic share of this Commonwealth’s alternative energy portfolio compliance requirements under the “alternative energy portfolio standards act.”
- Certification of a solar photovoltaic system with a binding written contract for the sale and purchase of alternative energy credits derived from solar photovoltaic energy sources entered into prior to the effective date of this section.
It is unclear if any challenges will be made to this 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).
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. 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.
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