Pennsylvania’s Net Metering Regulations: What Happens Now?
May 20, 2016
On Thursday, May 19, 2016, the Independent Regulatory Review Commission (“IRRC”) unanimously disapproved (5-0) the regulations proposed by the Pennsylvania Public Utility Commission (“PUC”) that would have significantly changed net metering in Pennsylvania.
IRRC concluded that the PUC does not have the statutory authority to adopt regulations that would impose a 200% size limitation on net metering projects. Under its rules, IRRC was required to vote on the regulations as a package. So, IRRC was required to reject the regulations in their entirety.
That leads, to the question of: what happens now?
The short answer is that the future of these net metering regulations is not very clear at this time, but, it’s safe to say that the regulations are down, but not out!
The longer answer follows:
IRRC’s disapproval temporarily bars the PUC from promulgating these regulations. It does not necessarily end the review process for these regulations. Disapproval merely triggers a new review period that gives the PUC the opportunity for further explanation or modification of the regulations.
Generally speaking, the PUC has four options:
- Resubmit With Revisions.
The PUC may resubmit the regulation with modifications. To do this, the PUC would need to submit a report to IRRC (and the Legislative Committees) within 40 days of receipt of the disapproval order.
For revisions, the report must contain a detailed explanation of how the revisions respond to IRRC’s concerns (i.e., lack of statutory authority). For example, the PUC could modify the regulations by removing the 200% size limitation.
If resubmitted, IRRC must vote on the modified regulations. The modified regulations can be approved, deemed to be approved, or disapproved by IRRC. IRRC must notify the Committees of the final disposition of the regulation. That notification triggers a final review period for Committees, which can lead to a resolution (requiring action by the General Assembly and the Governor). 71 P.S. § 745(d). Legislative review can result in the approval or disapproval of the modified regulations.
- Resubmit Without Revisions.
The PUC could also resubmit the regulation without modifications. To do this, the PUC would need to submit a report (within the same 40 day time-frame) that responds to the concerns raised in the order.
This option may prove to be difficult for the PUC. The regulations were approved by the PUC, February 2016, by a vote of 3-2. The term of Commissioner Witmer – who voted to approve the regulations – expired on April 1, 2016 and she has since left the Commission. A successor has been nominated by Governor Wolf, but he has not been confirmed by the Senate.
As noted, if resubmitted, IRRC must vote on the regulations for a second time and (as explained above) there will be a period of legislative review. See 71 P.S. § 745.7(d).
- Withdraw The Regulations.
The PUC may withdraw a disapproved regulation. A voluntarily withdraw will conclude the review process for these proposals. But it would not preclude the PUC from submitting these regulations in a new rulemaking.
- Take No Action.
The PUC could opt to take no action. If the PUC does not the above-described report within that 40 day time-frame, the regulations are deemed to be withdrawn.
It is not clear what option the PUC will choose. There are currently only 4 Commissioners. Two voted to approve the regulations; two voted against the regulations. Given that difference of opinion and the short time-frame for action, no one can predict with any degree of certainty which option will be chosen by the PUC.
That being said, please keep in mind that PUC could always also start a new rulemaking. In a new rulemaking, rather than the 200% limitation, the PUC could focus on the “retail value” standard used for determining the payments for excess generation under the Alternative Energy Portfolio Standards (“AEPS”) Act. This was suggested during the PUC’s vote on the rulemaking. At that time, Vice Chairman Place stated (in his dissenting statement[1]) that the PUC should focus on revaluating the “retail value” standard used for determining the payments for excess generation under the AEPS Act. 73 P.S. § 1648.5; 52 Pa. Code § 75.13(d). In doing so, he orally explained that definition of “retail value” could be changed (in the future) by regulation. Both Chairwoman Brown and Commissioner Powelson orally agreed with Vice Chairman Place that the definition of “retail value” should be investigated in the future by the PUC.
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.
[1] https://www.puc.state.pa.us/pcdocs/1414734.pdf