The General Assembly gave final approval to a sweeping energy conservation legislation--House Bill 2200 (George-D-Clearfield)-- that would require electric utilities to reduce peak demand by 4.5 percent by 2013. Left for next year were proposals to further mitigate the impact of electric rate caps expiring in 2010.

Cutting peak electricity use by just 1 percent can reduce the price of electric during those periods of high demand by 10 percent, according to the PJM Interconnection.

Gov. Rendell hailed approval of House Bill 2200 as an important tool consumers can use to reduce their electricity bill by $500 million over the next five years and put Pennsylvania among the leading states that mandate utilities and their customers to conserve energy.

The Public Utility Commission wasted no time in starting the process of implementing the legislation by unanimously approving a motion Thursday to begin implementation of House Bill 2200, which expands the PUC's oversight responsibilities and imposes new requirements on the electric distribution companies, with the overall goal of enhancing procurement; reducing energy demand and consumption; and expanding alternative energy sources.

"Yesterday, both the Senate and the House overwhelmingly passed House Bill 2200, which now is on the Governor's desk for signature," said the Joint Motion offered by Commissioners Kim Pizzingrilli and Robert F. Powelson. "As with the passage of any significant piece of legislation, the Commission will convene an internal working group to develop an implementation plan to ensure that guidance is provided to EDCs and that consumers realize the benefits of energy efficiency and conservation measures. The Commission recognizes the importance of implementing this law in a prompt manner, and will move forward with all deliberate speed, while allowing for stakeholder participation and input."

Here's a more detailed summary--

Conservation

-- Requires electric distribution companies to develop and file an energy efficiency and conservation plan with the Public Utility Commission.Plans would be implemented upon approval by the Commission.

-- Permits electric distribution companies to contract with a conservation service provider for implementation of energy efficiency and conservation plans. Requires the PUC to establish a registry of persons qualified to provide conservation services by March 1 1, 2009.

-- Requires minimum reductions in total annual weather-normalized retail electric consumption of one percent in 2011 and three percent in 2013. In addition peak demand must be reduced by at least 4.5% by 2013.

-- Provides for the installation of smart meters for new construction, upon request of a consumer at his or her cost or upon a depreciation schedule not exceeding 15 years.

Procurement

-- Subsequent to the expiration of rate caps, requires the default service provider to provide electric generation supply service to the customer pursuant to a commission-approved competitive procurement plan.

-- Electric power must be procured through competitive procurement processes including bilateral and long-term contracts.

-- Requires least-cost pricing.

Market Misconduct

-- Requires the PUC to direct an electric distribution company found to be guilty of market manipulation to take any and all reasonable action to quantify the effect of the market misconduct on Pennsylvania ratepayers.

-- The PUC may also direct the electric distribution company to take any and all reasonable legal action as may be necessary to recover the quantified damages and recompense affected Pennsylvania ratepayers.

Alternative Energy Portfolio Standards

-- Adds pulpwood and small hydroelectric plants as Tier 1 alternative energy sources. No new resource qualifying as biomass energy or low impact hydropower shall be eligible to generate Tier I alternative energy credits until the Commission has increased the percentage share of Tier I to reflect these additional resources.

Carbon Sequestration

-- Requires the Department of Conservation and Natural Resources to complete a study by April 1, 2009 to identify suitable geological formations, including sites within or in proximity to the Medina, Tuscarora or Oriskany Sandstone formation for the location of a state carbon sequestration network. The Department would be required to submit the study to the Governor and the General Assembly by May 1, 2009.

-- Requires the Department, by June 1, 2009, to hire one or moreindependent experts as may be necessary to perform an assessment regarding the costs, safety and risks associated with the underground storage of carbon dioxide. The independent expert would be required to submit the final assessment to the Environmental Committees of the House and the Senate and the Department by November 1, 2009.

PUC Reorganization

The bill allows the PUC to reorganize certain bureaus but retains the existing Law and Consumer Bureaus.

10/10/2008