Sen. Ray Musto

Energy is essential for modern economies. It is the basis for technological and economic development. It has also become an integral component of our national security.

Dwindling and costly energy supplies have placed a substantial demand on our natural resources and prompted us to explore ways to stretch our current resources to meet our energy needs. Fortunately, there are alternatives.

Renewable energy provides about 6 percent of the total energy supply in the United States. About half of that amount (45 percent) is hydroelectric power. According to the most recent report of the U.S. Energy Information Administration, renewable energy consumption in the United States last year was essentially the same level it was in 1989.

Furthermore, the report says that while energy production through wind and solar photovoltaics (solar power) have expanded rapidly in recent years, their share of the total is so small that this growth has not significantly affected the renewable industry.

In Pennsylvania, renewable energy contributes even less to our state's total energy supply. Pennsylvania's energy mix currently includes only about 2 percent renewable energy--including hydropower.

The bulk of Pennsylvania's energy still comes from coal and nuclear power.

Recognizing that our energy choices have many implications for economic growth, environmental protection and national security, Pennsylvania has just taken a momentous step in fostering the use of renewable and alternative energy sources with the recent enactment of the "Alternative Energy Portfolio Standards Act" (Act 213 of 2004). This new legislation will advance the use of renewable and alternative sources of energy by requiring that 18 percent of Pennsylvania's energy supply come from alternative energy sources by 2020.

Pennsylvania now joins a growing list of states that have programs to encourage the development of renewable energy for electricity generation. As Democratic chairman of the Senate Environmental Resources and Energy Committee, I am proud of this accomplishment. My committee held three public hearings and heard from a variety of agencies, interest groups and utility companies. Through this process we were able to develop innovative legislation that is uniquely suited to Pennsylvania and will best utilize our resources.

For instance, the use of waste coal is included in the legislation--an alternative energy source that few other states possess. The reuse of this material results in a number of economic and environmental rewards including energy production, elimination of coal refuse piles, and the reclamation of abandoned mine land.

The new law divides the alternative energy sources into two tiers. Tier I features sources such as solar energy, wind power, fuel cells, biomass energy (plant materials and animal waste used as fuel), low-impact hydropower, and coal mine methane. In Tier II various alternatives are available including waste coal, distributed generation systems, demand-side management, large-scale hydropower, municipal solid waste, the generation of electricity using wood waste, and coal gasification technology.

The new law mandates that within the next two years at least 1.5 percent of the electric energy sold by an electric distribution company or generation supplier to retail customers must be produced by Tier I alternative energy sources. This percentage will increase gradually each year until 2019, when at least 8 percent of the electric energy sold in Pennsylvania is generated by Tier I sources. Within the next 15 years, at least 10 percent of electric energy must be made by Tier II energy sources.

Pennsylvania also took important steps to increase the use of solar energy and promote solar technologies in the state. The Alternative Energy Portfolio Standards Act includes a "solar share." This means that of the electric energy required to be sold from Tier I sources, a certain portion must come from solar energy. The solar share will gradually increase so that by 2019, the percentage that must be sold from photovoltaic technologies is 0.5 percent.

The act also provides flexibility in the form of alternative energy credits. The law makes an alternative energy credit tradable. Thus, one credit is equal to one-megawatt hour of electricity from a qualified alternative energy source. And, if an electric distribution company or generation supplier has an abundance of alternative energy, it may bank alternative energy credits produced in one reporting year for compliance in the two subsequent reporting years.

If an electric distribution company or generation supplier fails to comply with alternative energy program requirements, it will have to pay a penalty in the form of an alternative compliance payment. The payment will be $45 multiplied by the number of additional alternative energy credits needed to comply.

Moreover, if a company does not comply with solar energy requirements, the payment will be 200 percent of the average market value of solar renewable energy credits sold during the reporting period. The compliance payments are to be paid into Pennsylvania's Sustainable Energy Funds and used for projects that increase the amount of electric energy generated from alternative energy sources.

By advancing the use of renewable and alternative energy, Pennsylvania is paving the way for a cleaner, healthier environment. Through the efforts of the Senate Environmental Resources and Energy Committee, Pennsylvania is helping to make our state and our country more energy self-sufficient and strong.

Senator Raphael Musto is Democratic Chairman of the Senate Environmental Resources and Energy Committee and represents the 14^th Senatorial District in Luzerne, Carbon and Monroe counties.

12/17/2004