Legislation passed the Senate (32-15) and House (161-35) this week which requires electric distributors and generators that sell directly to retail customers to have 18 percent of the energy they sell be from renewable or sources other than coal and nuclear power by 2019. The bill is now on the Governor’s desk.

With the Governor’s signature, Pennsylvania becomes the 18^th state to adopt renewable or advanced energy portfolio standards, including the neighboring states of New Jersey, New York and Maryland.

The business community expressed significant concerns about the potential of the portfolio standards to increase electric rates putting Pennsylvania at a competitive disadvantage. They did not oppose the idea of the standards, but asked for a seat at the table in the negotiations.

The initiative was spearheaded by Sen. Erickson (R-Delaware) and Rep. Ross (R-Chester) working with Gov. Rendell who proposed a portfolio standard as part of his budget address in February.

Senate Bill 1030 (Erickson-R-Delaware) requires 8 percent of electric portfolios be from Tier I energy sources: solar photovoltaic energy, wind power, low-impact hydropower, geothermal energy, biologically derived methane gas, fuel cells, biomass energy and coal mine methane.

There is a specific requirement in Tier I that photovoltaic make up 0.5 percent of the portfolio in 15 years.

Ten percent of electric portfolios must be from Tier II energy sources: waste coal, distributed generation systems, demand-side management, large-scale hydropower, municipal solid waste, generation of electricity by utilizing by-products of the pulping process and wood manufacturing process, including bark, wood chips, sawdust and lignin in spent pulping liquors, and integrated combined coal gasification technology.

Earlier versions of the legislation required a total of 15 percent from alternative energy sources—12 percent from Tier I and 3 percent from Tier II.

Today, less than one percent of the electricity generation capacity in Pennsylvania is from Tier I sources and most of that is from newly built wind farms.

About 7.8 percent of generation capacity is from Tier II energy sources.

But, generation capacity does not necessarily equal available electric from

existing sources since they have already been committed to existing distributors. For example, much of the electric generated from wind farms in Pennsylvania goes to New Jersey utilities to meet that state’s renewable portfolio standard.

Existing Electric Generating Capacity in Pennsylvania

Source: Pennsylvania Electric Power Generation Association

Pennsylvania already has more customers paying for electricity from green sources than any other state, including California, because electric deregulation adopted here in 1996 allowed generators to develop and sell electricity from wind mills, landfill gas and other sources.

The use of electricity is expected to grow by 25 percent in the next 15 years, according to Rep. Ross. As a result, Ross says, existing generating capacity should not be hurt by the new portfolio standards, but new energy sources that meet the standards would be brought online to meet expected demand.

The amendment also creates an alternative energy tradable credits program to allow energy generators to develop new energy sources and sell those credits to generators or distribution companies to meet their portfolio standard.

Generators and distribution companies can also opt to comply with the portfolio standard requirement by making compliance payments equal to $45 for each alternative energy credit needed to bring them into compliance paid into the Sustainable Energy Development Fund.

In addition, rural electric cooperatives are required to establish a voluntary program of energy efficiency and demand side management to satisfy compliance with the portfolio standard.

(Note: See related story below about PUC initiative on connecting distributed generation to the electricity grid.)

NewsClip: Bill would require more electricity from alternative sources

Bill may boost use of wind power

11/21/2004