Energy Advisory Board February 2, 2005 Act 213 Proposed Technical Guidance Overview PA DEP

Overview of Key Recommendations Environmental Standards Eligible Resource Delivery Requirements Resource Specific Standards – Low Impact Hydropower – Fuel Cells – Pumped Storage – Waste Coal – Distributed Generation – Coal Mine Methane Industrial Customers Demand-Side Management Net Metering and Interconnection

Department Authority Section 7(b) of Act 213 provides for the following responsibilities for DEP: “The Department shall ensure that all qualified alternative energy sources meet all applicable environmental standards and shall verify that an alternative energy source meets the standards set forth in section 2.”

Environmental Standards Two qualifiers: – Must self-certify that they have all required state and federal permits, one-time certification unless there is a modification – Must annually self-certify that they have no major compliance violations – Out-of-state sources must meet permitting and compliance standards equivalent to PA

Eligible Resource Delivery Requirements Electricity from eligible sources must be delivered to retail customers in Pennsylvania EGCs and EDCs must acquire eligible electric power from within their RTO – Penn Power – MISO – Orange and Rockland – NYISO – All Others – PJM All electricity from qualifying sources generated and delivered to retail customers in Pennsylvania is eligible

Resource Specific Standards Low-Impact Hydropower – Incremental improvements – Capacity from the incremental improvements can count towards Tier I – LIHI does not apply to new facilities – how should we deal with in-stream sources? – All other hydropower shall count towards Tier II

Resource Specific Standards (Continued) Fuel Cells – No fuel input limitations Pumped Storage – How should this be counted? – Credit for generation used to offset peak loads? (This would be consistent with the Act’s emphasis on load reduction/shifting)

Resource Specific Standards (Continued) Waste Coal – Emphasize that credits are based on the proportion of waste coal utilized – Should this be on a “heat input” basis? Distributed Generation – Limited to “Tier II” resource inputs Coal-Mine Methane – Only captured fugitive methane for electricity generation – Does not include commercially developed coal-bed methane

Industrial Customers Standards should not apply to self-generators, even those registered as EGS who are self- generating (not currently in draft guidance) Self-generators generating electricity from eligible fuels own those credits – unless other contractual arrangements have been made Recycled energy counts towards Tier II

Demand-Side Management All customer sectors eligible and should own their own credits Energy efficiency refers to reductions in overall energy usage. (Need to ensure that electricity is not shifted to another fuel source). Energy efficiency, new construction, major building retrofits, voluntary load shifting for customers greater than 1MW (periods of mandatory interruption only) M&V based on actual metering, credits accrue based on a baseline year and actual reductions Industrial By-product/Energy Reuse – customers own credits, measured by generation, environmental compliance rules apply

Net-Metering and Interconnection Basically recommend adoption of the NJ rules with some special provisions Retail for avoided usage, wholesale for excess supplied to the grid – trued-up annually 50KW residential, 2 MW for all other customer classes, including farms Net-metering and interconnection combined Should apply statewide, including rural electric cooperatives Net Metering: Tier I resources only; Interconnection: both tiers Customer-generators should own credits from generation

Next Steps Comments due on Feb. 11 – send to Eric Thumma Revised draft based on the comments will be completed by March 1 Published in the PA Bulletin with a 30 day comment period Questions and Comments: Eric Thumma