1. 67th Annual EAP Consumer Services Conference
Terrance J. Fitzpatrick
President and CEO
Energy Association of Pennsylvania

2. OUTLINE OF PRESENTATION
Understanding how a bill becomes a law
Pennsylvania energy outlook – natural gas & electricity prices
Current trends influencing energy policy
State legislative outlook – Clean Power Plan, Act 129, Renewable Energy, others?

3. HOW A BILL BECOMES A LAW

4. Bill is assigned to committee
HOW A BILL BECOMES A LAW
Idea is developed
Bill is drafted
Bill is introduced
Bill is assigned to committee
Ideas come from the legislator, a suggestion from a constituent, interest groups, other public officials (such as the Governor)
Other legislators are asked to "sign on" to the bill as "co-sponsors" -- both parties
The bill is introduced by the legislator in his or her own chamber (House or Senate) and assigned to a committee based on subject matter.
EAP-impacted bills typically go through House Consumer Affairs or Senate Consumer Protection

5. HOW A BILL BECOMES A LAW
Bill may be scheduled for a public hearing
Bill is scheduled for a vote in committee
Bill receives first consideration in full chamber
Bill is re-assigned to another committee
If contentious or needs discussion, the bill might be scheduled for public hearing (inviting comments for and against from general public, as well as committee members) before a vote
With or without a hearing, when it is ready to vote, a Standing Committee can:
Table, or set aside, the bill to make it inactive.
Change, or amend, the bill.
Defeat the bill.
Accept the bill.
Bill may take a detour en route to the full House or Senate in caucus

6. HOW A BILL BECOMES A LAW Bill can die along this process if:
Bill is returned to full chamber for 2nd reading
Bill scheduled for 2nd reading
Amendments proposed; simple majority & amendments pass
Full chamber votes on the bill. Simple majority votes in favor
Bill advances to 3rd reading
Bill can die along this process if:
Chamber decides not to schedule 2nd reading
Full (majority) chamber votes no on the bill before 3rd reading

7. HOW A BILL BECOMES A LAW
Bill advances to 3rd reading
Bill scheduled for 3rd reading
Further amendments can be proposed. 2/3 majority required to amend
Full body votes on the bill; majority votes in favor
Bill is sent to opposite legislative chamber
If successful, bill proceeds through identical process in the opposite chamber
Similar hurdles to overcome and can “die” along the way

8. HOW A BILL BECOMES A LAW
If the bill passes the 2nd chamber with no amendments, it goes to the Governor
If the 2nd chamber does amend the bill, it returns to house of origin
If they vote “yea” on the amendments, then it can go to the Governor.
If they vote “no,” and both chambers still want to see the bill pass, it is assigned to conference committee to work out the differences

9. HOW A BILL BECOMES A LAW Bill reaches Governor’s Desk
Governor does nothing. After 30 days with inaction, bill becomes law without his signature
Governor signs the bill. Bill becomes law!
Governor vetoes the bill
Legislators can override a veto with a two-thirds majority in each chamber

10. PA ENERGY SNAPSHOT GAS & ELECTRICITY PRICES
2007
2015
Gas Produced
182,277 MMcf
4,812,983 MMcf
State Rank – Gas Production
15th
2nd
Wholesale Gas Price
$9.35 per Mcf
$4.38 per Mcf*
Wholesale Electricity Price**
$83.70/MWh***
$43/MWh^
MMcf = volumetric measure of natural gas, per 1 million cubic feet; Mcf = per 1 thousand cubic feet
* Data as of July 2015 ** PJM annual average day ahead on-peak price *** Data from 2008 Sources: EIA, FERC,

11. CURRENT TRENDS INFLUENCING ENERGY POLICY
“Going green” – environmental / climate change concerns
Preference for “local” products, jobs, etc.
Distrust of big institutions – government, corporations
Political polarization & gridlock – fuels uncertainty about the future
Continuing technological innovations

12. PENNSYLVANIA POLITICAL ENVIRONMENT
Similar to Federal political environment – tension between Democratic executive and Republican legislators
Budget process much smoother in 2016 than Structural deficits remain for 2017.
Better cooperation and incremental progress – liquor reform, some other issues
2017 issues – budget (structural deficit); state pensions
In Harrisburg & Washington, can the political process solve big problems anymore?

13. LEGISLATIVE OUTLOOK CLEAN POWER PLAN COMPLIANCE
CPP adopted by EPA in 2015; requires PA to reduce carbon dioxide emissions 33% by 2030.
Options for compliance – improve efficiency of power plants; establish cap & trade program; increase renewable generation; increase energy efficiency.
U.S. Supreme Court stayed rule pending decision on appeal – before D.C. Circuit now. USSC may decide in
Act 57 of 2016 amended previous law to extend timeframe for legislative review of state CPP compliance plan in light of stay

14. LEGISLATIVE OUTLOOK AMENDMENTS TO ACT 129
Act 129 of 2008 required EDCs to reduce customers’ consumption 3% and peak demand by 4.5% by May 2013, and allowed PUC to set additional targets for later years.
Industrial customers (IECPA) want to amend law to allow opt out – Senate Bill 805 (Boscola)
EDCs want to amend law re: penalties, allow recovery of lost revenue, and update baseline year upon which budget is based.
Others – environmental groups, vendors, PUC – want to remove $250 million per year budget cap
Outlook for legislation clouded by uncertainty over CPP

15. LEGISLATIVE OUTLOOK RENEWABLE ENERGY
Alternative Energy Portfolio Standards Act (AEPS) of 2004 required electric utilities and suppliers to purchase 18% of portfolios from alternative energy sources by 2021, including 0.5% set aside for solar.
Act also mandates subsidies for alternative energy customer-generators by crediting them at full retail rate for generation. Customer-generators avoid paying grid costs, which are shifted to other customers.
Soundness of net metering policy is being debated in many states. Likely to be an issue in PA.
Legislation has been introduced to “close the border” to require solar credits be purchased from in-state producers. (HB 2040; SB 1343)
Increasing renewable energy is also a potential compliance strategy under the CPP. House Bill 129 (Vitale) would increase mandated purchases to 25% by 2030 and triple current solar mandate.

16. MAJOR POLICY QUESTION FUTURE SOURCES OF ENERGY
Who will decide and how?
Government policymakers – picking “winners” & “losers”?
Markets?
The energy industry?
In past, government, markets, and industry all played a role, but trend is toward greater government control
The absence of a technology-neutral policy to address climate change is key
Excessive government support for some renewable sources – especially rooftop solar.

17. Keep it in the ground?

18. Terrance J. Fitzpatrick
THANK YOU!
Terrance J. Fitzpatrick
President and CEO
Energy Association of Pennsylvania
800 N. 3rd Street, Suite 205
Harrisburg, PA
Tel: (717)