By Todd Stewart at HMS Renewable Energy
On January 12, 2024, State Senator Lisa Boscola, in collaboration with the Pennsylvania Public Utility Commission (PUC), introduced Senate Bill 1040 (Bill) that would, among other things, eliminate commercial scale net metering in Pennsylvania. Senator Boscola telegraphed this death punch for net metering in a co-sponsorship memo released in November of last year, in which she vowed to eliminate the provision of the Alternative Energy Portfolio Standards Act (“AEPS”),[1] that allows customer generators to develop projects that have no independent load, and which were not limited to 110% of the customer’s load. The independent load requirement was manufactured by the PUC in ill-fated regulations that were promulgated in 2016 and which were found to be unenforceable by Pennsylvania’s Commonwealth and Supreme Courts in 2020-2021.[2] The 110% requirement was the product of a PUC policy statement which it withdrew a year after the Pa. Supreme Court’s decision in Hommrich.
The Bill is proposed as an amendment to Title 66 of the Pennsylvania Code,[3] rather than as a free-standing bill or as an amendment within the AEPS, which is an interesting choice that seems to be an assertion of PUC jurisdiction over the subject matter in response to Hommrich’s conclusion that key elements of the PUC’s 2016 rulemaking (those that were stricken) had exceeded the PUC’s statutory authority.
The Bill contains several amendments to the AEPS that limit the current act’s reach and potency, including a provision that would limit projects capable of producing alternative energy credits to those certified prior to the effective date of the Bill. However, the most severe amendments were saved for net metering which would be once again limited to 110% of the customer generator’s load and morphed into a mandatory virtual meter aggregation program that would include all of a customer generator’s “designated accounts” in a utility’s territory.[4] In addition, any new projects would not be permitted on the same or an adjacent parcel to an existing project if the total size exceeded 3 MW. The Bill would also eliminate the ability to subdivide a parcel of land for use in net metering projects for a period of two years preceding an application to the PUC and would place an absolute limit on the total amount of Net Metered energy that can be approved by the PUC at 500 MW, with any applications thereafter to be placed on a waiting list until the PUC decides to extend the limit. The Bill also includes a cut-off date of December 31, 2023, for projects to have submitted an application, to be permitted to proceed under the existing requirements; i.e., to be grandfathered. The Bill provides no other discussion of existing net metered projects and neglects to recognize that the timing of the grandfathering provisions would cause many millions of dollars of damage to project developers all over Pennsylvania who have been making investments in net metered projects under the expectation that the law would continue in its present state.
In addition to these obviously antagonistic provisions, the Bill also contains a more subtle provision, obviously designed to appease organized labor, that would require that projects comply with prevailing wage laws in order to qualify for net metering and provides benefits to projects that are built on brownfield sites or other locations that developers may have previously considered to be too cumbersome and/or costly to develop.
Senator Boscola’s Bill is aimed at reinstating the limitations on the AEPS Act that the PUC imposed before, and which successfully suppressed commercial-scale development of net-metered energy projects in Pennsylvania for many years. There is no doubt that if the Bill were passed as introduced, which thankfully seems unlikely, that it would likewise dampen the development of such projects well into the future, as well as cause Pennsylvania to continue to lag behind the rest of the nation in production of clean, renewable energy.
Todd Stewart is a partner at HMS Legal and HMS Renewable Energy and represents developers of Alternative Energy projects in Pennsylvania in matters before the Public Utility Commission, in matters involving utility interactions, and in due diligence, land use, permitting and other regulatory matters.
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[1] 73 P.S. §§ 1648.1, et seq.
[2] Hommrich v. Commonwealth of Pennsylvania, Pennsylvania Public Utility Commission; 231 A.3d. 1027 (Pa. Cmwlth. 2020), affirmed, 664 Pa. 567, 245 A.3d 637 (Pa. 2021).
[3] 66 Pa.C.S. §§ 101, et seq.
[4] The term “designated accounts” is not defined and could be used to further restrict the ability of developers to operate in the Commonwealth.
