Subchapter D. ALTERNATIVE ENERGY PORTFOLIO REQUIREMENT

 (a)  EDCs and EGSs shall comply with the act through the acquisition of certified alternative energy credits, each of which shall represent one MWh of qualified alternative electric generation or conservation, whether self-generated, purchased along with the electric commodity or separately through a tradable instrument.

 (b)  For each reporting period, EDCs and EGSs shall acquire alternative energy credits in quantities equal to a percentage of their total retail sales of electricity to all retail electric customers for that reporting period, as measured in MWh. The credit obligation for a reporting period shall be rounded to the nearest whole number. The required quantities of alternative energy credits for each reporting period are identified in the following schedule:

   (1)  For June 1, 2006, through May 31, 2007: The Tier I requirement is 1.5% of all retail sales, of which at least 0.0013% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 4.2% of all retail sales.

   (2)  For June 1, 2007, through May 31, 2008: The Tier I requirement is 1.5% of all retail sales, of which at least 0.0030% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 4.2% of all retail sales.

   (3)  For June 1, 2008, through May 31, 2009: The Tier I requirement is 2% of all retail sales, of which at least 0.0063% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 4.2% of all retail sales.

   (4)  For June 1, 2009, through May 31, 2010: The Tier I requirement is 2.5% of all retail sales, of which at least 0.0120% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 4.2% of all retail sales.

   (5)  For June 1, 2010, through May 31, 2011: The Tier I requirement is 3% of all retail sales, of which at least 0.0203% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 6.2% of all retail sales.

   (6)  For June 1, 2011, through May 31, 2012: The Tier I requirement is 3.5% of all retail sales, of which at least 0.0325% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 6.2% of all retail sales.

   (7)  For June 1, 2012, through May 31, 2013: The Tier I requirement is 4% of all retail sales, of which at least 0.0510% of all retail sales are to come from solar photovoltaic sources and the rest from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 6.2% of all retail sales.

   (8)  For June 1, 2013, through May 31, 2014: The Tier I requirement is 4.5% of all retail sales, of which at least 0.0840% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 6.2% of all retail sales.

   (9)  For June 1, 2014, through May 31, 2015: The Tier I requirement is 5% of all retail sales, of which at least 0.1440% of all retail sales are to come from solar photovoltaic sources and the rest from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 6.2% of all retail sales.

   (10)  For June 1, 2015, through May 31, 2016: The Tier I requirement is 5.5% of all retail sales, of which at least 0.25% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 8.2% of all retail sales.

   (11)  For June 1, 2016, through May 31, 2017: The Tier I requirement is 6% of all retail sales, of which at least 0.2933% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 8.2% of all retail sales.

   (12)  For June 1, 2017, through May 31, 2018: The Tier I requirement is 6.5% of all retail sales, of which at least 0.3400% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 8.2% of all retail sales.

   (13)  For June 1, 2018, through May 31, 2019: The Tier I requirement is 7% of all retail sales, of which at least 0.3900% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 8.2% of all retail sales.

   (14)  For June 1, 2019, through May 31, 2020: The Tier I requirement is 7.5% of all retail sales, of which at least 0.4433% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 8.2% of all retail sales.

   (15)  For June 1, 2020, through May 31, 2021, and each successive 12 month period thereafter: The Tier I requirement is 8% of all retail sales, of which at least 0.5% of all retail sales are to come from solar photovoltaic sources and the remaining from nonsolar photovoltaic Tier I sources, and the Tier II requirement is 10% of all retail sales.

 (c)  EDCs are exempt from these requirements for the duration of their cost-recovery period. An EDC shall be required to comply with the requirements in effect during the reporting period, as identified in subsection (b), in which its exemption expires.

 (d)  EGSs are exempt from these requirements in the service territories of EDCs in their cost-recovery period. EGS compliance shall be measured against their total MWh sales to all retail electric customers in all EDC service territories that have exited their cost-recovery periods.

 (e)  A 90-day true-up period shall commence at the end of each reporting period. EDCs and EGSs not in compliance with this chapter at the end of a reporting period, as determined by the program administrator under §  75.64(c)(2) (relating to alternative energy credit program administrator), may acquire additional alternative energy credits during the true-up period to satisfy the requirements of this chapter.

 (a)  An application for alternative energy system status shall be submitted on a form developed and made available by the Commission. A copy of the application form will be made available on the Commission’s public internet domain. An application shall be verified by oath or affirmation as required in §  1.36 (relating to verification).

 (b)  A completed application and supporting attachments shall be filed with the alternative energy credit program administrator, the Department of Environmental Protection and any other parties that may be designated by the Commission.

 (c)  A facility, to be qualified for alternative energy system status, shall demonstrate that it is physically located in either:

   (1)  This Commonwealth.

   (2)  The control area of an RTO that manages a portion of the electric transmission system in this Commonwealth.

 (d)  Alternative energy credits derived from alternative energy sources located outside the geographical boundaries of this Commonwealth but within the control area of an RTO that manages the transmission system in any part of this Commonwealth shall only be eligible to meet the compliance requirements of EDCs or EGSs located within the service territory of the same RTO. For purposes of compliance with the act, alternative energy sources located in the control area of the PJM Interconnection, LLC RTO or its successor shall be eligible to fulfill compliance obligations of all Pennsylvania EDCs and EGSs.

 (e)  A facility, to be qualified for alternative energy system status, shall demonstrate that it generates electricity from or conserves electricity through a Tier I or Tier II alternative energy source.

 (f)  A facility may not be qualified unless the Department has verified compliance with applicable environmental regulations, and the standards set forth in section 2 of the act (73 P. S. §  1648.2).

 (a)  An alternative energy credit may be certified by the Commission for each MWh of electricity generated by qualified alternative energy systems on or after February 28, 2005.

 (b)  An alternative energy credit may be certified by the Commission for each MWh of electricity conserved by qualified alternative energy systems or demand side management on or after November 30, 2004.

 (c)  An alternative energy credit may not be certified for a MWh of electricity generation or electricity conservation that has already been used to satisfy another state’s renewable energy portfolio standard, alternative energy portfolio standard or other comparable standard.

 (d)  An alternative energy credit already purchased by individuals, businesses or government bodies that do not have a compliance obligation under the act may not be certified for a MWh of electricity generation or electricity conservation unless the individual, business or government body sells those credits to the EDC or EGS.

 (e)  When an alternative energy system relies on more than one fuel source or technology, alternative energy credits shall be certified for that portion of the electric generation that is derived from an alternative energy fuel source or technology.

 (f)  For all alternative energy systems except solar photovoltaic systems with a nameplate capacity of 15 kilowatts or less, alternative energy credit certification shall be verified by metered data obtained from or by one of the following:

   (1)  An RTO.

   (2)  The credits registry designated under §  75.70 (relating to alternative energy credit registry).

   (3)  The administrator designated under §  75.64 (relating to alternative energy credit program administrator).

 (g)  For solar photovoltaic alternative energy systems with a nameplate capacity of 15 kilowatts or less, alternative energy credit certification shall be verified by the administrator designated under §  75.64.

 (a)  The Commission may select an independent entity to act as a program administrator and perform administrative functions necessary to the implementation of this chapter. If an independent entity is not selected to act as a program administrator, the Commission will perform the functions identified in this section.

 (b)  The program administrator will have the following powers and duties in regard to alternative energy system qualification:

   (1)  Distribute, receive and review applications for alternative energy system qualification.

   (2)  Reject applications that are incomplete or do not adhere to the application instructions.

   (3)  Determine whether an application satisfies the geographic eligibility standard in §  75.62(c) (relating to alternative energy system qualification) and reject applications that fail this standard.

   (4)  Qualify applicants for alternative energy system status who have filed a complete application, adhered to application instructions, satisfied the geographic eligibility standard, complied with environmental regulations and utilized an alternative energy fuel source or technology.

   (5)  The program administrator will provide written notice to applicants of its qualification decision within 30 days of receipt of a complete application form.

 (c)  The program administrator shall have the following powers and duties regarding the verification of compliance with this chapter:

   (1)  At the end of each reporting period, the program administrator shall verify EDC and EGS compliance with §  75.61 (relating to EDC and EGS obligations), and provide written notice to each EDC and EGS of an initial assessment of their compliance status within 45 days of the end of the reporting period.

   (2)  At the end of each true-up period, the administrator shall verify compliance with §  75.61 for EDCs and EGSs who were in violation of §  75.61 at the end of the reporting period. The administrator will provide written notice to each EDC and EGS of a final assessment of their compliance status within 15 days of the end of the true-up period.

   (3)  EDCs and EGSs shall provide all information to the program administrator necessary to verify compliance with §  75.61.

   (4)  The program administrator shall provide a report to the Commission within 45 days of the end of each reporting period and true-up period that identifies the compliance status of all EDCs and EGSs. The report provided after the end of the true-up period shall propose alternative compliance payment amounts for each EDC and EGS that is noncompliant with §  75.61 for that reporting period. As part of this report, the administrator shall identify the average market value of alternative energy credits derived from solar photovoltaic energy sold in the reporting period for each RTO that manages a portion of this Commonwealth’s transmission system.

 (d)  The program administrator shall have the following powers and duties relating to alternative energy credit certification:

   (1)  The program administrator may not certify an alternative energy credit already purchased by individuals, businesses or government bodies that do not have a compliance obligation under the act unless the individual, business or government body sells those credits to the EDC or EGS.

   (2)  The program administrator may not certify an alternative energy credit for a MWh of electricity generation or electricity conservation that has already been used to satisfy another state’s renewable energy portfolio standard, alternative energy portfolio standard or other comparable standard.

 (e)  A decision of the program administrator may be appealed consistent with §  5.44 (relating to petitions for appeal from actions of the staff).

 (f)  The Commission may delegate other responsibilities to the program administrator as may be necessary for the implementation of the act.

 (a)  Within 15 days of receipt of the report identified in §  75.64(c)(4) (relating to alternative energy credit program administrator), the Commission will provide written notice to each EDC and EGS that was noncompliant with §  75.61 (relating to EDC and EGS obligations) of their alternative compliance payment for that reporting period.

 (b)  Each EDC and EGS shall be assessed an alternative compliance payment according to the following formula:

   (1)  For noncompliance with the solar photovoltaic requirements identified in §  75.61, an EDC and EGS shall make an alternative compliance payment equal to the following:

     (i)   The average market value for solar photovoltaic alternative energy credits sold during the reporting period in the RTO control area where the noncompliance occurred.

     (ii)   Add to value in subparagraph (i), the levelized up-front rebates received by sellers of solar renewable energy credits, (calculated as follows: total amount of rebates paid within the previous 20 years, divided by the total kilowatt capacity for which rebates were given in the previous 20 years, divided by 20 (the useful life of a solar photovoltaic system), multiplied by the percentage of alternative energy used during the reporting period originating from jurisdictions where rebates were given.

     (iii)   Multiply the value in subparagraph (ii) by 200%.

   (2)  For noncompliance with all other requirements identified in §  75.61, an EDC and EGS shall make an alternative compliance payment equal to $45 times the number of additional alternative energy credits necessary for compliance in that reporting period.

   (3)  The costs of alternative compliance payments made under this section may not be recoverable from ratepayers.

 (c)  EDCs and EGSs shall advise the Commission in writing within 15 days of the issuance of this notice of their acceptance of the alternative compliance payment determination or, if they wish to contest the determination, file a petition to modify the level of the alternative compliance payment. The petition must include documentation supporting the proposed modification. The Commission will refer the petition to the Office of Administrative Law Judge for further proceedings as may be necessary. Failure of an EDC or EGS to respond to the Commission within 15 days of the issuance of this notice shall be deemed an acceptance of the alternative compliance payment determination.

 (d)  EDCs and EGSs shall send their alternative compliance payments to a special fund designated by the Commission within 30 days of acceptance of their payment determination, or the conclusion of proceedings before the Commission regarding the modification of the level of payment.

 (e)  Alternative compliance payments shall be made available to the sustainable energy funds established through the Commission’s orders entered under 66 Pa.C.S. §  2806(f) (relating to Commission review of restructuring filings), under procedures and standards proposed by the Pennsylvania Sustainable Energy Board and approved by the Commission at Docket M-00031715. See 33 Pa.B. 4263 (August 23, 2003).

 (f)  Alternative compliance payments made available to the sustainable energy funds shall be utilized solely for projects that increase the amount of electric energy generated from alternative energy resources for purposes of compliance with §  75.61.

 (a)  No earlier than 60 days prior to the beginning of a reporting period and no more than 60 days after the conclusion of the true-up period, the Commission, upon its own initiative or upon the request of an EDC or EGS, may issue an order declaring that force majeure exists for some or all EDCs and EGSs for that reporting period. The order will include separate force majeure determinations for the Tier I alternative energy source, Tier II alternative energy source and solar photovoltaic requirements of §  75.61 (relating to EDC and EGS obligations).

 (b)  The Commission will provide public notice of all requests for force majeure determination.

 (c)  The Commission may find that force majeure exists if there are insufficient alternative energy credits to satisfy the aggregate Tier I alternative energy source, Tier II alternative energy source or solar photovoltaic obligation for all EDCs and EGSs under §  75.61 for that reporting period.

 (d)  The Commission may find that force majeure exists for the nonsolar photovoltaic requirement of §  75.61 if the average price for a nonsolar photovoltaic alternative energy credit purchased by a Pennsylvania EDC and EGS exceeds $45 in the 6-month period preceding the issuance of the order referenced in subsection (a).

 (e)  If the Commission determines that force majeure exists for a reporting period, EDCs and EGSs shall have the option of making alternative compliance payments in lieu of compliance with §  75.61 for that reporting period.

   (1)  This payment must equal $45 for each alternative energy credit needed to satisfy the Tier I nonsolar photovoltaic and Tier II requirements of §  75.61 or the Commission may choose to reduce the required level of Tier I nonsolar photovoltaic and Tier II compliance for the reporting period.

   (2)  For the solar photovoltaic requirement, EDCs and EGSs shall have the option of making an alternative compliance payment equal to the market value of solar photovoltaic credits in the applicable RTO service territory, or the Commission may choose to reduce the required level of solar photovoltaic compliance for that reporting period.

   (3)  A payment shall be accompanied by a statement with supporting facts, filed with the Commission and verified by oath or affirmation, consistent with §  1.36 (relating to verification), that the EDC or EGS has made a good faith effort to comply with this chapter as outlined in subparagraph (i) of the definition of ‘‘force majeure’’ in §  75.1 (relating to definitions), that they are unable to acquire a sufficient quantity of alternative energy credits to meet their obligations under §  75.61 as outlined in subparagraph (ii) of the definition of ‘‘force majeure’’ in §  75.1, and that an alternative compliance payment is the least cost method of compliance.

   (4)  The option to make an alternative compliance payment in lieu of compliance with §  75.61 may not be available to EDCs and EGSs that have already acquired sufficient alternative energy credits for compliance with the requirements of that reporting period.

   (5)  If the Commission modifies any compliance requirements, the Commission may increase the compliance requirements of an equivalent type and amount in subsequent years when the Commission determines that sufficient alternative energy credits of an equivalent type exist in the marketplace.

 (f)  Alternative compliance payments made by EDCs under subsection (e) shall be deemed a cost of compliance with this chapter and may be recovered under §  75.67 (relating to alternative energy cost-recovery).

 (a)  A default service provider may recover from default service customers the following reasonable and prudently incurred costs for compliance with the act:

   (1)  The costs of electricity generated by an alternative energy system, purchased by a default service provider, and delivered to default service customers for purposes of compliance with §  75.61 (relating to EDC and EGS obligations).

   (2)  The costs of alternative energy credits purchased and used within the same reporting period for purposes of compliance with §  75.61.

   (3)  The costs of alternative energy credits purchased in one reporting period and banked for use in later reporting periods, consistent with §  75.69 (relating to banking of alternative energy credits).

   (4)  The costs of alternative energy credits purchased in the true-up period to satisfy compliance obligations for the most recently concluded reporting period, consistent with §  75.61(e)

   (5)  Payments to the alternative energy credits program administrator for its costs of administering an alternative energy credits program, consistent with §  75.64 (relating to alternative energy credit program administrator).

   (6)  Payments to a third party for its costs in operating an alternative energy credits registry, consistent with §  75.70 (relating to the alternative energy credit registry).

   (7)  The costs levied by a regional transmission organization to ensure that alternative energy sources are reliable.

   (8)  The costs of alternative compliance payments made under §  75.66 (relating to force majeure).

 (b)  A default service provider shall demonstrate compliance with the requirements of §  75.61 and the default service provisions of Chapter 54 (relating to electricity generation customer choice) by identifying a competitive procurement process for acquiring alternative energy credits in default service implementation plans filed with the Commission.

 (c)  A competitive procurement process for alternative energy and alternative energy credits shall comply with the standards for competitive procurement processes identified in the default service provisions in Chapter 54.

 (d)  The costs of compliance with the alternative energy portfolio standards act shall be recovered through an automatic adjustment clause within the meaning of 66 Pa.C.S. §  1307 (relating to sliding scale of rates; adjustments) and consistent with §  54.187 (relating to default service rate design and the recovery of reasonable costs) according to the following standards:

   (1)  Costs incurred by a default service provider during the cost-recovery period shall be deferred as a regulatory asset and fully recovered with a return on the unamortized balance during the first full 12-month reporting period after the expiration of the cost-recovery period in the EDC service territory where it is acting as the default service provider.

   (2)  Costs incurred by a default service provider after the expiration of a cost-recovery period shall be recovered during the reporting period in which they are incurred, except as provided for in paragraph (7).

   (3)  The default service implementation plan shall include a schedule of rates for the recovery of these costs as required under 66 Pa.C.S. §  1307(a).

   (4)  A default service provider shall file a report with the Commission within 30 days of the conclusion of each reporting period that includes the information identified in 66 Pa.C.S. §  1307(e)(1).

   (5)  The Commission will hold public hearings on the substance of these reports, and other matters pertaining to this subject, as required by 66 Pa.C.S. §  1307(e)(2).

   (6)  The Commission will order the default service provider to provide refunds to or recover additional costs from default service customers consistent with 66 Pa.C.S. §  1307(e)(3).

   (7)  The costs of alternative energy credits purchased by the default service provider during the true-up period under section 3(e)(5) of the act (73 P. S. §  1648.3(e)(5)) shall be recovered during the reporting period in which these costs are incurred.

 (e)  The Commission will perform fuel costs audits, on at least an annual basis, of each default service provider that recovers costs using the automatic adjustment clause provided for under this section.

 (a)  Sales of electricity by EDCs and EGSs to retail electric customers marketed as deriving from alternative energy sources shall be tracked and counted separately from alternative energy credits used to support compliance with §  75.61 (relating to EDC and EGS obligations).

 (a)  An EDC and EGS may bank alternative energy credits certified in one reporting period for use in either or both of the two immediately following reporting periods.

 (b)  An EDC and EGS may bank alternative energy credits certified during a cost-recovery period for use in the reporting period in which the cost-recovery period expires, and the reporting period that immediately follows.

 (c)  Alternative energy credits acquired by EDCs and EGSs not used within the time limits identified in subsections (a) and (b) shall be retired within the alternative energy credits registry and not available for the compliance requirements of this chapter.

 (d)  EDCs and EGSs shall satisfy the requirements of this chapter for the present reporting period before banking alternative energy credits produced in that same reporting period for use in either or both of the two subsequent reporting periods.

 (e)  The Commission will determine the volume of sales, measured in MWh, by EDCs and EGSs to retail customers in the 12-month period that immediately preceded the effective date of the act derived from specific alternative energy systems. EDCs and EGSs may bank credits during the cost-recovery period for the generation output of qualified alternative energy systems that exceed their volume of alternative energy sales to retail customers during this 12-month period.

 (a)  The Commission will designate an alternative energy credit registry to track the creation and transfer of certified alternative energy credits among qualified alternative energy systems, EDCs, and EGSs. EDCs and EGSs shall record the price paid for each alternative energy credit in the alternative energy credit registry.

 (b)  The Commission may direct EDCs and EGSs to enter into agreements with an alternative energy credit registry to verify compliance with this chapter and for compliance with section 3(e)(8) of the act (73 P. S. §  1648.3(e)(8)). EDCs and EGSs shall comply with the rules, policies and procedures of the designated alternative energy credit registry identified in the registry’s terms of use, subscriber agreement or other comparable document.

 (c)  EDCs and EGSs shall provide the Commission and the program administrator with access to information in this registry necessary to verify compliance with this chapter and for compliance with section 3(e)(8) of the act.

 (d)  The prices paid for individual credits will be treated as confidential information by the Commission. Aggregate pricing data on alternative energy credits will be made available to the public by the Commission or the program administrator on a regular basis.

   This section cited in 52 Pa. Code §  75.63 (relating to alternative energy credit certification); and 52 Pa. Code §  75.67 (relating to alternative energy cost-recovery).