Green Power Update - October 2010

Policy news
Victory for clean energy
On October 13, the Senate unanimously approved House Bill 1394, sponsored by Representative Tom Houghton (D-Chester), that allows landowners to lease land enrolled in Clean and Green for wind energy and pay back taxes on only the portion of the property used for the wind energy system. This is an important distinction since the remaining farmland can still be used for agriculture and grazing. The bill also allows an exemption on rollback taxes for land devoted to other Tier I Alternative Energy Portfolio Standards Act resources (such as small-wind, methane digesters, and solar) if the majority of the power generated is used on the property.

Passage of House Bill 1394 would be a tremendous win for clean energy development. The bill provides much needed clarity on the issue of back taxes which has held up the development of some of the state's wind projects.

The bill now moves to the House which is expected to concur with the Senate amendments when it returns to session the week of November 8. Please stay tuned for further updates.

State energy efficiency ranking revealed
The American Council for an Energy-Efficient Economy (ACEEE) released its annual State Energy Efficiency Scorecard in October. Pennsylvania ranked 16 in the nation based on its scores in six policy areas including utility programs and policies; transportation policies; building energy codes; combined heat and power; state government initiatives; and appliance efficiency standards.

Pennsylvania received top scores for building energy codes, thanks to having the most up-to-date residential and commercial building energy codes. The state also received top scores for state government initiatives due to the Commonwealth's available funding programs and new construction requirements for state buildings. The Commonwealth also scored well for combined heat and power, due to strong net-metering and interconnection regulations allowing for the growth of distributed generation resources.

This year's most notable improvement was the Utility Efficiency Programs and Policy score, thanks to the passage of the Energy Savings Bill, Act 129. The Act requires electric utilities to reduce their overall electricity load by 1 percent by 2011 and by 3 percent by 2013, and reduce peak demand by 4.5 percent by 2013 by offering customers a portfolio of energy efficiency and conservation programs. We expect this score to improve even more in the upcoming years as annual spending and savings increase as the Act 129 programs continue to ramp-up.

The report also points out several areas where Pennsylvania could improve. Currently Pennsylvania does not have any type of decoupling mechanism to help break the link between electricity sales and revenues; many believe this absence creates a disincentive for utilities to invest in energy efficiency. In addition, Pennsylvania does not have any state appliance efficiency standards for products not already regulated by the federal government. We hope the next administration will work to address these missing pieces to further enhance the state's commitment to energy efficiency.

NRDC files lawsuit to reinstate PACE
In October, the National Resources Defense Council (NRDC) filed the lawsuit against the Federal Housing Finance Agency (FHFA), regulators of government sponsored mortgage buyers Fannie Mae and Freddie Mac, and the Office of the Comptroller of the Currency (OCC), regulators of national banks. The suit involves the agencies' effectively halting Property Assessed Clean Energy (PACE) programs.

PACE is an innovative financing tool currently authorized in 23 states. The five most well-known PACE programs — in Babylon, NY; Berkeley, CA; Boulder County, CO; Palm Desert, CA; and Sonoma County, CA — have had almost 2,000 participants combined. Under the PACE model, municipalities create financing districts and issue a master bond to provide upfront capital to homeowners within the district to install energy efficiency improvements or solar systems. Municipalities then issue property tax liens in the amount of the loan that is repaid by the homeowner as a property tax surcharge for up to 20 years. Not only do PACE programs provide much needed capital to homeowners to make clean energy improvements, the loan can be easily transferrable to the next property owner.

Over concerns with the current state of the housing market, FHFA and OCC issued statements to Fannie Mae, Freddie Mac and the national banks in July that brought existing and planned PACE programs to a halt across the country. This leaves participating homeowners in limbo and freezes the $150 million in federal stimulus funds allocated last year to support PACE programs.

This lawsuit follows those filed by California Attorney General Jerry Brown, Sonoma County, the City of Palm Desert, and the Sierra Club, and federal legislation introduced by Senator Barbara Boxer and Representative Mike Thompson to require the federal government to allow states and localities to move forward with PACE programs.

Act 129 annual reports issued
In accordance with the requirements of Act 129, electric utilities in the state submitted their annual reports to the Pennsylvania Public Utility Commission (PUC) on September 15 for the first program year (June 1, 2009 — May 31, 2010). During the first year, the utilities spent a combined $55,585,543 and are making progress towards the Act's requirements of reducing overall electricity load by 1 percent by 2011 and by 3 percent by 2013, and reducing peak demand by 4.5 percent by 2013.

Several trends were found across the utilities Inc.uding the fact the majority of savings were obtained by lighting measures in the residential class. This is not surprising since replacing inefficient bulbs and lighting fixtures with more efficient models is one of the quickest and lowest cost ways to save electricity. Most expect that more savings will come from the commercial sector as utility programs continue to mature, and more program offerings come online. Several utilities are also working to unveil residential and commercial new construction programs in the near future.

Check in with your local utility by using the links below to stay current on the various financial incentives being offered to homeowners, businesses, non-profit and government entities, and low-income customers to install higher efficiency, cost saving energy efficient improvements.

Met-Ed, Penelec and Penn Power
PPL Electric E-power
PECO Energy Smart Ideas
Duquesne Light Watt Choices
Allegheny Power Watt Watchers

Wind energy update
Interest in offshore wind continues to grow
Private investors and state policymakers are becoming increasingly interested in offshore wind energy. This summer, New Jersey enacted the nation's first renewable portfolio standard carve-out for offshore wind. The Offshore Wind Economic Development Act calls for at least 1,100 megawatts (MW) of new offshore wind electricity generating capacity to be built. The act also authorizes a 100 percent tax credit for capital investments of $50 million or more in new offshore wind facilities, and allows the Economic Development Authority to use money from the existing Global Warming Solutions Fund to support this development.

There's more good news. Just this month, Google and Good Energies, an investment firm specializing in renewable energy, each agreed to invest in the proposed $5 billion Atlantic Wind Connection (AWC). The AWC is a 350-mile transmission line planned to run from northern New Jersey to Norfolk, Virginia in the seabed of federal waters 15 to 20 miles offshore. The transmission line would carry a capacity of 6,000 megawatts, equal to the output of five large nuclear reactors, helping to support future offshore wind farms along the Atlantic coast. The line would have four connection points in southern Virginia, Delaware, southern New Jersey and northern New Jersey that would make it easier to bring energy onshore. While the project could face permitting and regulatory delays, the developers are hoping to complete the first phase of the project by 2016, which would include the installation of a 150 mile stretch of cable from New Jersey to Rehoboth Beach, Delaware. The full project would not be completed until 2021 at the earliest.

Solar energy update
PUC finalizes solar policy statement
On September 16, the Pennsylvania Public Utility Commission (PUC) voted 5 - 0 to adopt a Final Policy Statement to support the development of solar projects in Pennsylvania. The policy statement provides guidance to overcome barriers to solar development Inc.uding the hesitation of utilities to enter into long-term contracts for solar alternative energy credits (SAECs). Long-term contracts are vital to the development of new solar resources. Developers need to show lenders a firm long-term cash flow from the sale of SAECs to obtain financing.

The Policy Statement addresses this barrier by recommending utilities issue requests for proposals (RFPs) using the model developed by the PUC's solar working group to purchase SAECs from large-scale solar projects. The PUC also encourages utilities to enter into standardized long-term contracts of up to 20 years for credits and ensures full cost-recovery for this investment.

The Policy Statement also encourages utilities to purchase SAECs from small-scale solar resources. using bilateral contracts and through the use of aggregators who gather SAECs from various small-scale solar projects and sell them to the utilities. This would alleviate the difficulty owners of small-scale solar projects now have in selling SAECs. Encouraging utilities to purchase SAECs from these resources will also help reduce the payback on these systems for homeowners and businesses.

The PUC plans to continue working on solar development by establishing a stakeholder working group to further examine the SAEC market in Pennsylvania.

New report highlights Pennsylvania solar jobs
The Solar Foundation, in collaboration with Green LMI Consulting and Cornell University, released the National Solar Jobs Census in October. According to the report, Pennsylvania lands right behind California with the second largest number of solar jobs in the nation. The study reported a growing trend across the nation with solar firms expecting to add jobs at a much faster pace than the general economy, with over 50 percent of the solar firms surveyed expecting to add jobs.

It is not surprising that Pennsylvania put up strong numbers with its commitment to solar energy. The $80 million Commonwealth Finance Authority's solar program and the $100 million Pennsylvania Sunshine Program have helped create incentives for solar development and job growth across the state. In fact, the Sunshine Program expects to create $252 million in matching private investment by the completion of the program. The Pennsylvania Department of Environmental Protection (DEP) estimates there are currently two to three thousand direct jobs and more than 600 companies — including Komax in York, Flabeg in Pittsburgh, AE Polysilican in Fairless Hills, SPI in Belle Vernon, UGI in Valley Forge and solar installers like Dynamic Solar, ASI, Mercury Solar and Greenspring Energy ¬ in the industry here.

While this is good news, many of these jobs and companies could disappear when state funding sources are depleted. It is critical that the next administration replenish state solar funding and work to promote strong policy goals like an increased solar requirement in the Alternative Energy Portfolio Standards Act in order to help keep these great green jobs in Pennsylvania.

Solar manufacturer to create jobs in McKeesport
United States Green Energy Corporation recently received a $750,000 grant from the Pennsylvania Energy Development Authority's Green Technology Program to build a solar panel manufacturing plant in McKeesport (Allegheny County). The company is still examining potential locations for the park but expects to break ground by spring. The new manufacturing site should be up and running before the end of 2011 and will create up to 225 new jobs.

SunRun launches in Pennsylvania
SunRun is bringing its innovating solar financing model to Pennsylvania homeowners.

Under the SunRun model, the company purchases a solar power system for the homeowner and takes care of the installation, maintenance, repairs, monitoring and insurance. The homeowner agrees to pay SunRun a set rate for electricity generated by the solar power system. This fixed rate is generally lower than current utility rates and helps hedge against any future rate increases. This model represents a viable alternative for homeowners who want to install solar but don't want to pay the hefty upfront costs.

To date, SunRun has worked with over 5,000 homeowners across New Jersey, Massachusetts, Arizona, California and Colorado. SunRun plans to partner with Alteris Renewables, groSolar, Mercury Solar Systems, and Trinity Solar as it increases its footprint in Pennsylvania.

To learn more about SunRun's solar model visit its website at www.sunrunhome.com.

Happenings in the Marketplace
Settlement in FirstEnergy/Allegheny Energy merger brings clean energy benefits
FirstEnergy and Allegheny Energy, along with PennFuture and 18 other parties, filed a comprehensive settlement agreement with the Pennsylvania Public Utility Commission (PUC) on Monday, October 25. The settlement addresses concerns pertaining to FirstEnergy's proposal to purchase Allegheny Energy.

The settlement includes numerous clean energy benefits to the FirstEnergy and Allegheny Energy ratepayers including: $4 million for West Penn's Low-Income Usage Reduction Program (LIURP); affirmation of the commitment to provide $3.8 million to the West Penn Power Sustainable Energy Fund (WPPSEF); a commitment to deploy smart meters to at least 90 percent of customers by December 31, 2018; a commitment to procure 40 percent of the companies' Alternative Energy Portfolio Standard solar requirements for 2011-2021 through long-term contracts of nine and 10 years in length; $1 million in funding to the Keystone HELP program; and $1 million in funding to the Pennsylvania Sunshine Program.

The $1 million in funding for Keystone HELP will go toward establishing a loan loss reserve and interest rate buydown program for borrowers within the FirstEnergy/Allegheny Energy service territories. This new program will provide loans at lower rates and more flexible terms to consumers who are currently not able to obtain traditional loans and other sources of capital to make energy efficiency improvements to their homes.

Long-term contracting is essential to the development of large-scale solar projects in Pennsylvania. Long-term contracting helps developers get the financing necessary to build projects. The additional $1 million to the Pennsylvania Sunshine Program will also help replenish the successful rebate program, allowing more homeowners and small businesses to install solar energy systems.

The FirstEnergy/Allegheny Energy settlement is the latest agreement PennFuture has negotiated for renewable energy and efficiency investments in Pennsylvania. Through a series of legal cases and advocacy within state government, Pennsylvania has increased investments and incentives for renewable energy by nearly $200 million.

SEPTA-Viridity partnership generates savings
Thanks to a $900,000 award from the Pennsylvania Energy Development Authority (PEDA) and the Federal Transit Administration's Transit Investments for Greenhouse Gas and Energy Reduction Program, Viridity Energy will install a state-of-the-art, energy saving device along a portion of The Southeastern Pennsylvania Transportation Authority's (SEPTA) Market-Frankford Line.

As part of the project, Viridity Energy will install a large-scale battery array at the Letterly Substation, which will capture the energy from regenerative braking of trains along the Market-Frankford line. The battery will allow SEPTA to recycle the energy from braking, helping to improve the power quality, produce energy savings, and lower operating costs. The system is expected to reduce electrical power purchases 10 percent to 20 percent at each location of the batteries.

Each battery array will store as much as one megawatt of power, allowing SEPTA to sell back power to the grid for additional revenues.

The Viridity-SEPTA project should create approximately $500,000 in economic value for the agency, along with reducing annual carbon emissions by 1,258 tons per year. If this pilot program is successful, the technology could be deployed at all 38 SEPTA substations.

PECO announces post rate cap changes
PECO customers dreading the expiration of rate caps on January 1, 2011 can breathe a sigh of relief. PECO states that residential customers will only see an increase of 5 percent beginning in January. This is about $5 more per month for typical residential customers. Industrial customers will see a 7 percent increase and the small commercial customer class will actually see a decrease of 5 percent.

Many PECO customers feared a sharp rate increase similar to what occurred in the PPL service territory last year, with residential customers experiencing a 30 percent increase. Luckily there were several factors at play to help lessen the impact. For starters, PECO customers were already paying a higher cost of electricity compared to other service territories, due in part to a higher Competitive Transition Charges (CTC) on customer bills to payback previous investments PECO made in power generation. This charge expires when rate caps end. And when PPL procured power to meet its 2010 electricity demand, wholesale electricity prices were much higher. Due to the economic downturn and decreased demand, wholesale energy prices have fallen as much as 45.1 percent in the region over the past year, and this is reflected in PECO's 2011 rates.

There are also several actions PECO customers can take to help offset the slight rate increase. The PECO Energy Smart Ideas program offers a wide variety of rebates on energy saving technologies for all customer classes ranging from lighting to HVAC to appliances and motors. Additionally, PECO customers will now be able to shop around for power and could obtain a lower rate. Visit our electricity shopping page to find out more information.

Pennsylvania receives more funding for weatherization
Pennsylvania has been selected to receive an additional $3.8 million in federal funds to continue its successful Weatherization Assistance Program. The state has already weatherized nearly 8,400 homes under the American Recovery and Reinvestment Act (ARRA). Pennsylvania's program has been one of the most successful in the nation and is weatherizing homes at an optimal rate of approximately 25,000 homes per month helping to create much needed jobs. According to state reports, in the second quarter of 2010, the Recovery Act Weatherization Assistance Program supported 700 more jobs in Pennsylvania.

In addition to this award, the Pennsylvania Commission on Economic Opportunity has been selected to receive $2.4 million to evaluate energy savings in home display devices that help households manage their energy use. This will complement an existing program to weatherize 2,500 low-income homes in eastern and central Pennsylvania.

PennFuture News
Awards luncheon honors clean energy heroes
With so many educational institutions, religious organizations, small and large businesses, government, green power producers, green power leaders, public interest organizations, governmental entities, and faith-based groups going above and beyond to support clean energy, PennFuture hosted two Green Power Awards this year, one in Philadelphia and one in Pittsburgh.

The individuals and organizations receiving the awards included:

Philadelphia region:
Green Power: Buy It Awards

Green Power: Make It Awards

Green Power: Save It Awards

Green Power: Leading the Way Awards

Citizens' Choice Award

Special Leadership Award

Pittsburgh region:
Green Power: Buy It Awards

Green Power: Make It Awards

Green Power: Save It Awards

Green Power: Leading the Way Awards

Joint Leadership Award

Citizens' Choice Award

Congratulations to all of the award winners for showing leadership in their communities. If you have a nomination for next year's luncheons, please contact Mary Kane at kane@pennfuture.org.


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