SB 501 — An Act amending the act of November 30, 2004 (P.L.1672, No.213), known as the Alternative Energy Portfolio Standards Act, further providing for definitions; providing for force majeure; further providing for alternative energy portfolio standards, for portfolio requirements in other states, for health and safety standards and for interagency responsibilities; providing for zero emissions credits; and making editorial changes.

PRINTER'S NO.   771

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                        SENATE BILL
                        No. 501
                                               Session of
                                                 2025

     INTRODUCED BY SANTARSIERO, KANE, STREET, COMITTA, COLLETT,
        COSTA, SCHWANK, SAVAL, CAPPELLETTI, HUGHES, HAYWOOD,
        PISCIOTTANO, KIM AND MILLER, MAY 12, 2025

     REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, MAY 12, 2025


                                    AN ACT
 1   Amending the act of November 30, 2004 (P.L.1672, No.213),
 2      entitled "An act providing for the sale of electric energy
 3      generated from renewable and environmentally beneficial
 4      sources, for the acquisition of electric energy generated
 5      from renewable and environmentally beneficial sources by
 6      electric distribution and supply companies and for the powers
 7      and duties of the Pennsylvania Public Utility Commission,"
 8      further providing for definitions; providing for force
 9      majeure; further providing for alternative energy portfolio
10      standards, for portfolio requirements in other states, for
11      health and safety standards and for interagency
12      responsibilities; providing for zero emissions credits; and
13      making editorial changes.
14      The General Assembly of the Commonwealth of Pennsylvania
15   hereby enacts as follows:
16      Section 1.    Sections 1 and 2 of the act of November 30, 2004
17   (P.L.1672, No.213), known as the Alternative Energy Portfolio
18   Standards Act, are amended to read:
19   Section 1.   Short title.
20      This act shall be known and may be cited as the [Alternative
21   Energy Portfolio] Pennsylvania Reliable Energy Sustainability
22   Standards Act.
23   Section 2.   Definitions.
 1      The following words and phrases when used in this act shall
 2   have the meanings given to them in this section unless the
 3   context clearly indicates otherwise:
 4      "Advanced reactor."       A nuclear fission reactor consistent
 5   with the definition of "advanced nuclear reactor" in 42 U.S.C. §
 6   16271 (relating to nuclear energy). The term includes a small
 7   modular reactor.
 8      ["Alternative energy credit."          A tradable instrument that is
 9   used to establish, verify and monitor compliance with this act.
10   A unit of credit shall equal one megawatt hour of electricity
11   from an alternative energy source. The alternative energy credit
12   shall remain the property of the alternative energy system until
13   the alternative energy credit is voluntarily transferred by the
14   alternative energy system. (Def. amended July 17, 2007, P.L.114,
15   No.35)
16      "Alternative energy portfolio standards."          Standards
17   establishing that a certain amount of energy sold from
18   alternative energy sources is included as part of the sources of
19   electric generation by electric utilities within this
20   Commonwealth.
21      "Alternative energy sources."          The term shall include the
22   following existing and new sources for the production of
23   electricity:
24            (1)   Solar photovoltaic or other solar electric energy.
25            (2)   Solar thermal energy.
26            (3)   Wind power.
27            (4)   Large-scale hydropower, which shall mean the
28      production of electric power by harnessing the hydroelectric
29      potential of moving water impoundments, including pumped
30      storage that does not meet the requirements of low-impact

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 1    hydropower under paragraph (5).
 2        (5)   Low-impact hydropower consisting of any technology
 3    that produces electric power and that harnesses the
 4    hydroelectric potential of moving water impoundments,
 5    provided such incremental hydroelectric development:
 6              (i)    does not adversely change existing impacts to
 7        aquatic systems;
 8              (ii)    meets the certification standards established
 9        by the Low Impact Hydropower Institute and American
10        Rivers, Inc., or their successors;
11              (iii)    provides an adequate water flow for protection
12        of aquatic life and for safe and effective fish passage;
13              (iv)    protects against erosion; and
14              (v)    protects cultural and historic resources.
15        (6)   Geothermal energy, which shall mean electricity
16    produced by extracting hot water or steam from geothermal
17    reserves in the earth's crust and supplied to steam turbines
18    that drive generators to produce electricity.
19        (7)   Biomass energy, which shall mean the generation of
20    electricity utilizing the following:
21              (i)    organic material from a plant that is grown for
22        the purpose of being used to produce electricity or is
23        protected by the Federal Conservation Reserve Program
24        (CRP) and provided further that crop production on CRP
25        lands does not prevent achievement of the water quality
26        protection, soil erosion prevention or wildlife
27        enhancement purposes for which the land was primarily set
28        aside; or
29              (ii)    any solid nonhazardous, cellulosic waste
30        material that is segregated from other waste materials,

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 1        such as waste pallets, crates and landscape or right-of-
 2        way tree trimmings or agricultural sources, including
 3        orchard tree crops, vineyards, grain, legumes, sugar and
 4        other crop by-products or residues.
 5        (8)    Biologically derived methane gas, which shall
 6    include methane from the anaerobic digestion of organic
 7    materials from yard waste, such as grass clippings and
 8    leaves, food waste, animal waste and sewage sludge. The term
 9    also includes landfill methane gas.
10        (9)    Fuel cells, which shall mean any electrochemical
11    device that converts chemical energy in a hydrogen-rich fuel
12    directly into electricity, heat and water without combustion.
13        (10)    Waste coal, which shall include the combustion of
14    waste coal in facilities in which the waste coal was disposed
15    or abandoned prior to July 31, 1982, or disposed of
16    thereafter in a permitted coal refuse disposal site
17    regardless of when disposed of, and used to generate
18    electricity, or such other waste coal combustion meeting
19    alternate eligibility requirements established by regulation.
20    Facilities combusting waste coal shall use at a minimum a
21    combined fluidized bed boiler and be outfitted with a
22    limestone injection system and a fabric filter particulate
23    removal system. Alternative energy credits shall be
24    calculated based upon the proportion of waste coal utilized
25    to produce electricity at the facility.
26        (11)    Coal mine methane, which shall mean methane gas
27    emitting from abandoned or working coal mines.
28        (12)    Demand-side management consisting of the management
29    of customer consumption of electricity or the demand for
30    electricity through the implementation of:

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 1                 (i)    energy efficiency technologies, management
 2          practices or other strategies in residential, commercial,
 3          institutional or government customers that reduce
 4          electricity consumption by those customers;
 5                 (ii)    load management or demand response
 6          technologies, management practices or other strategies in
 7          residential, commercial, industrial, institutional and
 8          government customers that shift electric load from
 9          periods of higher demand to periods of lower demand; or
10                 (iii)    industrial by-product technologies consisting
11          of the use of a by-product from an industrial process,
12          including the reuse of energy from exhaust gases or other
13          manufacturing by-products that are used in the direct
14          production of electricity at the facility of a customer.
15          (13)    Distributed generation system, which shall mean the
16      small-scale power generation of electricity and useful
17      thermal energy.
18      "Alternative energy system."       A facility or energy system
19   that uses a form of alternative energy source to generate
20   electricity and delivers the electricity it generates to the
21   distribution system of an electric distribution company or to
22   the transmission system operated by a regional transmission
23   organization.]
24      "Biogas energy."      The generation of electricity that uses:
25          (1)    biogas resultant of anaerobic digestion of organic
26      material, including yard waste such as grass clippings and
27      leaves, food waste, animal waste and sewage sludge; or
28          (2)    landfill gas.
29      "Biomass energy."      The generation of electricity that uses:
30          (1)    organic material from a plant that is grown for the

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 1      purpose of being used to produce electricity or is protected
 2      by the Federal Conservation Reserve Program, and provided
 3      that crop production on Federal Conservation Reserve Program
 4      lands does not prevent achievement of the water quality
 5      protection, soil erosion prevention or wildlife enhancement
 6      purposes for which the land is primarily set aside; or
 7          (2)   any solid nonhazardous, cellulosic waste material
 8      that is segregated from other waste material, including waste
 9      pallets, crates and landscape or right-of-way tree trimmings
10      or agricultural sources, including orchard tree crops,
11      vineyards, grain, legumes, sugar and other crop by-products
12      or residues.
13      "Clean hydrogen."   Hydrogen produced through a process that
14   results in a lifecycle greenhouse gas emissions rate of less
15   than 0.45 kilograms of CO2e per kilogram of hydrogen.
16      "Coal mine fugitive emissions."      Methane gas emitted from an
17   abandoned or working coal mine.
18      "Combined heat and power system."     A combined heat and power
19   system installed on a commercial, institutional or industrial
20   facility site within this Commonwealth that is a qualified
21   facility under the Public Utility Regulatory Policies Act of
22   1978 (Public Law 95-617, 92 Stat. 3117) and has an annual
23   operating efficiency of at least 60% with at least 25% of the
24   total annual energy output being useful thermal energy. A
25   combined heat and power system shall qualify as a Tier II PRESS
26   energy source for up to 25 megawatts of aggregate electric
27   nameplate capacity on a site.
28      "Commission."   The Pennsylvania Public Utility Commission.
29      ["Cost-recovery period."     The longer of:
30          (1)   the period during which competitive transition

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 1      charges under 66 Pa.C.S § 2808 (relating to competitive
 2      transition charge) or intangible transition charges under 66
 3      Pa.C.S. § 2812 (relating to approval of transition bonds) are
 4      recovered; or
 5          (2)   the period during which an electric distribution
 6      company operates under a Pennsylvania Public Utility
 7      Commission-approved generation rate plan that has been
 8      approved prior to or within one year of the effective date of
 9      this act, but in no case shall the cost-recovery period under
10      this act extend beyond December 31, 2010.]
11      "Customer-generator."   A nonutility owner or operator of a
12   net metered distributed generation system with a nameplate
13   capacity of not greater than 50 kilowatts if installed at a
14   residential service or not larger than 3,000 kilowatts at other
15   customer service locations, except for customers whose systems
16   are above three megawatts and up to five megawatts who make
17   their systems available to operate in parallel with the electric
18   utility during grid emergencies as defined by the regional
19   transmission organization or where a microgrid is in place for
20   the primary or secondary purpose of maintaining critical
21   infrastructure, such as homeland security assignments, emergency
22   services facilities, hospitals, traffic signals, wastewater
23   treatment plants or telecommunications facilities, provided that
24   technical rules for operating generators interconnected with
25   facilities of an electric distribution company, electric
26   cooperative or municipal electric system have been promulgated
27   by the Institute of Electrical and Electronic Engineers and the
28   Pennsylvania Public Utility Commission.
29      "Demand-side management."   The management of customer
30   consumption of electricity or the demand for electricity through

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 1   the implementation of:
 2            (1)   energy efficiency technologies, management practices
 3      or other strategies in residential, commercial, institutional
 4      or government customers that reduce electricity consumption
 5      by those customers;
 6            (2)   load management or demand response technologies,
 7      management practices or other strategies in residential,
 8      commercial, industrial, institutional and government
 9      customers that shift electric load from periods of higher
10      demand to periods of lower demand, such as virtual power
11      plants; or
12            (3)   industrial by-product technologies consisting of the
13      use of a by-product from an industrial process, including the
14      reuse of energy from exhaust gases or other manufacturing by-
15      products, including combined heat and power systems and
16      waste-heat-to-power systems, that are used in the direct
17      production of electricity at the facility of a customer.
18      "Department."    The Department of Environmental Protection of
19   the Commonwealth.
20      "Distributed generation system."     Small-scale power
21   generation of electricity, not including combined heat and
22   power.
23      "Electric distribution company."     The term shall have the
24   same meaning given to it in 66 Pa.C.S. Ch. 28 (relating to
25   restructuring of electric utility industry).
26      "Electric generation supplier."      The term shall have the same
27   meaning given to it in 66 Pa.C.S. Ch. 28 (relating to
28   restructuring of electric utility industry).
29      "Energy price index."    The average of the day-ahead
30   locational marginal prices at the highest PJM Interconnection,

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 1   L.L.C., pricing node in Pennsylvania for each hour of the three
 2   prior years.
 3      "Energy storage resource."    A technology, including any
 4   electromechanical, thermal and electromechanical technology, or
 5   any technology defined as "energy storage technology" in 26
 6   U.S.C. § 48E (relating to clean electricity investment credit)
 7   or 26 CFR 1.48E-2(g)(6) (relating to qualified investments in
 8   qualified facilities and EST for purposes of section 48E) as of
 9   the effective date of this definition that is capable of
10   absorbing and storing electrical energy for use at a later time.
11      "Environmental justice area."        A geographic area
12   characterized by increased pollution burden and sensitive or
13   vulnerable populations based on demographic and environmental
14   data as identified by the department.
15      "Force majeure."   [Upon its own initiative or upon a request
16   of an electric distribution company or an electric generator
17   supplier, the Pennsylvania Public Utility Commission, within 60
18   days, shall determine if alternative PRESS energy resources are
19   reasonably available in the marketplace in sufficient quantities
20   or are likely to be developed in sufficient quantities due to
21   alternative compliance payments or economics for the electric
22   distribution companies and electric generation suppliers to meet
23   their obligations for that reporting period under this act. In
24   making this determination, the commission shall consider whether
25   electric distribution companies or electric generation suppliers
26   have made a good faith effort to acquire sufficient PRESS
27   alternative energy to comply with their obligations. Such good
28   faith efforts shall include, but are not limited to, banking
29   reliable alternative energy credits during their transition
30   periods, seeking reliable alternative energy credits through

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 1   competitive solicitations and seeking to procure reliable
 2   alternative energy credits or PRESS alternative energy through
 3   long-term contracts. In further making its determination, the
 4   commission shall assess the availability of alternative reliable
 5   energy credits in the Generation Attributes Tracking System
 6   (GATS) or its successor and the availability of reliable
 7   alternative energy credits generally in Pennsylvania and other
 8   jurisdictions in the PJM Interconnection, L.L.C. regional
 9   transmission organization (PJM) or its successor. The commission
10   may also require solicitations for reliable alternative energy
11   credits as part of default service before requests of force
12   majeure can be made. If the commission further determines that
13   PRESS alternative energy resources are not reasonably available
14   in sufficient quantities in the marketplace for the electric
15   distribution companies and electric generation suppliers to meet
16   their obligations under this act, then the commission shall
17   modify the underlying obligation of the electric distribution
18   company or electric generation supplier or recommend to the
19   General Assembly that the underlying obligation be eliminated.
20   Commission modification of the electric distribution company or
21   electric generation supplier obligations under this act shall be
22   for that compliance period only. Commission modification shall
23   not automatically reduce the obligation for subsequent
24   compliance years. If the commission modifies the electric
25   distribution company or electric generation supplier obligations
26   under this act, the commission may require the electric
27   distribution company or electric generation supplier to acquire
28   additional reliable alternative energy credits in subsequent
29   years equivalent to the obligation reduced due to a force
30   majeure declaration if the commission determines that sufficient

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 1   reliable alternative energy credits exist in the marketplace.]
 2   The determination made by the commission under section 2.1.
 3      "Fuel cells."     A device that converts chemical energy in a
 4   hydrogen-rich fuel directly into electricity, heat and water
 5   without combustion including an integrated system comprised of a
 6   fuel cell stack assembly or linear generator assembly and
 7   associated balance of plant components which converts a fuel
 8   into electricity using electromechanical means. The term does
 9   not include an assembly which contains rotating parts.
10      "Fusion energy."     The product of fusion reactions inside a
11   fusion device and used to generate electricity.
12      "Geothermal energy."     The utilization of natural heat of the
13   earth found below the surface of the earth, which is then used
14   to generate electricity.
15          (1)   The term includes:
16                (i)    Devices that generate electricity using a
17          product of geothermal process including heat, indigenous
18          steam, pressure, hot water and hot brines, gases and
19          byproducts.
20                (ii)    Devices that generate or distribute energy from
21          a geothermal heating and cooling system.
22          (2)   The term does not include helium, oil, hydrocarbon
23      gas or any other hydrocarbon substances.
24      "Geothermal heating and cooling system."     A system that:
25          (1)   Exchanges thermal energy from groundwater or a
26      shallow ground source to generate thermal energy through an
27      electric geothermal heat pump or a system of electric
28      geothermal heat pumps interconnected with a geothermal
29      extraction facility that:
30                (i)    Is a closed loop or a series of closed loop

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 1          systems in which fluid is permanently confined within a
 2          pipe or tubing.
 3                (ii)    Does not come in contact with the outside
 4          environment or an open loop system in which ground or
 5          surface water is:
 6                       (A)   circulated in an environmentally safe manner
 7                directly into the facility; and
 8                       (B)   returned to the same aquifer or surface
 9                water source.
10          (2)   Meets or exceeds the current Federal Energy Star
11      product specification standards.
12          (3)   Replaces or displaces less efficient space or water
13      heating systems, regardless of fuel type.
14          (4)   Replaces or displaces less efficient space cooling
15      systems that do not meet Federal Energy Star product
16      specification standards.
17          (5)   Does not feed electricity back to the grid.
18      "Hydropower."      The production of electric power by harnessing
19   the hydroelectric potential of moving water impoundments,
20   including pumped storage that does not meet the requirements of
21   low-impact hydropower.
22      "Lifecycle greenhouse gas emissions."       As defined under 26
23   CFR §§ 1.45V-1 (relating to credit for production of clean
24   hydrogen), 1.45V-2 (relating to special rules), 1.45V-3
25   (relating to rules relating to the increased credit amount for
26   prevailing wage and apprenticeship), 1.45V-4 (relating to
27   procedures for determining lifecycle greenhouse gas emissions
28   rates for qualified clean hydrogen), 1.45V-5 (relating to
29   procedures for verification of qualified clean hydrogen
30   production and sale or use) and 1.45V-6 (relating to rules for

20250SB0501PN0771                      - 12 -
 1   determining the placed in service date for an existing facility
 2   that is modified or retrofitted to produce qualified clean
 3   hydrogen) as of the effective date of this definition.
 4      "Low-impact hydropower."    Technology that produces electric
 5   power and harnesses the hydroelectric potential of moving water
 6   impoundments, if the incremental hydroelectric development:
 7          (1)   Does not adversely change existing impacts to
 8      aquatic systems.
 9          (2)   Meets the certification standards established by the
10      Low Impact Hydropower Institute and American Rivers, Inc., or
11      its successors.
12          (3)   Provides an adequate water flow for protection of
13      aquatic life and for safe and effective fish passage.
14          (4)   Protects against erosion.
15          (5)   Protects cultural and historic resources.
16      "Municipal solid waste."    This will include energy from
17   existing waste to energy facilities which the Department of
18   Environmental Protection has determined are in compliance with
19   current environmental standards, including, but not limited to,
20   all applicable requirements of the Clean Air Act (69 Stat. 322,
21   42 U.S.C. § 7401 et seq.) and associated permit restrictions and
22   all applicable requirements of the act of July 7, 1980 (P.L.380,
23   No.97), known as the Solid Waste Management Act.
24      "Net metering."    The means of measuring the difference
25   between the electricity supplied by an electric utility and the
26   electricity generated by a customer-generator when any portion
27   of the electricity generated by the [alternative] PRESS energy
28   [generating] system is used to offset part or all of the
29   customer-generator's requirements for electricity. [Virtual] The
30   term includes virtual meter aggregation on properties owned or

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 1   leased and operated by a customer-generator and located within
 2   two miles of the boundaries of the customer-generator's property
 3   and within a single electric distribution company's service
 4   territory [shall be eligible for net metering].
 5      "PRESS energy sources."   The term shall include existing and
 6   new sources for the production of electricity including Tier I,
 7   Tier II and Tier III PRESS energy sources.
 8      "PRESS energy system."    A facility or energy system that uses
 9   a form of PRESS energy sources to generate electricity and
10   delivers the electricity generated to the distribution system of
11   an electric distribution company or to the transmission system
12   operated by a regional transmission organization.
13      "Regional transmission organization."     An entity approved by
14   the Federal Energy Regulatory Commission [(FERC)] that is
15   created to operate and manage the electrical transmission grids
16   of the member electric transmission utilities as required under
17   [FERC] Federal Energy Regulatory Commission Order 2000, Docket
18   No. RM99-2-000, [FERC] Federal Energy Regulatory Commission
19   Chapter 31.089 (1999) or any successor organization approved by
20   the [FERC] Federal Energy Regulatory Commission.
21      "Reliable energy credit."    A tradable instrument that is used
22   to establish, verify and monitor compliance with this act. A
23   unit of credit shall equal one megawatt hour of electricity from
24   a PRESS energy source. The reliable energy credit shall remain
25   the property of the reliable energy system until the reliable
26   energy credit is voluntarily transferred by the reliable energy
27   system.
28      "Reliable energy sustainability standards."     Standards
29   establishing that a certain amount of energy sold from PRESS
30   energy sources is included as part of the sources of electric

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 1   generation by electric utilities within this Commonwealth.
 2      "Reporting period."      The 12-month period from June 1 through
 3   May 31. A reporting year shall be numbered according to the
 4   calendar year in which it begins and ends.
 5      "Retail electric customer."      The term shall have the same
 6   meaning given to it in 66 Pa.C.S. Ch. 28 (relating to
 7   restructuring of electric utility industry).
 8      "Small modular reactors."      An advanced nuclear reactor with a
 9   rated capacity of less than 300 electrical megawatts that can be
10   constructed and operated in combination with similar reactors at
11   a single site.
12      ["Tier I alternative energy source."      Energy derived from:
13          (1)    Solar photovoltaic and solar thermal energy.
14          (2)    Wind power.
15          (3)    Low-impact hydropower.
16          (4)    Geothermal energy.
17          (5)    Biologically derived methane gas.
18          (6)    Fuel cells.
19          (7)    Biomass energy.
20          (8)    Coal mine methane.
21      "Tier II alternative energy source."      Energy derived from:
22          (1)    Waste coal.
23          (2)    Distributed generation systems.
24          (3)    Demand-side management.
25          (4)    Large-scale hydropower.
26          (5)    Municipal solid waste.
27          (6)    Generation of electricity utilizing by-products of
28      the pulping process and wood manufacturing process, including
29      bark, wood chips, sawdust and lignin in spent pulping
30      liquors.

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 1           (7)   Integrated combined coal gasification technology.]
 2      "Tier I PRESS energy source."    Electric energy derived from:
 3           (1)   Solar photovoltaic and solar thermal energy.
 4           (2)   Wind power.
 5           (3)   Low-impact hydropower.
 6           (4)   Geothermal energy.
 7           (5)   Advanced reactors.
 8           (6)   Fusion energy.
 9           (7)   Coal mine fugitive emissions.
10           (8)   Biogas energy.
11      "Tier II PRESS energy source."       Electric energy derived from:
12           (1)   Natural gas or coal using at least 80% clean
13      hydrogen co-fired blend or equivalent carbon intensity
14      reduction technologies.
15           (2)   Non-Tier I distributed generation systems.
16           (3)   Demand-side management.
17           (4)   Hydropower.
18           (5)   Fuel cells.
19           (6) Biomass energy.
20           (7)   Storage resources co-located with a Tier I PRESS
21      energy source certified to possess the technical capacity to
22      deliver 10% nameplate capacity of the Tier I PRESS energy
23      source every hour for a 24-hour period.
24           (8)   Combined heat and power system.
25           (9)   Tier I PRESS energy source that meets the
26      requirements of section 3(e)(16).
27      "Tier III PRESS energy source."      Electric energy derived
28   from:
29           (1)   Natural gas or coal using 20% clean hydrogen co-
30      fired blend or equivalent carbon reduction technologies.

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 1           (2)   Waste coal.
 2           (3)   Municipal solid waste.
 3           (4)   Integrated combined coal gasification technology.
 4           (5)   Generation of electricity utilizing by-products of
 5      the pulping process, including bark, wood chips, sawdust and
 6      lignin in spent pulping liquors.
 7           (6)   Tier I PRESS energy source that meets the
 8      requirements of section 3(e)(16).
 9      "True-up period."   The period each year from the end of the
10   reporting year until September 1.
11      "Virtual currency."      A type of digital unit that is used as a
12   medium of exchange or a form of digitally stored value. The term
13   shall be broadly construed to include a digital unit of exchange
14   that:
15           (1)   has a centralized repository or administrator;
16           (2)   is decentralized and has no centralized repository
17      or administrator; or
18           (3)   may be created or obtained by computing or
19      manufacturing effort.
20      "Waste coal."   The combustion of waste coal in a facility:
21           (1)   In which the waste coal was disposed or abandoned
22      prior to July 31, 1982, or disposed of thereafter in a
23      permitted coal refuse disposal site regardless of when
24      disposed of, and used to generate electricity, or other waste
25      coal combustion meeting alternate eligibility requirements
26      established by regulation.
27           (2)   That uses at a minimum a combined fluidized bed
28      boiler and is outfitted with a limestone injection system and
29      a fabric filter particulate removal system.
30   Reliable energy credits shall be calculated based upon the

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 1   proportion of waste coal utilized to produce electricity at the
 2   facility.
 3      "ZEC."      A zero emission credit authorized under section 8.1.
 4      Section 2.     The act is amended by adding a section to read:
 5   Section 2.1.     Force majeure.
 6      (a)   Determination of commission.--
 7            (1)    Upon the commission's own initiative or upon a
 8      request of an electric distribution company or an electric
 9      generator supplier, the commission shall determine if PRESS
10      energy resources are reasonably available in the marketplace
11      in sufficient quantities or are likely to be developed in
12      sufficient quantities due to alternative compliance payments
13      or economics for the electric distribution companies and
14      electric generation suppliers to meet their obligations for
15      that reporting period under this act.
16            (2)    In making the determination under paragraph (1), the
17      commission shall consider whether electric distribution
18      companies or electric generation suppliers have made a good
19      faith effort to acquire sufficient PRESS energy to comply
20      with their obligations. The good faith efforts shall include,
21      but are not limited to, banking reliable energy credits
22      during their transition periods, seeking reliable energy
23      credits through competitive solicitations and seeking to
24      procure reliable energy credits or PRESS energy through long-
25      term contracts.
26            (3)    In further making a determination, the commission
27      shall assess the availability of reliable energy credits in
28      the Generation Attributes Tracking System or its successor
29      and the availability of reliable energy credits generally in
30      this Commonwealth and other jurisdictions in the PJM

20250SB0501PN0771                      - 18 -
 1      Interconnection, L.L.C., regional transmission organization
 2      or its successor. The commission may also require
 3      solicitations for reliable energy credits as part of default
 4      service before requests of force majeure can be made.
 5      (b)   Modifications of obligations.--
 6            (1)   If the commission further determines that PRESS
 7      energy resources are not reasonably available in sufficient
 8      quantities in the marketplace for the electric distribution
 9      companies and electric generation suppliers to meet the
10      obligations under this act, then the commission shall modify
11      the underlying obligation of the electric distribution
12      company or electric generation supplier or recommend to the
13      General Assembly that the underlying obligation be
14      eliminated.
15            (2)   Commission modification of the electric distribution
16      company or electric generation supplier obligations under
17      this act shall be for that compliance period only. Commission
18      modification shall not automatically reduce the obligation
19      for subsequent compliance years.
20            (3)   If the commission modifies the electric distribution
21      company or electric generation supplier obligations under
22      this act, the commission may require the electric
23      distribution company or electric generation supplier to
24      acquire additional reliable energy credits in subsequent
25      years equivalent to the obligation reduced due to a force
26      majeure declaration if the commission determines that
27      sufficient reliable energy credits exist in the marketplace.
28      Section 3.     Sections 3, 4, 6 and 7 of the act are amended to
29   read:
30   Section 3.     [Alternative energy portfolio] Pennsylvania reliable

20250SB0501PN0771                    - 19 -
 1                energy sustainability standards.
 2    (a)   General compliance and cost recovery.--
 3          (1)   [From the effective date of this act through and
 4    including the 15th year after enactment of this act and each
 5    year thereafter,] Beginning February 28, 2005, the electric
 6    energy sold by an electric distribution company or electric
 7    generation supplier to retail electric customers in this
 8    Commonwealth shall be comprised of electricity generated from
 9    [alternative] PRESS energy sources and in the percentage
10    amounts as described under subsections (b), [and] (c) and
11    (c.1).
12          (2)   Electric distribution companies and electric
13    generation suppliers shall satisfy [both] requirements [set
14    forth] specified in subsections (b), [and] (c) and (c.1),
15    provided, however, that an electric distribution company or
16    an electric generation supplier shall be excused from its
17    obligations under this section to the extent that the
18    commission determines that force majeure exists.
19          (3)   All costs for:
20                (i)    the purchase of electricity generated from
21          [alternative] PRESS energy sources, including the costs
22          of the regional transmission organization, in excess of
23          the regional transmission organization real-time
24          locational marginal pricing, or its successor, at the
25          delivery point of the [alternative] PRESS energy source
26          for the electrical production of the [alternative] PRESS
27          energy sources; and
28                (ii)    [payments for alternative energy credits, in
29          both cases that are voluntarily acquired by an electric
30          distribution company during the cost recovery period on

20250SB0501PN0771                     - 20 -
 1          behalf of its customers shall be deferred as a regulatory
 2          asset by the electric distribution company and fully
 3          recovered, with a return on the unamortized balance,
 4          pursuant to an automatic energy adjustment clause under
 5          66 Pa.C.S. § 1307 (relating to sliding scale of rates;
 6          adjustments) as a cost of generation supply under 66
 7          Pa.C.S. § 2807 (relating to duties of electric
 8          distribution companies) in the first year after the
 9          expiration of its cost-recovery period. After the cost-
10          recovery period,] any reasonable or prudent direct or
11          indirect costs for the purchase by electric distribution
12          of resources to comply with this section, including, but
13          not limited to, the purchase of electricity generated
14          from [alternative] PRESS energy sources, payments for
15          [alternative] reliable energy credits, cost of credits
16          banked, payments to any third party administrators for
17          performance under this act and costs levied by a regional
18          transmission organization to ensure that [alternative]
19          PRESS energy sources are reliable, shall be recovered on
20          a full and current basis pursuant to an automatic energy
21          adjustment clause under 66 Pa.C.S. § 1307 as a cost of
22          generation supply under 66 Pa.C.S. § 2807.
23    (b)   Tier I and solar photovoltaic shares.--
24          (1)   [Two years after the effective date of this act and
25    through May 31, 2025,] Beginning February 28, 2007, through
26    May 31, 2026, at least 1.5% of the electric energy sold by an
27    electric distribution company or electric generation supplier
28    to retail electric customers in this Commonwealth shall be
29    generated from Tier I [alternative] PRESS energy sources.
30    Except as provided in this section, the minimum percentage of

20250SB0501PN0771                  - 21 -
 1    electric energy required to be sold to retail electric
 2    customers from [alternative] Tier I PRESS energy sources
 3    shall increase to 2% three years after the effective date of
 4    this act. The minimum percentage of electric energy required
 5    to be sold to retail electric customers from [alternative]
 6    PRESS energy sources shall increase by at least 0.5% each
 7    year so that at least 8% of the electric energy sold by an
 8    electric distribution company or electric generation supplier
 9    to retail electric customers in that certificated territory
10    in the 15th year after the effective date of this subsection
11    is sold from [alternative] Tier I PRESS energy resources.
12        (1.1)     Beginning on June 1, 2026, at least 10.7% of
13    electric energy sold by an electric distribution company or
14    electric generation supplier to retail electric customers in
15    this Commonwealth shall be generated from Tier I PRESS energy
16    sources. Beginning on June 1, 2027, through May 31, 2035, the
17    minimum percentage of electric energy required to be sold to
18    retail electric customers from Tier I PRESS energy sources
19    shall increase by at least 3% each year so that at least 35%
20    of the electric energy sold by an electric distribution
21    company or electric generation supplier to retail electric
22    customers in that certificated territory is sold from Tier I
23    PRESS energy resources by May 31, 2035.
24        (2)   The total percentage of the electric energy sold by
25    an electric distribution company or electric generation
26    supplier to retail electric customers in this Commonwealth
27    that must be sold from solar photovoltaic technologies is:
28              (i)    0.0013% for June 1, 2006, through May 31, 2007.
29              (ii)    0.0030% for June 1, 2007, through May 31, 2008.
30              (iii)   0.0063% for June 1, 2008, through May 31,

20250SB0501PN0771                   - 22 -
 1        2009.
 2              (iv)    0.0120% for June 1, 2009, through May 31, 2010.
 3              (v)    0.0203% for June 1, 2010, through May 31, 2011.
 4              (vi)    0.0325% for June 1, 2011, through May 31, 2012.
 5              (vii)    0.0510% for June 1, 2012, through May 31,
 6        2013.
 7              (viii)    0.0840% for June 1, 2013, through May 31,
 8        2014.
 9              (ix)    0.1440% for June 1, 2014, through May 31, 2015.
10              (x)    0.2500% for June 1, 2015, through May 31, 2016.
11              (xi)    0.2933% for June 1, 2016, through May 31, 2017.
12              (xii)    0.3400% for June 1, 2017, through May 31,
13        2018.
14              (xiii)    0.3900% for June 1, 2018, through May 31,
15        2019.
16              (xiv)    0.4433% for June 1, 2019, through May 31,
17        2020.
18              (xv)    0.5000% for June 1, 2020, [and thereafter]
19        through May 31, 2031.
20        (3)   Upon commencement of the beginning of the 6th
21    reporting year, the commission shall undertake a review of
22    the compliance by electric distribution companies and
23    electric generation suppliers with the requirements of this
24    act. The review shall also include the status of
25    [alternative] PRESS energy technologies within this
26    Commonwealth and the capacity to add additional [alternative]
27    PRESS energy resources. The commission shall use the results
28    of this review to recommend to the General Assembly
29    additional compliance goals beyond year 15. The commission
30    shall work with the department in evaluating the future

20250SB0501PN0771                   - 23 -
 1      [alternative] PRESS energy resource potential.
 2      (c)   Tier II share.--Of the electrical energy required to be
 3   sold from [alternative] PRESS energy sources identified in Tier
 4   II, the percentage that must be from these technologies is for:
 5            (1)   Years 1 through 4 - 4.2%.
 6            (2)   Years 5 through 9 - 6.2%.
 7            (3)   Years 10 through 14 - 8.2%.
 8            (4)   Years 15 [and thereafter] through 19 - 10.0%.
 9            (5)   Beginning on June 1, 2026, through May 31, 2027, the
10      electrical energy required to be sold from PRESS energy
11      sources identified in Tier II, the percentage that shall be
12      from these technologies is 6%.
13            (6)   Beginning June 1, 2027, through May 31, 2035, the
14      percentage that must be from these technologies shall
15      increase by 0.5% each year so that at least 10% of the
16      electric energy is sold from PRESS energy sources identified
17      in Tier II by May 31, 2035, and each year thereafter.
18      (c.1)   Tier III share.--Of the electrical energy required to
19   be sold from PRESS energy sources identified in Tier III, the
20   percentage that must be from these technologies is:
21            (1)   June 1, 2026, through May 31, 2029 - 3.8%.
22            (2)   June 1, 2029, through May 31, 2032 - 4.4%.
23            (3)   June 1, 2032, and thereafter - 5%.
24      (d)   [Exemption during cost-recovery period.--Compliance with
25   subsections (a), (b) and (c) shall not be required for any
26   electric distribution company that has not reached the end of
27   its cost-recovery period or for electric generation supplier
28   sales in the service territory of an electric distribution
29   company that has not reached the end of its cost-recovery
30   period. At the conclusion of an electric distribution company's

20250SB0501PN0771                    - 24 -
 1   cost-recovery period, this exception shall no longer apply, and
 2   compliance shall be required at the percentages in effect at
 3   that time. Electric distribution companies and electric
 4   generation suppliers whose sales are exempted under this
 5   subsection and who voluntarily sell electricity generated from
 6   Tier I and Tier II sources during the cost-recovery period may
 7   bank credits consistent with subsection (e)(7).] (Reserved).
 8      (e)   [Alternative] Reliable energy credits.--
 9            (1)   The commission shall establish [an alternative] a
10      reliable energy credits program as needed to implement this
11      act. The provision of services pursuant to this section shall
12      be exempt from the competitive procurement procedures of 62
13      Pa.C.S. (relating to procurement).
14            (2)   The commission shall approve an independent entity
15      to serve as the [alternative] reliable energy credits program
16      administrator. The administrator shall have those powers and
17      duties assigned by commission regulations. [Such] The powers
18      and duties shall include, but not be limited to, the
19      following:
20                  (i)    To create and administer [an alternative] a
21            reliable energy credits certification, tracking and
22            reporting program. [This program should] The program
23            shall include, at a minimum, a process for qualifying
24            [alternative] PRESS energy systems and determining the
25            manner credits can be created, accounted for, transferred
26            and retired.
27                  (ii)   To submit reports to the commission at such
28            times and in such manner as the commission shall direct.
29            (3)   All qualifying [alternative] PRESS energy systems
30      [must] shall include a qualifying meter to record the

20250SB0501PN0771                       - 25 -
 1    cumulative electric production to verify the advanced energy
 2    credit value. Qualifying meters will be approved by the
 3    commission as defined in paragraph (4).
 4        (4)   (i)    An electric distribution company or electric
 5    generation supplier shall comply with the applicable
 6    requirements of this section by purchasing sufficient
 7    [alternative] reliable energy credits and submitting
 8    documentation of compliance to the program administrator.
 9              (ii)   For purposes of this subsection, one
10        [alternative] reliable energy credit shall represent one
11        megawatt hour of qualified [alternative] electric
12        generation, whether self-generated, purchased along with
13        the electric commodity or separately through a tradable
14        instrument and otherwise meeting the requirements of
15        commission regulations and the program administrator.
16        (5)   The [alternative] reliable energy credits program
17    shall include provisions requiring a reporting period [as
18    defined in section 2] for all covered entities under this
19    act. The [alternative] reliable energy credits program shall
20    also include a true-up period [as defined in section 2]. The
21    true-up period shall provide entities covered under this act
22    the ability to obtain the required number of [alternative]
23    reliable energy credits or to make up any shortfall of the
24    [alternative] reliable energy credits they may be required to
25    obtain to comply with this act. A force majeure provision
26    shall also be provided for under the true-up period
27    provisions.
28        (6)   An electric distribution company and electric
29    generation supplier may bank or place in reserve
30    [alternative] reliable energy credits produced in one

20250SB0501PN0771                  - 26 -
 1    reporting year for compliance in either or both of the two
 2    subsequent reporting years, subject to the limitations [set
 3    forth] specified in this subsection and provided that the
 4    electric distribution company and electric generation
 5    supplier are in compliance for all previous reporting years.
 6    [In addition, the] The electric distribution company and
 7    electric generation supplier shall demonstrate to the
 8    satisfaction of the commission that [such] the credits:
 9               (i)    were in excess of the [alternative] reliable
10        energy credits needed for compliance in the year in which
11        they were generated and that [such] the excess credits
12        have not previously been used for compliance under this
13        act;
14               (ii)    were produced by the generation of electrical
15        energy by [alternative] PRESS energy sources and sold to
16        retail customers during the year in which they were
17        generated; and
18               (iii)   have not otherwise been nor will be sold,
19        retired, claimed or represented as part of satisfying
20        compliance with alternative or renewable energy portfolio
21        standards in other states.
22        [(7)    An electric distribution company or an electric
23    generation supplier with sales that are exempted under
24    subsection (d) may bank credits for retail sales of
25    electricity generated from Tier I and Tier II sources made
26    prior to the end of the cost-recovery period and after the
27    effective date of this act. Bankable credits shall be limited
28    to credits associated with electricity sold from Tier I and
29    Tier II sources during a reporting year which exceeds the
30    volume of sales from such sources by an electric distribution

20250SB0501PN0771                    - 27 -
 1    company or electric generation supplier during the 12-month
 2    period immediately preceding the effective date of this act.
 3    All credits banked under this subsection shall be available
 4    for compliance with subsections (b) and (c) for no more than
 5    two reporting years following the conclusion of the cost-
 6    recovery period.]
 7        (8)    The commission or its designee shall develop a
 8    registry of pertinent information regarding all available
 9    [alternative] reliable energy credits, credit transactions
10    among electric distribution companies and electric generation
11    suppliers, the number of [alternative] reliable energy
12    credits sold or transferred and the price paid for the sale
13    or transfer of the credits. The registry shall provide
14    current information to electric distribution companies,
15    electric generation suppliers and the general public on the
16    status of [alternative] reliable energy credits created, sold
17    or transferred within this Commonwealth.
18        (9)    The commission may impose an administrative fee on
19    [an alternative] a reliable energy credit transaction. The
20    amount of this fee may not exceed the actual direct cost of
21    processing the transaction by the [alternative] reliable
22    energy credits administrator. The commission [is authorized
23    to] may utilize up to 5% of the alternative compliance fees
24    generated under subsection (f) for administrative expenses
25    directly associated with this act.
26        (10)    The commission shall establish regulations
27    governing the verification and tracking of energy efficiency
28    and demand-side management measures [pursuant to] under this
29    act, which shall include benefits to all utility customer
30    classes. When developing regulations, the commission [must]

20250SB0501PN0771                 - 28 -
 1    shall give reasonable consideration to existing and proposed
 2    regulations and rules in existence in the regional
 3    transmission organizations that manage the transmission
 4    system in any part of this Commonwealth. All verified
 5    reductions shall accrue credits starting with the [passage]
 6    enactment of this act.
 7        (11)   The commission shall [within 120 days of the
 8    effective date of this act] not later than March 30, 2005,
 9    develop a depreciation schedule for [alternative] reliable
10    energy credits created through demand-side management, energy
11    efficiency and load management technologies and shall develop
12    standards for tracking and verifying savings from energy
13    efficiency, load management and demand-side management
14    measures. The commission shall allow for a 60-day public
15    comment period and shall issue final standards within 30 days
16    of the close of the public comment period.
17        (12)   Unless a contractual provision explicitly assigns
18    [alternative] reliable energy credits in a different manner,
19    the owner of the [alternative] reliable energy system or a
20    customer-generator owns any and all [alternative] reliable
21    energy credits associated with or created by the production
22    of electric energy by such facility or customer, and the
23    owner or customer shall be entitled to sell, transfer or take
24    any other action to which a legal owner of property is
25    entitled to take with respect to the credits.
26        (13)   No PRESS energy system shall be eligible to sell
27    reliable energy credits associated with or created by the
28    production of electric energy subsequently utilized to
29    generate or produce virtual currency at a facility co-located
30    with the PRESS energy system, or where a power purchase

20250SB0501PN0771                - 29 -
 1    agreement commits the offtake of electric energy to a virtual
 2    currency generator or producer. Reliable energy credits may
 3    be sold based upon the proportion of electric energy at the
 4    facility that is not utilized to generate or produce virtual
 5    currency.
 6        (14)    An individual generating unit with a nameplate
 7    capacity over 250 megawatts must be located inside or within
 8    15 miles of this Commonwealth to be eligible for reliable
 9    energy credits. The commission may promulgate a regulation to
10    change the nameplate capacity for purposes of this paragraph
11    if the commission determines that a change to the nameplate
12    capacity is necessary to prevent a force majeure event or the
13    ongoing imposition of alternative compliance payments due to
14    lack of availability of reliable energy credits.
15        (15)    No PRESS energy source may be offered to meet the
16    compliance requirements of more than one tier unless:
17               (i)    the source is owned or leased by and located on
18        the grounds of a school district as defined in section
19        102 of the act of March 10, 1949 (P.L.30, No.14), known
20        as the Public School Code of 1949. If a PRESS energy
21        source is owned or leased by and located on the grounds
22        of a school district, a school district may offer credits
23        from a Tier I PRESS energy source to meet the compliance
24        requirements of Tier I and either Tier II or Tier III. A
25        school district may not offer credits to meet the
26        compliance obligations of more than one tier in any year
27        in excess of the school district's requirement for
28        electricity in the same year.
29               (ii)   The source is a Tier I PRESS energy source co-
30        located with an energy storage resource, certified to

20250SB0501PN0771                    - 30 -
 1        possess the technical capacity to deliver 10% nameplate
 2        capacity of the Tier I PRESS energy source every hour for
 3        a 24-hour period. The Tier I PRESS energy source co-
 4        located with a certified energy storage resource may
 5        receive credits to reach the compliance requirements of
 6        Tier 1 equal to the energy output of the Tier I energy
 7        source and may additionally receive credits to meet the
 8        compliance requirements of Tier II equal to the energy
 9        output of the co-located storage resource.
10        (16)    (i)   PRESS energy sources eligible for compliance
11        requirements in Tier II, Tier III and solar photovoltaic
12        technologies eligible for compliance requirements under
13        subsection (b)(2) must meet one of the following
14        requirements:
15                   (A)   directly deliver the electricity generated
16               to a retail customer of an electric distribution
17               company or to the distribution system operated by an
18               electric distribution company operating within this
19               Commonwealth and obligated to meet the compliance
20               requirements contained under this act;
21                   (B)   be directly connected to the electric system
22               of an electric cooperative or municipal electric
23               system operating within this Commonwealth;
24                   (C)   connect directly to the electric
25               transmission system at a location that is within the
26               service territory of an electric distribution company
27               operating within this Commonwealth; or
28                   (D)   generate electricity at generation units
29               whose construction and operation is subject to and
30               complies with permits issued by the department under

20250SB0501PN0771                  - 31 -
 1               the act of January 8, 1960 (1959 P.L.2119, No.787),
 2               known as the Air Pollution Control Act, or the act of
 3               July 7, 1980 (P.L.380, No.97), known as the Solid
 4               Waste Management Act.
 5               (ii)    This paragraph shall not be construed to affect
 6        a binding written contract, entered into prior to the
 7        effective date of this paragraph, for the sale and
 8        purchase of alternative energy credits derived from
 9        alternative energy sources until June 1, 2029.
10               (iii)   Beginning June 1, 2031, 6% of the electric
11        energy sold by an electric distribution company or
12        electric generation supplier to retail electric customers
13        in this Commonwealth and that is used to satisfy Tier I
14        obligations shall be generated from Tier I PRESS energy
15        sources that meet one of the requirements of subparagraph
16        (i). The percentage shall increase by 1.333% in each
17        subsequent compliance year through June 1, 2036, and
18        increase by 0.6% in each subsequent compliance year
19        through June 1, 2051.
20        (17)    Energy from a geothermal heating and cooling system
21    is eligible to sell reliable energy credits associated with
22    or created by the production of energy of the system.
23    Reliable energy credits from a geothermal heating and cooling
24    system shall be created based on the amount of energy,
25    converted from BTUs to kilowatt-hours, that is generated by a
26    geothermal heating and cooling system for space heating and
27    cooling or water heating. The commission shall determine the
28    form a

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