HB 1412 — An Act amending Title 66 (Public Utilities) of the Pennsylvania Consolidated Statutes, in restructuring of electric utility industry, providing for microgrid and energy storage.

PRIOR PRINTER'S NO.

1777 PRINTER'STHE NO.GENERAL ASSEMBLY OF PENNSYLVANIA HOUSE BILL Session of No.

3120 THE GENERAL ASSEMBLY OF PENNSYLVANIA HOUSE BILL Session of No.

COSTA, DRISCOLL, FARRY, GILLEN, LONGIETTI, O'NEILL, RAVENSTAHL, RYAN, SOLOMON, WARD,WARD ZIMMERMAN, JAMES AND ROZZI,ZIMMERMAN, MAY 19, 2017 ASREFERRED REPORTEDTO FROM COMMITTEE ON VETERANS AFFAIRS AND EMERGENCY PREPAREDNESS, HOUSEMAY OF19, REPRESENTATIVES,2017 AS AMENDED, MARCH 12, 2018 AN ACT Amending Title 66 (Public Utilities) of the Pennsylvania Consolidated Statutes, in restructuring of electric utility industry, providing for microgrid and energy storage.

Title 66 of the Pennsylvania Consolidated <-- Statutes is amended by adding a section to read:

20170HB1412PN312020170HB1412PN1777 - 2 - (2) Energy efficiency.

SECTION 1.

TITLE 66 OF THE PENNSYLVANIA CONSOLIDATED <-- STATUTES IS AMENDED BY ADDING A SECTION TO READ:

§ 2816.

MICROGRID AND ENERGY STORAGE.

(A) PILOT PROJECTS.--AN ELECTRIC DISTRIBUTION COMPANY MAY PROPOSE ENERGY STORAGE OR MICROGRID PILOT PROJECTS FOR REVIEW AND APPROVAL BY THE COMMISSION.

IN DETERMINING WHETHER A PILOT PROJECT UNDER THIS SECTION IS IN THE PUBLIC INTEREST, THE COMMISSION SHALL CONSIDER THE COSTS AND BENEFITS OF THE PROJECT, IN ADDITION TO THE POTENTIAL OF THE PILOT PROJECT TO:

(1) FACILITATE THE USE OF DIVERSE ELECTRIC SUPPLY OPTIONS IN THIS COMMONWEALTH, INCLUDING DISTRIBUTED ENERGY RESOURCES;

AND (2) ENHANCE ELECTRIC DISTRIBUTION, RESILIENCY AND OPERATIONAL FLEXIBILITY.

20170HB1412PN3120 - 3 - (B) PROJECT REQUIREMENTS.-- (1) A MICROGRID PILOT PROJECT SHALL BE DESIGNED TO SERVE:

(I) MULTIPLE CUSTOMER PREMISES, INCLUDING AT LEAST TWO ESSENTIAL PUBLIC PURPOSE ASSETS;

(II) A SINGLE PREMISES USED BY A FEDERAL, STATE OR LOCAL GOVERNMENT CUSTOMER OPERATING CRITICAL GOVERNMENT INFRASTRUCTURE AND FACILITIES NECESSARY TO SERVE THE PUBLIC DURING EMERGENCIES;

OR (III) A PUBLIC UTILITY PREMISES.

(2) A PETITION FILED BY AN ELECTRIC DISTRIBUTION COMPANY SEEKING APPROVAL OF A MICROGRID OR ENERGY STORAGE PILOT PROJECT SHALL INCLUDE ALL OF THE FOLLOWING:

(I) THE LOCATION OF EACH DISTRIBUTION SERVICE INTERRUPTION OCCURRING WITHIN THE ELECTRIC DISTRIBUTION COMPANY'S SERVICE TERRITORY IN THE PRECEDING FIVE-YEAR PERIOD.

(II) THE NUMBER OF CUSTOMERS, OTHER MICROGRIDS AND ENERGY STORAGE FACILITIES AND CRITICAL GOVERNMENT INFRASTRUCTURE LOCATED IN PROXIMITY TO THE PROPOSED MICROGRID PILOT PROJECT.

(3) A MICROGRID PILOT PROJECT MAY INCLUDE DISTRIBUTED ENERGY RESOURCES OWNED BY CUSTOMERS, AN ELECTRIC DISTRIBUTION COMPANY OR OTHER ENTITIES.

(4) A DISTRIBUTED ENERGY RESOURCE INCLUDED IN A PILOT PROJECT AND OWNED BY AN ELECTRIC DISTRIBUTION COMPANY SHALL BE COMPETITIVELY PROCURED.

(5) THE COMMISSION MAY ESTABLISH REASONABLE COST CAPS ON MICROGRID PILOT PROJECTS.

(6) NOTHING UNDER THIS SECTION SHALL BE INTERPRETED TO 20170HB1412PN3120 - 4 - REQUIRE AN ELECTRIC DISTRIBUTION COMPANY TO OWN, DEVELOP OR DEPLOY ENERGY STORAGE OR MICROGRIDS.

(C) COMMISSION REVIEW.-- (1) FIVE YEARS AFTER THE DATE THE FIRST PILOT PROJECT IS APPROVED, THE COMMISSION SHALL EVALUATE THE RESULTS OF EACH APPROVED PILOT PROJECT, INCLUDING THE PROJECT COSTS AND BENEFITS AND DATA ON THE INTERCONNECTION AND INTEGRATION OF DISTRIBUTED ENERGY RESOURCES AND WHOLESALE ENERGY MARKETS.

(2) WITHIN 180 DAYS OF COMPLETION OF THE EVALUATION UNDER PARAGRAPH (1), THE COMMISSION SHALL ISSUE AN ORDER DETERMINING WHETHER THE CONTINUED DEVELOPMENT AND DEPLOYMENT OF MICROGRIDS AND ENERGY STORAGE FACILITIES IS IN THE PUBLIC INTEREST.

(3) IF THE COMMISSION DETERMINES THAT THE DEVELOPMENT OF MICROGRIDS IS IN THE PUBLIC INTEREST, THE COMMISSION MAY CONTINUE TO ACCEPT AND CONSIDER PETITIONS SEEKING APPROVAL OF MICROGRID PILOT PROJECTS CONSISTENT WITH THE COMMISSION'S ORDER.

(D) REPORT TO THE GENERAL ASSEMBLY.--IF THE COMMISSION DETERMINES THAT THE DEVELOPMENT AND DEPLOYMENT OF MICROGRIDS AND ENERGY STORAGE FACILITIES ARE IN THE PUBLIC INTEREST, THE COMMISSION SHALL, WITHIN 60 DAYS OF ENTRY OF THE ORDER UNDER SUBSECTION (C)(2), SUBMIT A REPORT TO THE GENERAL ASSEMBLY CONTAINING RECOMMENDATIONS THAT SHALL INCLUDE ALL OF THE FOLLOWING:

(1) THE OWNERSHIP, DEVELOPMENT AND DEPLOYMENT OF MICROGRIDS BY ENTITIES OTHER THAN AN ELECTRIC DISTRIBUTION COMPANY.

(2) THE SPECIFIC CIRCUMSTANCES AND CRITERIA UNDER WHICH ENERGY STORAGE AND MICROGRIDS SHOULD BE DEVELOPED AND 20170HB1412PN3120 - 5 - DEPLOYED.

(3) LEGISLATIVE OR OTHER RECOMMENDATIONS THE COMMISSION DEEMS APPROPRIATE.

(E) RECOVERY.--AN ELECTRIC DISTRIBUTION COMPANY MAY RECOVER IN THE ELECTRIC DISTRIBUTION COMPANY'S DISTRIBUTION RATES ESTABLISHED UNDER SECTION 1308 (RELATING TO VOLUNTARY CHANGES IN RATES) REASONABLE AND PRUDENTLY INCURRED COSTS, INCLUDING A PRETAX RETURN ON, AND A RETURN OF, THE ORIGINAL COST OF AN ENERGY STORAGE FACILITY OR MICROGRID CONSTRUCTED PURSUANT TO AN APPROVED PILOT PROJECT AND THE REASONABLE AND PRUDENTLY INCURRED EXPENSES TO OPERATE AND MAINTAIN THE FACILITY.

(F) WHOLESALE MARKET PARTICIPATION.--ENERGY STORAGE AND MICROGRIDS PILOT PROJECTS AUTHORIZED UNDER THIS SECTION MAY PARTICIPATE IN WHOLESALE ENERGY, CAPACITY AND ANCILLARY SERVICES MARKETS.

NET PROCEEDS RESULTING FROM THE PARTICIPATION OF A DISTRIBUTED ENERGY RESOURCE OWNED BY AN ELECTRIC DISTRIBUTION COMPANY IN WHOLESALE ENERGY, CAPACITY OR ANCILLARY MARKETS SHALL BE CREDITED TO DISTRIBUTION CUSTOMERS.

(G) RATE STRUCTURE AND COST ALLOCATION.--THE COMMISSION SHALL DETERMINE THE APPROPRIATE RATE STRUCTURE AND COST ALLOCATION FOR THE JUST AND REASONABLE RECOVERY OF PRUDENTLY INCURRED COSTS FROM AND THE ALLOCATION OF WHOLESALE MARKET PROCEEDS TO DISTRIBUTION CUSTOMERS.

(H) DEFINITIONS.--AS USED IN THIS SECTION, THE FOLLOWING WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SUBSECTION UNLESS THE CONTEXT CLEARLY INDICATES OTHERWISE:

"DISTRIBUTED ENERGY RESOURCE." ANY OF THE FOLLOWING:

(1) A DISTRIBUTED GENERATION RESOURCE.

(2) ENERGY EFFICIENCY.