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August 26, 2016 in Alternative Energy by

PA PUC Announces 7% Increase for Non-Solar Tier I Alternative Energy Credits

By: Meghan Boland, Esq.

OCTOBER 6 UPDATE: In its Final Order, the the PUC decided it would extend the true-up period of its 7% annual non-solar Tier 1 Alternative Energy Credits cost increase by about six months, from November 30, 2016 to May 1, 2017. However, it declined to grant the request of several energy generation suppliers to shift compliance costs of the increase to electric distribution companies. More information be found on Energy Choice Matters.

A recent Pennsylvania Public Utility Commission (Commission) decision has resulted in an approximate 7% increase for the 2016 annual non-solar Tier I Alternative Energy Credits (AECs) obligation after the Commission discovered an error in its calculation. The Commission held initial stakeholder meetings to gather information on any effect this correction could have on electric generation suppliers (EGSs) and electric distribution companies (EDCs). As a result, the true-up period for these obligations was extended from September 1, 2016 to November 30, 2016.

The Commission is exploring possible remedies to mitigate the impact on EGSs and EDCs, and has issued the following proposals: 1) AEC Procurement and non-bypassable cost recovery by the EDC of the non-solar Tier I adjustments; and: 2) delaying the true-up period for the non-solar Tier I adjustment credits.

A number of retail suppliers have already voiced opposition to both proposals, largely due to the fact that EGSs and EDCs cannot pass on these costs to consumers the same way utilities can. The retail suppliers warn of the negative impacts of these unexpected, retroactive application of these charges against EGSs and EDCs and the potential for an artificial shortage of the credits because market participants are entering the market in reaction to the Commission’s actions.

The Commission is now seeking comments by those impacted by this decision concerning possible remedies to mitigate the impact, including any appropriate actions that the Commission could take, in addition to the two options it has proposed, outlined above. Comments are due to the Commission no later than September 9, 2016.

For more information or assistance with submitting your comments, please feel free to contact