PENNSYLVANIA PUBLIC UTILITY COMMISSION Opinion and Order [35 Pa.B. 2039] Public Meeting held
March 23, 2005Commissioners Present: Wendell F. Holland, Chairperson; Robert K. Bloom, Vice Chairperson; Kim Pizzingrilli
Petition for a Declaratory Order Regarding the Ownership of Alternative Energy Credits and any Environmental Attributes Associated with Non-Utility Generation Facilities under Contract to Pennsylvania Electric Company and Metropolitan Edison Company; Doc. No. P-00052149
Opinion and Order By the Commission
On February 22, 2005 Pennsylvania Electric Company (Penelec) and Metropolitan Edison Company (Met Ed) (jointly, the Companies) filed a Petition for Declaratory Order pursuant to 66 Pa.C.S. § 331(f). The Companies request that the Commission issue an order approving the Petition in its entirety and determine that the Companies own alternative energy credits (AECs) and any other environmental attributes associated with any and all non-utility generation (NUG) facilities listed in the Petition. (Petition, ¶ 1) The Companies also request that the Commission enter an order authorizing notice of the pendency of this proceeding in the Pennsylvania Bulletin and via Secretarial Letter to all jurisdictional electric generation suppliers and electric distribution companies; and directing all electric distribution companies to advise all NUG owners/operators with whom they have NUG contracts that any transactions involving the AECs and/or environmental attributes of NUG facilities presently under contract are at the parties' risk and may be void or voidable depending upon the outcome of this proceeding. (Petition, ¶ 45)
The Companies seek a declaratory order from the PUC confirming that they are entitled to the ownership of all ''alternative energy credits'' as defined in the Alternative Energy Portfolio Standards Act (AEPS), Act 213 of 2004, and any environmental attributes associated with the NUG facilities from which they are currently purchasing electric energy and/or capacity pursuant to executed and fully effective long-term power purchase agreements (PPAs). The Companies contend that the order is necessary to protect the interests of their customers who pay through a competitive transition charge for the above market costs associated with NUG PPAs; and to resolve an existing dispute with a NUG owner and operator regarding the ownership of these alternative energy credits and the environmental attributes of certain NUG facilities under contract to the Companies.
Met Ed asserts the ''existing dispute'' is between itself and the York County Solid Waste and Refuse Authority (York County), owner and operator of a 34.7 megawatt NUG facility located in Manchester Township, York County, Pennsylvania (York Facility). On November 25, 1986, Met Ed and York County entered into a 30 year PPA1 under which Met Ed will purchase all of the electric energy and capacity from the York Facility. The Companies contend that the PPA did not directly address alternative energy credits or other environmental attributes of the York Facility. The PPA is scheduled to end in 2016. The York Facility is a qualifying facility under applicable FERC regulations.2 By letter dated February 4, 2005 York County advised that, notwithstanding Met Ed's claim to any renewable energy credits or other environmental attributes associated with the Facility, York County ''will proceed to arrange for a sale of those assets to another buyer.'' On February 10, 2005, Met Ed responded to York County by letter stating that any sale by York County of the renewable energy credits associated with the York Facility will be invalid and/or voidable; and that the rights to renewable energy credits from existing NUGs with whom Met Ed has PPA belong to Met Ed. Met Ed's letter further stated that any credits may not be legally transferred to a third party without Met Ed's consent. Met Ed's Petition contends that in order to prevent an unlawful transfer or other disposition of the alternative energy credits or other environmental attributes associated with the Facility or other similar facilities, immediate action from the Commission is necessary.
The Companies have served a copy of the Petition on York County, the statutory advocates, the Office of Trial Staff, Pennsylvania's electric distribution companies and several other parties they contend are or may be impacted by the Petition.
On March 11, 2005, York County filed a Motion For Admission Pro Hac Vice and Motion For Extension Of Time In Which To Answer. York County requested a 17 day extension to file its Answer. Counsel for the Companies, Office of Trial Staff, Office of Consumer Advocate, Office of Small Business Advocate, Citizens Electric Company of Lewisburg, Duquesne Light Company and West Penn Power Company have authorized counsel of York County to represent that they do not object to this request for the extension. (Motion, ¶¶ 8 & 9)
On March 16, 2005, the Commission issued a Secretarial Letter granting York County's Motion for Admission Pro Hac Vice and Motion for Extension of Time in Which to Answer. In that letter, the Commission granted an extension to file Answers, Petitions to Intervene and any other responsive pleadings on or before April 20, 2005.
Discussion
The Public Utility Regulatory Policies Act of 1978, 16 U.S.C. § 824a-3(a)--(j) (PURPA) requires, among other things, electric utilities, like Penelec and Met Ed, to purchase electric energy and capacity from those NUG facilities that were certified by the FERC as ''qualifying facilities'' under FERC regulations. Under PURPA, qualifying facilities are entitled to special pricing for the electric energy and capacity required to be purchased by electric utilities, frequently referred to as ''avoided cost.''
Pursuant to Section 331(f) of Title 66 of Pennsylvania Consolidated Statutes,
The commission, with like effect as in the case of other orders, and in its sound discretion, may issue a declaratory order to terminate a controversy or remove uncertainty.
66 Pa.C.S. § 331(f). The Commission has the discretion to issue a Declaratory Order when there is a dispute on a legal issue or in order to terminate a controversy or remove uncertainty. Generally, if any factual disputes are raised by the parties or there is opposition to the petition, the Commission will refer the petition for declaratory order to the Office of Administrative Law Judge (OALJ) for hearing. See, Petition of Pennsylvania Power & Light Company for a Declaratory Order with Regard to the Proposed Purchase of Coal from the Tunnelton Mining Company, 1992 Pa. PUC Lexis 93 (August 28, 1992); Petition of Columbia Gas of Pennsylvania, Inc. for Declaratory Order, 1995 Pa. PUC Lexis 168, (Sept. 14, 1995).
The issue which is at the heart of the Petition, ownership of AECs and attributes, is of such importance to existing arrangements/agreements and to the implementation of AEPS that the Commission should develop a full record on the matter and afford all interested parties an opportunity to be heard. Furthermore, this issue is not unique to the Companies and may have significant implications as the Commission moves forward on its implementation of the AEPS legislation. Therefore, the matter shall be reassigned to the Office of Administrative Law Judge.
In the Petition, the Companies request that the Commission authorize notice of this proceeding via the Pennsylvania Bulletin and a Secretarial Letter to all jurisdictional electric generation suppliers and electric distribution companies. (Petition, ¶ 45) We will grant that request in part in accordance with the following discussion.
The Companies also request that the Commission, in the Secretarial Letter, direct all electric distribution companies to advise all NUG owners/operators with whom they have NUG contracts that any transactions involving the AECs and/or the environmental attributes of NUG facilities presently under contract are at the parties' risk and may be void or voidable depending upon the outcome of this proceeding. While the Commission understands the rationale behind the Companies' request, we decline to make the requested statement in this Order. Instead, we will simply caution all parties to these types of transactions that the Commission has not yet addressed the issues.
The Commission strongly encourages all interested parties to participate in this proceeding. We invite the parties to present all relevant issues as well as any related issues for all necessary factual and legal development before the OALJ. The Commission anticipates that this proceeding will establish important and binding precedent on the issue of ownership of AECs and attributes from NUG facilities.
At this time it is premature for the Commission to describe the nature of the proceeding before OALJ. The OALJ and the participating parties are to determine whether a single consolidated proceeding will best develop the issues or whether another format, for example, utility specific proceedings, are more appropriate.
The assigned Administrative Law Judge (ALJ) shall have the discretion to deny requests for utility specific proceedings and direct the parties into the consolidated proceeding if the ALJ deems it appropriate. Conversely, the ALJ shall also have the discretion to select and commence separate proceedings based on any filing, which did not specifically request a separate proceeding, as the ALJ deems appropriate.
Although the Companies state that they have served the statutory advocates, the Office of Trial Staff and all other parties that are or maybe impacted by this Petition, including all of the Non-Utility Generation owners currently under contract with the Companies, and the major electric distribution companies in Pennsylvania (Petition, ¶ 44), the Commission shall publish this Order and the Petition in the Pennsylvania Bulletin at the next available publication date after the entry of this Order. This will inform the public that any interested party may file Answers, Petitions to Intervene and any other responsive pleadings on or before April 20, 2005.
Therefore,
It Is Ordered That:
1. The matter shall be reassigned to the OALJ for appropriate proceedings and Recommended Decisions that address and resolve the relevant issues.
2. A copy of this order and the petition shall be published in the Pennsylvania Bulletin and provide that interested parties may file answers, petitions to intervene and any other responsive pleadings on or before April 20, 2005.
3. A copy of this order shall be served upon all persons listed in the Companies' Certificate of Service List and shall be published on our website.
4. Interested parties shall file answers, petitions to intervene and any other responsive pleadings at Docket No. P-00052149. Filings should be filed with James J. McNulty, Secretary, Pennsylvania Public Utility Commission, P. O. Box 3265, Harrisburg, PA 17105-3265.
5. The assigned ALJ shall establish the appropriate schedule for the proceeding. Resolution of the issues presented in the consolidated proceeding shall be given priority over the issues presented in any individual proceeding.
6. The assigned ALJ shall have the discretion to modify the proceeding and its schedule consistent with the needs of the parties without causing undue delay or waste of resources.
JAMES J. MCNULTY,
Secretary[Pa.B. Doc. No. 05-630. Filed for public inspection April 1, 2005, 9:00 a.m.] _______
1 The original 1986 Met Ed-York County PPA has been amended twice, the first time on Nov. 25, 1986 and again on May 18, 1992.
2 By a November 3, 1986 Order, the FERC granted York County's application to be certified as a qualifying facility at Docket No. QF 86-920-002.
