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Diesel Demand Response Generator Energy Legislation Introduced in Pennsylvania

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House Bill 1699, sponsored by Representative Chris Ross, was recently introduced in the Pennsylvania House of Representatives. This bill is pushing for the regulation of non-emergency standby stationary generators that are receiving revenues from the wholesale power markets for being a demand response (DR) generating resource.

HB 1699 Summary
Non-emergency standby generators are those generators that may be used during an emergency, for testing and maintenance purposes, for any other purpose at times other than during an emergency, and are subject to an agreement or obligation to provide power in response to power grid needs, economic signals from competitive wholesale electric markets, or special retail rates.

The following generators are exempt from the legislation:

  • Standby generators used for emergency purposes
  • Residential generators used for electric outages
  • Generators at fire stations
  • New or existing generators at nuclear power plants
  • Generators operating at 37 kilowatts or less

According to HB 1699, non-emergency generators are required to do all of the following:

Beginning in 2014:

  1. Initially register with the PA Department of Environmental Protection (DEP) and every five years thereafter
  2. Provide periodic updates if their operation or ownership changes
  3. Submit a compliance certification form detailing their compliance with the emissions limitations set forth in the legislation
  4. Pay a registration fee of $40
  5. Provide the DEP with an annual report detailing their operations
  6. Keep records of their operations

Beginning in 2016:

  1. Meet emissions standards set forth by the U.S. Environmental Protection Agency found at 40 CFR Part 60, Subpart IIII (relating to standards of performance for stationary compression ignition internal combustion engines) and JJJJ (relating to standards of performance for stationary spark ignition internal combustion engines)

The PA Public Utility Commission (PUC) is required to conduct a blind audit of participating DR generators with the list of generators registered with the DEP. Should the PUC confirm that a nonemergency generator is participating in the PJM markets but has not complied with the provisions of this legislation, the PUC must notify the Federal Energy Regulatory Commission (FERC) enforcement staff alleging a violation of PJM's Open Access Transmission Tariff, and may at its discretion, also file a complaint with FERC. In any instance where PUC determines that noncompliance is deliberate and continuing, the PUC shall refer the matter to the PA Attorney General for prosecution under the state’s Unfair Trade Practices and Consumer Protection Law.

Lastly, this bill provides for violations, penalties, and the disposition of fines for failure to comply with the requirements of the legislation.

Thoughts regarding HB 1699
We at Direct Energy are currently reviewing the bill and consulting with our customers to determine the overall impacts. We are also reviewing the potential for other adverse impacts on demand response programs as well as potential impacts on PJM capacity costs.

Where is HB 1699 in the Legislative Process?
Recently, HB 1699 was the topic of a Public Hearing before the House Environmental Resources & Energy Committee where opponents testified that it imposes unnecessary and burdensome regulations on PA businesses and institutions that go well beyond what has been deemed necessary by the EPA, thereby preventing many demand response customers from providing demand response capacity to PJM. They also voiced this legislation would raise costs to all PA consumers. On the other hand, supporters of the bill argued that the status quo creates negative environmental and health impacts, as well as an off-balance playing field for electric generators.

This bill currently sits in Committee, and has not yet been scheduled for a vote. Direct Energy is monitoring this bill and may recommend amendments upon completion of our analysis. If you need any additional information, please contact Colin Fitzsimmons.

Posted: December 05, 2013