SB 962 defines clean energy resources as wind, solar, geothermal, ocean power, the burning of properly filtered landfill gas, and the burning of gas from the anaerobic digestion of yard waste, food waste or animal waste (providing that it's not supporting large, new animal factories). It also allows for the use of fuel cells, as long as the hydrogen fuel is produced cleanly (i.e. by using clean energy resources to electrolyze water).
SB 962 starts realistically by requiring only 0.5% clean energy in 2006, then increasing to 1% in 2007, 2% in 2008 and so on (with a 1% increase each year). After hitting 9% in 2015, the annual increase continues unless the state actively chooses to suspend the annual increase.
Companies subject to the requirements of this legislation would get "clean energy credits" for each unit of clean power produced. These credits could be traded, so that companies which don't meet their requirement can purchase credits from other companies which have a surplus. Energy produced from solar power or fuel cells get triple credits, in order to ensure that these technologies have the support they need to bring their cost down. Solar photovoltaic and fuel cell technology is far too expensive to compete yet, but technological breakthroughs are bringing their costs down rapidly and this bill will help accelerate this cost reduction by creating more of a market for them.
Companies can fill up to 10% of their credits by helping install solar panels, solar hot water heaters, geothermal heat pumps or other small power generation at an electric customer's location.
Companies which fail to produce the required clean energy (or by credits) will pay a compliance fee of 5 cents/kWh of shortfall, to be paid into a clean energy fund that will provide grants to local governments and school districts for the installation of solar panels.
If the legislation increases the costs for a company, they are allowed to recover those costs through increases in electric bills. However, the company must show that the increased costs are not fully offset by a reduction in peak power prices (from reduced use of natural gas) and any rate increases must be approved by the PUC.
The bill has protections against double-counting of energy sales.
Advantages that SB 962 has over other similar legislation:
- has a CLEAN definition of renewables; most other bills include environmentally-damaging technologies such as the burning of waste coal, hydroelectric dams, or the incineration of animal wastes, trees, crops and various other "biomass" fuels.
- ensures that the clean energy sources used are NEW, not just a repackaging of existing power generation (note: the bill has an exeption for landfill gas that is newly filtered to meet the bill's requirements)
- has an annual increase that continues over time, rather than ending around 7-20% as most other bills do
- the bill ensures a diversity of fuels used to meet the bill requirements; most other bills allow the cheapest "renewable" technology to dominate; in Pennsylvania's green energy market, this has meant that landfill gas burning sweeps the market, undermining wind power; the SB 962 puts a 10% limit on the use of on-site "offset technologies," a 25% limit on the use of landfill gas, and provides triple credits for fuel cells and solar photovoltaic, with compliance fees also supporting solar PV. The outcome of this bill is that at least 4 types of clean power generation are likely to benefit, rather than 1 or 2.
- closes a loophole common to other RPS bills, preventing large industrial customers from avoiding the requirements by building their own on-site power generation
For a more detailed explanation of the mechanisms in the bill, you can view a comparison of the RPS legislation proposed in Pennsylvania by Incentives / Mechanisms or by which Fuels / Technologies are included.