2010 Pennsylvania Code
Title 66 - PUBLIC UTILITIES
Chapter 28 - Restructuring of Electric Utility Industry
2806.1 - Energy efficiency and conservation program.

     § 2806.1.  Energy efficiency and conservation program.
        (a)  Program.--The commission shall, by January 15, 2009,
     adopt an energy efficiency and conservation program to require
     electric distribution companies to adopt and implement cost-
     effective energy efficiency and conservation plans to reduce
     energy demand and consumption within the service territory of
     each electric distribution company in this Commonwealth. The
     program shall include:
            (1)  Procedures for the approval of plans submitted under
        subsection (b).
            (2)  An evaluation process, including a process to
        monitor and verify data collection, quality assurance and
        results of each plan and the program.
            (3)  An analysis of the cost and benefit of each plan
        submitted under subsection (b) in accordance with a total
        resource cost test approved by the commission.
            (4)  An analysis of how the program and individual plans
        will enable each electric distribution company to achieve or
        exceed the requirements for reduction in consumption under
        subsections (c) and (d).
            (5)  Standards to ensure that each plan includes a
        variety of energy efficiency and conservation measures and
        will provide the measures equitably to all classes of
        customers.
            (6)  Procedures to make recommendations as to additional
        measures that will enable an electric distribution company to
        improve its plan and exceed the required reductions in
        consumption under subsections (c) and (d).
            (7)  Procedures to require that electric distribution
        companies competitively bid all contracts with conservation
        service providers.
            (8)  Procedures to review all proposed contracts prior to
        the execution of the contract with conservation service
        providers to implement the plan. The commission may order the
        modification of a proposed contract to ensure that the plan
        meets the requirements for reduction in demand and
        consumption under subsections (c) and (d).
            (9)  Procedures to ensure compliance with requirements
        for reduction in consumption under subsections (c) and (d).
            (10)  A requirement for the participation of conservation
        service providers in the implementation of all or part of a
        plan.
            (11)  Cost recovery to ensure that measures approved are
        financed by the same customer class that will receive the
        direct energy and conservation benefits.
        (b)  Duties of electric distribution companies.--
            (1)  (i)  By July 1, 2009, each electric distribution
            company shall develop and file an energy efficiency and
            conservation plan with the commission for approval to
            meet the requirements of subsection (a) and the
            requirements for reduction in consumption under
            subsections (c) and (d). The plan shall be implemented
            upon approval by the commission. The following are the
            plan requirements:
                    (A)  The plan shall include specific proposals to
                implement energy efficiency and conservation measures
                to achieve or exceed the required reductions in
                consumption under subsections (c) and (d).
                    (B)  A minimum of 10% of the required reductions
                in consumption under subsections (c) and (d) shall be
                obtained from units of Federal, State and local
                government, including municipalities, school
                districts, institutions of higher education and
                nonprofit entities.
                    (C)  The plan shall explain how quality assurance
                and performance will be measured, verified and
                evaluated.
                    (D)  The plan shall state the manner in which the
                plan will achieve the requirements of the program
                under subsection (a) and will achieve or exceed the
                required reductions in consumption under subsections
                (c) and (d).
                    (E)  The plan shall include a contract with one
                or more conservation service providers selected by
                competitive bid to implement the plan or a portion of
                the plan as approved by the commission.
                    (F)  The plan shall include estimates of the cost
                of implementation of the energy efficiency and
                conservation measures in the plan.
                    (G)  The plan shall include specific energy
                efficiency measures for households at or below 150%
                of the Federal poverty income guidelines. The number
                of measures shall be proportionate to those
                households' share of the total energy usage in the
                service territory. The electric distribution company
                shall coordinate measures under this clause with
                other programs administered by the commission or
                another Federal or State agency. The expenditures of
                an electric distribution company under this clause
                shall be in addition to expenditures made under 52
                Pa. Code Ch. 58 (relating to residential low income
                usage reduction programs).
                    (H)  The plan shall include a proposed cost-
                recovery tariff mechanism, in accordance with section
                1307 (relating to sliding scale of rates;
                adjustments), to fund the energy efficiency and
                conservation measures and to ensure full and current
                recovery of the prudent and reasonable costs of the
                plan, including administrative costs, as approved by
                the commission.
                    (I)  The electric distribution company shall
                demonstrate that the plan is cost effective using a
                total resource cost test approved by the commission
                and provides a diverse cross section of alternatives
                for customers of all rate classes.
                    (J)  The plan shall require an annual independent
                evaluation of its cost-effectiveness and a full
                review of the results of each five-year plan required
                under subsection (c)(3) and, to the extent practical,
                how the plan will be adjusted on a going-forward
                basis as a result of the evaluation.
                    (K)  The plan shall include an analysis of the
                electric distribution company's administrative costs.
                (ii)  A new plan shall be filed with the commission
            every five years or as otherwise required by the
            commission. The plan shall set forth the manner in which
            the company will meet the required reductions in
            consumption under subsections (c) and (d).
                (iii)  No more than 2% of funds available to
            implement a plan under this subsection shall be allocated
            for experimental equipment or devices.
            (2)  The commission shall direct an electric distribution
        company to modify or terminate any part of a plan approved
        under this section if, after an adequate period for
        implementation, the commission determines that an energy
        efficiency or conservation measure included in the plan will
        not achieve the required reductions in consumption in a cost-
        effective manner under subsections (c) and (d).
            (3)  If part of a plan is modified or terminated under
        paragraph (2), the electric distribution company shall submit
        a revised plan describing actions to be taken to offer
        substitute measures or to increase the availability of
        existing measures in the plan to achieve the required
        reductions in consumption under subsections (c) and (d).
        (c)  Reductions in consumption.--The plans adopted under
     subsection (b) shall reduce electric consumption as follows:
            (1)  By May 31, 2011, total annual weather-normalized
        consumption of the retail customers of each electric
        distribution company shall be reduced by a minimum of 1%. The
        1% load reduction in consumption shall be measured against
        the electric distribution company's expected load as
        forecasted by the commission for June 1, 2009, through May
        31, 2010, with provisions made for weather adjustments and
        extraordinary loads that the electric distribution company
        must serve.
            (2)  By May 31, 2013, the total annual weather-normalized
        consumption of the retail customers of each electric
        distribution company shall be reduced by a minimum of 3%. The
        3% load reduction in consumption shall be measured against
        the electric distribution company's expected load as
        forecasted by the commission for June 1, 2009, through May
        31, 2010, with provisions made for weather adjustments and
        extraordinary loads that the electric distribution company
        must serve.
            (3)  By November 30, 2013, and every five years
        thereafter, the commission shall evaluate the costs and
        benefits of the program established under subsection (a) and
        of approved energy efficiency and conservation plans
        submitted to the program. The evaluation shall be consistent
        with a total resource cost test or a cost-benefit analysis
        determined by the commission. If the commission determines
        that the benefits of the program exceed the costs, the
        commission shall adopt additional required incremental
        reductions in consumption.
        (d)  Peak demand.--The plans adopted under subsection (b)
     shall reduce electric demand as follows:
            (1)  By May 31, 2013, the weather-normalized demand of
        the retail customers of each electric distribution company
        shall be reduced by a minimum of 4.5% of annual system peak
        demand in the 100 hours of highest demand. The reduction
        shall be measured against the electric distribution company's
        peak demand for June 1, 2007, through May 31, 2008.
            (2)  By November 30, 2013, the commission shall compare
        the total costs of energy efficiency and conservation plans
        implemented under this section to the total savings in energy
        and capacity costs to retail customers in this Commonwealth
        or other costs determined by the commission. If the
        commission determines that the benefits of the plans exceed
        the costs, the commission shall set additional incremental
        requirements for reduction in peak demand for the 100 hours
        of greatest demand or an alternative reduction approved by
        the commission. Reductions in demand shall be measured from
        the electric distribution company's peak demand for the
        period from June 1, 2011, through May 31, 2012. The
        reductions in consumption required by the commission shall be
        accomplished no later than May 31, 2017.
        (e)  Commission approval.--
            (1)  The commission shall conduct a public hearing on
        each plan and allow for the submission of recommendations by
        the Office of Consumer Advocate and the Office of Small
        Business Advocate and by members of the public as to how the
        electric distribution company could improve its plan or
        exceed the required reductions in consumption under
        subsections (c) and (d).
            (2)  The commission shall approve or disapprove a plan
        filed under subsection (b) within 120 days of submission. The
        following shall apply to an order disapproving a plan:
                (i)  The commission shall describe in detail the
            reasons for the disapproval.
                (ii)  The electric distribution company shall have 60
            days to file a revised plan to address the deficiencies
            identified by the commission. The revised plan shall be
            approved or disapproved by the commission within 60 days.
        (f)  Penalties.--
            (1)  The following shall apply for failure to submit a
        plan:
                (i)  An electric distribution company that fails to
            file a plan under subsection (b) shall be subject to a
            civil penalty of $100,000 per day until the plan is
            filed.
                (ii)  An electric distribution company that fails to
            file a revised plan under subsection (e)(2)(ii) shall be
            subject to a civil penalty of $100,000 per day until the
            plan is filed.
                (iii)  Penalties collected under this paragraph shall
            be deposited in the low-income electric customer
            assistance program of the energy distribution company for
            the respective service territory.
            (2)  The following shall apply to an electric
        distribution company that fails to achieve the reductions in
        consumption required under subsection (c) or (d):
                (i)  The electric distribution company shall be
            subject to a civil penalty not less than $1,000,000 and
            not to exceed $20,000,000 for failure to achieve the
            required reductions in consumption under subsection (c)
            or (d). Any penalty paid by an electric distribution
            company under this subparagraph shall not be recoverable
            from ratepayers.
                (ii)  If an electric distribution company fails to
            achieve the required reductions in consumption under
            subsection (c) or (d), responsibility to achieve the
            reductions in consumption shall be transferred to the
            commission. The commission shall do all of the following:
                    (A)  Implement a plan to achieve the required
                reductions in consumption under subsection (c) or
                (d).
                    (B)  Contract with conservation service providers
                as necessary to implement any portion of the plan.
        (g)  Limitation on costs.--The total cost of any plan
     required under this section shall not exceed 2% of the electric
     distribution company's total annual revenue as of December 31,
     2006. The provisions of this paragraph shall not apply to the
     cost of low-income usage reduction programs established under 52
     Pa. Code Ch. 58 (relating to residential low income usage
     reduction programs).
        (h)  Costs.--The commission shall recover from electric
     distribution companies the costs of implementing the program
     established under this section.
        (i)  Report.--The following shall apply:
            (1)  Each electric distribution company shall submit an
        annual report to the commission relating to the results of
        the energy efficiency and conservation plan within each
        electric distribution service territory. The report shall
        include all of the following:
                (i)  Documentation of program expenditures.
                (ii)  Measurement and verification of energy savings
            under the plan.
                (iii)  Evaluation of the cost-effectiveness of
            expenditures.
                (iv)  Any other information required by the
            commission.
            (2)  Beginning five years following the effective date of
        this section and annually thereafter, the commission shall
        submit a report to the Consumer Protection and Professional
        Licensure Committee of the Senate and the Consumer Affairs
        Committee of the House of Representatives.
        (j)  Existing funding sources.--Each electric distribution
     company shall, upon request by any person, provide a list of all
     eligible Federal and State funding programs available to
     ratepayers for energy efficiency and conservation. The list
     shall be posted on the electric distribution company's Internet
     website.
        (k)  Recovery.--
            (1)  An electric distribution company shall recover on a
        full and current basis from customers, through a reconcilable
        adjustment clause under section 1307, all reasonable and
        prudent costs incurred in the provision or management of a
        plan provided under this section. This paragraph shall apply
        to all electric distribution companies, including electric
        distribution companies subject to generation or other rate
        caps.
            (2)  Except as set forth in paragraph (3), decreased
        revenues of an electric distribution company due to reduced
        energy consumption or changes in energy demand shall not be a
        recoverable cost under a reconcilable automatic adjustment
        clause.
            (3)  Decreased revenue and reduced energy consumption may
        be reflected in revenue and sales data used to calculate
        rates in a distribution-base rate proceeding filed by an
        electric distribution company under section 1308 (relating to
        voluntary changes in rates).
        (l)  Applicability.--This section shall not apply to an
     electric distribution company with fewer than 100,000 customers.
        (m)  Definitions.--As used in this section, the following
     words and phrases shall have the meanings given to them in this
     subsection:
        "Conservation service provider."  An entity that provides
     information and technical assistance on measures to enable a
     person to increase energy efficiency or reduce energy
     consumption and that has no direct or indirect ownership,
     partnership or other affiliated interest with an electric
     distribution company.
        "Electric distribution company total annual revenue."
     Amounts paid to the electric distribution company for
     generation, transmission, distribution and surcharges by retail
     customers.
        "Energy efficiency and conservation measures."
            (1)  Technologies, management practices or other measures
        employed by retail customers that reduce electricity
        consumption or demand if all of the following apply:
                (i)  The technology, practice or other measure is
            installed on or after the effective date of this section
            at the location of a retail customer.
                (ii)  The technology, practice or other measure
            reduces consumption of energy or peak load by the retail
            customer.
                (iii)  The cost of the acquisition or installation of
            the measure is directly incurred in whole or in part by
            the electric distribution company.
            (2)  Energy efficiency and conservation measures shall
        include solar or solar photovoltaic panels, energy efficient
        windows and doors, energy efficient lighting, including exit
        sign retrofit, high bay fluorescent retrofit and pedestrian
        and traffic signal conversion, geothermal heating,
        insulation, air sealing, reflective roof coatings, energy
        efficient heating and cooling equipment or systems and energy
        efficient appliances and other technologies, practices or
        measures approved by the commission.
        "Peak demand."  The highest electrical requirement occurring
     during a specified period. For an electric distribution company,
     the term shall mean the sum of the metered consumption for all
     retail customers over that period.
        "Quality assurance."  All of the following:
            (1)  The auditing of buildings, equipment and processes
        to determine the cost-effectiveness of energy efficiency and
        conservation measures using nationally recognized tools and
        certification programs.
            (2)  Independent inspection of completed energy
        efficiency and conservation measures completed by third-party
        entities to evaluate the quality of the completed measure.
        "Real-time price."  A rate that directly reflects the
     different cost of energy during each hour.
        "Time-of-use rate."  A rate that reflects the costs of
     serving customers during different time periods, including off-
     peak and on-peak periods, but not as frequently as each hour.
        "Total resource cost test."  A standard test that is met if,
     over the effective life of each plan not to exceed 15 years, the
     net present value of the avoided monetary cost of supplying
     electricity is greater than the net present value of the
     monetary cost of energy efficiency conservation measures.
     (Oct. 15, 2008, P.L.1592, No.129, eff. 30 days)

        2008 Amendment.  Act 129 added section 2806.1. See the
     preamble to Act 129 of 2008 in the appendix to this title for
     special provisions relating to legislative findings and
     declarations.