April 14, 2026 · ENERGY · 13,461 words · 9 speakers · 67 segments
I
Call this meeting of the house energy committee to order at 932 Nick will you please call the roll chair Fiedler here
representative Boyd representative Brown on leave representative Serato on leave representative Davidson on leave representative Donahue on leave representative Friel on leave representative draw on these representative Ingalls on these representative McAndrew on these representative P.L.E. on these representative Russnock on these representative Steele represent event cap here chair Causer here representative Arminini on leave representative 130 Deputy Mayor this city council member Halick. On leave. Representative Rapp. On leave. Representative Stambol. Here. Representative Warner. On leave. Representative Williams. Here.
Attendance is recorded. Proceed, Madam Chair. Thank you, Nick. And thank you to our members, testifiers, and all of our guests for attending this morning's public hearing on my bill, House Bill 2348, printers number 3139. We held an informational hearing on the topic of net metering last month. I know I learned a lot and found it very useful, so thank you to everyone who participated. One of the things we learned at that hearing from several testifiers is that a significant cost burden is being placed on PA small businesses, largely as the result of some merchant generator facilities that seem to have little or no on-site electric load. It's important to me that we do everything we can to get renewables online and energy generally, more energy online in Pennsylvania. And at the same time, it will be of no surprise that customers, ratepayers, people back home, are on my mind every single day and I know are incredibly important to the members of this committee. We know people back home are already struggling with their bills, and they are very, very worried about what comes next, given that all the projections are pretty dire as far as rates going up and the possibility of blackouts and brownouts. That is the delicate balance that we are here to try to find in the Energy Committee today. At the informational hearing, we also heard that distributed energy resources, whether it be solar, wind, hydro, biogas, have benefits that go beyond just generating electricity. Distributed energy resources have significant environmental benefits, create good local jobs, and can have real financial benefits for rate payers as well, reducing the need for new costly transmission and distribution infrastructure. I want to emphasize that House Bill 2348 is a proposal, very much a work in progress and an attempt at a policy. It is an attempt to balance, as I said, competing imperatives. People back in our districts don't want their bills to go up, and if possible, they'd like them to go down. This is a daily reality they face, and I think it's our obligation as lawmakers here in this full-time legislative body to seek to address that every single day. We know folks back home also, of course, want clean air. They want a thriving economy with good-paying jobs, and they want to be confident that when they flip the switch the lights will go on So I appreciate everyone here with us today I want to note that joining us now in person also is Rep Rusnik Thank you to the members for being here this morning. I know it is a very busy morning. Chairman Cosler, do you have any opening remarks? Thank you, Madam Chair. This is a very important issue. I've had a chance to look through the testimony that's been submitted, and I think there's some valuable input that's going to be provided from our testifiers. So I'm looking forward to the information presented today and looking forward to getting questions answered. Thank you. Thank you, Chairman. As always in this committee, we seek to do our work in a bipartisan way whenever possible, so I'm hoping we can try to accomplish that on this challenging topic as well. Today we have nine testifiers spread over two panels. Thank you for joining us in person. We really do appreciate that. Please know members already have your written remarks in their packets, so feel free to summarize your testimony so we can get to questions and answers. In our first panel joining us right now, we have Georgina Areola-Lennox, Director of State Affairs, Mid-Atlantic for Solar Energy Industries Association. Stephen DeFrank, Chairman of the PUC. Thank you for joining us again. Mel Al-Ita, Pennsylvania Deputy Consumer Advocate. and Andy Tubbs, President and CEO of the Energy Association of Pennsylvania. Thank you also for returning to the committee. Ms. Arreola Lennox, would you please begin?
Okay. Is that better? Great. Thank you so much. Good morning, Chair Fiedler, Chair Kosser, members of the House Energy Committee. Thank you for the opportunity to be here today. As Chair Fiedler said, my name is Georgina Arreola Lennox, and I represent the Solar Energy Industries Association.
If I could ask you, the microphone, you have to actually bring it incredibly close, if you would.
Is that better?
Yes, thank you.
Of course. And I'm here representing the Mid-Atlantic region as SIA's Regional Director of State Affairs. Again, thank you for the opportunity to be here. This is a very important topic, and, you know, topics about the value of solar and what just valuation for any net energy that's generated is certainly not a new topic. We've been discussing this across a number of states, some as recently as this legislative session in Maryland, which just wrapped up yesterday, the number one topic that we face. So I hope to bring to bear some of the learnings and lessons that we've established there in order to make sure that we contribute to this important conversation today. SIA represents a broad coalition of companies across the solar and storage industries nationwide. We represent over 1,200 companies with dozens of them operating here in Pennsylvania. I think it's important for me to highlight that our focus as an association is to support policies that support reliable, affordable, and locally generated clean energy and that foster investment in job creation, particularly in the mid-Atlantic states and the PJM region, we're very focused on creating pathways that deploy solar and energy storage at the distribution system, as Chair Fiedler mentioned, you know, deployment of distributed energy resources can have significant improvements on the energy security of the Commonwealth as we face growing capacity needs and soaring energy prices. Now, over the past two years, my predecessor and a lot of other stakeholders have been engaging on this very topic to try to understand the concerns that have been raised by not only legislators but regulators in the state with the current net energy policy And from that engagement, we believe there are a few key principles that need to be kept in mind in order to guide any effort reforms. First, any transition should be fair and predictable. The investments that have been made by firms under the existing rules need to be respected. Stability is critical in order to maintain confidence in market. Second, net metering should protect, continue to serve its core purpose, meaning it should protect the customers that are offsetting on-site load. And perhaps we need to look at, you know, whether it's time to create separate policies for different sectors. Third, we believe any policy should encourage smart investment, meaning projects need to be cited in the places where they will actually, you know, yield the largest value to the grid and to rate payers And then last but certainly not least, we need to keep affordability as a core tenant in any reform. We do believe that there is a way to address these and balance these large goals of protecting consumers, enabling continued solar growth, and meeting future energy needs. But one thing that I do want to underscore is that the industry can adapt and respond to forward-looking changes. but one thing we absolutely need is certainty and consistency those are essential and again that's particularly important for projects that have already committed and made substantial capital investments in the state we thank chair Fiedler for introducing House Bill 2348 as I think this actually is a valuable tool in helping to continue this dialogue the committee has an important yeah it's creating an important forum to discuss these issues And we hope that this conversation will expand to include additional stakeholders and reach across to the Senate chamber. We recognize it as a coalition, obviously, that durable policy is a result of collaboration and compromise. So to that end, we are here to listen, engage, and be a part of this process. We want to make sure that we support a reform that actually supports the goals of Pennsylvania's energy future. So thank you so much for the opportunity. Again, I look forward to your questions.
Thank you, and thank you for being here. Chairman DeFrank, you may go ahead.
Good morning, Chair Feeler, Chairman Causer, and members of the House Energy Committee. My name is Steve DeFrank, and I'm chairman of the Pennsylvania Public Utility Commission. I appreciate the opportunity today to testify on House Bill 2348. As Chair Feele pointed out in her opening comments, there has been significant concern regarding the cost impacts of the current net metering construct. This is not a new issue. The Commission has repeatedly highlighted the growing imbalance within the existing framework and the resulting cost shifts to non-participating customers. Notably, when the committee held a hearing earlier in March, which I provided testimony, I wanted to go over some of those number projections for you again. $6.4 million in costs in 2026, $90 million in costs in 2027, and if all of the current projects in the system come to fruition, $700 million annually in costs moving forward. These are not theoretical figures. They reflect real and growing affordability impacts on Pennsylvania ratepayers As such I noted in the Commission support for legislative updates to net metering rules that would continue to foster true end net metering customers those that were always the intended beneficiaries, while preventing merchant generators from receiving excessive compensation at the expenses of others on the system. At its core, the current construct allows certain large-scale participants to receive compensation that exceeds the value of the electricity they provide to the grid. That gap does not disappear. It's picked up by other ratepayers. While the initial analysis of House Bill 2348, I believe it takes positive steps forward towards net metering reform. The Commission's analysis of the bill has identified the following areas to warrant further consideration. Safe harboring and grandfathering. The bill would clearly put a stop prospectively to the systemic inequities that are being realized by merchant generator intervention into the current net metering landscape. However, the safe harbor or grandfathering provisions of the bill raise significant concern. Existing customer generators benefiting from the current inequities of net metering rules would be permitted to continue until December 31, 2050. The Commission believes this approach is overly expansive and will lock in existing cost inequities for decades, delaying meaningful relief for existing ratepayers. In effect, the longer the grandfathering period, the longer current ratepayers will subsidize these merchant generators. It's that simple. We submit the Committee should consider the shortest time period possible for grandfathering these facilities in order to mitigate the financial burden they create. It is also important to note that the expiration of any grandfather period would not eliminate the customer generation's abilities to receive compensation, but would instead align it more closely to the actual value they provide the system. The Commission's concern is not the customer-cited generation itself, but it's with ensuring that all customers contribute fairly to the cost of maintaining and operating a safe and reliable electric system. The safe harbor provision of the bill would also permit the Commission to place a cap on the amount of megawatts and therefore, by definition, the number of facilities provided with this benefit. The Commission may only apply this cap to facilities with pending interconnection applications. We note that legislation does not instruct the Commission as to the goal or the intent of the cap. Without clearly defined policy objectives, the application of such cap risks significant legal challenges for the Commission. The Commission recommends that the Committee consider adding language in this provision that provides an express purpose for the application of the CAP, such as to protect ratepayers from burdensome costs or to ensure the continued provision of just and reasonable rates. Further, the Committee may want to consider directing the Commission to apply any CAP chronologically so customers who submitted interconnection applications first would have a higher likelihood of not being removed by the cap. As well, the bill requires compensation for grandfathered accounts at the EDC's small general service or small commercial rate schedule. This requirement creates a structure that could shift costs inappropriately between customer classes, particularly from larger participants to small and medium-sized business customers. Next, I want to talk about the rate schedule requirements for warehouse and commercial rooftop systems. requires compensation for net metering systems on these types of facilities to be established under the EDC's Small General Service and Small Commercial Rate Schedule. Again, the Commission believes the requirement will likely shift costs from larger commercial or industrial participants to smaller commercial customers, creating an outcome that is neither transparent nor equitable. Specifically, this will likely result in unnecessary cross-subsidization of rates between large commercial accounts to small and medium-sized commercial accounts. For instance, consider an industrial rooftop net metering system is receiving compensation under a small commercial rate, then the small commercial rate class could bear costs that do not reflect their own usage or system impact. The Commission thus recommends that larger commercial or industrial participants pay avoided costs and not be tied to the EDC's small general service and small commercial rate schedules. This is consistent with the Commission's view that the cost should be shouldered by non-net meter customers or subsidized by the small commercial or general service customers. Next, I want to talk about the virtual net metering aggregation provisions of the bill. House Bill 2348 requires compensation for this subset of net meter accounts on a monthly basis. The Commission notes that net meter accounts are compensated for excess generation on an annual basis, which the bill does correctly identify throughout other provisions. We highlight for your consideration to modify this section if the Committee so chooses. Regarding the long-term ramifications of continued payment of full retail value, the Commission believes that the bill will make a positive impact in this short and medium term. However, in the long term, we submit the continued compensation at the full retail value will create the same cost-shifting challenges this legislation is intended to address, particularly as participation expands. As we have the four categories of the bill, all we're going to do is force these current customer generators into the two customers, either warehouse, rooftop, or the industrial sites. Now, that's a policy decision that if you want to make to push these facilities into those types of properties, so be it. However, the cost that you're doing this at is significant. I mean, the difference between a generator getting a wholesale rate and a retail rate is over 50% difference, and that's not even taking into consideration the cost of transmission. So when you consider the full savings of this that other ratepayers are paying, it is significant. It's just under double the cost. So as we're establishing these islands, understand you're continuing these costs and equities onto the other ratepayers. In concluding, the commission is currently running analyses to project the impact of House Bill 2348 cost reductions in comparison with our projections under the current paradigm. As we finalize these figures, we will be sure to communicate them to the committee. While it would appear that House Bill 2348 will have an impact by reducing some costs associated with the current net metering structure, the bill leaves the potential to entice development in many of the subset categories I just talked about. In closing the Commission believes House Bill 2348 is a positive constructive step in the right direction We commend the committee for bringing this issue up for consideration in such a short amount of time Chair from when we first had that conversation, you know, a month ago, six weeks ago. The bill represents necessary progress towards prudent reform, but additional refinements will be essential to ensure long-term affordability, fairness, and system sustainability. The Commission stands ready to work with the General Assembly to ensure that Pennsylvania's net meter and framework supports innovation while protecting all customers from unattended and disproportionate costs. We hope that you consider the input we provided you as you deliberate House Bill 2348. Happy to answer any questions the committee may have. I do want to point out one other thing. I just got this figure from our staff before we came here. So you understand the onset that we're facing here. The number of applications we've gotten for merchant generators since June 1st of 2025 to April 13th of 2026 is 955. Thank you.
Chairman, do you mind repeating what you just said so that all the members can make sure they heard the new figure you just brought in?
So the number of applications the commission has received from June 1st of 2025 to April 13th of 2026 is 955.
Now, if your bill is adopted with the timeline you have in it, September 1st of 2025, that's when you have your cutoff period, you would take 681 projects out of the mix.
So that means that's how many projects were filed between May 31st of 2025 and September 1st of 2025.
Thank you so much. Thank you for your testimony and those numbers. We look forward to the future projections that you anticipate receiving. Ms. Elatea, thank you so much for being here. You may go ahead.
Thank you. Can you hear me? All right. Good morning, Chair Friedler, Chair Kauser, members of the House Energy Committee. My name is Mel Elatia. I serve as a Deputy Consumer Advocate at the Pennsylvania Office of Consumer Advocate. On behalf of Consumer Advocate Daryl Lawrence, I thank you for the opportunity to testify here today about net metering, House Bill 2348, and its potential impact on Pennsylvania utility consumers. For purposes of keeping my remarks brief, I will not read the entirety of my prepared written testimony, but I will happily address any questions relating to my written testimony or my oral remarks today. House Bill 2348 clearly addresses many of the concerns that were raised in testimony on March 2nd, including by Consumer Advocate Lawrence and other testifiers. Look, it goes without saying that the General Assembly sets policy for the Commonwealth, and if the policy goal of this bill is the continued promotion of distributed energy resources through alternative energy systems including but not limited to rooftop solar the OCA supports many provisions of this bill because they offer reasonable and practical approaches to key issues and we offer recommendations for this committee's consideration we can support the following provisions first the bill's requirement that small customer generators be compensated at the full retail value means that residential and small business customers will be compensated at a higher full retail rate, including distribution charges, rather than under the Commission's current lower price to compare method for annual access generation These changes are important for the promotion of alternative energy systems because a decision to own and operate to lease or to contract with a third party who owns and operates an alternative energy system on one's home or small business comes with a set of risks and potential costs. These risks include, but are not limited to, counterparty risk, for example, solar installers engaging in fraud, going bankruptcy or providing poor service, warranty risk in terms of installation and maintenance damage, risk to rooftop damage, and risk to facility damage due to weather events. If the goal is to promote alternative energy systems, ensuring that these smaller customers are compensated at the full retail value for excess generation will help promote consumer willingness to take on these potential risks and potential costs. Second, House Bill 2348 contains reasonable and practical approaches to the issues surrounding large customer generators. It addresses concerns about unreasonable subsidization of merchant generators by placing specific and reasonable limits as to eligibility. It also contains safe harbor or grandfathering provisions for existing large customer generators that have made investments under the existing rules. We acknowledge and appreciate the concerns expressed here today by Chairman DeFrank around the right sizing of these provisions, but our office certainly supports grandfathering provisions for those who have made investments under existing rules. Most importantly, as it relates to large customer generators, the bill requires that large customer generators be compensated at the avoided cost rate. This change to the statute is important for the promotion of distributed energy resources while avoiding unreasonable subsidization of large customer generators by other customers. With that said, the OCA recommends a change to the definition of avoided cost so that it excludes distribution charges. Removing distribution charges from this definition would more closely align the definition with the avoided cost compensation model that is found in several other states. The avoided cost should be lower than the full retail value by excluding distribution charges and excluding other utility administrative costs. Avoided costs can include the average locational marginal price of electricity and capacity charges and transmission charges. The avoided cost, in theory, is the expense that the utility avoids by not having to purchase power from a third party to serve that customer generator. But it also incentivizes investments in alternative energy sources by large customer generators, and it avoids unreasonable subsidization by non-generating customers. Additionally, applying the month-to-month billing credit at avoided costs makes sense because large customer generators benefit from the distribution system, given that they rely on it to send their excess power to the grid, and during times when their solar facilities are not producing power, like evenings, bad weather, and other events. the third reason we are the third provision that we support in House Bill 2348 is the provisions promoting rooftop solar on warehouses and other commercial buildings within the Commonwealth it achieves this by adding a provision for compensation at the full retail value under the utility small general service or small commercial rate schedule And finally our second recommendation for this committee consideration is to modify one or the other term of small customer generator or large customer generator. From a statutory interpretation standpoint, it would be helpful to clarify one or the other term to actually include 50 kilowatts in the applicable size threshold. Thank you for the opportunity to submit testimony here today on this important bill, and I'm happy to respond to any questions you may have.
Thank you so much for your testimony. Mr. Tubbs, when you're ready, you may begin.
Thank you, Chair. Good morning, Chair Feeler, Chair Couser, and members of the House Energy Committee. My name is Andy Tubbs, President of the Energy Association of Pennsylvania. I'd like to start off by saying I really appreciate that we're having this hearing and that we're having this conversation. I think you can tell from the testimony and my written testimony, this has been an issue that the electric distribution companies in Pennsylvania have been working on for some time and working with the commission and other stakeholders to address this issue. So the fact that we're having hearings on net metering in and of itself is a positive sign for Pennsylvania and our customers, so we greatly appreciate the energy being put into this conversation. With that said, I think, you know, while we support what the committee is trying to do, we think the current net metering system has a real loophole, but we're concerned that the bill as offered will only serve to exasperate that problem. So I think with some clarifications we can address this, but I think we just want to talk about it a little bit here this morning. So net metering was designed for homeowners and small businesses with rooftop solar. That was a good idea. and the Energy Association of Pennsylvania believes that net metering as a concept is valuable, and supporting the development of solar in Pennsylvania is worthwhile. The problem is that Pennsylvania courts have allowed large commercial solar developers to exploit the same rules. These are not homeowners. They are essentially small power plants, but instead of being paid wholesale market rates like other power plants, they collect the full retail rate, which includes distribution, low-income program funding, and other charges they do not contribute to. The gap is about 7 cents per kilowatt hour above what the market pays. So one large merchant generator can collect $350,000 or more per year in excess payments, and that money comes directly from the bills of every other customer in the rate class. Statewide, just three of our utilities report that the cost shift is already at $33 million annually, and the trend line is moving sharply upward. At First Energy PA alone, merchant generator interconnection applications went from 52 in 2022 to 510 in 2023 to nearly 1,000 just last year. This is not slowing down. I want to take a moment to talk about who feels this most acutely, because it's not always the utilities you hear about. Pennsylvania has several small electric distribution companies, like Citizens Electric in Lewisburg and Wellsboro Electric in north-central Pennsylvania. These utilities serve tight-knit rural communities with customer bases under 10,000 customers. When a merchant generator connects to just one of those territories, there are small, simply far fewer customers to absorb the cost. Take Wellsboro Electric. With a recent rate case, two 3-megawatt solar projects coming online would have translated to $0.01 to $0.5 per kilowatt hour increases in commodity costs for every customer they serve. just to pay for above market solar generation. That is a meaningful number for the families in those communities. Citizens in Wellsboro Electric have worked – and Wellsboro Electric have worked through the regulatory process to get relief, and the POC has supported them. UGI Electric did the same with the Penn Renewable case last month. On March 13th, since I last testified here, the Commonwealth Court has upheld the approach used by UGI, affirming that the commission has the authority to classify large generators and rate classes that reflect their actual impact on the grid. These utilities fought for these outcomes case by case, proceeding by proceeding, at considerable time and expense, The concern is that House Bill 2348, as drafted, would erase those gains. My written testimony goes into detail on the concerns we have with the proposed bill. However, there are four specific problems with the bill that we ask the committee to consider. Grandfathering. Grandfathering provision lock-in merchant-generate rates through 2050. PPL's analysis shows that if every application in the queue before September 2025 is grandfathered as proposed, the price to compare would jump from $0.17 per kilowatt hour in 2028 to $0.73 in 2029. Default load would be completely offset by excess generation within a year. That is not a rounding error. That is a structural collapse in the system. Customer classification. The bill restricts the PUC's ability to reclassify customers based on net metering status. That directly undercuts the Penn Renewables case. The courts just affirmed the commission has this authority, and the bill would take it away. Virtual meter aggregation. The virtual meter aggregation provisions dramatically expand the problem. The bill removes geographic limits, broadens who qualifies as a dependent account, and allows these aggregated projects to collect full retail rates through 2050. A warehouse roof in one county can effectively become a building mechanism, reaching the merchant-generated loophole. I lost my train of thought. There we go. Across the entire servitorial with no clear limit on how many customers can be attached. And the avoided cost definition, the definition of avoided cost, which is a right concept to move toward, still includes capacity, transmission, and distribution costs. That largely preserves the overcompensation problem that we currently have. In my testimony, we outlined some proposed fixes, and other states have already done this. California and Vermont have reformed net metering without abandoning clean energy. We do not need a complex framework. We just need three targeted changes. Pay customer generators based upon avoided cost, meaning the value of the commodity itself, not a bundled retail rate. confirm the POC's authority to classify customers based upon their actual impact on distribution system and do this statewide through a rulemaking, not utility by utility through years of litigation, and require meaningful on-site energy use to qualify for net metering. If a facility exists only to generate and export power, it is a power plant. It should be treated like one. At our January hearing on customer affordability, we talked about the forces driving up customer bills, Capacity markets, transmission costs, commodity prices, many of those involve regional and federal dynamics that take time to work through. The merchant generator loophole is different. It's a Pennsylvania problem, and it is a Pennsylvania problem to fix. We can do it without hurting the homeowners and small businesses that Net Meter and NetSource is always meant to serve, but we must get the bill right. EAP stands ready to work with the committee on language that closes the loophole, protects ratepayers preserves the Commission's authority and holds up what the courts have decided we appreciate the committee attention to the issue and I welcome any questions you may have thank you so much mr Tubbs Thank you to all of our testifiers and genuinely we do appreciate your feedback I not just saying that and this is very much a proposal in the works so thank you
I want to note for the record that joining us online is Representative Ingalls and joining us in person, Representatives McAndrew, Girall, and Donahue. We'll now go to questions. Chairman And DeFrank, I'll ask my question. I'll direct it to you. Can you help us get an idea of how much money we're talking about? Both you and Mr. Tubbs, I know, specifically mentioned that. And at our hearing on this topic, you estimated that the 23 merchant projects that are now online are costing small business customers about $4 million a year, with that number potentially rising much larger if all the proposed projects come online. I know at the beginning of the hearing you mentioned some additional projects. So can you give us an idea of how much money are we talking about? And for, you know, a regular small business in one of our districts, what is the impact?
So our staff estimates under the current applications we would have, it would be about $700 million annually. And that's assuming they stop today. So as you add more and more of these projects, that number continues to grow. So if you remember when we first started talking about this in January, our numbers from last year was about $500 million annually. So because of that drastic increase in applications, we added $200 million annually just in the last year. And, Chair, if I can correct what I said earlier because I gave you the numbers backwards. So since May 31st of 2025 to April 13th of 2026, we've received 955 applications. And under your bill, when you stop it at September 1st of 2025, you would have removed 681 of those projects from the current construct, which would have saved ratepayers about $250 million annually just in those projects. that would leave 274 projects that would still be under the old paradigm. That would be from May 31st of 2025 to August 31st of 2025.
Thank you so much, and thank you for clarifying. As I said at the beginning, I think this really is finding the right balance, right? We are in an energy crisis now. We have to do everything we can to get more energy, including renewable online, and always top of mind are rate payers, the folks back home and trying to do everything we can on their bills. So thank you for that. Chairman Causer. Thank you very much to all of you for your testimony. I think what's clear is that our current system of net metering is flawed, and I think that we have heard that repeatedly and needs reform. this hearing is specifically on this particular bill, House Bill 2348. And I found the text of the bill to be interesting, containing a lot of what I call loopholes and what seems to be very concerning to me because my main concern is the shift onto other rate payers and actually the impact of costing rate payers more. I'm trying to wrap my head around the testimony that we've heard from all four of you. And from the PUC, we've heard that it's a step in the right direction. However, in the long term, it may actually make things worse. From the consumer advocate we heard outright support for the bill From the Energy Association we heard that it might make things worse From the Solar Energy Association we heard strong support So where does that leave the rate payer in the middle of all of that, trying to figure out if it's going to make things worse, as the PUC testimony asserts, then why is the consumer advocate testifying in support of the provisions in the bill?
There's some misconception here. So if I can start out, I wouldn't necessarily categorize it as making it worse. What I would say is it would statutorily establish what I would consider an unintended consequence of the net metering program. Net metering, we've had these discussions. It's not a merchant generation program. It's just not. It's meant to offset your load. That's what it's meant for. I understand why merchant generators want a net meter because it's so profitable. That's why we're having these conversations. This isn't hard. It shouldn't be hard. It's hard to make these decisions because you're going to have to change something that someone set a business plan on. I get it. And, by the way, I understand. I'm not saying pull the rug out from these installations tomorrow. But a 25-year runway, ooh. I mean, that's longer than an amortization of the financing of it. That's longer than the life expectancy of a solar panel. So why is it 25 years? I mean, that's a sweetheart deal.
I don't know about consumer advocates. And I appreciate that clarification. It's just concerning to me the different perspectives that I'm hearing. So please go ahead.
If I can help clear up. Consumer advocate Daryl Lawrence testified on March 2nd about concerns about unreasonable subsidization. And that is in concert with the concerns about merchant generators. The consumer advocate represents the interests of residential rate payers, but all consumer interests. So we're also looking out for commercial and industrial as well. So when I said we support the reasonable and practical approaches here to the large customer generator issues, we said specifically because it places new limitations as to what can qualify as a large customer generator. I don't know the knowledge of this committee as to what I would call the saga of net metering regulations and IRC rejections and the Commonwealth Court disapproving. But the commission did try to put some limitations as to what could qualify. This bill does that. So this bill says that the customer must have an independent load, right, and that it must have a purpose other than servicing the system. That's a great qualifier to knock out merchant generators, right. The next one is that it says that the alternative system must be sized no greater than 200% of the customer's annual electric consumption at the interconnection point. Again, that's a great qualifier. And both of these qualifiers reflect exactly the regulatory policy that the commission tried to do through regulation unsuccessfully. So this bill puts those in, and we think they help knock out merchant generators just through those eligibility criteria alone. So that's very helpful. However, what's important is a commercial industrial customer, And I thinking about you know when I just go visit my local brewery in town like they investing in solar facilities on their premises And being able to size it at 100 of their annual consumption or 110 makes sense But I understand if policymakers want to make that up to 200%. But that's double their size. And they're more sophisticated consumers, and they're going to have consultants telling them what their options are and how to do this. And so that's where the positive of the bill is about compensating them at avoided cost as opposed to the full retail rate. So we want our commercial industrial customers to be a benefit from net metering, just like residential. They're more sophisticated, right? And they will benefit at just the avoided cost rate. This bill, unfortunately, though, as we are suggesting, needs to be modified because the avoided cost definition in this bill includes distribution and it shouldn't. Okay, voided cost is meant to be lower than the full retail rate. So I hope that helps clarify. Also, we did, Consumer Advocate Lawrence did testify in support of grandfathering provisions. Again, we have to represent the interests of all consumers. And so there are customer, consumers, customer generators that have taken, you know, our participants in the existing roles as they are, right?
And they're making investment decisions. in solar facilities based on the existing rules. So we support our grandfathering. We totally hear the concerns about whether it needs to be tightened up and right-sized, and we would definitely be willing to work with everyone in getting that right. Thank you for that. One other point, if I can. There are other things in this bill that are positives. The one thing that's overlooked is the virtual meter aggregation, removing the two-mile restriction. that's something that, you know, everyone's going to benefit from a lot, and the farming community is going to benefit with digesters and things like that. So that's a good positive. The other thing is it gives us enforcement. So the reason we're having this conversation about net metering in the first place was the Supreme Court said we didn't have the enforcement of it, and that's why we're even having this conversation. Now that's what created the issue was the Supreme Court decision, so it does clarify that as well. And I appreciate that clarification. My purpose in pointing out the consumer advocate's testimony is because in the testimony, it flat out supports the bill and says exactly why the consumer advocate supports the bill. And from my reading of the bill, there's a real possibility that in the long term, this can make things worse for the rate payer. That is my concern. We see this bill as a step in the right direction. And we understand bills continue to be amended and modified, and we're happy to continue to be a part of that dialogue and chime in, you know, as those changes get made. And we, like anyone else, consider the concerns that are expressed by other, you know, participants in the industry. We're not just like we've spoken and that's it. But we do think this bill, you know, is a step in the right direction in considering solar penetration rates within Pennsylvania. Again, this goes back to the General Assembly sets the policy goal. If the goal, right, is to promote continued promotion of alternative energy systems, including solar, just looking at the stats from the Solar Energy Industry Association, only 2.34 percent of Pennsylvania homes have solar, and only 1.35 percent of Pennsylvania electricity is produced from solar. So this really goes to the policy goals and then the balancing act involved, and we're happy to continue to work with right-sizing any provisions of this bill. And it's clear with policy that We should be looking at the impact on all ratepayers. Absolutely. Thank you so much, and thank you for those clarifications. I do want to provide one further piece of information, which is it is our understanding that the average solar system does last about 25 years, give or take. So I think some of the provisions in this bill are an attempt to factor that in, to factor in, you know, these are large companies that are coming to do business under certain regulations and trying to take that into account. That said, given the energy crisis that people are facing right now, I think that is at the forefront of what this committee is thinking about, and things are going to get worse for ratepayers under the status quo if we do nothing. Prices are going to go up, and so I think that is the reality that we face, And, yeah, I just wanted to put that out there, that this legislation is an attempt to address the situation that is bad now and only going to get worse if we fail to act.
Representative Steele, please go ahead.
Thank you, Chair. You know, it was interesting to hear Chair Cosser point out that he heard a lot of difference of opinion and testimony when, in fact, what I'm hearing is a lot of – and you made some great points, and that was an interesting discussion that came from your comment. But what I'm hearing is a lot of consensus from this panel. And the points of consensus are largely that, yes, we're in a bind here, and something's got to be done. And that this bill is an excellent starting point, and there's great potential here to really solve this problem that is facing Pennsylvanians and the people that we represent in a big way. In fact, in Pennsylvania, the situation is dire. That point was made loud and clear and really requires urgent action. So I greatly appreciate this conversation. All of your testimony, the chairs work on this issue, and I'm excited to see this conversation move forward. Just a quick point of clarification. If somebody could please explain to me, I'm hearing that the merchant generators would have to prove purpose other than generating load. So if somebody could just expand upon that, please. I would appreciate it. Thank you.
Do you want to? I had it. Yeah, so the bill currently – oh, it's on. Okay, can you hear me? All right. So the bill currently says, under the definition of large customer generator, that to qualify, the customer must have an electric load that is independent from the alternative energy system, and that serves a purpose other than to support the operation, maintenance, or administration of the system. So, you know, thinking about the merchant generator that may have multiple solar panels on, like, farmland, right, and then there's, like, a barn with a light bulb, right, and then the other, you know, usage is just to support the system. So it's to avoid that kind of scenario, which I think is the concerns, consensus concerns over merchant generate. So if I may, I think Mel is right. I think what we're saying is when you look at where we are today, you could have multiple solar panels on, say, a 10-acre site, and it's just broken up into different companies, and they're all cut off at that 3-megawatt threshold. So they're different arrays that are all sort of incorporated differently. and the only electric usage they may have is maybe a panel on the solar system itself There no actual usage on site but they getting that full payment for that minimal use of electricity Contrary if you have an active working farm that has solar panels with it or you have a home with a residential customer who invested in the system and put solar panels on the roof, they're using electric every single month. They're consuming, right? And they're using the solar panels to offset their usage. The situation with some merchant generators is but for the net metering policy. They wouldn't be there. Or to add to that, they wouldn't be participating in that metering. It's possible that they'd still be there, but their option then would be to interconnect directly to the PJM grid. And that's the point of the purpose of compensating them at avoided cost because that's what they would get if they were participating in the market. So it's an adequate incentive for these large customer generators. And it's also, that was the provision, that was the PUC reg that was struck down by the court. So the PUC did a reg that said, but it was for all generators. It wasn't, you know, we weren't separating out, you know, warehouse roofs or industrial sites. All merchant generators, you were limited to that. And then that's what the court struck down, so that's why it's wide open now.
Thank you for the question. Thank you for the answer.
Joining us in person also is Rep. Kephart, for the record. Final member question for panel one comes from Representative Williams.
Thank you, Madam Chair, and I'll be quick about this so we can get on to panel number two. My read of this bill, having worked in the net metering problem for many, many years, I'm looking for the opportunity for a policy statement and legislation that stops shifting costs from one class, not one class to another, but from solar generators to non-solar generators, regardless the class, whether it's large, small, commercial, or residential. And the part that was not being said out loud is that, especially on the residential side, they're able to avoid their distribution costs. And now we've defined that into the bill. We've said the ugly part out loud right in the middle of the bill that the full retail value now includes the entire bill, generation, capacity, transmission, and distribution components of the entire bill would be offset. Someone has to pay for that. Chairman DeFrank, I'm going to direct it to you. I always get fantastic answers that are, I think, cut straight to the quick on these things. Is it not true that if we define the full retail value to include all four components of the bill as being offset by solar or whatever the renewable system is, that someone else has to pay the costs.
Yes, I said that in my testimony, that they don't just disappear. Those costs are absorbed by some. Right now, it would be by the rate class. What I've testified earlier before in front of this committee was those costs, it's too small of a rate class, it's small commercial. They will not be able to absorb those costs. I assume EDCs will come to us and say, okay, we need these costs absorbed. There is no other rate class for us to absorb them over other than residential.
And the reason I asked that question is, you know, in person now, and I did read your testimony, in person now we hearing that this bill would help offset subsidization at the small commercial level or small business level except that this is directly impacting the bills of residential customers our rate payers our constituents This is going to, again, aggravate their cost, is it not?
It is. You know, as I pointed out, I mean, the issue is these other tiers. So the large customer class that OCA talked about, I don't know any generator that's going to go in that class. I mean, I guess you might have some school. I would know no generator without load that would go in that class because if you're capping it at 200% of load and I have no load, why would I ever go into that class? So what the bill does is it limits the space available for these generators because now you either have to be in an industrial site or on a warehouse roof, which, again, I pointed out is a policy decision of the General Assembly. If you want to limit where these facilities can go, this is a way of doing that. But understand, you're paying for it or other ratepayers are paying for that in those increased costs.
My point is actually far more simple, which is defining full retail value to include generation, capacity, transmission, and distribution, even for one rooftop residential solar panel, shifts cost to everyone else. Does it not?
Yes. It does. I just may add real quickly, PICO is a very good example. The PICO service carrier does not have merchant generators. It does not have a large number of these large commercial generators we're talking about. But they do have solar rooftop, solar panels that are being compensated in the residential market. So their service territory is both in the city of Philadelphia but also in the suburbs of Philadelphia. The residents that live in the city of Philadelphia are subsidizing those in the suburbs that are able to put solar panels on their homes. So you have a distinction.
So Representative Williams, you're right.
The residents of the city of Philadelphia, they're really subsidizing those solar panels out in the suburbs. To the point of millions of dollars. Right?
My last comment is directed to the consumer advocate, and I'll be quick, Madam Chair. We've been fighting this issue for, I don't know, two decades, Chairman, probably, at least 15 years. 2011. Right, right. So about 15 years then. And to this point, the consumer advocate's job has been to protect consumers from subsidization from other people, whether it's other classes or policy. This is the first time in those 15 years that I've heard the consumer advocate say that promoting full retail price and net metering advances and promotes energy systems, alternative energy systems and penetration. Your entire mission is about controlling cost on consumers. You're not an environmental advocacy group. We have people that do that in our government. And I strongly suggest that you go back to the consumer advocate and remind him of what the mission is of the consumer advocate office. Thank you.
Thank you, Representative. You may respond, of course.
Thank you very much. So I think you know at the outset it important to note that cost you know the cost in the utility industry and for distribution service you know is recovered from all rate pairs And you know defining rate classes and how rate classes will recover those costs, you know, is a matter of rate design and something that's dealt with in rate cases. So net metering as a policy is saying it's okay with there being some subsidies, right, that residential customers with rooftops, solar, will be subsidized by their neighbors. That's what net metering says. So, and that currently is done at the full retail rate on a, and that's under the law, on a month-to-month credit basis. But at the end of the 12-month period for the excess generation, it's done according to the commission's interpretation at the current lower price-to-compare method. So already there's these inherent subsidies going on, and that's based on the General Assembly's policy decision to allow for net metering for purposes of expanding distributed energy resources. In terms of advocating for consumers and their interests, especially residential customers, we do anticipate energy prices to be increasing significantly due to the rise of demand caused by data centers on our PJM electric grid. And we do understand that there may be residential consumers who may want to invest in rooftop solar to help address their affordability issues. With that said, we would be remiss in not testifying here today about what residential customers have had to face with respect to that solar industry. For example, according to a CBS Pittsburgh report, the OAG's Bureau of Consumer Protection received 87 complaints in 2020 that jumped in 2024 to 227 complaints. The Consumer Financial Protection Bureau of the federal government had to issue warnings in 2024 relating to the amount of fraud and bankruptcy that's going on and alerted consumers to aggressive sales tactics and contracting risks, including hidden fees, misleading statements about federal tax credits, misrepresentations and omissions concerning prepayments, and misrepresentations of financial benefits in targeting certain consumers. meaning lower income consumers and basically having them enter into a raw deal. So with that, we are aware of the risks that residential consumers face with respect to all of these decisions. They're less sophisticated and have less means to address these risks and costs. That is why we support, if net metering were to be continued, that not just on the month-to-month billing credit, but at the end of the 12-month period, that that excess generation be at the full retail value. To your point, the distribution wires are not going to be ripped up. They're still going to be receiving distribution service, and to the extent they don't have excess generation, they'll pay that distribution rate. But we contrast this with the avoided cost rate for larger customer generators because that's really where the system gets expanded. It's more at a substation-substation level to meet the needs of these large customer generators, and that's why we support the avoided cost rate for larger customer generators. Thank you.
Thank you so much. I appreciate it. Thank you to all of our guests for being here today. Thank you to panel one. We will be in touch with follow-up questions. And we now welcome up panel two. Being mindful of the time, I know we're going to be We are short on it.
Joining us on panel two, Mark Schottinger, President and Chief Legal Officer at Solar Landscape. Todd Papasurgy, General Counsel and Vice President of Governmental Affairs at PA Independent Oil and Gas Association. Brett Reinford, Owner and Manager at Reinford Farms. Thank you for coming back.
I did not recognize you in the audience. You look different from when we visited your farm. We appreciate you coming to us.
and Chris Anderson, International Representative, IBEW District 3.
Thank you all for being here, and thank you for your testimony. As I said to Panel 1, please know members do have your written testimony in their packets. Feel free to summarize and make sure to leave hopefully a few minutes at the end for questions. Mr. Papasurji and Mr. Wallace, you may begin.
Thank you, Madam Chair, Chairman Causer, members of the committee. We thank everyone for the opportunity to testify. My name is Todd Papasurgy. I serve as General Counsel and Vice President of Governmental Affairs for the Pennsylvania Independent Oil and Gas Association. With me is Ben Wallace, our Vice Chair and the COO of Penteco Oil Company and Penteco Environmental Solutions. As Madam Chair indicated, we've submitted written testimony, and I'm providing a summary of that and answering any questions that anyone may have. As was mentioned a lot during the first panel, it's very obvious Pennsylvania is at an inflection point on energy policy. The question before us on House Bill 2348 is simple. Will we maintain a stable framework that encourages private investment while increasing energy supply, or will we move in an opposite direction? Respectfully, House Bill 2348 potentially moves us backwards, And it's because we are facing a real and growing supply challenge. Demand across PJM is accelerating, driven by advanced manufacturing, electrification, AI infrastructure. These are not intermittent loads. They require constant, reliable power. At the same time, we are retiring generation faster than we're replacing it. PJM has estimated that we are at an 80,000 megawatt gap in the next 10 years. between retiring generation and future need. That's roughly the equivalent of 30 to 35 large power plants. This is exactly the gap that customer generators can help close. AAPS, as originally designed, was built to encourage the types of resources that we've been talking about today. But they're projects that can be deployed quickly, financed privately, and located at or near the point of consumption. So that brings us to a question that might be on everyone's mind today. Why does an oil and gas association care about alternative energy sources? Well, let's be clear about a threshold matter. Pioga is here today advocating on behalf of customer generators, and customer generators are not merchant power plants. They've been used interchangeably throughout today's testimony so far, but even the bill itself does not speak to merchant generators. The bill, of course, speaks to large customer generators, but there's a big difference there. These are Pennsylvania businesses, manufacturers, farms, operators, who invest their own capital to produce energy on site. They reduce their demand on the grid, and when they produce excess, they supply power locally, regardless of the amount of power that is used on site. Customer generators including natural gas distributive energy projects are precisely that resource These don work very well at small scale either So when it comes to large customer generators, one of the things we've heard mentioned today is the 200% cap on generation. That doesn't work for the innovation that the AEPS Act was originally put in place and designed for. While Chairman DeFrank has talked about solar and community solar and rooftop solar in regard to APS, that's not what the Act says. The Act talks about the sourcing of available and environmentally friendly means to increase the load onto the grid so that we can have more generation. Every megawatt that customer generators generate is a megawatt that the system does not need to build, procure, or transmit. It is immediate and measurable value. So let's talk about how that works with House Bill 2348. First, shifting the composition from full retail value to avoided cost without any other guide rails on it could undermine project viability. It's one thing to talk about avoided costs. It's one thing to talk about a 200% cap. It's completely different to talk about both. that would completely reduce the innovation that is available currently under the AAPS Act. AAPS requires EDCs to acquire and sell electric energy again from renewable and environmentally beneficial sources. That brings me to another point in the Act. There's a new definition in the Act of what's called a preferred site. A preferred site clearly implicates areas of environmental concern, such as brownfields and abandoned coal areas. Within the current framework, Pennsylvania's conventional natural gas producers have the ability to turn molecules into electrons in innovative and significant ways that would be environmentally friendly. Just a few hundred wells fed into an AAPS-eligible distribution system can power hundreds of homes with electricity, increasing energy availability and affordability with adding environmental benefits such as reducing the need to plug wells that otherwise might be abandoned. Legacy conventional natural gas wells would fit perfectly within the paradigm, clearly considered in the new preferred site definition, by extending the life of natural gas wells, which of course, as we all know, is an already existing energy source, while at the same time saving the Commonwealth potentially hundreds of thousands, if not millions of dollars in potential plugging costs. Second, the Act imposes a September 1, 2025 cutoff date for full retail eligibility. We would urge Chairman Fiedler or Chairwoman Fiedler and the committee to look at this hard because it's kind of a deadline without a full definition. If we have a deadline in place that can extend the life of bringing innovation into the Commonwealth, that's something that Pioga could get behind. But just a strict 2025 deadline without thinking about future projects kind of misses the point of the innovation of the AAPS Act. Notwithstanding that, and something that is not explicit within our written testimony, natural gas distributive energy projects can work on something in between full retail price and the avoided cost with the 200% cap. There's an important caveat here, especially because of energy volatility. Avoided costs could work for these types of projects, so long as it is not on a spot pricing basis. If there is some sort of longer runway so that we have predictability in pricing and predictability of viability There could be some sort of compromise there that Pioga would be happy to work on the committee with in finding some sort of way to fit that within the new paradigm that House Bill 2348 posits Finally, transferring significant policymaking authority to the PUC over pricing, eligibility, and participation caps. These are core policy decisions that should be left to the General Assembly and not given to the PUC. Clear policy drives investment, and uncertainty discourages it. The more that discretion is placed within the PUC, the less predictable the economics may become. When investment is discouraged and stops, the supply and the innovation that is critical to the AAPS Act will stop with it. And that's a perfect segue for me to turn the mic over to Mr. Wallace, who will describe how these concepts impact natural gas distributive energy projects actually on the ground.
Thank you. Good morning, Chairwoman Fiedler and Chairman Couser and the entire committee. We appreciate the opportunity to testify before you. My name is Ben Wallace. I'm the vice chair of Pioga and the chief operating officer of Penteco Oil Company and Penteco Environmental Solutions. One elephant in the room that we're missing is that the grid needs supply. So I would like to bring this discussion out of policy and into real-world projects because many are not familiar with how this legislation affects natural gas distributed energy projects. In Westmoreland County, one of our member companies invested over $45 million over several decades developing natural gas wells that support local communities and businesses. Many of those wells are now low-producing but remain vital to the overall energy profile and stability in Pennsylvania. Instead of abandoning these wells, this operator invested in a distributed generation project, a combined heat and power system that produces 2.5 megawatts of electricity. This is exactly what AEPS was meant to encourage, using existing resources more efficiently, producing reliable power, extending the life of infrastructure, and shedding load from the already stressed grid. But that investment came with real costs. They spent over $2.5 million in project development and an additional $750,000 required for utility system upgrades. And I'll add that those utility system upgrades were installed by union electricians at prevailing wage because they're on the utility system. These upgrades become utility-owned assets. They strengthen the grid, but they are paid for and financed entirely by the customer generator. Accordingly, this project or these projects only work because there is a predictable compensation framework. If that framework changes, the economics collapse and projects like this stop. At Penteco, we have a similar opportunity in Allegheny County. We operate over 950 wells, including a field of more than 200 stripper wells near one of the largest waste disposal facilities in Pennsylvania, which is operated by us. That site has all the elements essential for distributed generation. We have on-site fuel through the wells. We have consistent industrial electrical demand. And we have a legitimate industrial use for waste heat to generate waste cooling. We are prepared to invest more than $5 million in a project that would add 2 to 3 megawatts of power to the grid, would reduce strain on an already constrained system by shedding our load from the local grid. It would power the equivalent of several thousand homes, and it would improve efficiencies through combined heat and power But unfortunately that private investment by our company is on hold It not because the technology doesn work or the equipment is not available It's because the policy framework currently is uncertain. Capital cannot be deployed where regulations are uncertain. There are broader issues that the PUC has not addressed. By Chairman DeFrank's own testimony, he referenced approximately 600 applications. If those applications were 2 megawatts each, that's over 1,200 megawatts of new infrastructure currently in the pipeline ready to be financed. Unfortunately, we do not have a complete accounting of the benefits of these customer-generated facilities. We do not know how much load they offset, how much infrastructure they fund, or how much energy they contribute locally. yet major policy changes are being considered without that full picture. What we do know is this. Customer generators reduce demand, add supply, and invest private capital into the grid.
Mr. Wallace, I hate to interrupt you. I do, I just want to ask for a bit of brevity if you would. I know members have a hard out at 11 to get to session, and so just want to ask to make sure we can get to the other panelists.
I have two more sentences. You may give them both. What we do know is this, customer generators reduce demand, add supply, and invest private capital into the grid. At a time when Pennsylvania needs more energy, we should be enabling these practical deployable projects, not creating barriers to them. On behalf of Pioga's 300 member companies, we thank you for the opportunity to present to you today.
I thank you so much. Mr. Schottinger, you may go ahead.
I'll try to be quick. Thank you, Chair Fiedler, Chair Causer, and all the members of the committee. So I'm Mark Schottinger. I'm one of the owners of Solar Landscape. I'm president and chief legal officer. We're the biggest in the country at doing this one particular kind of energy project, which is warehouse rooftop solar. So we lease warehouse rooftops from our real estate partners, cover the roof and solar, pump the electrons back into the grid. We have over 170 different real estate partners, and they represent hundreds of millions of square feet here in Pennsylvania, which is gigawatts worth of new generation. Obviously, there's an energy crisis here in Pennsylvania. I won't belabor that point. The point I want to leave everybody with is that warehouse rooftops are a really low-hanging fruit to mitigate this energy crisis. We had a study performed by the Brattle Group in 2025 that you all can have if you don't already have it, where they looked at, hey, if there was two gigawatts of warehouse rooftop solar in Pennsylvania, what would be the impact on rate payers? And their conclusion was that rate payers in PA would save $1.8 billion. So that's not theoretical. That's real. The cause of that savings is really two things. Primarily avoided production costs. So they mapped out the hours of the day when the solar from these warehouse rooftops would be generating electrons into the local distribution grid. and during those same hours of the day, the fuel prices in the PJM are very, very high. So you're getting a free fuel electron where the fuel is the sun on the local distribution grid at the same time that you could have instead been paying a lot for a very expensive fuel electron from the PJM. The other piece of that savings is avoided transmission and distribution costs because we're siting these projects literally on top of and next door to and down the street from where people consume electricity. So there's been a lot of talk about merchant generators who are putting a big solar project in a field in the middle of nowhere with a light bulb of load. That's never the case with warehouse rooftop solar. This is the intent of net metering is you're putting these things on commercial industrial warehouses, and there's always load there, and there's always load next door and down the street.
You're putting generation close to load. You're avoiding transmission and distribution wire upgrades that would otherwise need to be made at scale, and ratepayers pay for those. We have billions of dollars worth of these projects, so billions of infrastructure investment in Pennsylvania that we've been developing. The recent court case that sort of pulled the rug out from under all of this means that we're putting a stop right now to those projects. This bill is something that would let us get back to work. Aside from the $1.8 billion of ratepayer savings that would come with getting back to work on these projects, every 500 megawatts of them that we do creates about 4 million man-hours of jobs, construction jobs for local Pennsylvanians. So there's real economic development opportunity here from these projects. And HB 2348 really gives us the clarity and the certainty around how these projects would be structured and compensated, that we can go out, finance them, and get back to work. the bill is great we have a couple of small tweaks that we've submitted that we think could make it clearer so that there's no sort of opportunity for misinterpretation of the bill in the future I won't belabor those points here because you already have the written testimony but I appreciate your time thank you
thank you so much and we do love to hear about ways to save customers money so thank you for emphasizing that Mr. Reinford thank you for joining us We were very glad to join the Agriculture Committee back in the fall to visit your farm in Juniata County. Thank you for joining the committee, and you may go ahead.
Good morning, Chairwoman Fiedler. Thank you, and good to see you again, and thanks for coming out to our farm and bringing the group. Chairman Couser and members of the committee, my representative, Mr. Stambaugh.
If I could ask you to get as close.
Yep. Yeah, I know it's odd, but thank you.
No, that's fine.
So my comments are just about three minutes. So my name is Brett Reinford. I'm a second-generation dairy farmer in Mifflintown, Pennsylvania. Our families farm about 1,100 acres and milk about 700 cows. We own and operate an on-farm anaerobic digester since 2008, with the second one being operational in 2019. And so thank you so much for allowing me to present today. We appreciate that you're recognizing that digesters need to be part of this conversation. We appreciate wholeheartedly the effort behind House Bill 2348, and my comments today are just in reference to on-farm digesters. Digesters are a core part of our operation. They allow us to convert manure and food waste into renewable electricity while improving nutrient management, reducing emissions, and strengthening our farm's overall sustainability. farm digesters like ours can be found across the commonwealth of pennsylvania but digesters only work if the economics work these systems require millions of dollars of upfront cost with long-term commitment that is why fair full retail net metering is essential when we send excess electricity back to the grid being compensated at retail rate makes these projects financially viable Without that future digester projects simply will not be built and existing ones will be almost impossible to maintain I have a few questions and comments for clarification regarding the bill. First, would farmers need to comply with the preferred location and caps, like the 200% cap that's currently being proposed? If so, we need to understand where these systems would be encouraged and ensure that arbitrary limits do not unintentionally restrict growth of these systems on farms. Second, digesters are long-term infrastructure designed to operate for generation. Because of that, we believe that time limits should not be placed on them. For example, the 20-50, 25-year time limit does not align with real-life dairy digesters and creates certainty and discourages investment. digesters last a lot longer than 25 years. And third, Section 7D appears to give the PUC the authority to take back any retail rate benefits that we might garner from this particular bill. And so farmers need long-term certainty, and that cannot be allowed if we are planning on making investment into digesters on farms. So without net metering, a full retail value, especially for systems up to 3 megawatt, and projects like ours become unworkable. That compensation is the primary revenue that supports these investments, and changing the game for farmers after they've already invested millions of dollars under existing policies strands the capital and discourages future upgrades and investment. Digest to provide real value, we manage food waste that would otherwise go to landfill, we reduce methane on farms, we generate reliable local energy, and create additional revenue in this industry with very tight margins. It is also important to recognize that digesters represent a small but impactful part of Pennsylvania's energy portfolio. There's over 30 operating in Pennsylvania today, which I'm guessing is less than about 20 megawatt of total power. And there would be potential for some growth, but not a lot. but their impact on agriculture and the environment is really significant. So what farmers need most out of this bill is certainty. And if we can get this policy right, Pennsylvania can support dairy farms, strengthen royal economies, and reduce emissions while leading in sustainability on agriculture. So thank you for your time. Thanks for letting me be a part of this, and I'm happy to be a resource.
Absolutely. Thank you, and thank you for the questions you posed in here. I want to make sure you get complete answers, so I can promise if we don't get to it in the next few minutes, we will get you and all the members of the committee the full answers to your questions. Mr. Anderson, thank you for joining us. Please go ahead.
Thank you, Chair Fiedler, and thank you, Chair Causer, members of the Energy Committee. I appreciate the opportunity to testify. I Chris Anderson here on behalf of the 44 members of the International Brotherhood of Electrical Workers We represent folks in all phases of the construction production transmission and distribution of electricity and we understand the importance that solar will play in the energy future of Pennsylvania. I'm not going to sit here and lie to everyone and say that this is the silver bullet that will solve all of our energy issues, but it is a key cog in the wheel of what our energy future is going to look like and how we help regulate costs for consumers. You know, on top of being a labor advocate, I'm also a consumer advocate because my members share in the day-to-day concerns about what those electricity costs are going to look like going forward. So we're trying to recognize and balance the ways that we can help build out an affordable and reliable energy grid with respect to meet the energy demands. We recognize the depth of all the technology that's coming online and how do we meet those demands. as well as protect consumers. We're going to remain steadfast in our support for sound policy that puts consumers at the forefront and helps employ our members. I look forward to working with the committee on developing sound policy. Thank you.
Thank you so much. I'll ask one brief question, if I may. I'll direct it to you, Mr. Schottinger. Obviously, we're facing an energy crisis in Pennsylvania and much larger nationally. Can you just tell us briefly how fast can you get these systems up generating power, and what is the cost of these projects compared to other forms of energy?
We can get a project on a big warehouse rooftop up and running in as little as 12 months, which to put that in context, the typical energy project is looking at five-plus years. The reason that we go so fast is we have rinse and repeat site control. So all of our real estate partners that have roofs here in PA, we already have site control documents. We interconnect at the distribution grid with the local utility instead of having to go through the PJM. So it's a six-to-eight-month interconnection process instead of a five-plus-year interconnection process. And then this is truly unique to what we do. I think there's zero NIMBY issues, right? So we've never had a NIMBY protest over a warehouse rooftop solar project. The project is effectively invisible up on the roof. In terms of cost, warehouse rooftop solar projects are more expensive for my company, right? It's not more expensive for rate payers. It's more expensive to build on a warehouse rooftop because we have to lease the roof from a real estate company compared to siting a project on the ground sort of in the middle of nowhere. You can get a cheaper cost for dirt than you can for a warehouse rooftop. So in order to do these projects at all, we need to make sure that they're compensated at a rate that enables us to finance and build the projects. and this bill would enable that to happen and give us the certainty around the financing so that we could go make the investment.
Thank you for that. Chairman Couser? Thank you, Madam Chair. I guess my brief question will go to the gentleman from Pioga. Often the discussion automatically goes to solar, but your testimony is very interesting in that talking about natural gas a resource that very plentiful here in the state In your testimony you talk about some suggestions certainly for the bill and suggestions for maximizing this but how would you envision this working with the number of wells that we have in Pennsylvania, not even talking about drilling new wells, the number that we have in Pennsylvania, how can we maximize the situation so that we can generate as much energy as we can to get that out of the grid.
This bill, or the Alternative Energy Portfolio Standards Act, is a match made in heaven for shallow conventional wells. The cap on 3 megawatts for AEPS projects is small enough that there's really no more cellless operators that will participate in that. They have way too much gas, and it's just too small for their operations. But for shallow wells, you have these conventional long-life wells that last perhaps 100 years, and they make very few MCF per day each. But when you take a field of about 200 of them and aggregate them into one, you can easily run a 2 to 3 megawatt system. So these fields are often in areas that are more rural, that are stranded, or they're in areas where there's a lot of competition for pipeline space, which right now there's not a lot of pipeline space because of Marcellus gas. So you take those several hundred thousand traditional wells, and they can generate electricity into the grid. Currently, a lot of them operate compression, where they compress into pipelines. It's an electric machine that pushes gas. You just flip that around. You take a natural gas-fired engine, and you put a generator on it, and you connect it back to the grid. So to the extent that this program lives on, it is absolutely a great way to give new life to those wells and to make them a valuable part of the energy backbone in Pennsylvania.
Thank you very much. Thank you so much. Seeing no member questions, I'd just like to thank all the members, testifiers, and guests for joining us. I do truly believe we gathered some important information today that will inform the legislative process. And the one piece that is clear to me is that the legislature must act. The status quo right now is not serving our needs. Certainly as we get deeper into an energy crisis, it will not. And we need to balance many factors, right, focusing on customers, balancing the needs of farmers, small businesses, and trying to get more energy online ASAP. Not a small task. But I think it's really what our constituents expect of us as a full-time legislature, is thoughtful action and legislating. So I thank all of you for being here. I look forward to working with Chairman Causer and the members of the committee. We will be in touch, and thank you again. Have a great day. Thank you. Thank you.