PUC to Review Interconnection Regulations as Electric Demand Rises

The rising demand and cost for energy has put the issue at the forefront of policy discussions at both the federal and state levels.

Regional electric grid operator PJM Interconnection has been struggling to streamline and update its regulations to be able to quickly connect new power generation project to the grid at the same time it is seeing a rapid increase in electric demand from data center operators and other large-load customers.

This has led to a supply-demand imbalance and rising energy prices that are being passed along to utility consumers. Policies have also not kept up with evolving energy technologies, including renewable energy sources, distributed energy, and battery storage, leading to uncertainty and confusion.

In Pennsylvania, Gov. Josh Shapiro has been vocal about the need for new energy policies and worked to push PJM to develop regulations for data center interconnections. He has also advocated for advancing policies to speed up permitting and promote renewable energy.

Now the state Public Utility Commission, which oversees electric utilities in the state, has voted to undertake a universal review of its interconnection regulations. This will include studying “how new electric load, upgrades to existing load, and distributed energy resources are connected to the distribution system,” a press release states.

PUC Vice Chair Kimberly Barrow, who introduced the motion for review, said that the agency’s interconnection regulations don’t involve just the wholesale electric market, but also distributed energy systems, which connect to local utility distribution lines rather than the PJM grid. Distributed energy systems include residential and small-scale solar, wind, biomass, and other renewable energy sources.

In Pennsylvania, the Alternative Energy Portfolio Standards were developed in 2004 to promote the adoption of renewable energy. The AEPS requires utilities to get a specific percentage of their electricity from alternative resources. It also allows residential and small solar customers to send surplus power from their systems to the distribution system and receive credits to reduce their electric bills, known as net metering, which provides an incentive for adoption.

Barrow’s motion states that the AEPS regulations are in need of a general update, and also do not include emerging technologies, such as battery storage. In addition, revisions to PJM policies will give states greater responsibility for projects that want to send electricity to the wholesale market, but connect to utility distribution lines. This would include “merchant-generators” who build small-scale solar projects to connect to the distribution system and receive net metering credits, but with most of the power being sent to the grid.

The issue of merchant-generators profiting from net metering has been contentious, and utility companies argue that they are forced to buy the power at rates higher than the wholesale rate and pass along the costs to other residential and business customers. After the notice of rulemaking is published in the Pennsylvania Bulletin, a public comment period will open.

Also in late December, S.B. 1019 was introduced in the state Senate that would tighten the net metering regulations to eliminate merchant generation, and to preserve state financial incentives for locating solar projects on underused and low-impact sites, such as brownfields, warehouse rooftops, and parking canopies. It was referred to the Consumer Protection and Professional Licensure Committee.