Background
Williams Companies plans two solar photovoltaic systems, each with roughly 11 megawatts of capacity, beside natural-gas compressor stations in Wyoming and Columbia Counties. Its pipeline subsidiary, Transcontinental Gas Pipe Line Company, operates the stations and buys electricity from PPL Electric Utilities. The proposed arrays would connect to the stations’ internal electrical systems, and the stations would consume the generated power directly. The electricity would not pass through PPL’s distribution grid or a regional transmission system.
Williams asked the Pennsylvania Public Utility Commission to declare that the projects could generate solar renewable-energy credits under the Alternative Energy Portfolio Standards Act, known as the AEPS Act. Those credits help electric distribution companies satisfy Pennsylvania’s renewable-energy requirements. Williams relied on Act 40 of 2017, which says a qualifying solar system may directly deliver its electricity to a retail customer of an electric distribution company operating in Pennsylvania.
The PUC denied eligibility. Reading Act 40 together with the AEPS Act’s definition of an “alternative energy system,” the agency concluded that a project still had to connect to a utility distribution system or regional transmission system. Williams petitioned the Commonwealth Court for review, presenting a first-impression question about whether Act 40 created an independent direct-delivery route to solar credits.
The Court’s Holding
The en banc Commonwealth Court reversed. Judge Michael H. Wojcik’s opinion held that Act 40 permits a solar photovoltaic system to qualify when it delivers electricity directly to a retail customer of a Pennsylvania electric distribution company, even without grid interconnection. Transco was PPL’s retail customer, and Williams proposed to send the solar electricity directly into Transco’s compressor stations. The projects therefore fit the statutory text.
The court rejected the PUC’s effort to import the older AEPS Act interconnection requirement into every Act 40 pathway. Doing so would erase the practical distinction between Act 40’s direct-delivery language and its separate provisions addressing delivery to a distribution system, connection to a cooperative or municipal system, and connection to the transmission grid. Pennsylvania statutory construction disfavors readings that make enacted language mere surplusage.
The court also concluded that Act 40, as the later enactment, controls any irreconcilable conflict with the AEPS Act. Direct delivery supplies an additional compliance route rather than an absurd or unintended result. President Judge Cohn Jubelirer dissented, reasoning that Act 40 should be harmonized with the existing eligibility structure and did not eliminate interconnection. Judge Dumas concurred in the result, emphasizing that the newer statute prevails because the provisions conflict.
Key Takeaways
- A Pennsylvania solar project can qualify for solar renewable-energy credits through direct delivery to an electric utility’s retail customer.
- The power need not enter an electric distribution company’s grid or a regional transmission network.
- Act 40’s direct-delivery language is an independent eligibility pathway that cannot be read out of the statute.
- The decision applies to large behind-the-meter projects even when they are too large for ordinary net metering.
Why It Matters
The ruling materially expands the class of Pennsylvania solar projects capable of generating valuable credits. Industrial facilities, pipeline operators, manufacturers, and other large retail customers can structure on-site or adjacent generation to serve their own load without routing electricity through the grid. Developers and financing counsel may now model credit revenue for projects the PUC previously viewed as outside the program.
Regulatory practitioners should document the retail-customer relationship and the physical path of delivery. The holding does not dispense with Act 40’s Pennsylvania geographic requirements or other certification rules; it resolves the particular interconnection obstacle. The divided opinions also identify a likely issue for further appellate review, but unless changed, the majority’s declaration binds the PUC and supplies a new compliance pathway for direct-delivery solar development.
Utilities and credit-market participants will also need to adjust certification review and contracting assumptions. The decision treats reduced grid use as compatible with the portfolio program rather than a reason for exclusion. Parties negotiating power-purchase or credit-sale agreements should allocate the risk of later appellate reversal, confirm metering and verification requirements, and avoid assuming that behind-the-meter status alone answers eligibility. The precise project design and customer relationship will remain central to agency review.