Roger E. Clark, Esq.The Reinvestment Fundroger.clark@trfund.com215.574.5814

Drexel University

Great Works Symposium: Vital Systems of CitiesEnergy

November, 2, 2010

The Reinvestment Fund (TRF)

Real Estate Development

Policy & Information Services

Business Lines

Lending and Investing

Private, nonprofit community development financial institution

Founded in 1985 - energy lending since 1993

$1 billion in cumulative investments and loans throughout the mid-Atlantic

Currently manage $670 million in capital from 800 investors

www.trfund.com

PolicyMap

U.S. Energy Consumption

U.S. Energy Consumption by Source, 1635-2000 (Quadrillion Btu)

Source: U.S. Department of Energy - Energy Information AdministrationAnnual Energy Review 2009http://www.eia.gov/emeu/aer/contents.html

U.S. Energy Overview

Total Energy Consumption by Sector

Petroleum Overview

Petroleum Consumption by Sector

Petroleum Imports

Pennsylvania Energy - Oil

The Drake Well in Titusville, Pennsylvania, was the world’s first commercial oil well

Western Pennsylvania was the site of the world’s first oil boom.

In 2005 Pennsylvania produced about 3.6 million barrels of crude oil (1 barrel = 42 gallons.

Most oil wells in the state produce only a few barrels of oil per week.

Pennsylvania is the leading petroleum-refining State in the Northeast.

PA Oil Production

Natural Gas Overview

Natural Gas Consumption by Sector

Pennsylvania Energy – Natural Gas

In 2005, Pennsylvania produced about 168 billion cubic

feet of natural gas.

Average gas well production is less than 11 Mcf

(thousand cubic feet) of natural gas per day.

Major natural gas pipelines cross Pennsylvania

PA Gas Wells

PA Production of Natural Gas

Marcellus Shale

Marcellus Shale

U.S. Geological Survey has reported estimates of recoverable gas reserves in the Marcellus shale at 1,925 billion cubic feet (Bcf) (Milici and Sweezey, 2006).

Industrial and academic assessments vary from 50 to 500 trillion cubic feet (Tcf).

A recent study by Kuuskraa and Stevens (2009) report Marcellus shale gas recoverable reserves at 100 to 200 Tcf.

PA General Assembly failed to pass a natural gas severance tax. 

Pennsylvania Energy - Coal

Pennsylvania produced 65.4 million short tons of coal in 2008

Ranks 4th in US production (behind Wyoming, West Virginia and

Kentucky)

Pennsylvania sells about one-half of its coal output to other

States throughout the East Coast and Midwest.

Coal provides 52% of PA’s electricity generation.

  

Nuclear

Pennsylvania Energy – Nuclear

The first commercial U.S. nuclear power plant came online in 1957 in Shippingport, PA

Pennsylvania ranks second in the U.S. in nuclear power generating capacity – 9,300 MW

Nuclear is 21% of PA’s electricity generation. Nuclear plants:

– Beaver Valley Power Station (FirstEnergy)– Limerick Generating Station (Exelon Nuclear)– Peach Bottom Atomic Power Station (Exelon Nuclear)– Susquehanna Steam Electric Station (PPL Susquehanna LLC)– Three Mile Island (Exelon Nuclear)

Pennsylvania Energy - Renewables

Wind – 748 MWs of wind capacity in 17 projects

Solar – 11.31 MW in 805 installations

Hydro – 751 MW in 6 facilities

Biomass – very modest – a few cogeneration facilities at some lumber sites

Electric Utility Retail Sales by Sector

Pennsylvania Energy - Electricity

Net summer generating capacity - 45,130 MW

Annual Generation - 222,350,925 MWH

Annual Consumption -150,400,589 MWH

Capacity GenerationCoal 41.0% 52.9%Nuclear 20.7% 35.4%Natural Gas 21.1% 8.4%Oil 10.1% 0.4%Hydro, Wind & Other 7.1% 2.9%

The History of PECO

Started with the Brush Electric Light Company of Philadelphia, 1881.

Thomas Dolan convinced ten of Philadelphia's wealthiest entrepreneurs to invest in a company in "the business of manufacturing, procuring, owning and operating various apparatus used in producing light, heat, or power by electricity or used in lighting buildings."

The new venture traded a 50 percent share, or $100,000, of its stock for a license of the Brush arc dynamo, an electric generator that was then considered the best way to generate power for lighting.

John Wanamaker’s Store - 1878

Charles Brush’s home in Cleveland - 1887

The Urge to Merge

Brush merged with The United States Electric Lighting Company of Pennsylvania, 1885 - formed the secret "Electric Trust" (a holding company) in 1886.

The Trust soon acquired or controlled four more small local utilities.

Local entrepreneur Martin Maloney hoped to eliminate wasteful competition by consolidating Philadelphia's electric companies and standardizing service. He chartered the Pennsylvania Heat, Light and Power Company in 1895 and immediately began to acquire competitors, Columbia Electric Light Company and Philadelphia Edison Company.

In 1896, Maloney's Pennsylvania Heat acquired the Electric Trust and all its subsidiaries.

In 1898, Maloney absorbed five of Philadelphia's eight remaining independent arc lighting companies.

The Chester facility was Philadelphia Electric Company's first expansion outside of the city.  The Chester Generating Plant was actually built by Delaware County Electric Co. before merging with Philadelphia Electric. The coal and oil burning plant closed around 1980.

Photo - Jeffrey Totaro - http://www.inliquid.com/art/photo/totaro/totaro_c.shtml

The Wharf at Rivertown

Crosby St. Substation and the Famous Chester sign – 1926Photo courtesy of John Harrison, Aston, PA

Marketing to Philadelphia Homeowners

History of the Philadelphia Electric Company - 1881-1961

Nicholas Wainwright

 

Pennsylvania’s Electric Utilities

PJM

PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in 13 states and the District of Columbia - 51 million people

PJM dispatches about 167,795 MW of generating capacity over 56,350 miles of transmission lines.

Electric Choice

Electric Generation and Customer Choice Act Act No. 138 of 1996 -

http://www.legis.state.pa.us/WU01/LI/BI/BT/1995/0/HB1509P4282.HTM

Pennsylvania was among the very first states in the U.S. to allow electricity customers to choose the company that generates their electricity. The generation portion of the electric utilities were deregulated. The distribution and transmission functions remain part a regulated service.The law capped electric rates at 1997 levels for a set period of time. Rate caps for some utilities have already expired; all utility rate caps will expire by December 31, 2010.

Electric Choice

When the Rate Caps Expire

Penn Power 01/01/2007 UGI Electric 01/01/2007 Duquesne 01/01/2008 Citizens’ 01/01/2008 Pike County 01/01/2008 Wellsboro 01/01/2008 PPL 01/01/2010 Allegheny Power 01/01/2011 Met-Ed 01/01/2011 Penelec 01/01/2011 PECO 01/01/2011

Electric Choice Opens Up Generation

First wave of customer shopping saw a large voluntary

market for clean power

Voluntary market continues in various forms: PECO

Wind ($2.54 for 100 kWh of wind power per month) – up

to 40,000 customers

Clean power is part of the product offering now where

rate caps have expired

Shopping Statistics for PPL

Source: Pennsylvania Office of Consumer Advocatewww.oca.state.pa.us/Industry/Electric/elecstats/Stats1010.pdf

Residential Commercial Industrial Total

Number of Customers Shopping 411,760 72,665 1,001 485,426% of Customers Shopping 33.6% 41.2% 79.8% 34.6%Customer Load Served by Other Suppliers (MW) 1,324 1,787 1,630 4,741% of Customer Load Served by Other Suppliers 37.8% 81.7% 91.8% 63.5%

Rate caps in PPL ended 31 December 2009 Current shopping as of 2 October 2010:

Pennsylvania’s RPS

Pennsylvania Alternative Energy Portfolio Standard Act

Act 213 of 2004 / amended by Act 35 of 2007 Requires that an annually increasing percentage of

electricity sold to retail customers in Pennsylvania come from alternative energy sources. Up to 18% by 2021.– Tier 1 (renewable energy) – up to 8%– Solar Share – up to 0.5% - possibly 858 MWs– Tier 2 (alternative energy) – up to 10%

Established right to interconnection and net metering for alternative energy systems

AEPS Mechanism

All electricity sellers must utilize Alternative Energy Credits (AECs) for demonstrating compliance with the standard.

One AEC equals 1 MWh of electricity from a specific source.

AECs are sold or traded separately from electricity. PJM Generation Attributes Tracking System (GATS) used to track AEC transactions.

PA AEPS Program Administrator is Clean Power Markets, Inc. -  paaeps@cleanpowermarkets.com

AEPS website: http://paaeps.com

Future Energy Issues

The Politics of Energy– A new governor is being elected today– A new state legislature as well

Will political support for clean energy continue? Will Alternative Energy Portfolio Standards Act

percentages be increased? Will Act 129 utility conservation programs be extended

and expanded? Will state funding for clean energy be increased?

Local Reports

Philadelphia Greenworks Sustainability Plan - http://www.phila.gov/green/greenworks/PDFs/GreenworksPlan002.pdf

Philadelphia Local Action Plan for Climate Change – April 2007 http://dvgbc.org/files/resources/PhiladelphiaClimateChangeLocalActionPlan2007.pdf