COUNCIL OF THE CITY OF PHILADELPHIA2 COMMITTEE ON THE ENVIRONMENT3 Room 400, City Hall6 Philadelphia, Pennsylvania Monday, December 5, 20117 1:25 p.m. PRESENT: COUNCILMAN JAMES KENNEY, CHAIR10 COUNCILMAN FRANK DiCICCO COUNCILMAN CURTIS JONES, JR.11 COUNCILWOMAN BLONDELL REYNOLDS BROWN BILL 110829 - An ordinance amending Subcode "A" (The Philadelphia Administrative Code) of14 Title 4 of The Philadelphia Code, entitled "The Philadelphia Building Construction and15 Occupancy Code," by providing for the manner of payment of building permit fees when a16 solar electric or photovoltaic system is installed...17 18 - - -19 20 21 22 23 24 25 2 1
May I have2 your attention. The Committee on the3 Environment will begin the hearing by4 taking testimony, and then when we have a5 quorum, we will move to the public6 meeting and vote the bill out of7 Committee.8 With me is Councilmember9 Reynolds Brown. On the way are10 Councilman Jones and Councilman DiCicco.11 This is a public hearing of12 Bill No. 110829, which is an ordinance13 amending Subcode "A" (The Philadelphia14 Administrative Code) of Title 4 of The15 Philadelphia Code, entitled "The16 Philadelphia Building Construction and17 Occupancy Code," by providing for the18 manner of payment of building permit fees19 when a solar electric or photovoltaic20 system is installed, under certain terms21 and conditions.22 Kristin Sullivan, please.23 (Witnesses approached witness24 table.)25 3 12/5/11 - ENVIRONMENT - BILL 1108291
Good2 afternoon. Please identify yourself for3 the record.4
Good afternoon.5 My name is Kristin Sullivan. I am the6 Energy Manager for the City of7 Philadelphia.8
Good afternoon,11 Chairman Kenney and members of the12 Committee on the Environment. Again, as13 I said, my name is Kristin Sullivan and I14 am the Energy Manager for the City, but15 I'm also the Program Director for the16 DOE-funded Solar America Cities Program.17 I really appreciate your time here today18 and appreciate the support for this19 legislation.20 I'm here to testify on Bill No.21 110829, which was introduced by22 Councilman Kenney and proposes changes to23 the building permit fee structure for24 solar energy projects.25 4 12/5/11 - ENVIRONMENT - BILL 1108291 Target No. 4 of Greenworks2 Philadelphia, the City's comprehensive3 sustainability plan, is to purchase or4 generate 20 percent of electricity used5 in Philadelphia from alternative energy6 sources. Adopting this fee structure for7 building permits will help move8 Philadelphia closer to this goal by9 providing a reprieve for businessowners,10 residents or other entities that want to11 build larger-scale solar projects12 throughout the City of Philadelphia.13 The Mayor's Office of14 Transportation and Utilities, along with15 the Department of License and Inspections16 and the Mayor's Office of Sustainability,17 appreciate Councilman Kenney's office18 introducing this bill. We agree that19 this is a great complement to the20 recently passed Bill No. 110533, which21 improves the fee structure for electrical22 permits. These kinds of changes that23 help reduce the, quote/unquote, balance24 of system's costs are precisely what the25 5 12/5/11 - ENVIRONMENT - BILL 1108291 industry is calling for here in this2 region.3 We fully support this bill,4 which seeks to reduce permitting fee5 costs for solar projects built in the6 City by modifying the existing fee7 structure for building permits. The8 modification excludes the cost of solar9 panels and inverters in the construction10 value. Eliminating the cost of the11 panels within the construction value12 creates a more reasonable fee structure.13 The core intention of the bill is to14 provide reprieve for all sizes of solar15 projects. We believe that the reduction16 in fees will not adversely affect the17 City's revenue stream on any significant18 level.19 Providing this reduction in20 permitting costs can help to offset the21 current struggles in the solar market.22 To further add difficulty, the23 Pennsylvania Solar Renewable Energy24 Credit market is what many have been25 6 12/5/11 - ENVIRONMENT - BILL 1108291 tagging as suffering from success. The2 solar industry answered the call of the3 Alternative Energy Portfolio Standard4 with resounding reaction and provided5 more than enough SRECs, Solar Renewable6 Energy Credits, for state compliance.7 This success has caused the market slump,8 weakening the economics for solar9 installs both large and small.10 Supporting solar energy in11 Philadelphia provides a multitude of12 benefits for the City, residents and the13 region. More solar installations within14 the City will increase distributed15 generation, which reduces the need for16 conventionally fueled generation, reduces17 grid concession during high peak times,18 which is when solar installations are19 most likely providing electricity, and20 reduces emissions regionally.21 Furthermore, solar provides an important22 visual indication of the City's23 commitment to sustainability.24 Thank you, and I'm very happy25 7 12/5/11 - ENVIRONMENT - BILL 1108291 to answer any questions.2
Thank you3 very much. Just one question relative to4 the SREC issue. I thought that the rate5 in Pennsylvania was prohibitively low6 compared to New Jersey and that's the7 reason why people can't get their8 projects financed, because the SREC rate9 in Pennsylvania, which is a coal and10 gas-driven state, seems to be or is lower11 than, for example, New Jersey, which12 people can easily get financing for their13 solar projects. Could you --14
Sure. The15 market in New Jersey has been suffering16 for some of the same reasons as it has in17 Pennsylvania, but we've had more of an18 issue here because we have -- our19 set-aside is a lot smaller. That20 contributes to the fact that all our21 highest costs that we had seen in the22 solar SREC, a cost per megawatt hour of23 $259, whereas in New Jersey it went up as24 high as $659.25 8 12/5/11 - ENVIRONMENT - BILL 1108291 Another element of that was the2 way that the alternative compliance3 penalty was structured. So if you didn't4 comply to the Portfolio Standard that the5 state set, that compliance payment also6 dictated how low the cost would go. So7 we had a lower compliance payment as8 well.9
Okay.10 Could you please identify11 yourself for the record and proceed.12
Yeah. My name is13 John Young. I'm with the Department of14 Licenses and Inspections. I just came to15 answer any questions that Councilpeople16 might have had.17
For the18 record, could you give us an idea of some19 examples of what the average savings on a20 small residential or commercial project21 would be?22
Sure.23 Specifically for the building permits --24 well, in general, it's safe to say that25 9 12/5/11 - ENVIRONMENT - BILL 1108291 the building permit fee will be cut in2 half more or less in all cases. I think3 that's a fair generalization to make4 across all of the different sized5 projects.6 Specifically speaking, for your7 average residential installation that8 might be five kilowatts, whereas that9 would cost around $30,000, again10 depending on market prices for the11 panels, normally the panels and inverters12 cost about half of that. So before when13 we were talking about the construction14 value, you would have paid $25 per15 thousand dollars worth of the cost of16 that project. So $25 of the $30,000,17 which would be around $750. When you18 half that to not include panels and19 inverters, you're at 15,000 and you're20 paying 375.21
Okay.22 Any questions for these23 witnesses?24 (No response.)25 10 12/5/11 - ENVIRONMENT - BILL 1108291
Ron5 Celentano, Micah Gold and Courtney Lane.6 (Witnesses approached witness7 table.)8
Please9 identify yourself for the record and10 proceed.11
Ron Celentano.12 I'm the President of Pennsylvania Solar13 Energy Industries Association and a14 consultant.15
Good afternoon,18 Chairman Kenney and members of the19 Committee on the Environment. I'm Ron20 Celentano, as I said, President of21 Pennsylvania Solar Energy Industries22 Association, or PASEIA. 6 Among other boards that I'm on, I'm also7 on the Technical Advisory Board of the8 DOE-funded Philadelphia Solar City9 Partnership Program. I am here to10 testify on Bill No. 15 PASEIA, which represents over16 80 business members that work in the17 solar energy industry in Pennsylvania,18 very much appreciate the introduction of19 this bill by Councilman Kenney. Recently20 Bill No. 110533 was passed, which21 improves the electrical permit fee22 structure for solar photovoltaic systems23 by excluding the material cost of the24 solar PV modules and the inverters from25 12 12/5/11 - ENVIRONMENT - BILL 1108291 the permit fee calculation. It makes a2 lot of sense to align the building3 construction permit fee structure in a4 similar manner such as proposed in5 Councilman Kenney's Bill No. 6 Currently, there's about 5,4007 solar PV systems installed in8 Pennsylvania, totalling over 1219 megawatts of capacity. 12 Most of these systems were installed with13 the help of grants and rebates from14 various sources over recent years. The15 state funding sources now have been16 drying up to a trickle. The Federal17 Section 1603 Treasury Grant is expiring18 at the end of this month and the American19 Recovery and Reinvestment Act funds are20 exhausted. No one is expecting any of21 these funding sources to come back to22 life. 16 It also adds to slowing down the17 development of new projects coming18 online. 21 However, solar systems will22 continue to be installed in spite of the23 financial adjustments that have to be24 considered. That is why it is so25 14 12/5/11 - ENVIRONMENT - BILL 1108291 important to minimize or remove the2 barriers for implementing solar system3 installations such as with the electrical4 and building permit ordinance and fee5 structures. Philadelphia has been6 recognized nationally for making7 significant strides in this area with the8 help of the Department of License and9 Inspections, and by reducing the building10 permit fees for solar projects is one of11 the important obstacles that can be12 minimized for solar project development13 to continue to grow in Philadelphia,14 particularly for non-profit entities that15 cannot take advantage of any tax credits16 for this technology. 21 Therefore, PASEIA22 enthusiastically supports Councilman23 Kenney's Bill No. 2
Thank you3 very much.4 Whoever is next, please5 identify yourself for the record and6 proceed.7
Good8 afternoon, Chairman Kenney and members of9 the Committee on the Environment. My10 name is Micah Gold-Markel and I'm the11 founder of Solar States. Thank you for12 the opportunity to present testimony13 today on Bill 110829, introduced by14 Councilmembers Kenney and Reynolds Brown15 that aims to reduce building permitting16 fees for solar projects.17 This morning I'm coming from a18 30 kilowatt rooftop solar installation at19 Finanta, located at 1301 North 2nd20 Street. We are going forward with this21 project despite challenges in the SREC22 market that Ron and Kristin have spoken23 about and in an adverse environment for24 solar energy projects.25 16 12/5/11 - ENVIRONMENT - BILL 1108291 Recently -- this bill is2 particularly important because of recent3 developments in the solar market. Just4 last week, there was a ruling from an5 American company called Solar World,6 which has sued China or Chinese7 manufacturers of solar panels, to create8 a higher price for solar panels, and the9 International Trade Court, the ITC,10 recently found in favor of them, and we11 anticipate panel prices going up by a12 minimum of 10 percent in January.13 Now, the merits of this case14 can be discussed at length. Regardless15 of that, it means that the prices for our16 materials are going up. And we want to17 continue doing projects inside the City18 of Philadelphia. And what does this19 mean? Well, at Finanta we're not only20 putting solar panels up onto the roof of21 the building, we are also assisting PECO22 with upgrading their utility poles and23 transformers. We are trying to remain24 competitive so that we keep jobs in25 17 12/5/11 - ENVIRONMENT - BILL 1108291 Philadelphia rather than going over to2 New Jersey where the market is thriving.3 Currently, I believe New Jersey is second4 behind the State of California -- and5 this is hard to say for me -- in solar6 jobs, and we really want to be right up7 there with them.8 To get back to the anti-dumping9 case, we're going to see prices going up,10 and thus if we can see any reduction in11 regulatory prices and L&I costs going12 forward, that would greatly assist with13 continuing our push for installs in the14 Philadelphia area.15 Lastly, it's important to16 realize that solar installations create17 jobs across a wide array of skill sets.18 It's not just an engineer or19 college-educated person who gets to work20 on these installs. As I left the21 installation this morning, we had folks22 who were working on it with simply a high23 school degree who had been trained in how24 to properly install solar panels. So25 18 12/5/11 - ENVIRONMENT - BILL 1108291 from high school graduates all the way up2 to college graduates, to people who are3 engineers, there is a vast array of jobs4 available, and I think it's important5 that we encourage this sector to grow so6 that we can see jobs across all education7 levels.8 Thank you for your time, and9 I'd be happy to answer any questions.10
Then again11 I think I mentioned this at the last12 hearing, but I'm very happy for our North13 Bowl meeting up in Northern Liberties,14 which allowed us to meet each other and15 over a beer discuss all these issues, and16 I think that's some of our better17 legislation comes as a result of out18 there meeting and greeting people and19 hearing what they had to say. So thank20 you.21 COUNCILMAN DiCICCO: Absolutely22 over a beer, right?23
Well, he24 had one, too.25 19 12/5/11 - ENVIRONMENT - BILL 1108291 Councilman Jones.2
Yes,3 Mr. Chairman, and I'll be brief,4 considering I was late to your committee.5 By way of Arthur Ashe, they6 recently installed close to 100 panels on7 their roof. By way of pre this piece of8 legislation reducing the fees, what's the9 cost difference on something like that?10
For the11 electrical fees, I knew that we were12 cutting the cost about in half, and I13 anticipate roughly the same for building14 fees. So, for example, I'm not sure if15 there's a maximum on the building fees.16 I'm a little more familiar with the17 electrical fees, which I testified for18 before, but for the electrical fees,19 there was a max of $7,500, so we were20 seeing that cut in half.21 Generally when I run a budget22 for a project in the City of23 Philadelphia, I look at -- fees can come24 in anywhere from to percent of the25 20 12/5/11 - ENVIRONMENT - BILL 1108291 total install costs. It's significant,2 significant. So any reduction we can see3 in that certainly helps.4
And then5 finally, are we -- is the demand such6 that -- Councilman Kenney's been way out7 front on this issue. Can we see8 manufacturing expansions here?9
You know, I10 think it's certainly possible. It's all11 market driven. We want to see12 manufacturing here in the United States.13 And I think there's a common14 misconception that in China one of the15 reasons why they make cheap panels, at16 least in the solar industry, is because17 they have cheap labor or that they've18 devalued their currency. In fact, I19 don't believe that to be true. They have20 very advanced techniques. A lot of it is21 completely automated, so there's very22 little human labor involved with the23 manufacturing process. It's just a24 matter of having the intellectual25 21 12/5/11 - ENVIRONMENT - BILL 1108291 property and having the willpower to2 support this industry.3
And that's5 something that we lack. And as I like to6 finish all of my testimony, the sun is7 the source of all power, period.8
Thank you11 very much.12 Please identify yourself for13 the record.14
My name is Courtney15 Lane. I'm the Senior Energy Policy16 Analyst with the PennFuture Energy17 Center.18 Good afternoon and thank you19 for the opportunity to present testimony20 today on Bill No. 110829 that aims to21 reduce building permitting fees for solar22 projects. My name is Courtney Lane and,23 as I mentioned, I'm with an organization24 called PennFuture. PennFuture is a25 22 12/5/11 - ENVIRONMENT - BILL 1108291 statewide public interest membership2 organization working to enhance3 Pennsylvania's environment and economy,4 with offices in Harrisburg, Philadelphia,5 Pittsburgh and Wilkes-Barre. We've been6 working on promoting the development of7 solar energy in Pennsylvania since the8 passage of the state's Alternative Energy9 Portfolio Standard in 2004.10 First I wanted to start by11 stating that solar energy creates12 numerous benefits for Philadelphia.13 Solar energy improves the reliability of14 our electric grid by reducing demand15 during peak hours of the day, helping to16 prevent blackouts and brownouts. It17 provide a valuable hedge to electric18 consumers against fossil fuel price19 uncertainty, and creates local jobs. In20 fact, solar energy creates more jobs per21 megawatt hour of capacity than any other22 energy technology. The 2011 Solar Census23 stated that there are 4,700 jobs in24 Pennsylvania.25 23 12/5/11 - ENVIRONMENT - BILL 1108291 PennFuture supports this bill2 because it will encourage the growth of3 new solar installations and solar jobs in4 Philadelphia by reducing permitting fees5 for solar projects. If passed, this bill6 will also complement 110533 recently7 signed into law by Mayor Nutter, which8 reduces electrical permit fees for solar9 energy projects.10 Allowing for reductions in11 permit fees for solar projects is12 critical at a time when it's becoming13 harder to finance these projects. Many14 of the traditional tools available to15 finance solar systems are no longer16 available. As mentioned previously by17 others here today, solar owners used to18 be able to count on the sale of Solar19 Renewable Energy Credits to help finance20 our solar systems. However, due to the21 oversupply in the market, these credits22 have plummeted to a high of close to 30023 down to below $20 today. This makes it24 nearly impossible to finance a system on25 24 12/5/11 - ENVIRONMENT - BILL 1108291 the value of these credits alone.2 At the same time, federal and3 state funding programs for solar,4 including the Pennsylvania Sunshine5 Program, the Commonwealth Financing6 Authority, are almost depleted, and7 favorable lieu of tax credits at the8 federal law are also expected to expire9 at the end of the year.10 With these financial incentives11 becoming more scarce, the proposed bill12 will help reduce the cost of installing a13 solar system by reducing permitting fees.14 This will help encourage businesses and15 residences to make the long-term16 investment in solar power and will help17 to keep solar installers employed in the18 City and help clean up our electricity19 supply.20 Thank you for your time and21 consideration.22
Thank you23 very much for your testimony.24 Any questions for these25 25 12/5/11 - ENVIRONMENT - BILL 1108291 witnesses?2 (No response.)3
Seeing4 none, thank you very much.5 Anyone else to testify on this6 bill?7 (No response.)8
Seeing9 none, we now would like to acknowledge10 the presence of Councilman Jones and11 Councilman DiCicco, along with12 Councilwoman Reynolds Brown and myself.13 There's a quorum. And we will end the14 public hearing, convene the public15 meeting, and the Chair recognizes16 Councilmember Brown for a motion on Bill17 No. 110829.18
Thank you,19 Mr. Chairman. I move that Bill No.20 110829 be reported out of Committee with21 a favorable recommendation. I further22 move that the rules of Council be23 suspended so as to permit first reading24 at our next scheduled session.25 26 12/5/11 - ENVIRONMENT - BILL 1108291 (Duly seconded.)2
There are7 none opposed. Bill No. 110829 will be8 reported out of this Committee favorably9 and a request will be made for rules10 suspension to allow for first reading at11 our next Council session.12 That concludes the business of13 the public meeting. Thank you for your14 attendance.15 (Committee on the Environment16 concluded at 1:45 p.m.)17 - - -18 19 20 21 22 23 24 25 27 1 CERTIFICATE2 I HEREBY CERTIFY that the3 proceedings, evidence and objections are4 contained fully and accurately in the5 stenographic notes taken by me upon the6 foregoing matter on December 5, 2011, and that7 this is a true and correct transcript of same.8 9 10 11 12 --------------------13 MICHELE L. MURPHY14 RPR-Notary Public15 (The foregoing certification of this19 transcript does not apply to any reproduction20 of the same by any means, unless under the21 direct control and/or supervision of the22 certifying reporter.)23