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New York PSC Lifts Cap On Banking RECs For Utilities For RECs From Mandated DER Purchases

July 17, 2018

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The New York PSC has, for the utilities, lifted a cap on banking RECs for compliance with the clear energy standard (CES) only for any RECs the utilities are required to purchase under the compensation mechanism the PSC adopted for utility purchases from distributed energy resources

The PSC's CES Phase 1 Implementation Plan Order permitted LSEs to bank RECs for use in the future years, but set the limit for the banking of Tier 1 RECs each year at 60% of that year’s requirement. Thus, an LSE that acquired RECs equal to more than 160% of its requirement in a given year would be able to satisfy 100% of its REC compliance obligation for that year and bank an additional 60% of the RECs for the following year, but would forfeit any remaining RECs.

The CES Phase 2 Implementation Plan Order revised the Renewable Energy Standard (RES) Tier 1 LSE obligations for 2018 through 2021. The revision was based on the expected three-year development and construction cycle between the receipt of an award for Tier 1 RECs and a facility’s ability to start producing RECs upon commercial operation.

In addition, the Commission established in the Value of Distributed Energy Resources (VDER) proceeding that electric distribution utilities shall offer compensation, through their Value Stack tariffs, to eligible distributed energy resources (DERs). Where generators accept this compensation, which includes, in part, the environmental value, the distribution utilities receive the associated RECs that are created. RECs acquired from DERs through the Value Stack or Phase One NEM tariff (VDER RECs) may be used to meet the CES obligation of the acquiring utility, but are non-transferrable.

On December 18, 2017, the Joint Utilities (JU) submitted a Petition for Clarification (Joint Utilities Petition) regarding the CES Phase 2 Implementation Order. The Joint Utilities Petition said that, as a result of the reduction in the Tier 1 obligations in that Order and the number of VDER RECs that members of the Joint Utilities expected to receive, members of the JU were likely to acquire VDER RECs equal to more than 160% of their Tier 1 obligations in some of the years between 2018 and 2021. Based on the existing rules, those additional RECs would be forfeited. However, because the cost estimates in the VDER Phase One Order were based on an assumption that all RECs received would be used for CES compliance, this would result in additional costs to ratepayers. The Joint Utilities Petition requested that the Commission address this issue by lifting the current restriction on transfers of VDER RECs among compliance entities and eliminating the 60% restriction on the banking of RECs through 2022.

The Commission granted the Joint Utilities' petition in part by suspending the 60% cap on banking of VDER RECs through 2022.

"This suspension of the REC banking cap only applies to VDER RECs, and does not apply to other Tier 1 RECs," the PSC ruled

Under the PSC's order, Central Hudson Gas & Electric Corporation, Consolidated Edison Company of New York, Inc., New York State Electric & Gas Corporation, Niagara Mohawk Power Corporation d/b/a National Grid, Orange and Rockland Utilities, Inc., and Rochester Gas and Electric Corporation may bank an unlimited number of Generation Attribute Certificates acquired from projects compensated based on Phase One Net Energy Metering or Value Stack tariffs (VDER RECs) for use in compliance with the Clean Energy Standard in years 2018 through 2022

"As this fully addresses the risk of forfeited VDER RECs and resulting costs to ratepayers, the request to lift the restriction on transfers of VDER RECs is denied," the PSC said in its order

Cases 15-E-0302 and 15-E-0751

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