Regulator Rules On Retail Supplier's Motion To Recognize For RPS Compliance RECs That Were Inadvertently-Retired By Supplier

June 5, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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The Connecticut PURA has ruled on a motion from Liberty Power Holdings, LLC for PURA to recognize for RPS compliance RECs that Liberty had inadvertently-retired, with PURA giving the company the option to pay a penalty of 12.5% of the full ACP in order to use the inadvertently-retired RECs

Liberty Power Holdings, LLC (Liberty or Company) had filed a motion with PURA requesting that the Authority allow certain inadvertently-retired renewable energy certificates (RECs) to be counted toward the Company’s compliance with Connecticut’s 2018 renewable portfolio standards (RPS).

Specifically, according to PURA, Liberty incorrectly retired 5,000 quarter 1 2018 Class I RECs into "My Unassigned Obligation" subaccount in the New England Power Pool Generation Information System (NEPOOL GIS).

According to PURA, Liberty stated that it acquired the 5,000 quarter 1 2018 Class I RECs for purposes of compliance with its 2018 Connecticut RPS obligations. According to PURA, Liberty incorrectly placed these RECs in the "My Unassigned Obligation" subaccount in NEPOOL GIS with the assumption that the RECs would be automatically banked because they were unassigned and would be available to use for 2018 Connecticut RPS compliance.

However, according to the subsequent NEPOOL GIS correspondence, contrary to the Company’s prior understanding, the "My Unassigned Obligation" subaccount is not a subaccount in which RECs are banked for future use; rather, it is a subaccount in which RECs are retired. Since the inadvertently-retired RECs were left in the "My Unassigned Obligation" subaccount at the end of the applicable trading period, the RECs were retired.

PURA said that according to the NEPOOL-GIS Operating Rules, certificates retired/settled in a compliance subaccount are taken out of circulation and cannot be resettled or moved, nor can the label be changed, for any reasons, once a trading period is closed. PURA said that the "My Unassigned Obligation" subaccount is mainly used for load obligation management and is treated as a compliance subaccount in NEPOOL GIS. As a result, RECs placed in this subaccount are retired and taken out of circulation.

Further summarizing Liberty's motion, PURA recounted that, upon learning that these RECs were inadvertently retired, Liberty made its request for recognition of these RECs for the purposes of its 2018 RPS obligations in advance of the October 15, 2019 compliance deadline. According to PURA, Liberty stated that these inadvertently retired RECs have not been, and will not be, used toward any other state’s compliance obligation. In addition, Liberty has successfully transferred any remaining active RECs into the correct subaccount. Further, PURA recounted, the Company claims it has not previously placed RECs into an incorrect subaccount.

In addressing Liberty's motion, PURA stated, "The Authority has repeatedly held that RECs must be retired in the Connecticut NEPOOL GIS subaccount to be accepted for Connecticut RPS compliance, and that PURA will not review or rectify any administrative or clerical errors of any person and/or entities who fail to comply with NEPOOL GIS rules or overlook the results of the GIS based upon clerical or managerial error."

"The Authority determined the requirement of strict adherence to NEPOOL GIS rules must be applied equally to all load-serving entities," PURA said

PURA noted that, in previous cases where an electric supplier failed to properly account for RECs in accordance with NEPOOL GIS rules, the Authority has accepted settlements of approximately 12.5% of the alternative compliance payment (ACP) that would have been required as a result of the disallowance of such RECs.

"Therefore, the Authority will provide the following option to allow the inadvertently-retired RECs to be used toward the Company’s compliance with Connecticut’s 2018 RPS: 1) Liberty shall provide an affidavit attesting that those specific 5,000 quarter 1 2018 Class I RECs will be used only for the purpose of Connecticut 2018 RPS compliance, and will not use them for any other state, or in future years, or for any other purpose other than Connecticut 2018 RPS compliance; and 2) pay a penalty of 12.5% of the full ACP for the 2018 RPS compliance of $34,375 [(5,000 Class I x $55/REC = $275,000) ; ($275,000 x 12.5% = $34,375)]," PURA said

PURA directed Liberty to notify the Authority no later than the October 15, 2019 deadline for 2018 RPS compliance if the Company intends to accept this alternative compliance option to allow the inadvertently-retired RECs to be counted toward the Company’s 2018 RPS requirement.

Docket No. 19-06-01

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