Pa. ALJ Recommends Adopting PPL SREC Settlement, Not Requiring Aggregators to Sign Long-Term Contracts

A recommended decision from a Pennsylvania ALJ would approve a settlement regarding the procurement of solar alternative energy credits (SRECs) at PPL Electric Utilities, and would decline to require solar aggregators under a small system carve-out to certify that they have long term contracts for SRECs (P-2008-2060309).

As only noted in Matters, the settlement provides for the procurement of SRECs, for residential default service only, under long-term contracts of seven to nine years in length, under competitive RFPs (see details in 11/24). The procurements would be for 3,000 SRECs per year, resulting in target quantities of 27,000 SRECs for Solicitation 1 (a delivery period of 9 years), 24,000 SRECs for Solicitation 2 (a delivery period of 8 years), and 21,000 SRECs for Solicitation 3 (a delivery period of 7 years).

Additionally, a set-aside program for SRECs from solar systems with a DC rating of 15 kW or less would be created. Such SRECs would be procured under bilateral contracts with solar aggregators, and not system owners. The set aside amount shall be equal to 1,000 SRECs for the 9-year term, 1,100 SRECs for the 8-year term, and 1,600 SRECs for the 7-year term.

The ALJ recommended adopting the settlement terms without modification.

The single issue reserved for litigation concerned whether solar aggregators under the small system set aside program should be required to certify that they have signed long term contracts for SRECs.

The Sustainable Energy Fund of Central Eastern Pennsylvania (SEF) argued that such a certification requirement is necessary to ensure that long-term contracts are available to solar generation owners, which SEF said are needed to support solar development. SEF said that solar aggregators may not sign long-term contracts with generation developers, absent a mandate, due to the surplus of SRECs in the state.

However, the ALJ agreed with PPL that the SEF's proposed mandate would (1) limit the options of small-scale solar owners (some of whom may eschew long-term contracts in expectation of higher future SREC prices); (2) discourage participation from those aggregators forced to comply; (3) bar the participation of new solar operators; and (4) require PPL to incur additional administrative costs (to be passed onto ratepayers) by forcing it to confirm that the aggregators' contracts were long-term.

"There is no evidence to support a finding that requiring long-term contracts for small scale developers would be desirable to the developers and aggregators save [SEF's] opinion that the only way to promote revenue stability is to provide long-term contracts and ensure a funding stream," the ALJ found.

"SEF has not produced any evidence that solar aggregators can meet the long-term contract requirement, nor has it produced any evidence that aggregators or small system owners want long-term contracts," the ALJ said in rejecting the proposed certification requirement.