Christie Signs New Jersey Bill Which Exempts Existing BGS Contracts from Revised Solar RPS, But Declines Exemptions for Existing Retail Supplier Contracts

New Jersey Governor Chris Christie has signed S-1925, which, among other things, accelerates the solar RPS and provides a special exemption for existing Basic Generation Service provider contracts, but not existing retail supplier contracts.

Specifically, the legislation exempts, from any increase beyond the number of SRECs mandated by the previously controlling solar renewable portfolio standard requirements, the existing supply contracts of BGS providers.

The legislation does not extend this same protection to the existing contracts of retail suppliers.

Unlike a prior revision to the solar RPS passed several years ago, retail suppliers are not, under S-1925, to be allocated the shortfall in the solar RPS caused by exempting existing BGS contracts. However, this does not mitigate the immediate hit taken by retail suppliers with respect to increased costs under their existing contracts, and does not mitigate the near-term distorting price in BGS service (which will not reflect the revised solar RPS until contracts starting June 1, 2013).

Although, starting June 1, 2013, new BGS contracts will reflect both the otherwise applicable solar RPS plus the shortfall from any existing, exempt contracts included in the BGS portfolio (and thus the new, non-exempt BGS contracts should reflect a premium over retail supplier RPS costs since the BGS provider must meet its own solar RPS obligation and that of the exempt providers), retail suppliers expressed skepticism as to whether this would cure the distorting impact of the exempted BGS contracts, since lower-priced exempted BGS contracts will still be blended in the small customer default service portfolio.