Regulator Rejects Utility Settlement on RPS Compliance Obligations As Inconsistent With Precedent (Retail Supplier Had Raised Concerns)

The Connecticut PURA has rejected a proposed settlement between Connecticut Light and Power (Eversource) and the agency's Prosecutorial Unit (PRO) concerning CL&P's RPS compliance obligations, stating that the settlement is inconsistent with past practice as RPS compliance obligations and settlement were applied to competitive retail suppliers

As summarized by PURA in its ruling on a motion to approve the settlement, "In 2015, Eversource purchased 14,500 Class III Renewable Energy Certificates (RECs) to fulfill the Company’s 2015 RPS compliance, at the cost of $396,875 to ratepayers. However, Eversource did not properly settle these 14,500 Class III RECs in the Connecticut Generation Information System (GIS) subaccount. Instead, the Company placed these RECs in the GIS Reserved Account, which is not accepted by the Authority for Renewable Portfolio Standards (RPS) compliance."

As summarized by PURA in its ruling on a motion to approve the settlement, "Under the terms of the Revised Settlement Agreement, in exchange for the Authority’s allowance of the 14,500 Class III RECs to be used for RPS compliance, Eversource agrees to make a contribution, solely at the cost of Eversource shareholders, in the amount of $28,093.75, 25% of which shall go to the Clean Energy Fund and 75% to Operation Fuel."

In summarizing the arguments offered by proponents of the settlement, PURA recited that, "This settlement amount is calculated based on 12.5% of the Alternative Compliance Payment (ACP) that Eversource would have to pay, reduced by 50% reduction in recognition that Eversource’s self-supply procurement activities in 2015 saved ratepayers millions of dollars for the cost of electric supply."

As previously reported, Clearview Electric, Inc. opposed the settlement agreement. As summarized by PURA in its ruling on a motion to approve the settlement, "According to Clearview, to be consistent, the Authority should require Eversource to pay 12.5% of the potential ACP amount, which would be $56,187.50 (14,500 RECs x $31/REC x 12.5%)."

PURA rejected the settlement, concluding that, "the Revised Settlement Agreement is inconsistent with past practices and does not adequately resolve this matter."

"In previous cases where an electric supplier had failed to properly account for RECs in accordance with GIS rules, the Authority mostly accepted settlements of approximately 12.5% of the ACP that would have been required as a result of the disallowance of such RECs. The Authority determined the requirement of strict adherence to GIS rules must be applied equally to all load-serving entities, including the electric distribution companies, and ratepayers should not be burdened with Eversource’s administrative failure. Allowing Eversource to discount the generally accepted settlement amount by 50% would give Eversource an unfair advantage over all other load-serving entities who are required to comply with the same RPS requirements," PURA stated