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Pa. PUC Denies More Retail Supplier Out-Of-State Solar REC Grandfathering Requests
April 26,2019 The Pennsylvania PUC issued an order on a request from AEP Energy requesting grandfathered treatment of out-of-state solar RECs given new in-state requirements. The PUC also denied reconsideration concerning its earlier decision on a separate grandfathering request filed by the NRG retail suppliers In brief, AEP Energy had asked the PUC to grandfather certain solar RECs under existing contracts with various solar power facilities, including an affirmation concerning the end date of various legacy contracts (as opposed to renewals which must comply with the statutory in-state requirements). The PUC granted AEP Energy's petition in part, with respect to what the PUC found to be existing contracts. However, the PUC denied the requested end date of grandfathering sought by AEP Energy, as the PUC found that the sought end dates for various contracts exceeded the end date of the contracts, and instead reflected renewals, which must meet the statutory in-state requirements As an illustrative example, AEP Energy sought to use out-of-state solar RECs from an Ohio Northern University (ONU) solar facility for the life of the facility, presenting a contract with such facility for the purchase of solar RECs However, the PUC noted that the vintage years specified in the contract are Calendar Years 2017 - 2021, beginning on January 1, 2017. AEP Energy argued that the specification of certain years in the agreement was never intended to be relied upon as an expiration date of the purchase and sale agreement between AEP and the ONU solar facility. AEP Energy asserted that as the solar needs of AEP Energy change over time (due to shifts in the amount of customer load that was being served), these obligations could be more realistically matched with the projected output of the ONU facility closer in time. However the PUC stated, "The Commission is unpersuaded by this argument. As noted above, Section 2.4 of the agreement states that '[t]his Agreement shall be effective on and as of the Effective Date and shall terminate upon satisfaction by Buyer and Seller of their respective obligations pursuant to this Agreement.' The only obligations are for vintage calendar years 2017 – 2021 ('Calendar Year' means the twelve (12) month period beginning January 1 and ending December 31 in which the energy was generated). Also, the contract quantity only includes the RECs generated by the Unit during the Calendar Years 2017 – 2021. As the obligations end December 31, 2021, the parties would have to renew this agreement to extend any obligations beyond December 31, 2021," the PUC said As such, "we find that in accordance with Section 2804(2)(ii) of the Adm. Code and the Commission’s Implementation Orders, the applicable terms of the agreement between AEP and AOP’s [AEP OnSite Partners] ONU Solar Facility ends on December 31, 2021. Accordingly, only NSTI [Non-Solar Tier I]] credits from the ONU Solar Facility, issued by GATS for generation through the month of December 2021 are eligible to be used by AEP for AEPS Tier I Solar compliance in accordance with 52 Pa. Code § 75.69 (relating to the banking of alternative energy credits). The amount of credits shall not exceed the amounts specified in the agreement," the PUC said The PUC made similar findings with respect to similar AEP Energy contracts See the PUC's order here in Docket P-2018-3004218 for more details Separately, the PUC denied reconsideration of its prior order on a solar REC grandfathering petition from the NRG Energy retail suppliers As previously reported (see story here for background), the PUC previously denied certain relief sought by NRG with regards to grandfathering because the agreements with the solar facilities create a purchase obligation for an NRG affiliate that is not licensed as a retail supplier The PUC summarized one of the NRG suppliers' rehearing arguments by stating, "they assert that the Commission appears to have overlooked how the grandfathering available under Act 40 should be applied to a trail of contracts between and among entities within the same corporate family." "Regarding [this] assertion, that the Commission overlooked the fact that the contracts at issue are between and among entities within the same corporate family and that this possible oversight impacted the Commission’s decision, we find this argument is unsupported by any law or facts not previously considered by the Commission," the PUC said "The NRG Retail Affiliates’ assertion that contracts between and among entities within the same corporate family should be treated differently than contracts between and among entities not within the same corporate family is without merit. The NRG Retail Affiliates cite to no case or statutory law to support this argument and the Commission is not aware of any such law either. Nor do the NRG Retail Affiliates point to any binding contract provision to support its assertion that NRG Energy Manager is not permitted to utilize its purchased SAECs to satisfy the SAEC requirements of any non-NRG affiliated entity, and the Commission did not find such contract provision in any of the contracts filed with the Petition. The NRG Retail Affiliates provide no new law or facts in its Petition for Clarification or Reconsideration as it relates to their assertion that the Commission appears to have overlooked how the grandfathering available under Act 40 should be applied to a trail of contracts between and among entities within the same corporate family," the PUC said in denying reconsideration See the PUC's order here in P-2018-3004077 for more
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