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MSEIA Solar Securitization Plan

The plan focuses on achieving the state's RPS goals at the lowest possible cost to ratepayers while maintaining diversity and transparency. It offers long-term contracts, ensures cost recovery with profit, and specifies market segments. The plan advantages include savings for ratepayers, economic growth, and a secure recovery mechanism for utilities.

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MSEIA Solar Securitization Plan

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  1. Mid-Atlantic Solar Energy Industries Association Securitization Plan 5/22/2008

  2. MSEIA’s plan is focused on desired outcomes: • Able to succeed in achieving State’s RPS goals • Does so at least possible cost to ratepayers • Maintains diversity in rate classes served • Transparent - Level playing field • Maintains industry diversity • Able to serve public policy goals

  3. Features of the MSEIA Securitization Plan: • EDC’s offer standard, long-term contracts and PSEG- • style loans • RPS solar responsibility is shifted from LSE’s • EDC’s are assured of recovery of costs with profit • EDC’s are not subject to SACP penalties • Long-term contracts are fixed price for small systems, • competitively-priced for large systems

  4. Features of the MSEIA Securitization Plan (cont’d.) • Market Segments specified: • <20 KW 17% • Low-Income 8% • 20 – 400 KW private 20% • 20 – 400 KW public 20% • Over 400 KW 35% • Developer Cap – 25% of each market segment • Utilities retire SRECs

  5. Transition of RPS Responsibility Utility contracts Megawatts LSE Obligation 2004 2009 2020 Year Result: LSE’s have a continuing responsibility that is clear and simple

  6. MSEIA Securitization Plan Advantages for Ratepayers and Taxpayers: • Simple for residential ratepayers to participate • Legacy project costs can be lowered – significant • savings to ratepayers ($190 million est. savings). • Saves SACP costs – ratepayers don’t pay for solar • power that is not delivered (savings could be zero • to ~$150 million) • Maximizes economic & local job growth • Best ability to focus on public policy goals • (transmission-constrained areas, pairing solar with • EE, etc.)

  7. MSEIA Securitization Plan Advantages for Utilities: • Assures a secure recovery mechanism with profit • Simple • Familiar regulatory process • Low administrative input • No enforcement mechanisms needed - low risk

  8. Why transfer responsibility for new RPS capacity from LSE’s? • If EDC’s are conducting the functions needed for success • in meeting the RPS, it is not necessary to involve LSE’s in • a superfluous role. • If LSE’s remain involved unnecessarily, additional • complexity and transaction costs, and an unnecessary • cost markup, will result. • If LSE’s remain involved, LSE’s cannot be forced to buy • SREC’s from EDC’s. If LSE’s buy SREC’s from other • sources, EDC’s are left with SREC’s they can’t sell, and • ratepayers could get double-charged. • Allows EDC’s to recover costs directly from ratebase. • It’s simpler and more secure for EDC’s.

  9. Why retain fixed pricing for small systems? • Areas of definite, substantial savings exist for ratepayers. • All successful renewable energy incentives in history have • been simple, fixed incentives. • If New Jersey is to experiment with delivering a • governmental incentive by creating a market commodity, it • should do so cautiously, in stages. • The large systems, those most able to deal with a • commodity market for obtaining incentives, can lead the • way and prove the concept. • Thousands of residential systems per year, and dozens of • small businesses, can participate easily.

  10. Why retain fixed pricing for small systems? (cont’d.) • Rate class equity is better served, especially for the • residential rate class (36.5% of KWH). • The thriving small business community that was created • by previous solar energy policy can continue to thrive and • grow, creating New Jersey jobs. • Diversity of opportunity is preserved.

  11. If EDC’s assume functional responsibility for new RPS capacity, why not subject them to SACP’s? • All SACP’s are eventually charged to ratepayers. • Ratepayers should not have to pay for solar KWHs that • are not delivered, much less pay for them at a • substantially higher rate. The savings could be • substantial. • If EDC’s follow the policy faithfully, but are not in control of the amount of solar power that is built, then it is not rational to penalize them if RPS targets are not met. • If the solar industry has the tools to succeed in meeting • the RPS, we believe it will be met. It is our responsibility to • see to it. It is we who bear the penalty if it is not.

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