On Tuesday, January 6, 2009 I went to the Maryland Public Service Commission (PSC) & testified at a rule making session.  This is the second time I’ve offered my opinions to the Commission.  At first I felt like a crank, but now I think I did the right thing – you’ve got to let your government know what you want from it. 

I should probably say right here and now that if you are not familiar with Renewable Energy Credits (REC’s), or the Maryland Renewable Portfolio Standard (RPS), then you should first read REC's Explained to get up to speed.  We’ll wait. 

Commissioners Nazarian, Williams, Freifeld, Brogan were present at this meeting.  At issue were the regulations concerning the 15 year up-front payments to level 1 solar Renewable Energy Facilities (REF’s), like mine.  My intention was to urge the commission to act swiftly, whatever their decision might be.  I also wanted to let them know that our solar REC’s have been listed for sale on the PSC website for five months but that the only offers I’d received were from REC broker/aggregators, not utilities, and that the offers were for much less money than the legislation provided for.  The electricity suppliers say that they will not offer to buy my REC’s because they are bound by law to offer a 15 year contract with a price fixed by the PSC (80% of ACP adjusted for net present value).  This is exactly why I am eager to receive an offer from a utility – I don’t want to have to deal with selling REC’s every year.  I’d like my money as soon as possible, thank you very much.  However, utility are refusing to buy my REC’s because they claim they have no guarantee (besides my signature on a contract, which I guess is not good enough for them) that I will actually deliver those REC’s.  Presumably, electricity suppliers sign other contracts for future deliveries, such as coal, trusting that railcars of carbon will come trundling to the plant on time.  What’s so different about my REC’s?

The stated concern of the utilities is that if, in the future, my solar panels don’t actually produce the amount of REC’s the utility paid for, then they would then have to buy new REC’s to make up the difference.  Then, in theory, they would sue me to get their money back for the REC’s I didn’t deliver.  I have to concede that I can almost see their point because, in reality, they wouldn’t sue.  It’s just not cost effective – and if the reason I can’t deliver my REC’s is through no fault of my own – say my house burns down – it’s also terrible public relations. 

Some examples of the calamities the Commissioners (and other parties) thought up for my solar panels that would cause them to under-produce:  a baseball will break one, or I’ll sell my home to someone who removes them, or a neighbor will build a larger house next to mine that shades the panels.  Although most of the scenarios were unlikely, it was nice to hear that the Commissioners were trying to draft regulations that would take these problems into account.  But in the end, they decided to go ahead with the language proposed by BGE.  The proposed addition to the regulations governing REC transactions (COMAR 20.61.01.05C(c), for you fellow wonks) will be as follows: 

“A supplier that executes a contract directly with a Level 1 facility owner or designee shall receive annually Tier 1 Solar RECs equal to the calculated annual output of the contracted facility used to determine the single initial payment under section C(1)(a).” 

In plain English, this means that if an electricity supplier, let’s say, BGE, purchases my REC’s based on estimates of my future production, and then for any reason, from Act of God to outright fraud, those REC’s are not produced, BGE can still use them to fulfill its RPS requirement.  At first reading, it may seem like the good citizens of Maryland might get cheated out of a few REC’s.  After all, if the glass breaks on one or two panels, and it’s going to cost the owner $1,500 to replace them, and the system is already 10 years old, and he has two kids in college… you can imagine a scenario where the owner might be willing to put up with a year or two of reduced output from his system before getting around to paying for the repair.  In this case, according to the revised language, the utility would still get to count the system’s REC’s as eligible, even though they are technically nonexistent. 

In reality, I don’t see many homeowners installing PV systems and then just letting them fall into disrepair.  If, 10 years from now, a squirrel chews through a wire in my attic, causing my system to stop producing power, I would fix the problem immediately.  After all, I installed the system for the clean electricity it produces, not the REC payments I’m getting. 

An interesting metaphysical concept was brought up during the meeting: one of the Commissioners commented that the REC’s don’t actually exist in the first place.  His point was that REC's are just a construct invented to assign value to the environmental benefits of generating a Megawatt of clean power.  Which demonstrates that a statement can be technically true – REC’s do not physically exist – and also completely misleading.  We need to behave like REC’s do exist and that the clean energy they represent has a very real value, or we will be facing a host of quite frightening physical problems- rising sea levels, climate change, loss of species and habitat, reduction in worldwide food supply, etc.  Metaphysics will take a back seat as physics, in all its thermodynamic wonder, takes over.     

The real problem I’m facing now is that the changes to the regulations will not actually be published until March 27, 2009.  There is a 30 day comment period and then, if there are no substantial objections during the comment period that the Commission feels are worthy of a hearing to revisit the issue – again – the regulations will go into effect on June seventh, 2009.  Over two years after the initial legislation authorizing these 15 year contracts went into effect!  In the lengthy meantime, I’m left waiting with my two lonely 2008 REC’s rattling around my GATS account.  Here are my options:

A)    Sell them to a REC broker for less than I was counting on.

B)    Hang onto them until after the new regulations go into effect & then (hopefully) sell a 15 year contract to a utility.

C)     Forget I every heard the acronym REC and just get on with my life. 

Okay, (c) isn’t really an option, at least, not an affordable one.  I’ll keep you posted and let you know what I decide.  UPDATE:  The REC’s were sold to an broker – option a.