1. Explanation of January 23, 2012 “Hybrid” Recommendation to NJ SREC Working Group
Stephen Wemple on behalf of
Con Edison Development,
Con Edison Energy &
Con Edison Solutions
February 16, 2012

2. Current SREC Dynamics
Current law [section 38 d. (3)] exempts existing BGS contracts “effective prior to any future increase in the solar renewable portfolio standard”
All increases are born by retail suppliers (and their customers) and “new” BGS contracts.
EY 11 SREC obligation was 37% higher for retail suppliers
.417% versus .305% for “exempt” load
Incremental cost of $34 Million at $600/SREC.
The disparity will increase to ~40% in EY 12
Estimated at .55% versus .39% for “exempt” load
Incremental cost of $28 Million at $250/SREC.

3. Current SREC Dynamics (continued)
Market is behaving as expected
BGS auction has reinvigorated the bilateral market
Contracts can be executed for three years (EY 13 – EY 15) at prices of about $200/SREC.
SREC requirement is scheduled to more than double in three years:
442 GWH EY 12
596 GWH EY 13
772 GWH EY 14
965 GHW EY 15.
Three year shelf life gives producers the option to sell now or bank SRECs for sale in subsequent energy years.

4. “Hybrid” Recommendation
Continuation of the EDC SREC programs is a separate issue, and should be considered on its own merits.
If the EDC programs are extended, SREC requirements should be adjusted; just not right away
Maintains supply-demand “balance” over a three year period.
Implement increases in SREC requirements on a three year forward basis for EY 16 (which starts June 2015)
Balances stakeholder interests
Avoids disrupting existing supply contracts
Producers can “bank” SRECs for sale in future energy years.
Increases likelihood of attracting new projects when equilibrium is achieved
In contrast, a near term increase in the requirement only benefits existing solar projects, increasing ratepayer costs without attracting new investment.
Avoids existing “exemption” language in SEAFCA legislation from perpetuating the disparity between BGS and other suppliers’ obligations.

5. Illustrative Example 1 Assumption:
BPU approval in 2012, one time solicitation of 20 GWH in EY 14*
EY 13
EY 14
EY 15
EY 16
EY 17
6/12 - 5/13
6/13 - 5/14
6/14 - 5/15
6/15 - 5/16
6/16 - 5/17
EDC Expansion (Cumulative GWH) 20
Current GWH Requirement
442
596
772
965
1150
Proposed GWH Expansion 60
"New" GWH Requirement
1025
1170
* This is not a recommendation to expand the EDC program, just an illustration of how to address resulting SRECs

6. Illustrative Example 2 Assumption:
BPU approval in 2012, annual solicitations of 20 GWH/yr beginning EY 14 *
EY 13
EY 14
EY 15
EY 16
EY 17
6/12 - 5/13
6/13 - 5/14
6/14 - 5/15
6/15 - 5/16
6/16 - 5/17
EDC Expansion (Cumulative GWH) 20 40 60 80
Current GWH Requirement
442
596
772
965
1150
Proposed GWH Expansion
120
"New" GWH Requirement
1085
1230
* This is not a recommendation to expand the EDC program, just an illustration of how to address resulting SRECs