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2011 New Jersey Energy Master Plan Recommends Changes to New Jersey's Solar Program

December 7, 2011

On December 6, 2011 Governor Christie announced the adoption of the 2011 New Jersey Energy Master Plan (the “Master Plan”). The Master Plan details the Christie Administration’s (the “Administration”) strategic vision for the use, management and development of energy in New Jersey over the next decade. It is important to note that the Master Plan is a series of policy directions and recommendations and does not, in and of itself, have the force of law.

The Master Plan was amended since the introduction of the June 2, 2011 draft and contains, among other things, the following recommendations and policy directions regarding solar energy:

1. Accelerate the Renewable Portfolio Standard. Increase the Renewable Portfolio Standard (the “RPS”) over the next three years to provide interim relief for the current oversupplied Solar Renewable Energy Certificate (“SREC”) market and reduce the outlier years of the RPS schedule to minimize the impact to ratepayers. It is important to note that a footnote to this recommendation indicates that the Administration supports an extension of SREC shelf life from three to five years.

2. Reduce the Solar Alternative Compliance Payment. Reduce the Solar Alternative Compliance Payment (“SACP”) to reflect the continuing downward trend in solar installation costs. A revised SACP schedule has already been proposed by the New Jersey Board of Public Utilities (the “BPU”); however, the Master Plan indicates that the BPU will be proposing a new SACP schedule.

3. Return to the Percentage Obligation for Solar. Modify existing law to change the fixed solar energy generation requirement of the RPS to a requirement defined as a percentage of total energy. The Master Plan concludes that a flexible requirement based on a percentage of total energy, rather than a fixed generation requirement, is better equipped to account for the likely changes in the economy and energy demand that will occur over time and will not neglect opportunities for new renewable technologies.

4. Promote Solar PV Installations That Provide Economic and Environmental Benefit by Limiting SREC Eligibility. Provide the BPU with review and certification authority for SREC generation capability of grid supply projects to ensure compatibility with land use, environmental and energy policies. The Master Plan concludes that behind-the-meter commercial and industrial installations offer an economic benefit that is not provided by subsidizing the installation of residential or grid-supplied solar. Further, the Master Plan concludes that solar development should be encouraged on Brownfields and landfills and should be discouraged on farmland. Finally, the Master Plan concludes that local governments should be allowed to collect property taxes on grid supply projects based on the enhanced value of the site.

5. Increase Transparency. Require that all solar projects, other than residential, register with the BPU to assist in the development of economic forecasts and planning for the future of the New Jersey solar program.

6. Expand Opportunities for Solar. Modify existing rules to allow for the installation of systems through which numerous end users are connected behind-the-meter to a centrally located system (community and/or virtual net metering).

7. Long Term SREC Contracts. Extend the existing program by which utilities can offer long-term SREC purchase contracts of up to 15 years.

For more information, please contact:

Stephen A. Kisker Of Counsel | (973) 530-2074 |
Robert H. Crespi Member of the Firm | (973) 530-2060 |
John G. Valeri Jr. Member of the Firm | (973) 530-2030 |
Michelle A. Schaap Member of the Firm | (973) 530-2026 |