The LREC/ZREC PROGRAMand RFP Results

Developing Small Behind-The-Meter Renewable Generation in Connecticut

Christie Bradway, Manager, Renewable Power Contracts,

October 26, 2012

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What are LRECs and ZRECs?• LRECs: Low Emission Renewable Energy Credits (RECs) – Fuel Cells; Solar; Small Hydro; Wind• No larger than 2,000 kW• Must have low emissions

• ZRECs: Zero Emission Renewable Energy Credits – Solar, Small Hydro, Wind• No larger than 1,000 kW

• Requires contracts with small <100 kW; medium – 100 – 250 kW; large – 250 – 1,000 kW

• Must have zero emissions

• LRECs/ZRECs can be used to meet CT Class I RPS requirements

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Connecticut Public Act 11-80 & the LREC/ZREC Program

• Requires CL&P and UI to purchase Renewable Energy Credits (“RECs”) under 15-year contracts

• Projects must meet eligibility criteria: Connecticut Projects located behind the customer meter

in our service territory Interconnected to the EDCs distribution system Must be in service on, or after, July 1, 2011 Can not have received CCEF or CEFIA grants or rebates

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Budget Based ProgramThe Program is based on committing an annual budget and not procuring an amount of capacity (MW)

LRECs ZRECs (Large, Medium and small)$4M/Yr for 15 Yr contracts = $60M $8M/Yr for 15 Yr contracts =

$120M

5 Procurement Yrs = $60M x 5 = $300M 6 Procurement Yrs = $120M x 6 = $720M

Combined Total Program Budget for LRECs and ZRECs = $1.02 B

• 80/20% budget split between CL&P & UI CL&P ~80% = $816M UI ~20% = $204M

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CL&P Received Approval on our Solicitation Plan in April 2012

• Timeline and Methodology of Solicitation Annual RFP and Tariff

• Method of Evaluation Ranked by lowest price per REC to commit an annual budget and meets eligibility criteria Bid evaluation discount of 10% for Connecticut manufactured, researched or developed technologies

• Form of Standard Contract No negotiation of terms and strict termination provisions

• Additional Standardized Documents RFP; Small ZREC Tariff; Meter Specifications

Group Size Solicitation Method

LREC 0 – 2,000 kW RFP

Large ZREC 250 – 1,000 kW RFP

Medium ZREC 100 – 250 kW RFP

Small ZREC 0 – 100 kW Tariff

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Successful LREC/ZREC Procurement Plan Filed with PURA on Oct. 10, 2012

• Resulted in 76 contracts and $90M in contract commitments– Next competitive solicitation expected in April 2012.

• Exercised contract protections and controls– Strict termination provisions if contracts were not executed

or performance assurance was not paid

– Use of a Stand-by queue allowed us to select “next project in the queue” until bid expiration

CL&P’s RFP Budget

• LRECs = $3.2M/year annual budget

• ZRECs = $4.26M/year annual budget• Large (250 kW & up) = ~$2.13M/year• Medium (over 100 kW; <250 kW) = ~$2.13M/year

* Reminder – Small ZRECs were not part of RFP

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Results of 1st RFP

1. Prices significantly lower than cap by about 1/3 of cap

2. Contracts have resulted in the commitment of most of the available budget, with the exception of LRECs where 39.5% ($1.3M) of funding was not committed due to Bidders not providing Performance Assurance and termination of contracts.– PURA allows for uncommitted dollars to be rolled into a future Solicitation (April 2013)

3. RFP contracts will result in approximately 25MW of installed renewable capacity in CT– LRECs = 4 MW – fuel cells– ZRECs = 21 MW - solar

Category Size # Bids Received

# Bids Selected(Round 1 + 2)

Average Weighted Price/REC

Committed Budget ($M)

Uncommitted Budget ($M)

15 Year Contract Commitment Value ($M)

LRECs Up to 2 MW

43 8 $59.91 $1.9 $1.3M $29

Medium ZRECs

100 – 250 kW

113 47 $149.29 $2.1 $78K $30.8

Large ZRECs

250 – 1,000 kW

140 21 $101.36 $2.0 $145K $29.8

Total 296 76 $91.01 $6.0 $1.5M $90

Small ZREC Program• At this time, no date set for opening of program

• PURA Decision requires CL&P to open within 30 days of “PURA approval of Medium & Large ZREC contracts”

• PURA is still reviewing Procurement Plan

• Small ZREC Price = $164.22/REC (proposed)

• The companies are jointly completing key Small ZREC documents

• Application rules

• Small ZREC Q&A

• Small ZREC Tariff Informational Session – November 5, 2012

• 9 am – 3 pm at Northeast Utilities - 107 Selden Street, Berlin, CT

Questions?• Website: www.cl-p.com

• Click on “Renewable Energy Credits” under “Going Green”

• Email: Contact CL&P: lrec.zrec@nu.com