Adjustments to the Alternative Compliance Payment Rate

The Alternative Compliance Payment (ACP) Rate for 2013 is set at $550/MWh. Competitive Retail Electric Suppliers will be able to meet their Solar Carve-Out compliance obligation for load under contract prior to January 1, 2010 with an Alternative Compliance Payment at a rate equal to the RPS Class I ACP rate for the applicable Compliance Year. These eligible contracts do not include any contracts associated with Basic Service load sold by distribution companies to retail customers. This ACP Rate will not be adjusted by the Consumer Price Index (CPI), unlike the RPS Class I ACP Rate, which is adjusted by the CPI. DOER has provided a forward schedule for the ACP Rate in the RPS Class I Regulation 224 CMR 14.00.

Calculation of and Adjustments to the Minimum Standard

All Retail Electric Suppliers with RPS obligations are required to demonstrate compliance with the RPS Solar Carve-Out as a percent obligation of their load served. The following formula will be used to set the Minimum Standard (MinStnd) for each Compliance Year (CY), based on the total RPS load obligation data available from two years prior Compliance Year.

MinStnd %, CY = MinStnd MWh, CY / Total RPS Load Obligation MWh, CY-2

Minimum Standard: Base Growth Rate

The Minimum Standard is adjusted each year by a base growth rate of 30%, such that the Minimum Standard will increase 30% more than it increased the year before. This growth rate provides a robust market demand growth for the solar industry. Solar Carve-Out Minimum Standard, shall be announced by the Department not later than August 30 of the preceding Compliance Year.

Minimum Standard: Market Balance Adjustments

The Minimum Standard is adjusted each year according to the SREC market oversupply or shortage experienced in the previous Compliance Year. This adjustment maintains market balance by assuring the value of Re-Minted SRECs offered in the auction and protecting ratepayers from unrelenting dependence on ACP compliance.

Minimum Standard Adjustments: Operative Formulas

Compliance year 2010:

For Compliance Year 2010, the Minimum Standard is 34,164 MWh, calculated as 30 MW multiplied by 365 days in the year multiplied by 24 hours in the day multiplied by 0.13 (or 13%) capacity factor.

Compliance Year 2011:

For Compliance Year 2011, the Minimum Standard is 78,577 MWh, calculated as 69 MW multiplied by 365 days in the year multiplied by 24 hours in the day multiplied by 0.13 (or 13%) capacity factor.

Compliance Years after 2011:

MinStnd MWh, CY = Total Compliance Obligation CY-1 + [Total SRECs Generated (projected) CY-1 - SRECs Generated (actual) CY-2] x 1.3 + Banked Volume CY-2 + Auction Volume CY-2

The Solar Carve-Out Renewable Generation Attributes actually generated for the Compliance Year two years prior (CY-2) shall be determined as the Attributes minted by the NEPOOL GIS in the Compliance Year two years prior (CY-2). The total Solar Carve-Out Renewable Generation Attributes projected to be generated for the previous Compliance Year (CY-1) shall be calculated by DOER as the sum of Attributes reported to DOER by the independent Third Party Meter Reader during the first two quarters of the previous Compliance Year (CY-1), and the projection of Attributes to be generated during the final two quarters of the previous Compliance Year prior (CY-1) by considering information including, but not limited to, the Commercial Operation Dates of Units that have received or have pending Statement of Qualifications. DOER shall provide documentation of its projection with its announcement of the new compliance obligation.

NOTE: If the Auction does not clear after the second round, the Auction Safety Value will re-calculate the MinStnd MWh,CY by again adding the term Auction Volume CY-2

Limitation: Under conditions of extreme short markets, the Minimum Standard formulas may result in a decrease in the Minimum Standard from one year to the next. Under this circumstance, the Minimum Standard will remain the same as in the previous Compliance Year.

Termination of the Program

When DOER qualifies 400 MW of solar for the program, qualification of all additional solar installations is transferred to the RPS Class I Program. Once the cap has been met, the Minimum Standard for the RPS Solar Carve-Out will be set annually per regulation to maintain market balance. The RPS Solar Carve-Out program remains in effect until all the Auction Opt-In Terms of the qualified projects and the full shelf-life years of any Re-Minted Auction SRECs have both expired, thereby maintaining price certainty for all solar generators.

For the year after the final Compliance Year, when the Solar Carve-Out Minimum Standard is set to zero SRECs shall cease to exist, and all generation from qualified Solar Carve-Out Renewable Generation Units shall produce RPS Class I Renewable Energy Attributes.

This information is provided by the Department of Energy Resources.