N.J. Admin. Code § 14:8-2.12

Current through Register Vol. 56, No. 21, November 4, 2024

Section 14:8-2.12 - Class I RPS Cost Cap

(a) To calculate the Cost Cap established by statute at N.J.S.A. 48:3-87.d(2), Board staff shall calculate the annual cost of the Class I renewable energy requirement (excluding ORECs and SREC-IIs created through the CSI Program) as a percentage of the total paid for electricity by all customers in the State, using a methodology as follows:

1. The annual cost as a percentage shall be calculated by dividing the cost to customers of the Class I renewable energy requirement (excluding the cost of ORECs and SREC-IIs created through the CSI Program) (that is, the numerator) by the total paid for electricity by all customers in the State (that is, the denominator), and multiplying by 100.

2. The cost to New Jersey customers of the Class I renewable energy requirement (the numerator) shall be equal to the annual cost of the Cost Cap-Applicable Programs as defined at (a)2i below, reduced by the dollar value of any energy and environmental savings attributable to the Cost Cap-Applicable Programs, as described at (a)2ii and iii below.

i. The Cost Cap-Applicable Programs shall be the Solar Renewable Energy Certificate (SREC) Program; the Transition Incentive (TI) Program, which provides incentives through the Transition Renewable Energy Certificates (TRECs); the Administratively Determined Incentive (ADI) Program established pursuant to P.L. 2021, c. 169, which provides incentives through Solar Renewable Energy Certificate-IIs (SREC-IIs); the Class I Renewable Energy Portfolio (RPS), which provides incentives through the Class I Renewable Energy Certificates (Class I RECs); and any future Class I program created as part of the RPS. The annual cost of SRECs, TRECs, eligible SREC-IIs, Class I RECs, and any future Class I program shall be found in the annual Renewable Portfolio Standard compliance reports produced by Board staff. In calculating the annual cost of SREC-IIs, the Board shall include only the cost the SREC-IIs created and retired through the ADI Program. SREC-IIs created and retired through the CSI Program established pursuant to P.L. 2021, c. 169 shall not be considered eligible SREC-IIs for purposes of the Cost Cap calculation and shall not be included in the calculation of the cost of the Class I renewable energy requirement.

ii. Energy savings attributable to the Cost Cap-Applicable Programs shall be determined annually by Board staff, and shall equal the sum of the reduction in prices in the PJM wholesale markets for energy that results from the reduction in demand or increases in low cost supply associated with the Cost Cap-Applicable Programs; and the reduction in prices in the PJM wholesale markets for capacity that results from the reduction in demand or the increases in low cost supply associated with the Cost Cap-Applicable Programs. Board staff shall conduct an analysis, using data on electric energy and capacity prices available from PJM and other sources, to determine the impacts caused by Cost Cap-Applicable Programs resources on electric energy and capacity costs for New Jersey ratepayers.

iii. The environmental savings attributable to the Cost Cap-Applicable Programs shall be equal to the tons of carbon dioxide not emitted by electric generators located in the PJM region as a result of the Cost Cap-Applicable Programs multiplied by the social cost of carbon value. To calculate the tons of carbon dioxide not emitted, staff shall, on an annual basis, multiply the average historical electric carbon dioxide emissions rate as most recently published by PJM Interconnection by the number of megawatt-hours of zero-carbon electricity generated by resources participating in the Cost Cap-Applicable Programs. The social cost of carbon value shall initially be set equal to the midpoint of social cost of carbon in the most recently published United States Government Interagency Working Group on Social Cost of Greenhouse Gases, which is currently set at the three percent discount rate. The Board may elect, through a Board order, to adjust the social cost of carbon value used based on society's evolving understanding of the costs imposed on society by global climate change, after a notice and comment proceeding, provided that the Board shall not select a scenario that results in a social cost of carbon less than the three percent discount rate. The Board may consider, through a Board order, additional environmental savings associated with reduced particulate matter and other harmful emissions from fossil fuel power plants after a notice and comment proceeding. Any changes to the metrics for calculating the social cost of carbon or the addition of additional environmental savings shall be made only after publication of the proposed changes on the Board's website and a public comment period of at least 30 days.

3. The total paid for electricity shall be reported by Board staff on an annual basis based on its estimate of the electricity costs paid by all customers in the State (the denominator). To determine the denominator, Board staff shall report the sum of the following:

i. The energy costs, as reported by the Energy Information Administration (EIA); and

ii. The capital costs of electric generating facilities not otherwise covered in the EIA data amortized over their expected life, including, but not limited to, host-owned behind-the-meter solar projects.

4. Board staff shall calculate the annual cost percentage pursuant to (a) above based on data available at the time, including projections where actual data is not available.

(b) The Board shall certify, through a Board order, that the annual cost percentage calculated by staff at (a) above, does not exceed nine percent in energy year 2019, energy year 2020, and energy year 2021, respectively, and does not exceed seven percent in any energy year thereafter, except as otherwise permitted at (c) below, and take any necessary actions to maintain statutory compliance as set forth at (e) below.

(c) Annually, the Board shall identify, through a Board order, any amount that was not spent in a given energy year, but was eligible to be spent under the Cost Cap, between energy years 2019 through 2024. Those values shall be carried over and made available in future energy years until energy year 2024, so long as the total costs to customers for energy years 2019 through 2024 do not exceed the sum of nine percent of the total paid for electricity by all customers in the State in energy years 2019, 2020, and 2021 and seven percent of the total paid for electricity by all customers in the State in energy years 2022, 2023, and 2024.

(d) Prior to start of each energy year, Board staff shall develop a forecast of the Cost Cap calculation and estimate whether or not the annual cost percentage calculated pursuant to (a) above is at risk of exceeding the annual cap set forth at (b) above. If the forecast for a given energy year shows that the annual cost percentage is at risk of exceeding the annual cap for that energy year, the Board shall take measures to reduce the cost of the Cost Cap-Applicable Programs in the upcoming energy year, until such time as the forecasted annual cost percentage falls below the annual cap. The Board shall first reduce the capacity allocations budgeted to the ADI Program established at N.J.A.C. 14:8-11.7for the upcoming energy year. If the reduction in the ADI Program capacity allocations is insufficient to enable compliance with the Cost Cap, the Board shall reduce the upcoming energy year's Class I RPS compliance obligations established at N.J.A.C. 14:8-2.3(a) until compliance with the Cost Cap is reestablished.

(e) Board staff shall provide, on an annual basis, a true-up calculation of the Cost Cap for the prior energy years based on new data that has become available since the prior true-up. In the event that the true-up finds that funds were spent in excess of the Cost Cap in a given energy year, those funds shall be deducted from the amount eligible to be spent in the next energy year and the Board shall take actions as specified at (d) above. Any reduction in incentives or incentive availability attributable to Cost Cap compliance will only apply to projects that have not yet registered in the SuSI program or, in the case of projects located on contaminated lands temporarily eligible for the ADI Program (see N.J.A.C. 14:8-11.7(b)7), those that have not yet received a conditional certification issued by the Board.

N.J. Admin. Code § 14:8-2.12

Recodified from N.J.A.C. 14:4-8.8 and amended by R.2004 d.151, effective 4/19/2004.
See: 35 N.J.R. 4445(a), 36 N.J.R. 2053(b).
Added a new (a); deleted (b); recodified former (b)i through iv as (a)1 through 4; recodified former (c) as (b), and in (b)3, deleted "interim" preceding "standards".
Recodified from N.J.A.C. 14:4-8.12 and amended by R.2006 d.178, effective 5/15/2006.
See: 37 N.J.R. 3911(a), 38 N.J.R. 2176(a).
Former N.J.A.C. 14:4-8.12, heading was "Penalties".
Recodified as N.J.A.C. 14:8-1.3 by R.2012 d.107, effective 6/4/2012.
See: 43 N.J.R. 1162(a), 44 N.J.R. 1703(a).
Section was "Enforcement".

Adopted by 54 N.J.R. 1179(b), effective 6/20/2022