Northeast Solar Update - Summer 2012

In recent months, the states of Massachusetts, New Jersey and New York have each taken legislative steps to encourage the development of solar generating facilities. In summary, Massachusetts enacted Senate Bill 2395 ("SB 2395") that, in part, increases the existing regulatory cap on net-metering service and requires distribution companies to continue soliciting proposals for long-term contracts for renewable energy generation. New Jersey's Bill S-1925 ("S-1925") accelerates that state's solar renewable portfolio standard ("RPS") and reduces the cost of a solar alternative compliance payment ("SACP"). Finally, New York Governor Andrew Cuomo is considering signing into law a bill that would exempt the sale and installation of commercial solar generation facilities from state sales and use taxes.

Massachusetts

Governor Deval Patrick signed SB 2395, entitled An Act relative to competitively priced electricity in the Commonwealth, on August 3, 2012, which contains numerous energy provisions including several which relate to net-metering and long-term contracts for renewable generation.

Net-Metering Cap Increased

Prior to enacting SB 2395, an electric distribution company in Massachusetts could only allow net-metering if the aggregate amount of generation from net-metered systems equaled less than 3% of its total peak energy demand. Net-metering facilities owned by government and municipality customers had a 2% cap while those facilities owned by private customers faced a 1% cap. SB 2395 raised the total cap imposed on electric distribution companies to 6% of the total peak demand and permits government customers and private customers to each represent, in the aggregate, up to 3% of the electric distribution company's total peak demand. Since the 1% cap on private customer-owned facilities has been reached by most of the electric distribution companies in Massachusetts, SB 2395 is expected to drive more investment in distributed generation, including solar, by private customers because the revenue from net-metering services would facilitate the project's financing.

Another important feature of SB 2395 is that certain small private projects are exempt from the net-metering cap and will be permitted to receive net-metering service.1

Long-Term Contracts for Renewable Generation

SB 2395 extends the mandate that electric distribution companies solicit proposals for long-term renewable generation contracts beyond December 31, 2012 to December 31...