The New Jersey Board of Public Utilities has proposed to readopt and amend its rules for offshore wind facilities and Offshore Renewable Energy Certificates ("ORECs"). The sale of ORECs is intended to help fund the offshore wind facilities, but the Board has yet to establish a funding mechanism for ORECs, stalling potential developments.
When the Board initially adopted the rules in 2011 and again readopted them with amendments this fall, it reserved the issue of the OREC funding mechanism for a later date. The Board held four stakeholder meetings on the funding mechanism during 2011 and accepted comments and draft proposals before and after each conference. Although it recently retained a consultant on the funding mechanism, the Board has yet to propose a rule and has taken no public action since the last stakeholder meeting more than a year ago.
The Board's August 2012 proposed amendments to its application rules similarly do not provide any information on how ORECs will be funded. They instead require applicants to specify in detail their anticipated costs, revenues, and the price per OREC in MW-hours necessary to make the project commercially viable. The proposed amendments include:
- OREC pricing proposals must represent the calculation of the price based on the total revenue requirements of the project over a 20-year period, specifying all anticipated costs, revenues, taxes, financing, and subsidies.
- OREC pricing proposals must specify the expected energy output of the project and the price per OREC in MW-hours necessary to make the project commercially viable.
- The value of the electricity generated would not be deducted when calculating the OREC price but must be returned to ratepayers along with any tax credits, subsidies, or environmental benefits.
- Applicants must provide substantiating documentation for any claims that manufacturing will be based in New Jersey.
- Applicants must seek Board of Public Utilities approval for any changes to the organizational structure of key employee positions.
- Applicants must provide evidence of financing, such as a letter of intent to offer credit from credible financiers, a commitment from equity investors, and/or guarantees from an investment-grade party.
- Ratepayers, suppliers, or providers may not make up any potential cost differences resulting from changes in tax laws or decommissioning costs in excess of anticipated costs.
Comments on the proposed amendments were due on October 19, 2012. It is likely that the Board will not post comments on its web site until it issues a final rule on the amendments this winter