Market Sensitive Information2 June 2008 Conectiv Energy Comments on Sun Farm Network Proposal June 2, 2008

Market Sensitive Information2 June Design Parameter Current ProposalConectiv EnergyComments Contract Term 10 Yrs10 Years Provides coverage for financing. EDC Contracting % 60%, reviewed annually by the board Percentages should be set beginning with 50% in declining increments over a 3 year period - Also consider PSEG and ACE programs that have been announced. Segment Sizes <10Res, all other <100, Residential(<10), </= 150 kw, low income projects with 250 kw cap Limiting segment size may provide room for a longer program period. Max System Size 700KW250kw Encourages market and project development Developer Cap 30% within a segment for a year (not per cycle) No cap Encourages efficient market development Program Sunset 3 Years Favored segments (low income, etc.) could continue

Market Sensitive Information2 June Design Parameter Current ProposalConectiv EnergyComments Contracts Issued Monthly over 9 cycles starting each September No preference on contract issuance Timing & transparency are key to a vibrant solar market in NJ Contracts Allocated Based On SREC price requested by project, lowest to highest. Application age is secondary factor. Contracts accepted by price and acceptable performance metrics Contracts need to include credit and delivery information Contract Price Set Per contract, based on SREC price applied for Prices should be set by competitive factors – allow the market to drive pricing structure Project Eligibility All types of projects within a given territory (customer owned, investor owned, grid supply, community solar). Encourage all types of project development in the state Legacy System Treatment Legacy systems (must be defined) not eligible for EDC contracts Legacy systems should not be eligible Excluding legacy systems avoids windfall profits paid by ratepayers

Market Sensitive Information2 June Design ParameterCurrent ProposalConectiv EnergyComments SREC Handling SRECs sold by EDCs to LSEs each year (spot market). LSEs buy at their discretion. SRECs should be auction to eligible participants (transparency is important) Eligible participants include credit worthy participants, BGS participants, and existing third party participants. Timing should put sale in January – prior to BGS auctions SREC Resale Pricing N/A EDC Cost Recovery Contract payout costs, plus admin costs, plus BPU-authorized profit, recovered from SREC sale proceeds + SPRC- like charge (if needed). Admin costs capped. N/A The cost recovery construct needs to be able to stand up to rate payer advocate scrutiny to allow for market stability Application Requirements Project must complete standard form, signed contracts. Applications per project (not aggregated) Aggregation should be allowed Project developer must still meet standard credit & contract expectations Monthly Contract Allocation Done by each EDC, process similar to that used in CORE Ensure a timely and transparent contract process