1. Background of Maryland’s Renewable Portfolio Standard Solar Technical Conference October 19, 2007 Maryland Public Service Commission

2. Solar Technical Conference Gregory Kim Energy Resources and Markets Division Regulatory Economist Working with the RPS from 2.1.06 - Present

3. MD RPS Timeline 7.1.04 – HB 1308 / SB 869 RPS Legislation goes into effect 11.24.05 – COMAR 20.61 established 1.1.06 – 1st Compliance Year Begins 12.31.06 – End of 1 st Compliance Year 3.8.06 – 1 st Retroactive RECs issued 1.1.07 – Beginning of 2 nd Compliance Year

4. MD RPS Timeline Continued 4.24.07 – SB 595 / HB 1016 7.1.07 – SB 595 / HB 1016 goes into effect 10.1.07 – Sections 1 & 4 of SB 595 / HB 1016 goes into effect 1.1.08 – 1 st Solar Compliance Year Begins 10.19.07 – Solar Technical Conference Near future - Changes to COMAR

5. 7.1.04 – Initial RPS (HB 1308 / SB 869) Enacted 5.26.04 Effective 7.1.04 HB 1308 – Renewable Energy Portfolio Standard and Credit Trading Act Enacted as Code of Maryland § 7-701 et seq.

6. Facets of the Current RPS REC Requirements and Compliance Fee Schedule Retroactive RECs issued REF Certifications Industrial Process Load Economic Hardship Eligible Fuel Sources Generation Bonuses Annual Reports Maryland Renewable Energy Fund Reporting Requirements

7. Current REC Requirements and Compliance Fee Schedule REC requirements for 2006 and 2007: − Tier 1 = 1% of retail electricity sales − Tier 2 = 2.5% of retail electricity sales Compliance Fee Schedule for 2006 and 2007: − Tier 1 = $20 / MWh − Tier 2 = $15 / MWh − Tier 1 IPL = $8 / MWh − Tier 2 IPL = $0 / MWH (essentially no Tier 2 IPL obligation.

8. Retroactive RECs Credit for generation was given after a facility was given a Renewable Energy Facility Certification 2004 Retroactive RECs – 1.1.04 – 12.31.04 2005 Retroactive RECs – 1.1.05 – 11.24.05 Everything from 11.25.05 – Present are RECs

9. Retroactive RECs

10. Renewable Energy Facility Certifications

11. Industrial Process Load (IPL) PUC Article § 7-701 (d) PUC Article § 7-703 (a)(2(i)

12. Cost Recovery Mechanism / Extreme Economic Hardship An electricity supplier may recover an alternative compliance fee if: − payment of a compliance fee is the least-cost measure. − Insufficient Tier 1 renewable sources − Wholesale electricity supplier defaults or otherwise fails to deliver RECs PSC may waive the compliance fee if it finds an extreme economic hardship. Extreme economic hardship based on, but not limited to: − bankruptcy − poor credit rating − a state or federal extreme financial hardship designation.

13. Eligible Fuel Sources Tier 1 Solar Wind Qualifying Biomass Methane from the anaerobic decompositions of organic materials in a landfill or wastewater treatment plant. Geothermal A fuel cell that produces electricity from a Tier 1 renewable source. Hydroelectric (less than 30 MW in rated capacity) Tier 2 Hydroelectric (greater than 30 MW in rated capacity other than pump storage generation) Poultry Litter Waste-to-energy See PUC § Article 7-701

14. Generation Bonuses 2 RECs for 1 MWh of Generation from Solar Power. (went away with updated RPS) For REF placed in service on or after 1.1.04: − 1.2 RECs for 1 MWh of Generation for Wind Power placed into service on or before 12.31.05 − 1.1 RECs for 1 MWh of Generation for Wind Power placed into service after 12.31.05 and before 12.31.08 − 1.1 RECs for 1 MWh of Generation from methane placed into service on or before 12.31.08

15. Compliance Year 2006 Annual Reports Based upon the reports received: Total Tier 1 REC obligation: 520,019 Total Tier 2 REC obligation: 1,300,067 Total Tier 1 RECs used for compliance: 552,8474 Total Tier 1 RECs used for compliance: 1,322,069 Amount paid in Compliance Fees: $35,125 Number of RECs needed if.005% Tier 1 Solar Obligation applied to year 2006: 2,600 Number of Solar Facilities currently certified as Maryland Renewable Energy Facilities: 0

16. Maryland Renewable Energy Fund Revenues from the alternative compliance fees are to be paid into this fund (Year 2006 = $ 35,125). Fund used to make loans and grants to support the creation renewable energy sources in the state. The Maryland Energy Administration is responsible for administering this fund. Will include a solar sub-fund within.

17. Reporting Requirements Retailers: − 4.1.07 (on or before April 1 of each year after that): RPS Annual Reports Maryland Public Service Commission: − 2.1.07 report to the General Assembly on the status of implementation. − 12.1.09, the PSC status report to the Governor and the General Assembly. − 1.1.17, the PSC must report to the Governor and the General Assembly a review of the implementation and the environmental and economic impacts of the RPS.

18. RPS Changes (SB 595 / HB 1016) Enacted: 4.24.07 Effective: 7.1.07 & 10.1.07 (Sections 1 & 4) Maryland Energy Administration (MEA) / Maryland Public Service Commission (PSC) report. Commission designated administrator of the solar energy RPS program. Delay option for implementing the annual solar RPS. Minimum contract period and commission rate determination provision.

19. Updated Reporting Requirements In addition to the previous reports: Maryland Public Service Commission: − 2.1.07 report to the General Assembly on the status of the net metering program Maryland Energy Administration (in consultation with the Maryland Public Service Commission): − 2.1.07 report to the General Assembly on the status of the RPS fund.

20. Net Metering changes Net energy metering is the measurement of the positive or negative spread between electricity consumed and generated by the customer. Capacity limit on the net generation program is increased from 34.722 to 1,500 megawatts. The standard limit on generating capacity for an individual customer-generator from 200kw to 2 MW.

21. Solar Energy RPS Administrator 1.1.08 - Designated by the PSC The individual is to oversee the solar energy program, including: Program development Education and outreach to promote solar energy Making policy recommendations to the Commission regarding improving the State’s use of solar energy.

22. Resource Location Renewable Energy Facility Location Transition mechanism

23. Other RPS changes Delay Option Minimum Contract Period

24. Tier Requirements * Includes the mandatory Tier 1 Solar Requirement. Tier 1 Solar RECs are a sub-set of Tier 1 RECs

25. New Compliance Fee Schedule vs. the Current Compliance Fee Schedule (per MWh)

26. Additional Resources Maryland PSC website US Department of Energy website Senate Bill 595 / House Bill 1016 (Chapter 119) DSIRE website PJM-GATS Department of Legislative Services − SB 595 Summary

27. Questions UMD Leaf House – US Department of Energy Solar Decathlon