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Connecticut Sees Most Project 150 Capacity Failing to Achieve Commercial Operation
September 6, 2011
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Future energy procurement legislation in Connecticut should allow flexibility for the procuring agency to develop the appropriate price and other relevant contract terms needed to assure that the approved projects are financeable, the Connecticut Public Utilities Regulatory Authority would find in a draft report to the General Assembly concerning the Project 150 contracts (11-07-06).
Under the Project 150 statute, the state sought to develop 150 MW of renewable energy under long-term contracts.
Of the 14 projects that the Authority has approved, totaling 159.8 MW, only about four projects totaling about 47 MW appear as if they are likely to be completed and go in service as required by contract, the draft finds.
One project is definitely not going forward, while four projects are improbable, for reasons including lack of financing due to the inadequate terms provided for in the contract.
Another five projects are at stages of development that make it difficult but not impossible for them to achieve the obligatory scheduled operation date, or an in service date no later than two years from the original scheduled operation date.
The four remaining projects which appear likely to be completed consist of one 30 MW biomass facility and three fuel cell projects of 9.0, 4.8 and 2.4 MW each.
Due to this experience, the draft report recommended that the General Assembly should not attempt to use the Project 150 statute, as currently worded, to attempt to procure additional renewable generation going forward because the projects are reporting that the pricing formula contained in the statute and in the contract is not sufficient to obtain financing in current market conditions.
The draft notes that separate statutes regarding integrated resource planning may be used to contract for new generation if a need is identified.
In future procurement legislation, the General Assembly should allow for flexibility, within certain guidelines, for the agency conducting the procurement to develop the appropriate price and other relevant contract terms and conditions needed to assure that the projects approved are financeable, the draft states.
Additionally, if the General Assembly wants the Authority to terminate or modify Project 150 contracts, the General Assembly should amend the statute to expressly give the Authority the discretion to do so upon request of one or more parties to the contract. The Authority cannot terminate or modify these or any other contracts absent specific legal authority to do so established within the contract itself or by law, the draft notes.
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