Statement from the Massachusetts DOER
While DOER realizes as a practical matter that providing a reduced ACP Rate for pre-existing contracts will result in a reduction in the demand for SRECs in the early years of the program, that exact percentage is unknown at this time. The demand will be a direct reflection on that percentage of load that was contracted for prior to January 1, 2010 which is data that DOER does not generally collect. DOER did discuss this issue with a handful of competitive retail suppliers, and under a confidentiality agreement, obtained contract information from 8 suppliers serving about 1500 GWh in 2009. DOER provides the following information with no warranty of its accuracy beyond the above stated parameters.
Approximately 50% of the retail load in Massachusetts is served by competitive suppliers, and of that portion, DOER estimates that about 70-90% of that load will be served in 2010 under a pre-2010 contract. This percentage decreases dramatically in the following years as contracts expire or are renewed, such that in 2011 only 40% of the competitive supply load will be served by pre-2010 contracts. This trend continues with 20% in 2012, 10% in 2013, and under 5% in 2014.
It is important to remember that combined with the growth in the Minimum Standard each year, the overall percent of applicable load relative to the Standard diminishes even more substantially.
While DOER hopes this very limited analysis provides some information to the solar development community but will not assure its accuracy beyond the given parameters or be responsible for any further conclusions drawn by any market participant. DOER will receive additional information on load under contracts by retail suppliers as part of the 2009 Annual Compliance Filing and will report that information, in the aggregate, as soon as it is available.
SRECTrade Comment
Essentially what this is saying is that the settlement exempts suppliers under previous supply contracts from the SREC requirement. This will impact 35-45% of the demand in the Massachusetts SREC market. This means that if the requirement in 2010 was 30 MW of solar to meet the RPS, with these exemptions, the actual requirement will be 17-20 MW of solar. In the following 3 years the impact is reduced to 20% of the total demand, 10% and 5%, respectively. Fortunately, DOER has several levers it can pull to ensure that pricing of SRECs stays within the $300-$600 range. For example, if there is a surplus in 2010, the requirement for 2011 will likely be increased to adjust for the surplus. This should mitigate the impact of this settlement. Finally, even with the reduced demand, the state needs to get to an average solar capacity of 17-20MW in 2010. This is no small task.
According to this projection, approximately 20,000 SRECs need to be purchased in Pennsylvania for generation through May 31, 2010. However, the reality is a bit more complex. Electricity markets are composed of three types of companies: electricity generators who supply the power, electricity transmitters responsible for transmission and electricity distributors responsible for the delivery of the retail electricity. It is important to know that although the distribution companies (EDCs) or retail utilities are most commonly associated with state RPS goals, it is actually the numerous electricity suppliers who are responsible for purchasing the SRECs to meet the RPS. The Pennsylvania electricity market is comprised of 11 Electricity Distribution Companies (EDCs). Behind each EDC are the many suppliers providing power to them. When the PA RPS was passed, the suppliers for several EDCs were exempted for the first few years. 
As a result, the actual demand for PA SRECs in the 2009-10 Energy Year drops from nearly 20,000 SRECs to under 5,000 SRECs – 25% of what was initially projected. In 2010-11, the demand drops from an initial projection of 33,000 SRECs down to 21,000 SRECs – about 60% of initial projections!