FAQs for Load Serving Entities

NYSERDA will update frequently asked questions (FAQs) about ZECs and RECs periodically.


NYSERDA Tier 1 Renewable Energy Credits (RECs) FAQs

  1. How is a Load Serving Entity (LSE) Renewable Energy Standard (RES) compliance obligation calculated?

The obligation of each LSE will be determined as a function of the actual load served by that LSE during the RES Compliance Period (January 1 through December 31). Once final load data for the Compliance Period has been reported to the New York Generation Attribute Tracking System (NYGATS), each LSE’s RES compliance obligation will be determined by multiplying the LSE’s actual load served by the Compliance Obligation Percentage. To meet its compliance obligation, the LSE must acquire Tier 1 RECs or make Alternative Compliance Payments (ACPs)in combined amounts that equal that number.

Final load data will be available approximately five months after end of the compliance period. This topic is discussed in Section 5 of the Phase 1 Implementation PlanLink opens in new window - close new window to return to this page.[PDF] filed on October 31, 2016.

The Public Service Commission's August 1, 2016 Order Adopting a Clean Energy StandardLink opens in new window - close new window to return to this page.[PDF] stated that the RES compliance obligation would be determined by multiplying the LSE’s actual load served in the Compliance Period times the Compliance Obligation Percentage. The LSE Compliance Obligation Percentage for 2018 is 0.15%, as outlined in Section 2 of the Phase 2 Implementation Plan[PDF]. As an example:

LSE XYZ Actual Load for 2018 Compliance Period (January 1, 2018 through December 31, 2018) - MWh:

1,000,000

RES Tier 1 Compliance Obligation Percent: 0.15%
LSE XYZ Tier 1 Compliance Obligation for 2018 Compliance Period: 1,500

The RES obligation is separate from any obligation on LSEs to encourage zero-carbon emitting generation under the ZEC program. Please see the ZEC Frequently Asked Questions section for more information on the ZEC program.

  1. When can LSEs purchase Tier 1 RECs from NYSERDA?

NYSERDA offers Tier 1 RECs for sale on a quarterly basis, and will announce information on the next sale at the end of each quarter. The sale will be open for 21 days. During that period, LSEs may submit orders up to their right-of-first refusal amount. LSEs may also request additional Tier 1 RECs beyond that amount. Requests above the right of first refusal REC quantity will be granted if there are additional Tier 1 RECs still available after all right of first refusal requests have been fulfilled.

  1. How do LSEs submit a request to purchase Tier 1 RECs?

All Tier 1 REC Orders will be submitted through NYGATSLink opens in new window - close new window to return to this page.. LSEs may also find information about their REC balances by compliance year within NYGATS.

For each quarterly sale NYSERDA is offering each LSE a “right of first refusal” election opportunity to purchase Tier 1 RECs. The “right of first refusal” REC quantity is determined by the proportion of the total statewide load served by the LSE (computed from the most recent twelve-month data available to NYSERDA). LSEs are able to submit orders up to the right of first refusal quantity. Requests above the right of first refusal quantity will be granted if there are additional Tier 1 RECs still available after all right of first refusal requests have been fulfilled.

  1. Do all the Tier 1 RECs that NYSERDA is offering for sale represent the total obligation of all LSEs for the compliance year?

Not necessarily. NYSERDA will offer for sale available current vintage Tier 1 RECs, as well as any available prior vintage Tier 1 RECs. While NYSERDA-procured Tier 1 RECs are designed to contribute a significant quantity of RECs toward LSE compliance, changes from forecasted load to actual load, forecasted production to actual NYSERDA-contracted production, as well as increases in spot REC market activity or other Tier 1 RECs obtained through projects installed under the Value of Distributed Energy Resources may cause the sale offering volume to fulfill varying percentages of each LSE’s obligation.

  1. How do I know how many Tier 1 RECs I need to purchase?

LSEs may refer to the compliance module in NYGATS, which will provide information about their current Tier 1 REC balances by compliance year, the current compliance year obligation percentage and Tier 1 REC obligation to date.

  1. May an LSE buy more than the right of first refusal Tier 1 REC quantity?

An LSE may order more than the right of first refusal, but to ensure equity among LSEs, NYSERDA will only guarantee the right of first refusal amount during each sale. If some LSEs elect not to purchase the right of first refusal quantity, and other LSEs order more than their right of first refusal, NYSERDA will first fulfill all LSE orders for the minimum quantity, and then allocate the rest proportionally to those who have expressed an interest in purchasing additional Tier 1 RECs.

  1. If NYSERDA does not ultimately have enough Tier 1 RECs to satisfy all LSEs’ RES compliance obligations, what are other sources of Tier 1 RECs that are available from which an LSE can purchase the balance of their RES compliance obligation?

In addition to purchasing Tier 1 RECs from NYSERDA, an LSE may achieve RES compliance in any of three ways:

  1. LSEs may purchase Tier 1 RECs from a third party;
  2. Self-Supply: LSEs may enter into agreements, including long-term power purchase agreements (PPAs), with renewable energy resources to procure Tier 1 RECs or obtain these RECs through eligible Value of Distributed Energy Resource projects; and
  3. LSEs may pay an alternative compliance payment (ACP).

LSEs may pursue any combination of these three strategies. For example, an LSE may choose to purchase a quantity of Tier 1 RECs from NYSERDA while also acquiring Tier 1 RECs from other sources. If an LSE is unsuccessful in acquiring a sufficient quantity of Tier 1 RECs the LSE can complete its compliance by making ACPs, as substitutes for Tier 1 RECs, in an amount sufficient to fulfill the compliance obligation shortfall. Each LSE will need to determine the best approach to demonstrate compliance.

Regarding the second, self-supply option, to be eligible for compliance with RES obligations, Tier 1 RECs must be sourced from a facility that has obtained certification from NYSERDA. NYSERDA is now in the process of certifying facilities and recording their RECs as Tier 1 eligible in NYGATSLink opens in new window - close new window to return to this page. as detailed in thePhase 1 Implementation PlanLink opens in new window - close new window to return to this page.[PDF] filed on March 24, 2017. LSEs and/or eligible facilities can post an interest to transact RECs on the NYGATS Bulletin Board.

If an LSE has purchased Tier 1 RECs from NYSERDA in an amount that exceeds the LSE’s actual compliance requirement, it may bank the excess certificates in accordance to the banking rules[PDF].

  1. Does a new LSE that had no load in the previous year still need to comply?

Any LSE that serves load during the compliance year will have the obligation to comply by acquiring Tier 1 RECs or paying ACPs. As described above, the actual obligation of an LSE will be calculated at the end of the compliance period after final load numbers for the compliance period are available.

  1. Can Tier 1 RECs be produced and procured from adjacent control areas?

Yes. In order to count towards an LSE’s RES compliance obligation, the RECs must be tagged as eligible New York Tier 1 RECs in NYGATS. These RECs may be produced in other control areas so long as they are deemed eligible according to the resource and delivery requirements established in the August 1, 2016 Commission OrderLink opens in new window - close new window to return to this page.[PDF]. The Phase 1 Implementation PlanLink opens in new window - close new window to return to this page.[PDF], filed March 24, 2017 has more details on geographic eligibility for Tier 1 resources.

  1. Why would an LSE prefer to pay an ACP instead of purchasing Tier 1 RECs?
An LSE may prefer to pay ACPs instead of purchasing eligible New York Tier 1 RECs for administrative simplicity. However, the ACP price has been established at a price higher than NYSERDA’s Tier 1 REC sales price.
  1. How does an LSE demonstrate compliance with this obligation?

LSEs will demonstrate compliance with the RES by transferring Tier 1 RECs into their EDP subaccount, with the reason “RES Compliance” in their NYGATS account. If the LSE has Tier 1 RECs in a Banked or Active subaccount in their NYGATS account, those Tier 1 RECs will not count towards their obligation. LSEs will need to review and accept an annual compliance report to verify they have met their obligations.

  1. When is compliance filing due?

As described in the Phase 1 Implementation Plan, filed March 24, 2017, NYGATS will generate a compliance year RES compliance report, containing the actual compliance obligation and Tier 1 REC balances in the LSE's NYGATS account in July following the compliance year. LSEs must verify and accept their compliance filings by August 31 each year.

  1. Are there reports released by NYGATS showing qualified Tier 1 RES resources?

Yes. NYGATS produces public reports of all facilities granted a Tier 1 RES Statement of Qualification. NYGATS also provides reporting of provisionally certified resources (those that are not yet operating) on an aggregate level.

NYSERDA Zero-Emissions Credits (ZEC) and ZEC Sales FAQs

  1. How is a Load Serving Entity (LSE) ZEC compliance obligation calculated?

The obligation of each LSE will be determined based on the actual load served by that LSE from April 1 through March 31 (ZEC Compliance Period). The Department of Public Service has stated that load will be calculated without losses (wholesale).

Final load data will be available approximately five months after end of the ZEC Compliance Period (approximately September 15). Once final load data for the ZEC Compliance Period has been reported to the New York Generation Attribute Tracking System (NYGATS), each LSE’s ZEC obligation will be determined using each LSE’s actual load share ratio (the LSE’s load during the ZEC Compliance Period divided by the total New York State load during the ZEC Compliance Period). To meet its compliance obligation, the LSE must acquire ZECs from NYSERDA in an amount that equals its load share ratio multiplied by the total number of ZECs purchased by NYSERDA during that ZEC Compliance Period.

The ZEC obligation is separate from any obligation on LSEs to encourage generation utilizing renewable resources under the Renewable Energy Standard (RES). For more information on RES, please see RES Frequently Asked Questions.

  1. How did NYSERDA calculate each LSE’s projected ZEC compliance amount?

NYSERDA communicated with each LSE via email regarding a projected ZEC compliance amount using each LSE’s load served during a 12-month reference period (the “base year”). This base year load number was necessary for NYSERDA to calculate an estimated ZEC compliance obligation. As described above, the LSE’s actual ZEC compliance obligation will be based on the LSE’s actual load during the ZEC Compliance Period and the total number of ZECs generated in that compliance period.

An example of the projected ZEC compliance calculation is provided below:

LSE XYZ Actual Load for Reference Period (April 1, 2017 through March 31, 2018) (MWh) 10,000,000
LSE’s Load Share percentage for Reference Period 10%
Maximum Available ZECs to be purchased by NYSERDA during first Compliance Year – page 145 of the Order Adopting a CES 27,618,000/year
LSE XYZ Projected ZEC Compliance Obligation for first Compliance Period 2,761,800/year
  1. Will the amount of ZECs that NYSERDA will initially sell an LSE during the Compliance Period equal an LSE’s ZEC Compliance Obligation?

Maybe, but probably not. The amount of ZECs that each LSE is projected to need and will purchase from NYSERDA is an estimate based on the LSEs historic load share ratio. The actual ZEC compliance obligation will reflect an LSE’s actual April 1 through March 31 load for the compliance year and the actual ZECs purchased by NYSERDA during the same period. If an LSE’s actual load share ratio differs from the forecasted load share ratio for the ZEC compliance period, or if the actual ZEC purchases by NYSERDA differ, the LES’s compliance obligation will be different.

  1. Can LSEs return unneeded ZECs to NYSERDA?

The Commission ordered that any unneeded ZECs should be returned to NYSERDA at the price the LSE paid.

  1. What are the terms and conditions of the ZEC Agreement?

On November 17, 2016, the Public Service Commission issued an Order Approving Standardized Agreements in the CESLink opens in new window - close new window to return to this page.[PDF], including the Agreement for the Sale of Zero-Emissions Energy Certificates from NYSERDA to LSEs. NYSERDA posted the Standard Zero-Emissions Energy Certificate Purchase Agreement[PDF] on its webpage. NYSERDA recommends reviewing the Agreement carefully as it contains important information regarding payment and delivery schedules.

  1. My LSE had no load in the base year. Will I still need to comply?

Any LSE that serves load during a compliance year will have the obligation to comply with the ZEC obligation. As described above, the actual obligation of an LSE will be calculated at the end of the ZEC Compliance Period. If an LSE has load in the compliance period of April 1 through March 31 but showed zero load in the reference year, the LSE will still have a ZEC compliance obligation for the compliance period.

  1. When is the ZEC reconciliation?

The ZEC reconciliation will occur each year in the September timeframe after the final load data has been made available in NYGATS.