TransCanada and Massachusetts reached a partial settlement in a lawsuit in which TransCanada claimed that the mandate to buy only in-state environmental attributes such as SRECs (in this case focused on wind) violated Interstate Commerce. Transcanada dropped the suit when the Commonwealth’s Department of Energy agreed to grandfather supply contracts entered into before January 1, 2010.

Exempting electric suppliers from incremental changes in Renewable Portfolio Standard (RPS) changes are common. In New Jersey the latest changes in Solar Renewable Energy Certificate (SREC) purchase requirements exempts suppliers that have entered into existing Basic Generation Services (BGS) increases. The supplemental increases are shifted to those electric suppliers not contracted under BGS contracts. Once the contracts run out, which is generally 3 years or less, the SREC purchase increases shift back to an even distribution for all suppliers and future BGS auction participants can factor in the higher RPS requirements. These changes are generally a small percentage.

This settlement did not solve the constitutionality of the law in regards to Interstate Commerce. It does show that at this point a minority of electric suppliers may threaten the Interstate Commerce card to achieve a settlement. The downside is that a supplier risks damaging their reputation with their customers if it is perceived that they do not support renewable energy. Lawsuits of this type bring uncertainty for investors in renewable energy. Interstate Commerce was brought up in NJ Clean Energy meetings in the last month for the first time because of the Massachusetts suit.

The settlement will be welcome news for solar developers in Massachusetts and other states such as New Jersey which only accept SRECs from in state solar facilities.