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Frequently Asked Questions - This Week

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Answers to Frequently Asked Questions are provided in this section.

The first posting of FAQs is in August. The last posting of FAQs is in the latter part of January, after bidders are registered to participate in the Auctions. From that point through the close of the Auctions, questions and answers are emailed directly to Registered Bidders and are not posted to the BGS Auction website. Questions that are not from Registered Bidders or their advisors are answered strictly as time permits.

Your use of this page (site) constitutes an acceptance of the Terms as described in the disclaimer.

 

 

FAQ-74

I am looking for a presentation from last year that provided the Renewable Portfolio Standard (“RPS”) obligations applicable to BGS Suppliers. If that presentation is no longer available, where can I find information regarding current RPS obligations for BGS Suppliers? Is there an example calculation available?


Documents from prior auctions are removed from the BGS Auction website as the information in such documents may no longer be relevant.

BGS Suppliers are responsible for meeting New Jersey’s RPS requirements for solar electric generation, Class I renewable energy, and Class II renewable energy. The RPS requirements for June 1, 2023 through May 31, 2026 are as follows:

 

Solar Electric Generation (SRECs)

Class I Renewable Energy

Class II Renewable Energy

June 1, 2023 to May 21, 2024

4.90%

27.00%

2.50%

June 1, 2024 to May 21, 2025

4.80%

35.00%

2.50%

June 1, 2025 to May 21, 2026

4.50%

38.00%

2.50%

 

Note that the EDCs apply the RPS percentages specified by the BPU to energy supplied by the supplier (and not to energy associated with sales at the retail meter) and hence, apply the RPS percentages to energy that includes distribution and transmission losses and is de-rated by the marginal loss factor. To determine the energy that a Load Serving Energy must supply, PJM uses loss-loaded schedules and de-rates these schedules by marginal losses to arrive at energy settlement values. The factors used in de-ration are determined for each hour for each EDC by PJM and are available in the BGS Data Room. When calculating the BGS Supplier’s obligations under the RPS, each EDC applies the RPS percentages to the values from the PJM settlement, which are also the values for settlement under the BGS Supplier Master Agreement, and which are equal to the energy that a BGS supplier must provide.

Compliance with Offshore Wind Renewable Energy Certificate (“OREC”) obligations, compliance with Transition Renewable Energy Certificate (“TREC”) obligations, and compliance with SREC-II obligations arising from the Solar Successor Incentive Program (“SuSI”) are also a component of a BGS Supplier’s Class I obligation. BGS Suppliers have the responsibility to retire ORECs, but BGS Suppliers bear no cost to acquire the ORECs. Additionally, BGS Suppliers bear no cost to acquire TRECs. Instead, TRECs are retired to the TREC Administrators GATS account and then the statewide Class I requirement is reduced on a 1-to-1 basis. The EDCs expect SREC-II to be administered in the same way as TRECs.

The Auction Manager will make available an example that demonstrates the calculation of a supplier’s RPS obligation. An announcement will be made when this document becomes available.

12/7/2022, in Renewable Portfolio Standards.
FAQ-73

It appears that to become a Qualified Bidder the Part 1 Application requires an Applicant to certify that it will destroy any document distributed by the Auction Manager that lists the Qualified Bidders within five (5) days of the Board rendering a decision on the Auction. We face regulatory requirements related to transactions into which we enter and these requirements may conflict with us being able to make this certification. Is it possible to forego this certification or forego receiving the list of Qualified Bidders from the Auction Manager? Can we be qualified as a bidder without making the certification if we explain our circumstances to the Auction Manager?


In order to become a Qualified Bidder, it is not possible to forgo making this certification. Section VII.E.4 of the BGS-RSCP Auction Rules and Section VI.E.4 of the BGS-CIEP Rules require that the Applicant certify that it will destroy any document distributed by the Auction Manager that lists the Qualified Bidders within five (5) days of the Board rendering a decision on the Auction results. An Applicant that does not make this certification will not become a Qualified Bidder. The documents to be destroyed relate solely to the application process in view of possible participation in the BGS Auctions and do not relate to any transaction that may arise as a result of the supplier winning tranches in the BGS Auctions.

It is not possible to forego the receipt of the list of Qualified Bidders from the Auction Manager. Qualified Bidders that submit a Part 2 Application are required to make several certifications with respect to other Qualified Bidders as listed in the document received from the Auction Manager.

Each potential bidder must consult the Auction Rules (including the Certifications and Disclosures to Be Made portion of the Auctions Rules) before submitting its Part 1 Application and reach its own determination as to whether it is able to make each required certification. Each potential bidder should seek advice from its legal counsel as necessary. Neither the Auction Manager nor the EDCs can make a determination as to whether the circumstances of a potential bidder are consistent or inconsistent with a particular certification.

12/7/2022, in Application.
FAQ-72

We would like to rely on the financial standing of a Guarantor. What are the minimum requirements for the Guarantor to receive unsecured credit under the BGS Supplier Master Agreements? Are we able to change the entity on whose financial standing we are relying after the Part 1 Date? 


An applicant wishing to rely on the financial standing of a Guarantor must provide the information required by Section 7 of the Part 1 Application for the Guarantor, including credit ratings and certain financial information. Specifically, in order to rely on the financial standing of a Guarantor and to receive unsecured credit under the BGS Supplier Master Agreements, the Guarantor must: (1) be rated by at least two of the following rating agencies: S&P Global Ratings (“S&P”), Moody’s Investors Services, Inc (“Moody’s”), Fitch, Inc (“Fitch”), or A.M. Best Company (“A.M. Best); and (2) have a minimum senior unsecured debt rating (or, if unavailable, corporate issuer rating discounted one notch) of at least “BBB-” from S&P, “Baa3” from Moody’s, “BBB-” from Fitch, or “bbb” from A.M. Best.

A committee of representatives from the EDCs determines the credit rating as well as the tangible net worth for the Guarantor and calculates the unsecured credit granted to the Guarantor as described in the BGS-Supplier Master Agreements.  This determination is provided to Qualified Bidders on December 16, 2022 with the Notification of Qualification in a creditworthiness assessment. There is no mechanism to request an early creditworthiness assessment for the Guarantor. Further, there is no mechanism or opportunity for the Qualified Bidder to request a creditworthiness assessment of another entity (including itself) after the Part 1 Application process is complete.

Each Qualified Bidder, regardless of the creditworthiness assessment of such Qualified Bidder or its Guarantor, must provide a Pre-Auction Letter of Credit with their Part 2 Application.

For the BGS-CIEP Auction, the Pre-Auction Letter of Credit must be in an amount of $375,000 per tranche of the Qualified Bidder’s indicative offer at the maximum starting price.

For the BGS-RSCP Auction, the Pre-Auction Letter of Credit must be in an amount of $500,000 per tranche of the Qualified Bidder’s indicative offer at the maximum starting price.  For a Qualified Bidder to the BGS-RSCP Auction that is relying on the financial standing of a creditworthy Guarantor, such Qualified Bidder is required to provide a Letter of Intent from the Guarantor in an amount of $1.9M per tranche of the Qualified Bidder’s indicative offer at the maximum starting price.  For a Qualified Bidder to the BGS-RSCP Auction that is not investment grade credit and that does not rely on the financial standing of a creditworthy Guarantor, such Qualified Bidder will be required to provide a Letter of Reference from a financial institution in an amount of $1.9M per tranche of the Qualified Bidder’s indicative offer at the maximum starting price.  (Alternatively, the Qualified Bidder can provide a Pre-Auction Letter of Credit for the full amount, namely $2.4M per tranche of the Qualified Bidder’s indicative offer at the maximum starting price.).

The EDCs may re-evaluate a Bidder’s and/or their Guarantor’s creditworthiness should the Bidder be a winner at BGS Auctions.

12/2/2022, in Credit, Supplier Master Agreement .
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