10-year long term contracts with utility scale solar projects will reduce demand for existing solar projects SRECs in Pennsylvania in the future. Fixed rate long-term contracts backed by ratepayers always reduce competition. They create winners and losers with solar investors in the territory that the long-term contracts are permitted. The winners are the solar owners with long-term contracts. The ratepayers always lose because they are forced to continue to purchase higher priced SRECS as opposed to purchasing SRECs in a spot market in which all solar can participate. Residential, small, medium and large commercial solar projects in PA will have the demand for AEC's directly reduced by the amount contracted by the 10-year AEC contracts.
PECO was given permission by the Pennsylvania Public Utility Commission to enter into 10-year fixed rate contracts for a total of 25Mw with large new solar projects (larger than 5Mw). This procurement will reduce demand for existing and new small solar projects for the next 10-years.
Flett Exchange has observed this process numerous times during the last decade. Solar developers and solar trade groups petition state legislatures and Public Utility Commissions to force regulated distribution companies to enter into long-term procurement for renewable attributes such as SRECs and AEC's. The procurements are ratebased so that if any long term purchases are "out-of-the-money" the ratepayer has to make up for the losses. New Jersey Legislature was convinced to write legislation requiring the electric distribution companies EDC's to enter into long term contracts between 2009 and 2014. All of those contracts were at losses and ratepayers are still making up losses by non-bypassable surcharges.
The Petition of PECO Energy Company for Approval of Its Default Service Program for the Period From June 1, 2025, through May 31, 2029 whole petition is available here: