To the Editor:
The Hartford Business Journal was wide of the mark in turning a virtue of a new state energy initiative into a negative, (Connecticut’s $1B Energy Program Hits Early Snags, Sept. 17).
The article cast as a problem the fact that several companies decided to drop out of the Zero Emissions Renewable Energy Credit and Low Emissions Renewable Energy Credit (ZREC/LREC) program after United Illuminating accepted their bids. In reality these dropouts were triggered by important protections built into the program to discourage unrealistic bids and to prevent projects that are not economically feasible from holding a place in the line for funding.
These types of problems plagued state energy initiatives in the past — the most vivid example being Project 150, which achieved poor results in part because many bidders were not anxious to move forward with projects that made little economic sense.
In order to avoid repeating this mistake, the new ZREC/LREC program requires bidders to have a stake in the outcome — instead of just trying to game the system. Under this program, those who submit a project selected to move forward must post a “performance assurance” payment. This forces bidders to make a realistic assessment of their ability to complete the project in the required one-year time frame. It they can’t, they must forfeit their “performance assurance” and their project is canceled. This protection weeds out potential “line-sitters” like the ones that have plagued the Project 150 program, and ensures that only projects likely to be completed sign contracts under this program.
The “performance assurance” protections built in to the ZREC/LREC program are an example of the thoughtful, realistic and innovative approach Connecticut is taking to building a new energy future. By harnessing market forces and leveraging economic incentives, we are moving forward to realize Governor Malloy’s vision of bringing cheaper, cleaner and more reliable power to the residents and businesses of our state. In fact, it is worth noting that the 21 projects receiving contracts from UI in this first phase of the ZREC/LREC program will provide clean renewable electricity at a cost much lower than renewable projects in other states.
Daniel C. Esty Commissioner Connecticut Department of Energy and Environmental Protection
