(a) The Commission shall establish by regulation the mechanisms under which a REC and SREC shall be created and recorded with respect to the entity generating electricity using eligible energy resources for use in complying with the renewable energy portfolio standards of this subchapter. Once the GATS system is operational and the PJM Interconnection, or a related organization currently known as PJM Environmental Services, Inc. (PJM-ESI), begins issuing RECs and SRECs, the Commission may issue an order approving the use of RECs and SRECs issued by the PJM Interconnection or PJM-ESI for compliance with the renewable energy portfolio Standards of this subchapter.

(b) Beginning June 1, 2007, each retail electricity supplier shall submit an annual report to the Commission, on a form and by a date specified by the Commission, that:

(1) Demonstrates that the retail electricity supplier has complied with the renewable energy portfolio standards established pursuant to this subchapter and includes the submission of the required amount of renewable energy credits; or

(2) Demonstrates the amount of electricity sales for the compliance year by which the retail electricity supplier failed to meet the renewable energy portfolio standard.

(c) Beginning June 1, 2007, each municipal electric company shall submit an annual report to the Delaware Energy Office and the Controller General that:

(1) Demonstrates that the municipal electric company has complied with the RPS established pursuant to this subchapter and includes the submission of the required amount of renewable energy credits; or

(2) Demonstrates the amount of electricity sales for the compliance year by which the municipal electric company failed to meet the RPS.

(d) In lieu of standard means of compliance with this statute, any retail electricity supplier may pay into the Fund an alternative compliance payment of $25 for each megawatt-hour deficiency between the credits available and used by a retail electricity supplier in a given compliance year and the credits necessary for such retail electricity supplier to meet year’s renewable energy portfolio standard. A municipal electric company may pay the alternative compliance payment into a fund established by its municipal members. In subsequent years, the alternative compliance payments for any retail electricity supplier or municipal electricity company shall increase as follows:

(1) If a retail electricity supplier has paid an alternative compliance payment of $25 for each megawatt-hour in any previous year, then the alternative compliance payment shall be $50 for each megawatt-hour.

(2) If a retail electricity supplier has paid an alternative compliance payment of $50 for each megawatt-hour in any previous year, then the alternative compliance payment shall be $80 for each megawatt-hour.

(3) Alternative compliance payments shall not be more than $80 for each megawatt-hour.

(4) The State Energy Coordinator shall have the authority to review the alternative compliance payment on an as needed or annual basis to determine reasonableness compared to market REC prices. Following an analysis conducted by the Delaware Energy Office, the State Energy Coordinator shall also have the authority to adjust the alternative compliance payment by 10% in order to achieve reasonableness.

(e) In lieu of standard means of compliance with this statute, any retail electricity supplier may pay into the Fund a Solar Alternative Compliance Payment of $400 for each megawatt-hour deficiency between the credits available and used by a retail electricity supplier in a given compliance year and the credits necessary for such retail electricity supplier to meet the year’s Renewable Energy Portfolio Standard. A municipal electric company may pay the solar alternative compliance payment into a fund established by its municipal members. In subsequent years, the solar alternative compliance payments for any retail electricity supplier or municipal electricity company shall increase as follows:

(1) If a retail electricity supplier has paid a Solar Alternative Compliance Payment of $400 for each megawatt-hour in any previous year, then the solar alternative compliance payment shall be $450 for each megawatt-hour.

(2) If a retail electricity supplier has paid a Solar Alternative Compliance Payment of $450 for each megawatt-hour in any previous year, then the Solar Alternative Compliance Payment shall be $500 for each megawatt-hour.

(3) The State Energy Coordinator shall have the authority to review the Solar Alternative Compliance Payment on an as needed or annual basis to determine reasonableness compared to market-based SREC prices. Following an analysis conducted by the Delaware Energy Office, the State Energy Coordinator shall also have the authority to adjust the Solar Alternative Compliance Payment by 20% in order to achieve reasonableness, but not higher than 20% of the competitive market cost of an SREC, determined by the quarterly weighted average cost of meeting the requirement through purchase of an SREC as analyzed by the Delaware Energy Office.

(f) (1) Recovery of costs. — A retail electricity supplier or municipal electric company may recover, through a nonbypassable surcharge, actual dollar for dollar costs incurred in complying with a state mandated renewable energy portfolio standard, except that any compliance fee assessed pursuant to subsection (d) of this section shall be recoverable only to the extent authorized by paragraph (f)(2) of this section.

(2) A retail electricity supplier or municipal electric company may recover any alternative compliance payment if:

a. The payment of an alternative compliance payment is the least cost measure to ratepayers as compared to the purchase of eligible energy resources to comply with a renewable energy portfolio standard; or

b. There are insufficient eligible energy resources available for the electric supplier to comply with a renewable energy portfolio standard.

(3) Any cost recovered under this section shall be disclosed to customers at least annually on inserts accompanying customer bills.

75 Del. Laws, c. 205, § 1; 76 Del. Laws, c. 165, §§ 7-9; 77 Del. Laws, c. 451, §§ 3, 13-19.