A proposal in New Jersey to set a lower compliance fee for the state's Class II renewable electricity requirements may be pushing renewable energy certificates (RECs) in Pennsylvania's market lower because of overlapping supply.
The New Jersey legislation would establish a $10/MWh alternative compliance payment (ACP) for the Class II requirements in the state's renewable portfolio standard (RPS), according to a draft of the bill obtained by Argus. At present, the ACP for Class II requirements in New Jersey is $50/MWh.
While the bill was introduced on 24 November, lawmakers have yet to officially file it in the state's legislative system. The official version is expected to appear in the system on Wednesday, according to the New Jersey Assembly Majority Office. But that version was not immediately available.
Utilities covered by the RPS must use Class II resources, such as hydropower projects 3MW-30MW in size and municipal waste recovery facilities, for 2.5pc of their retail sales each year. The ACP serves as a fee for each megawatt-hour by which an electricity supply misses that mark, with the state's Board of Public Utilities currently tasked with setting the price.
The draft bill's circulation among REC market participants appears to have had immediate consequences for the related Pennsylvania Tier II market on Tuesday. Vintage 2026 credits traded on the Nodal Exchange at $29/MWh — $1.50 lower than Argus assessed them on 26 November — during the first half of Tuesday's session. Similarly, the 2027 Tier II RECs traded at $31.50/MWh, 75¢ lower than their most recent assessment.
New Jersey Class II RECs for 2026 also went at $29/MWh, $3.25 lower than they finished last week.
The credit pool for New Jersey Class II credits and Pennsylvania Tier II credits partially overlap, with both extending eligibility to some of the same projects, such as certain larger hydropower systems and waste incinerators.
The proposal's prospects are unclear at this early stage in the legislative process. Assembly deputy majority leader William Moen (D), the prime sponsor, wants the bill to tackle ratepayer burdens and energy affordability — key issues for PJM states in the wake of consecutive record-high capacity auctions that have increased electricity costs for residents.
