According to a related presale report (and as had been announced in an earlier request for proposal), the Connecticut Green Bank (Green Bank) is monetizing certain solar renewable energy credits (SHRECs) generated under its Solar Home Renewable Energy Program and sold to Connecticut Light and Power (d/b/a Eversource Energy) and United Illuminating (UI).
Under the SHREC program, the utility SHREC buyers are directed by statute to enter into purchase agreements for the related SHRECs. Pursuant to separate Eversource and UI Master Purchase Agreements and related Eversource and UI Confirmations, the utility SHREC buyers pay $50 for the SHRECs generated by the first 6788 PV systems in so-called "tranche 1" and $49 for each generated SHREC for the next 7250 PV systems in "tranche 2" over a fifteen year term. Eversource buys 80% of the applicable SHRECs and UI buys the remaining 30%. Connecticut's Public Utilities Regulatory Authority reviewed the purchase agreements and approved cost-recovery by the utility SHREC buyers.
There are 2 classes of rated Notes – $36,800,000 of Class A (rated A- (sf)) and $1,800.000 of Class B (rated BBB- (sf)) Notes. Interest on the Class B Notes is deferred and funds are used to amortize Class A Notes if a specified DSCR falls below a threshold level.
While the presale report states that the transaction was analyzed under the rating agency's related ABS methodology, the report also describes the significant analysis of the counterparty utility SHREC buyers, the quasi-public nature of the Green Bank, the statutory authority for, and related regulatory review and approval of, the SHREC program, a required independent engineering report to estimate PV generation and other related features of the transaction.
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2019. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.