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From: Ken on 1 May 2010 17:20
And now for something completely different.

So, last year I went to a Green Energy conference hosted by a local
utility, PSE&G. While there, PSE&G and a number of other booth people
pitched putting up a grid-tied solar energy system. This kind of thing
consists of:
1. Enough solar panels to cover the roof.
2. Some medium sized boxes bolted to the inside wall of the garage.
These convert DC from the panels to 220 VAC.
3. Four new breaker panels with Frankenstein's Monster switches on the
side, three inside, one outside.
4. A new electric meter.

When the Sun Does Not Shine, the Meter Runs Forwards normally.

When the Sun Shineth, the Meter Runs Backwards. Lots. Fast.

The way this thing is rigged is that if the panels are generating less
power than the house is using, the meter runs forwards. When the panels
are generating more power than the house is using the meter runs
backwards. The output of the boxes is tied to the AC power right behind
the meter, hence the name "Grid Tied".

The financial incentives were insane. The base cost of the system we
eventually installed was $72K. The State threw in a $16K rebate, gratis,
that went straight to the installer. On top of that, this thing counts
as a solar energy system for Federal purposes. In 2009, when it went in,
30% of the remainder left after the state rebate could be used as a
Federal Tax Credit, some 19.8K in this case. (In 2009 the government
removed the $1500 cap on this kind of thing; it's back, now.)
Net cost after rebates and tax credit: Around $46K.

So, the electric bill has been zero for a while now. So that's a couple
grand a year and, given the vagaries of the weather, a check from PSE&G
is going to show up in a few weeks since we've generated a couple
megawatt-hours more than we've used. (Yeah, the new meter keeps track of
that kind of thing.)

So, at $2K a year in savings, assuming nothing goes wrong (ha!), that's
around 23 years to get back the investment. But there's more..

Turns out that New Jersey and a number of other states in these parts
require the utility companies to have a certain percentage of generation
that's "green" and either non-polluting or low polluting. For every
megawatt-hour of required clean energy the utilities don't make, they
pay a fine. This state-set fine varies over time. In New Jersey, at the
moment, the fine is around $720 or so. However, the utilities can zero
out the fine on each megawatt if they can give the state a Solar
Renewable Energy Credit (SREC) certificate. The utilities can make these
by, say, putting up solar panels and connecting them to the grid; for
each megawatt-hour of energy their panels make, they get a certificate
and don't have to pay a fine.

Now comes the fun. If anybody has a solar energy system and has it
connected to the grid, and the installation passes state requirements
and inspectino, they, too, get an SREC for every megawatt-hour of energy
thus generated. Note: This isn't excess energy or anything. It's energy
generated, period.

There's a market for the SRECs. The eventual buyers are the utilities.
They don't want to pay much.. But there's that fine hanging around.
There are aggregators who buy up onesie-twosies of these things, then
sell a large bunch to the utilities. Then there's all sorts of
businesses and individual homeowners who've put these systems on the
roofs of their warehouses and homes. There's web sites where these
things are created, bought, sold, and retired. (GATS covers NJ and a
bunch of other states.)

Sold my first four yesterday for more than I asked in the mid $600's; at
this rate, I'll have payback in 5 1/2 years or less!

There doesn't seem to be any definitive answer on whether the money
generated by selling an SREC is taxable or not. The IRS doesn't seem to
have a clue, seriously. So there may be a ruling in the future that
might require some payment of back taxes.. Or not.

So, here comes the Quicken questions.

This is kinda like having a spring on one's property where people show
up with gallon jugs and you charge them a buck a gallon. Selling SRECs
is income, all right, but I'm not actually paying for anything like I
would, say, if I went out and bought and sold a stock. The certificates
have numbers; if one actually doesn't want to sell one's certificates,
one can ask for them to be sent (!), at which point they could be used
to paper the wall.

I'd like to track the certificates in Quicken, especially if the Feds
come calling in a few years. But how?

Finally, it's one thing to be playing around with these blame SRECs, but
at some point the local utility is going to settle with me for the
excess electricity I've been generating. Everything I've managed to dig
out so far seems to indicate that this >is< taxable income, just like if
I had a Nuclear Power Plant in the back yard. (Which, in a bizarre kind
of way, I do, in the sense that the Sun is such a beast, and is the
source of the energy...). So, how does one handle this?

Any thoughts on the subject would be greatly appreciated.

K. Becker


From: Tim Conway on 1 May 2010 19:06

"Ken" <jkbecker(a)no.spam.opt.opline.net> wrote in message
news:4bdc9b2f$0$4975$607ed4bc(a)cv.net...
> And now for something completely different.
>
> So, last year I went to a Green Energy conference hosted by a local
> utility, PSE&G. While there, PSE&G and a number of other booth people
> pitched putting up a grid-tied solar energy system. This kind of thing
> consists of:
> 1. Enough solar panels to cover the roof.
> 2. Some medium sized boxes bolted to the inside wall of the garage. These
> convert DC from the panels to 220 VAC.
> 3. Four new breaker panels with Frankenstein's Monster switches on the
> side, three inside, one outside.
> 4. A new electric meter.
>
> When the Sun Does Not Shine, the Meter Runs Forwards normally.
>
> When the Sun Shineth, the Meter Runs Backwards. Lots. Fast.
>
> The way this thing is rigged is that if the panels are generating less
> power than the house is using, the meter runs forwards. When the panels
> are generating more power than the house is using the meter runs
> backwards. The output of the boxes is tied to the AC power right behind
> the meter, hence the name "Grid Tied".
>
> The financial incentives were insane. The base cost of the system we
> eventually installed was $72K. The State threw in a $16K rebate, gratis,
> that went straight to the installer. On top of that, this thing counts as
> a solar energy system for Federal purposes. In 2009, when it went in, 30%
> of the remainder left after the state rebate could be used as a Federal
> Tax Credit, some 19.8K in this case. (In 2009 the government removed the
> $1500 cap on this kind of thing; it's back, now.)
> Net cost after rebates and tax credit: Around $46K.
>
> So, the electric bill has been zero for a while now. So that's a couple
> grand a year and, given the vagaries of the weather, a check from PSE&G is
> going to show up in a few weeks since we've generated a couple
> megawatt-hours more than we've used. (Yeah, the new meter keeps track of
> that kind of thing.)
>
> So, at $2K a year in savings, assuming nothing goes wrong (ha!), that's
> around 23 years to get back the investment. But there's more..
>
> Turns out that New Jersey and a number of other states in these parts
> require the utility companies to have a certain percentage of generation
> that's "green" and either non-polluting or low polluting. For every
> megawatt-hour of required clean energy the utilities don't make, they pay
> a fine. This state-set fine varies over time. In New Jersey, at the
> moment, the fine is around $720 or so. However, the utilities can zero out
> the fine on each megawatt if they can give the state a Solar Renewable
> Energy Credit (SREC) certificate. The utilities can make these by, say,
> putting up solar panels and connecting them to the grid; for each
> megawatt-hour of energy their panels make, they get a certificate and
> don't have to pay a fine.
>
> Now comes the fun. If anybody has a solar energy system and has it
> connected to the grid, and the installation passes state requirements and
> inspectino, they, too, get an SREC for every megawatt-hour of energy thus
> generated. Note: This isn't excess energy or anything. It's energy
> generated, period.
>
> There's a market for the SRECs. The eventual buyers are the utilities.
> They don't want to pay much.. But there's that fine hanging around. There
> are aggregators who buy up onesie-twosies of these things, then sell a
> large bunch to the utilities. Then there's all sorts of businesses and
> individual homeowners who've put these systems on the roofs of their
> warehouses and homes. There's web sites where these things are created,
> bought, sold, and retired. (GATS covers NJ and a bunch of other states.)
>
> Sold my first four yesterday for more than I asked in the mid $600's; at
> this rate, I'll have payback in 5 1/2 years or less!
>
> There doesn't seem to be any definitive answer on whether the money
> generated by selling an SREC is taxable or not. The IRS doesn't seem to
> have a clue, seriously. So there may be a ruling in the future that might
> require some payment of back taxes.. Or not.
>
> So, here comes the Quicken questions.
>
> This is kinda like having a spring on one's property where people show up
> with gallon jugs and you charge them a buck a gallon. Selling SRECs is
> income, all right, but I'm not actually paying for anything like I would,
> say, if I went out and bought and sold a stock. The certificates have
> numbers; if one actually doesn't want to sell one's certificates, one can
> ask for them to be sent (!), at which point they could be used to paper
> the wall.
>
> I'd like to track the certificates in Quicken, especially if the Feds come
> calling in a few years. But how?
>
> Finally, it's one thing to be playing around with these blame SRECs, but
> at some point the local utility is going to settle with me for the excess
> electricity I've been generating. Everything I've managed to dig out so
> far seems to indicate that this >is< taxable income, just like if I had a
> Nuclear Power Plant in the back yard. (Which, in a bizarre kind of way, I
> do, in the sense that the Sun is such a beast, and is the source of the
> energy...). So, how does one handle this?
>
> Any thoughts on the subject would be greatly appreciated.

Wow! That's fascinating. I don't have an answer, but hopefully someone
here will. Good luck.


From: CSM1 on 1 May 2010 19:18
Ken <jkbecker(a)no.spam.opt.opline.net> wrote in news:4bdc9b2f$0$4975
$607ed4bc(a)cv.net:

> And now for something completely different.
>
> So, last year I went to a Green Energy conference hosted by a local
> utility, PSE&G. While there, PSE&G and a number of other booth people
> pitched putting up a grid-tied solar energy system. This kind of thing
> consists of:
> 1. Enough solar panels to cover the roof.
> 2. Some medium sized boxes bolted to the inside wall of the garage.
> These convert DC from the panels to 220 VAC.
> 3. Four new breaker panels with Frankenstein's Monster switches on the
> side, three inside, one outside.
> 4. A new electric meter.
>
> When the Sun Does Not Shine, the Meter Runs Forwards normally.
>
> When the Sun Shineth, the Meter Runs Backwards. Lots. Fast.
>
> The way this thing is rigged is that if the panels are generating less
> power than the house is using, the meter runs forwards. When the
panels
> are generating more power than the house is using the meter runs
> backwards. The output of the boxes is tied to the AC power right
behind
> the meter, hence the name "Grid Tied".
>
> The financial incentives were insane. The base cost of the system we
> eventually installed was $72K. The State threw in a $16K rebate,
gratis,
> that went straight to the installer. On top of that, this thing counts
> as a solar energy system for Federal purposes. In 2009, when it went
in,
> 30% of the remainder left after the state rebate could be used as a
> Federal Tax Credit, some 19.8K in this case. (In 2009 the government
> removed the $1500 cap on this kind of thing; it's back, now.)
> Net cost after rebates and tax credit: Around $46K.
>
> So, the electric bill has been zero for a while now. So that's a
couple
> grand a year and, given the vagaries of the weather, a check from
PSE&G
> is going to show up in a few weeks since we've generated a couple
> megawatt-hours more than we've used. (Yeah, the new meter keeps track
of
> that kind of thing.)
>
> So, at $2K a year in savings, assuming nothing goes wrong (ha!),
that's
> around 23 years to get back the investment. But there's more..
>
> Turns out that New Jersey and a number of other states in these parts
> require the utility companies to have a certain percentage of
generation
> that's "green" and either non-polluting or low polluting. For every
> megawatt-hour of required clean energy the utilities don't make, they
> pay a fine. This state-set fine varies over time. In New Jersey, at
the
> moment, the fine is around $720 or so. However, the utilities can zero
> out the fine on each megawatt if they can give the state a Solar
> Renewable Energy Credit (SREC) certificate. The utilities can make
these
> by, say, putting up solar panels and connecting them to the grid; for
> each megawatt-hour of energy their panels make, they get a certificate
> and don't have to pay a fine.
>
> Now comes the fun. If anybody has a solar energy system and has it
> connected to the grid, and the installation passes state requirements
> and inspectino, they, too, get an SREC for every megawatt-hour of
energy
> thus generated. Note: This isn't excess energy or anything. It's
energy
> generated, period.
>
> There's a market for the SRECs. The eventual buyers are the utilities.
> They don't want to pay much.. But there's that fine hanging around.
> There are aggregators who buy up onesie-twosies of these things, then
> sell a large bunch to the utilities. Then there's all sorts of
> businesses and individual homeowners who've put these systems on the
> roofs of their warehouses and homes. There's web sites where these
> things are created, bought, sold, and retired. (GATS covers NJ and a
> bunch of other states.)
>
> Sold my first four yesterday for more than I asked in the mid $600's;
at
> this rate, I'll have payback in 5 1/2 years or less!
>
> There doesn't seem to be any definitive answer on whether the money
> generated by selling an SREC is taxable or not. The IRS doesn't seem
to
> have a clue, seriously. So there may be a ruling in the future that
> might require some payment of back taxes.. Or not.
>
> So, here comes the Quicken questions.
>
> This is kinda like having a spring on one's property where people show
> up with gallon jugs and you charge them a buck a gallon. Selling SRECs
> is income, all right, but I'm not actually paying for anything like I
> would, say, if I went out and bought and sold a stock. The
certificates
> have numbers; if one actually doesn't want to sell one's certificates,
> one can ask for them to be sent (!), at which point they could be used
> to paper the wall.
>
> I'd like to track the certificates in Quicken, especially if the Feds
> come calling in a few years. But how?
>
> Finally, it's one thing to be playing around with these blame SRECs,
but
> at some point the local utility is going to settle with me for the
> excess electricity I've been generating. Everything I've managed to
dig
> out so far seems to indicate that this >is< taxable income, just like
if
> I had a Nuclear Power Plant in the back yard. (Which, in a bizarre
kind
> of way, I do, in the sense that the Sun is such a beast, and is the
> source of the energy...). So, how does one handle this?
>
> Any thoughts on the subject would be greatly appreciated.
>
> K. Becker
>
>

What would be wrong with creating an Asset account and putting the SRECs
in that?


--
CSM1
http://www.carlmcmillan.com
From: Ken on 2 May 2010 15:58
On 5/1/2010 7:18 PM, CSM1 wrote:

>> This is kinda like having a spring on one's property where people show
>> up with gallon jugs and you charge them a buck a gallon. Selling SRECs
>> is income, all right, but I'm not actually paying for anything like I
>> would, say, if I went out and bought and sold a stock. The
> certificates
>> have numbers; if one actually doesn't want to sell one's certificates,
>> one can ask for them to be sent (!), at which point they could be used
>> to paper the wall.
>>
>> I'd like to track the certificates in Quicken, especially if the Feds
>> come calling in a few years. But how?
>>
>> Finally, it's one thing to be playing around with these blame SRECs,
> but
>> at some point the local utility is going to settle with me for the
>> excess electricity I've been generating. Everything I've managed to
> dig
>> out so far seems to indicate that this>is< taxable income, just like
> if
>> I had a Nuclear Power Plant in the back yard. (Which, in a bizarre
> kind
>> of way, I do, in the sense that the Sun is such a beast, and is the
>> source of the energy...). So, how does one handle this?
>>
>> Any thoughts on the subject would be greatly appreciated.
>>
>> K. Becker
>>
>>
>
> What would be wrong with creating an Asset account and putting the SRECs
> in that?
>
>

This is probably because I don't quite understand how Quicken handles
Asset accounts. I use an asset account to handle the value of, say, my
house or maybe my car. So: One asset, one account. Is that right? When I
created an asset account there wasn't any "buy" or "sell" stuff, it
looked basically like a check book.

Since these SRECs are showing up sometimes once a month, twice a month,
or none a month, do I need to have an asset account for each SREC that
shows up?

On the other hand there's the investment account method. Each one of
these could be treated like a share in a stock or something with an
initial value of zero, and, when sold, the final value. I'm trying this
right now. It shows the cost basis being equal to the selling value.
Umm... Which, I guess, may be right, seeing as they might not be taxable.

Comments?

K. Becker



From: R. C. White on 2 May 2010 22:07
Hi, Ken.

Assets come in many "flavors". ;<}

There are tangible assets, such as your house and car. And there are
intangible assets, such as bank accounts, stocks and bonds - and your SRECs.
In most cases, we acquire assets by paying cash for them. But there are
other ways; we can acquire an asset by gift or inheritance, or by winning in
Las Vegas, for example. The most common way to acquire the most common
asset - cash - is by earning it with our labor.

In your case, it sounds like you should account for your solar production
income by first reducing your energy expense category by the amount of
credit earned. When the earnings exceed your energy expense, create an
appropriate income category for it.

In accountant-speak, we normally record the acquisition of an asset by:
Debit Asset
Credit Cash (another asset)

But for your new situation, once the credits exceed expenses, the entry
would be:
Debit Asset (SREC)
Credit Income (Solar Energy Credits Earned)

Since I'm not familiar with provisions of the New Jersey laws (or US laws)
that provide for these credits - or any of the Federal rules, either, I'll
stop here. I don't know if the credits are taxable or not. Maybe they
should be treated as reducing the cost of the solar energy system you
installed. (You DID record that large expenditure as purchase of an asset,
didn't you? And reduce your cost by the large credits you received for
installation?) But the Internal Revenue Code starts with the "general
definition" that "gross income means all income from whatever source
derived" is taxable - then creates a bewildering array of exceptions to that
rule.

I've been retired for nearly 20 years, Ken, and many accounting practices
and tax rules have changed in that time. Please discuss this with your own
CPA for competent guidance on how to handle your investment in the system
and credits you received for the installation, as well as for the continuing
credits you will receive for energy you provide to the grid.

RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc(a)grandecom.net
Microsoft Windows MVP
(Using Quicken Deluxe 2010 and Windows Live Mail in Win7 x64)

"Ken" <jkbecker(a)no.spam.opt.opline.net> wrote in message
news:4bddd93e$0$31262$607ed4bc(a)cv.net...
> On 5/1/2010 7:18 PM, CSM1 wrote:
>
>>> This is kinda like having a spring on one's property where people show
>>> up with gallon jugs and you charge them a buck a gallon. Selling SRECs
>>> is income, all right, but I'm not actually paying for anything like I
>>> would, say, if I went out and bought and sold a stock. The
>> certificates
>>> have numbers; if one actually doesn't want to sell one's certificates,
>>> one can ask for them to be sent (!), at which point they could be used
>>> to paper the wall.
>>>
>>> I'd like to track the certificates in Quicken, especially if the Feds
>>> come calling in a few years. But how?
>>>
>>> Finally, it's one thing to be playing around with these blame SRECs,
>> but
>>> at some point the local utility is going to settle with me for the
>>> excess electricity I've been generating. Everything I've managed to
>> dig
>>> out so far seems to indicate that this>is< taxable income, just like
>> if
>>> I had a Nuclear Power Plant in the back yard. (Which, in a bizarre
>> kind
>>> of way, I do, in the sense that the Sun is such a beast, and is the
>>> source of the energy...). So, how does one handle this?
>>>
>>> Any thoughts on the subject would be greatly appreciated.
>>>
>>> K. Becker
>>>
>>>
>>
>> What would be wrong with creating an Asset account and putting the SRECs
>> in that?
>>
>>
>
> This is probably because I don't quite understand how Quicken handles
> Asset accounts. I use an asset account to handle the value of, say, my
> house or maybe my car. So: One asset, one account. Is that right? When I
> created an asset account there wasn't any "buy" or "sell" stuff, it looked
> basically like a check book.
>
> Since these SRECs are showing up sometimes once a month, twice a month, or
> none a month, do I need to have an asset account for each SREC that shows
> up?
>
> On the other hand there's the investment account method. Each one of these
> could be treated like a share in a stock or something with an initial
> value of zero, and, when sold, the final value. I'm trying this right now.
> It shows the cost basis being equal to the selling value. Umm... Which, I
> guess, may be right, seeing as they might not be taxable.
>
> Comments?
>
> K. Becker

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