ELIZABETH — The Union County Improvement Authority must find a new company to run solar energy systems that were installed on public buildings because the original vendor has run out of money, officials said.
Tioga Energy Inc, the California company that installed and maintained solar power systems on public schools, libraries and other municipal government buildings across the county just over two years ago, has been unable for nearly a year to cover all of the payments on the authority’s remaining $13 million of debt for construction of the energy collection systems.
Jonathan Williams, general counsel to the authority, said the cost to the county agency will be minimal if any, with the debt service payment covered through a settlement with Tioga and through payments from a new vendor.
Authority officials said Tioga has lost money because of the drastic drop in the value of solar renewable energy certificates or SRECs.
New Jersey requires major utility companies to purchase SRECs, which basically subsidize solar energy projects.
In 2011, the county authority bonded $15.1 million, or about 70 percent of the cost to buy and install the solar panels, with Tioga paying the rest.
Williams said the solar systems generated low-cost power for the public buildings, resulting in a savings on energy costs.
School boards and municipalities paid Tioga for the electricity, and the company also received revenue from the sale of SRECs. Those funds were use to cover the county’s debt costs.
When Union County first contracted with Tioga to put solar panels on more than 25 buildings in 2011, SRECs were selling for $600 per certificate, according to an authority resolution passed earlier this month.
By spring 2013, the value had dropped to $120 per certificate, according to the authority. In May 2013, Tioga stopped making the full payments for the authority’s bonds and the authority declared Tioga in default, according to the authority’s resolution adopted earlier this month.
The authority filed for a $4 million guarantee that Tioga was required to pay under its contract with the county agency, the resolution states, but Tioga estimated it has about $1 million to pay the $25.7 million in claims from creditors, including the improvement authority.
Authority commissioners, in their resolution, told Executive Director Daniel Sullivan to seek at least $150,000 from Tioga, but Williams said Sullivan will seek more.
The resolution also states the authority identified another vendor, Capital Corp Corp, of New Jersey, as potentially a replacement company to take over management of the solar system.
Williams said that while the authority dipped into its own funds to cover part of one debt service payment last year, the county agency expects that a settlement with Tioga and payments from the new vendor will cover all or nearly all the debt service in the future.
In three years, Williams said, the authority can refinance the bonds to reduce payments.
He said the solar energy system will continue provide electricity to the public building as a reduced cost.