Connecticut Class III REC Monetization for CHP

Connecticut's Class III REC program was designed specifically to support combined heat and power and energy efficiency, and the obligation steps up to 5% of retail electricity sales in 2026. The Class III Alternative Compliance Payment rate is $31 per MWh ($0.031 per kWh), as set by the Public Utilities Regulatory Authority — not the $55 per MWh figure sometimes quoted, which is the Class I ACP rate (Class II is $25 per MWh). That distinction matters commercially: a credit near $27 is roughly 87% of the Class III ceiling, not a 50% discount to it, so the headroom for further appreciation is thin.

Updated June 4, 2026 · PA S-RECs Knowledge Hub · ~6 min read

Class III: the CHP and efficiency carve-out

Connecticut's Renewable Portfolio Standard divides eligible resources into three classes. Class I covers new renewables (solar, wind, fuel cells, qualifying biomass and hydro). Class II covers existing renewables and trash-to-energy. Class III is the distinct carve-out for combined heat and power and energy efficiency — created specifically to recognize the carbon and grid value of high-efficiency on-site generation.

The Class III obligation has stepped up over time and reaches 5% of retail electricity sales in 2026. Connecticut's annual retail electricity sales total roughly 28 million MWh, which translates to approximately 1.4 million Class III credits demanded each year. Valuing that demand requires a price, and Connecticut does not publish one — see the pricing section below.

What CHP qualifies for Class III

The Class III statute defines three categories of eligible resources:

• Customer-sited CHP systems with a minimum operating efficiency of 50%. Per C.G.S. § 16-1(a), the system must be located at a commercial or industrial facility in Connecticut, and must have been developed on or after January 1, 2006. Both conditions are threshold eligibility requirements, not preferences.
• Waste heat recovery systems that recover heat or pressure from commercial and industrial processes, installed on or after April 1, 2007.
• Electricity savings from conservation and load management programs that started on or after January 1, 2006 — though new ratepayer-supported programs are no longer eligible to add to the supply pool.

The 50% operating efficiency floor is the gating criterion most CHP systems clear easily — well-designed natural-gas CHP systems typically run 65–80% efficient, and the floor is set well below typical performance. The COD requirement (January 1, 2006 or later) excludes legacy facilities but covers essentially the entire modern CHP fleet.

How the revenue split works

The revenue-sharing requirement varies based on:

• Whether the CHP system was installed before or after specified statutory milestones
• Whether the owner is residential or non-residential
• Whether the project received state financial support (grants, incentives, low-interest financing)

Two distinct statutory rules are commonly conflated here, and neither one sends 50% of credit revenue to the Conservation and Load Management Fund. C.G.S. § 16-243q(c) requires that a minimum of 25% of Class III credit revenue go to the party that conserved the electricity or installed the project, with the remainder directed to the Conservation and Load Management Plan. Separately, C.G.S. § 16-243q(b) governs Alternative Compliance Payment proceeds, splitting them 75% to the Conservation and Load Management Plan and 25% to the Clean Energy Fund — that split applies to compliance penalties paid by suppliers, not to credit sales revenue.

PURA has published no accessible program rule explaining how the § 16-243q(c) credit split is applied to privately financed CHP, so the share a private host actually retains cannot be stated with confidence from public sources. Treat the statutory 25% floor as the only firm number and confirm the project's funding history and PURA treatment before signing an aggregation contract.

Registration and monetization

1. PURA application — submit a Class III resource registration to the Public Utilities Regulatory Authority. The application requires nameplate capacity, fuel source, efficiency calculations, COD documentation, and funding history.

2. NEPOOL GIS registration — open a generator account at NEPOOL GIS. CT credits are minted at the same registry as MA and ME credits, so a host with multi-state exposure uses a single account.

3. Quarterly production reporting — Class III credits are issued based on metered electrical output, reported to NEPOOL GIS on the standard quarterly cycle.

4. Sales — Class III RECs trade primarily through OTC brokers and bilateral contracts with Connecticut electric distribution companies (Eversource, United Illuminating) and competitive suppliers. The market is less liquid than PA Tier II but supports both spot and forward contracting.

Pricing context

No Connecticut agency publishes Class III clearing prices, so there is no official price series to cite and we do not present a live trading range. The only defensible recent datapoint we can point to is an S&P Global Platts assessment of $27 per MWh for current-year-vintage CT Class 3 on 20 June 2024. Measured against the $31 per MWh Class III ACP rate set by PURA, that is roughly 87% of ceiling — meaning the practical upside is a few dollars per MWh, not a doubling. Anyone modelling Connecticut Class III revenue should treat pricing as opaque and obtain a broker indication for the specific vintage rather than relying on a published range.

Who Class III works best for

Connecticut Class III is the best fit for CHP hosts who:

• Have CHP systems installed on or after January 1, 2006 at Connecticut commercial or industrial facilities
• Financed the project with private capital (no Green Bank or state incentive funding)
• Operate at 50% or higher overall efficiency
• Have continuous-load profiles (hospitals, university campuses, manufacturers, district energy systems)

Because § 16-243q(c) guarantees the installing or conserving party only a 25% minimum and PURA has not published its application to privately financed CHP, realized revenue should be modelled conservatively — from an opaque price near the $27 per MWh 2024 assessment against a $31 per MWh ceiling, with the retained share treated as an open question.