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Pepco Files Letter Regarding Long Term Power Purchase Agreement
Pepco is seeking approval of the Agreement for bundled renewable energy and tier one renewable energy credits from a solar facility.
From Pepco’s Letter:
[ *** ] Order No. 21977 required Pepco submit an additional RFP and PPA consistent with the order and file monthly updates with the Commission until a PPA is executed. Order No. 21977 also directed Pepco to file the final PPA with the Commission for approval once executed. Since that time, Pepco filed monthly updates with the Commission regarding the status of negotiations and convened at least monthly updates to Commission Staff and their independent evaluator on the terms of the Agreement as it evolved through negotiations.
Pepco is pleased to report that these negotiations have concluded, and Pepco attaches the final Agreement for the Commission’s approval. To aid the Commission’s consideration, Pepco also submits a summary of the Agreement, which follows this letter and summarizes the key commercial terms and contractual requirements. The negotiated Agreement for “bundled” renewable energy and Tier One renewable energy credits from a solar facility is in the public interest and should be approved, as it satisfies relevant Commission orders and regulations, advances the District of Columbia’s goals of transitioning electric generation to renewable energy, and furthers Pepco’s commitment to support the Commission and the District in the clean energy future. Both the Agreement and summary are considered Confidential because they contain sensitive commercial and financial information and disclosure of such information could cause competitive harm to the counterparty to this transaction. As such, both the summary and Agreement will be filed confidentially.
The Agreement is for a term of 25 years, for approximately 7% of total SOS load per the above-cited orders and incorporates a competitive contract price per MWh generated. The project is expected to come on-line in late 2027. The project has a 75MW installed capacity and Pepco would be taking all generated energy and renewable energy credits (RECs) from this facility, which mitigates the issues experienced in 2022, which occurred because the counterparty could not find a buyer for the remaining output of the facility preventing it from getting financed.2 The competitiveness of contract price can be measured in comparison to the estimated cost of SOS over the relevant 25-year period.3 While the Agreement does allow for an up to 20% price increase to address specific market risks, such as tariffs and other potential changes in law, which could impact the cost of the project, the Agreement negotiated by Pepco mitigates the potential price increases to customers by limiting any such increase to a “cap,” as specified in the Agreement, and provides for damages in the event that the renewable generator does not provide the contracted-for supply during the term of the Agreement. Please also note that the Agreement is as a result of an arms-length negotiation and its terms may differ in some respects from the form contract approved by the Commission in Order No. 21977.
The negotiated price, customer protection provisions, and increased renewable energy supply for Pepco SOS customers collectively demonstrate that this Agreement is in the public interest and Pepco respectfully requests Commission approval. [***]
Pepco’s Letter Request (07/14/2025)
FC1017 (02/21/2003)
(In The Matter Of The Development And Designation Of Standard Offer Service In The District Of Columbia)
