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Responses were filed by the Office of People’s Counsel, Baltimore Gas and Electric Company, Delmarva Power & Light and Potomac Electric Power Company, WGL Energy, Office of Staff Counsel and the Supplier Coalition.  

Excerpts from OPC’s Comments: 

[ *** ] In response to the Public Service Commission’s request that interested parties file a proposed maximum green product price for each choice service territory, the Office of People’s Counsel reiterates its earlier recommendation that the Commission establish a forward-looking process to determine price guidelines. OPC also cautions the Commission against adopting the supplier coalition’s recommendation to set an interim green power price for 2025 at 150 percent of the trailing average standard offer service (“SOS”) rate. Such a rate is likely to result in a baseline price for green power that is too high and leads to unfair profits—thus conflicting with Senate Bill 1’s focus on transparency and consumer protection in the retail electricity market. The General Assembly passed Senate Bill 1 to strengthen consumer protections against deceptive practices in the retail electricity market, and the resulting statute’s provisions provide for increased Commission oversight that can prevent unfair retail supplier price gouging. OPC echoes Staff’s concerns in its Green Product Pricing Petition filed on October 9, 2024, regarding the need for price guidelines that limit a supplier’s ability to make an unfair profit. [ *** ] 

OPC acknowledges the challenge the Commission faces in setting a price cap when green product offers could vary greatly in terms of how “green” the product actually is. However, SB1 permits green product offers to be composed of 51 percent RPS-eligible RECs, and an interim price cap at 150 percent of the trailing average SOS price could result in unfairly high profits for green products meeting SB1’s minimum requirements. Therefore, the Commission should reject RESA’s recommendation to set an interim green power price for 2025 at 150 percent of the trailing average SOS rate.

From Baltimore Gas and Electric Company, Delmarva Power & Light and Potomac Electric Power Company’s Comments:

[ *** ] Baltimore Gas and Electric Company (“BGE”), Delmarva Power & Light Company (“Delmarva Power”), and Potomac Electric Power Company (“Pepco”) (collectively the “Exelon Joint Utilities”) file these comments to recommend that the green product cap baseline should be calculated using the trailing 12-month SOS rate or the SOS price to compare for any baseline used to calculate the maximum green product price cap.

The Exelon Joint Utilities support using the trailing 12-month SOS rate for any baseline used to calculate the max green product price cap. 

Public Utilities Article (“PUA”) § 7-707(c)(2) requires retail electricity suppliers who market and sell “green power” to charge rates at or below a Commission-approved baseline. The Commission must consider several specific factors in setting the baseline green power price. Like Staff, the Exelon Joint Utilities recommend using the trailing 12- month SOS rate to calculate the green product baseline cap because this methodology is transparent. All suppliers will have the ability to track the trailing 12-month average when they make their green product offers. WGL Energy Services and the Supplier Coalition both also recommend using the trailing 12-month SOS average in their green product baseline methodologies. The Exelon Joint Utilities have no recommendations regarding the adder (including the risk premium and locational value and source of RECs) to calculate the green power price cap.

OPC’s Proposal to Calculate the Baseline for Green Power in a Prospective Manner places an Undue Burden on Utilities.

OPC’s recommendation of a prospective calculation is an estimate that will be based on too many unknown variables. While the majority of SOS supply contracts for the following year will be known in December 2024, there are other components of the SOS price that are not known, including the transmission charge that changes annually in June, periodic procurement cost adjustments (that changes monthly for Delmarva Power and Pepco, and three times per year for BGE), and the administrative charge that changes three times per year in February, June, and October. The Exelon Joint Utilities have concerns about being responsible for calculating a prospective SOS price that will be based on many unknown variables.

If the Commission Elects to Use a Forward-Looking Method to Calculate the Green Product Price Cap, the Exelon Joint Utilities Recommend Using the SOS Price to Compare to Calculate the Baseline in a prospective manner when Determining the Green Product Price Cap.

In the alternative to utilizing the trailing 12-month SOS rate, the baseline could be calculated using the SOS price to compare to calculate the price cap of retail electric supplier offerings. The price to compare represents the best estimate of the future SOS price that the utilities have at the point in time it is calculated. The SOS price to compare includes procured supply contracts but does not forecast upcoming changes to other components (like transmission, the administrative charge, and the procurement cost adjustment) but holds them at current levels until the component’s change is filed or approved. If the Commission elects to adopt OPC’s proposal to use a forward-looking SOS price, the price to compare should be used to calculate the green product price cap. Utilities should not be forecasting and estimating components of the future SOS price that are not yet known which would require utilities to calculate a new formulaic forward looking SOS rate. The SOS price to compare is a more forward-looking calculation than the trailing 12-month SOS average, but for consistency with the price cap for non-green product supplier offers, the Exelon Utilities support using the 12-month trailing SOS average. [ *** ]

From WGL Energy’s Comments: 

[ *** ] WGL Energy’s proposed green power pricing highlights significant challenges in implementing the new green power requirements, particularly regarding Renewable Energy Credit (REC) sourcing and pricing. There should be a balance between regulatory compliance and market feasibility. WGL’s recommended pricing model offers two distinct scenarios: a primary approach using 51% Maryland RPS-qualified RECs with the remaining 49% from other jurisdictions, priced at 12-month SOS trailing rates plus $20/MWh, and an alternative scenario that would dramatically increase costs to $60/MWh if 100% Maryland-generated RECs are mandated. The underlying data underscores the sourcing challenges, with historical reports showing that only 19% of RECs used for compliance have been generated within Maryland. WGL supports Maryland’s renewable energy objectives while keeping green power options economically viable for consumers.

From Office of Staff Counsel’s Comments: 

[ *** ] Staff recommends that the Commission set a maximum green product price that includes the most recent 12-month average SOS rate of the customer’s respective utility service territory, along with the average Tier 2 Renewable Energy Credit (“REC”) price in the previous year’s RPS annual reports as a baseline. Staff’s proposed methodology limits a supplier’s ability to make an unreasonable profit that would result if the pricing model used Tier 1 prices as a baseline. Under the Tier 1 baseline scenario a supplier could game the system by purchasing the least expensive RECs (Tier 2) and turning around and selling a green product based on the higher Tier 1 prices. Remedies are available for suppliers that wish to use more expensive Tier 1 RECs or have other cost drivers that would cause their prices to be higher pursuant to PUA §7-707(d)(3).

The green product price for the respective service territory will be calculated by taking the difference between the current year’s RPS requirements and the green power percentage that is being offered in the subject product. For example, if the green product is comprised of 51% green power, then this will be subtracted from that year’s RPS requirements. For 2025 the total RPS requirement is 38%.  The resulting percentage would be 51% – 38% = 13%. This 13% will be known as the Green Power Premium Factor (“GPPF”). Under this model, suppliers will be rewarded for offering a greener product by being able to achieve a higher GPPF.

The GPPF is then multiplied by the average of the previous year’s Tier 2 REC price which produces the Green Product Premium (“GPP”) that the supplier will be permitted to add on to the most recent 12-month average SOS rate in the customer’s respective service territory. In this example the 2023 Calendar Year Tier 2 REC price of $0.01050 is used. Accordingly, the calculation would be as follows: $0.01050 x 0.13 (13% GPPF) = $0.00137 GPP. This method should limit the ability for a supplier to game the system by marketing a green product that corresponds to the percentage of green power offered in the product while purchasing the least expensive RECs, i.e. Tier 2 RECs.  [ *** ] 

From Supplier Coalition’s Comments: 

[ *** ] the Supplier Coalition maintains its position that the Commission should conduct a fulsome evidentiary proceeding that takes the required statutory criteria in Public Utilities Article § 7-707(d)(2)(iii)(1) into account before establishing a final green power pricing structure. This evidentiary proceeding would include an opportunity for the submission of expert testimony on market fundamentals since the General Assembly contemplated that the Commission would carefully consider energy and REC costs, the percentage of RECs that would be eligible for Maryland Renewable Portfolio Standard, the source of the RECs used to support green power products, and “applicable market data” to determine a green power price pursuant to PUA § 7-707.

Accordingly, the Supplier Coalition maintains that, in the interest of time, given that the pricing requirements from SB1 begin on January 1, 2025, the Commission should establish an interim green power price for 2025 at 150% of the trailing average SOS rate, pending the outcome of the Commission’s proceeding to consider the required statutory factors to set a green power price. The Supplier Coalition requests that the Commission reject Staff’s and OPC’s proposals, and: 

(1) set an interim green power product price cap indexed at 150% of the trailing average SOS rate, as contemplated by the General Assembly in PUA § 7-707(d)(4)(i); and 

(2) establish a procedural schedule to develop an evidentiary record that includes the required information upon which the Commission may establish a green power product price pursuant to PUA § 7-707(d)(2)(iii). [ *** ] 

OPC’s Comments (ML# 314094) 
BG&E – Delmarva – Pepco Comments (ML# 314096)
WGL Comments (ML# 314098)
OSC Comments (ML# 314101)
Supplier Coalition Comments (ML# 314102)
9757 (10/09/2024)
(Petition Of Commission Technical Staff For Green Product Pricing)