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Under Proposed New Opt-out Aggregation, MD PSC Changes Pepco’s Default Service Product Design & Postpones Aggregation Program Rollout Until 2027
In an Order the Maryland PSC has endorsed a change in the wholesale product design for electricity SOS at Pepco to account for the expected launch of an opt-out municipal aggregation for Montgomery County, with the PSC substantially adopting a proposal submitted from the Office of People’s Counsel. Note, however the PSC ordered that OPC’s proposal shall be updated to reflect a PSC directive concerning the aggregation’s start date.
The PSC’s applies to Pepco only since Pepco has the most SOS load that is potentially affected by an opt-out aggregation (CCA). Although parts of Montgomery County are served by BGE and Potomac Edison, parties have generally agreed that the amount of CCA load involved at BGE wouldn’t materially impact SOS. At Potomac Edison, parties agreed that the amount of potential load impacted by Montgomery County’s CCA will likely fall within the existing “INC/DEC” load variability provisions for wholesale suppliers.
OPC’s proposal would cap the amount of new load for which an SOS supplier would be responsible to 15 MW. This load responsibility cap would cover potential increases in the SOS supplier’s load obligations from municipal aggregation opt-outs as well as returns to SOS from competitive retail suppliers, load growth, and the PJM Scalar adjustment.
The 15 MW maximum load increase exposure would be the combination of two caps, one which is 10 MW, and another which is 5 MW, each applicable at different times.
The 10 MW cap would apply to changes between the SOS supplier’s PLC established in the SOS auction, and the actual PLC that is expected upon completion of a CCA opt-out period.
After a one-time initial revision is made to the SOS supplier’s load obligation subject to this initial 10 MW cap, the SOS supplier’s ongoing exposure to a load increase would be capped at 5 MW
To the extent SOS load exceeds the caps described above, Pepco would procure additional supplies based on, and assigned to, the customers in the individual county driving the increased load (e.g. Montgomery County and/or Prince George’s County). As such, different SOS prices could apply to customers based on county, under this scenario.
The MD PSC preferred OPC’s proposal rather than holding a separate auction for only those Montgomery County customers who opt-out of the municipal aggregation. The Commission expressed concerned that holding a separate SOS procurement for opt-out customers only. (with interim PJM market purchases also needed) could lead to volatile rates, which opt-out customers would have little notice to protect against. The Commission noted that opt-out customers have the same right to be shielded from “rate shock” as other SOS customers.
In addition, the Commission noted that a separate SOS procurement for opt-out customers would occur after the CCA opt-out period which would make the CCA letter informing customers of their ability to opt-out would not include any comparison of the CCA rate and SOS rate as is required by statute because the SOS price would not yet have been set.
The benefit of the OPC proposal would allow the CCA opt-out letter to compare the aggregation rate to the indicative SOS rate established prior to any potential price change due to load increases.
The PSC agreed with OPC’s approach for modifying the SOS auctions but ordered that OPC’s proposal shall be updated (with respect to timing, etc.,) considering the PSC also directing that the Montgomery County CCA shall not commence prior to October 1, 2027.
Although the Commission basically adopted the OPC proposal, the Commission directed that the CCA would not start prior to June 1, 2027.
“The Commission is concerned that there remains no firm start date for the CCA and that Montgomery County is considering beginning the CCA on June 1, at the start of the summer cooling season, given the open uncertainties about what rates customers will be paying both within the CCA and for those who opt out.”
The PSC said that a June 1 CCA start date produces, “unjustifiable risks of rate shock,” for all SOS customers. The PSC thus directed filings, reflecting the changes to the SOS load obligation noted above, and directs a CCA start date of October 1, 2027.
The PSC said that such updated SOS RFP documents shall also include a proposal to address the potential that the Montgomery County aggregation fails to commence service on October 1, 2027. The PSC said that Montgomery County should also more closely align its CCA supply procurement with SOS auctions. The PSC said, “While it [the adopted OPC approach] provides balance for the immediate question of how to handle SOS, the Commission’s preference would have been for Montgomery County to provide the Commission with a comprehensive proposal that addresses SOS and Montgomery County’s procurement plan together, demonstrating how these would work in tandem. The Commission expects that this will be addressed when Montgomery County files its procurement plan.”
“For example, when the Commission reviews Montgomery County’s Aggregation Plan, it will be interested in Montgomery County demonstrating how its procurement will align with SOS, how Montgomery County would address either over-procurement or under-procurement, and how that will interact with and impact any potential SOS spot market purchases as a result of Montgomery County’s procurement practices, and how such over or under-procurement could affect CCA pricing.”
“The Commission accordingly directs that the parties shall confer and submit a joint filing for Commission approval that provides for a CCA start date of October 1, 2027, and contains the necessary changes to permit the procurement proposed by OPC.”
Order (10/01/2024).
Order On Standard Offer Service Procurement Processes For Community Choice Aggregation Pilot
Notice (09/19/2024)
9064 (05/10/2006)
In The Matter Of The Competitive Selection Of Electricity Supplier/Standard Offer Or Default Service For Investor-Owned Utility Small Commercial Customers; And For The Potomac Edison Company D/B/A Allegheny Power’s, Delmarva Power And Light Company’s And Potomac Electric Power Company’s Residential Customers
See also: 9056
