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Commission Discusses Wholesale SOS Retail Suppliers Petition Indicating Further Stakeholder Comments Needed
The Maryland Commission, after reviewing and discussing the joint petition filed by several wholesale SOS suppliers at its administrative meeting, the Commission decided to take the matter under advisement. Petitioning SOS suppliers were Axpo U.S. LLC, Constellation Energy Generation, LLC, DTE Energy Trading, Inc., Hartree Partners, LP, Shell Energy North America (US), L.P., and Vitol Inc.
During the administrative meeting, Commissioners voiced concern about a potential windfall to SOS suppliers from their requested relief. PSC Staff noted that wholesale SOS bids are not transparent, nor are a specific supplier’s actual capacity costs known.
Commissioner Bonnie Suchman did not accept joint SOS suppliers’ argument that a price is only “known”, and thus not eligible for future treatment as a proxy, if the price is “final” (and, for example, not subject to future change due to litigation).
Suchman said that it sounds like SOS suppliers are saying that the price were known at the time of bidding, but now the price is “unknown”, adding, “I don’t understand how that can, I mean, there are situations that are not anticipated when you sign a contract. And parties can’t say ‘Well we didn’t anticipate that and therefore we’re going to change the terms of the contract.’”
The PSC expressed desire to accept further stakeholder comments on the matter.
As previously reported, a joint petition was filed by several Maryland wholesale SOS suppliers seeking to be made whole due to an increase in the capacity price in PJM, resulting from litigation and a subsequent FERC order on remand concerning the capacity price.
As background, after conducting the base residual auction for the 2024/2025 Delivery Year, PJM had originally published a capacity price of $66.07/MW-day for the Delmarva zone, which had been in place at the time several SOS auctions for Maryland occurred.
At FERC and on appeal, certain capacity sellers challenged how PJM calculated this price, and because a court remand the matter back to FERC, a higher price was established for the Delmarva zone.
Due to the capacity price change resulting from litigation, the SOS suppliers are seeking to treat the capacity price originally posted by PJM as a proxy price under their SOS agreements, meaning that the capacity price is subject to true-up.
For all SOS auctions for the 2024/2025 Delivery Year, the SOS suppliers seek to receive a supplemental capacity payment that equals the difference between PJM’s posted Final Zonal Net Load Price for capacity (currently $175.22/MWd) and the proxy price of $66.07/MWd for the 2024/2025 Delivery Year.
The SOS suppliers in their petition argue that, while PJM had posted a price of $66.07/MWd, the capacity price was not “known” at the time of the SOS auction, because the price was not “final.” The SOS suppliers argue that, because the capacity price was not “known” by SOS bidders at the time of the procurement, then the capacity price, per the SOS agreements, is a proxy price, and subject to true-up.
Delmarva Power has opposed the SOS suppliers’ sought relief, stating that, under the SOS agreements, “Seller bears the risk of any other changes in PJM products and pricing during the term of this Agreement.”
“Delmarva Power submits that, pursuant to the terms of the FSA, the Petitioners are not entitled to having the Zonal Net Load Price for all SOS auctions for the Delivery Year 2024/2025 that occurred between February 28, 2023 and March 12, 2024 be treated as a proxy price under the FSA, nor are the Petitioners entitled to receive a supplemental capacity payment that equals the difference between PJM’s posted Final Zonal Net Load Price for capacity (currently $175.22/MWd) and the Zonal Net Load Price of $66.07/MW published on February 28, 2023 for the 2024/2025 Delivery Year.”
Joint Petition of Standard Offer Service Suppliers for Order Requiring Pass-Through of Zonal Net Load Price in Full Requirements Service Contracts for 2024/2025 Delivery Year – LPAxpo U.S. LLC, Constellation Energy Generation, LLC, DTE Energy Trading, Inc., Hartree Partners, LP, Shell Energy North America (US), L.P., and Vitol Inc. (07/07/2024)
See: https://webpsc.psc.state.md.us/DMS/maillogsearch. (ML# 309990) Additional information was filed on June 10, 2024 and June 10 and June 07, 2024. See (ML# 310162, ML# 310184 and ML# 310192 at MD PSC MailLog Number link above.
