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[ *** ] By this Order, the Public Service Commission of the District of Columbia (“Commission”) approves the executed Renewable Energy Purchase Agreement (“Agreement”) filed by the Potomac Electric Power Company (“Pepco” or “Company”) on July 11, 2025, for the bundled sale of energy and Renewable Energy Credits (“RECs”). The Commission also removes the five percent (5%) Standard Offer Service (“SOS”) load cap and directs Pepco to try to procure a target quantity of twenty-five percent (25%) of the SOS load through renewable energy power purchase agreements. Additional directives apply to Pepco in this Order regarding this Agreement and future Power Purchase Agreements (“PPA”). [ *** ] 

1. DECISION 
2. The Commission approves the Agreement and finds that it is in the public interest. The Agreement, negotiated under the framework established in Orders Nos. 21918 and 21977, provides energy and RECs over 25 years for 5% of the SOS load (approximately 172,000 MWh annually). The Commission hired an Independent Monitor to monitor and evaluate the RFP process for fairness. The Independent Monitor certified that the solicitation process was fair and reasonable and that the negotiation of the specific contract terms was fair, reasonable, and in good faith. Further, the Independent Monitor found that the Agreement contains provisions that appropriately protect customers. As part of its evaluation, the Independent Monitor performed a market benchmarking analysis and found the initial contract price in the Agreement falls within a reasonable range of benchmark prices. Additionally, the Independent Monitor found that the key terms on which the parties spent the most time negotiating reflected market conditions.
3. As previously discussed in Order No. 19897, integrating long-term renewable energy PPAs into the District of Columbia’s (“District”) SOS procurement portfolio preserves “the environmental quality, including effects on global climate change and the District’s public climate commitments.” Using PPAs in this manner is also “consistent with Clean Energy DC, the District of Columbia Climate and Energy Action Plan.” The Commission concludes that approval of this Agreement advances the District’s goal to reduce greenhouse gas emissions.
4. Based on present market conditions and a December 2027 commercial operation date, the Commission expects the net impact on SOS customer rates to be minimal once the full annualized effect of the Agreement is fully incorporated into SOS rates. Based on the bundled price per MWh reflected in the Agreement, these costs will displace approximately 5% of the total annual wholesale full requirements service for SOS customers. Any additional expenses associated with the delivery of 172,000 MWhs of intermittent renewable energy from the solar project will also be reflected in total SOS rates. The Commission expects that any impact on SOS rates will be proportionately shared across all SOS sales within each SOS customer class. Further, consistent with Section 4103 of the Commission’s SOS rules, parties will have an opportunity to comment on the proposed retail rates for SOS that will not only reflect the weighted average prices of the winning bids for the ninety-five percent (95%) share of the SOS load but also the impact of incorporating the costs related to the approximately 5% Agreement into overall SOS rates.
5. Finally, the Commission determines that the executed Agreement is reasonable and customary for long-term renewable energy PPAs and includes a package of prudent ratepayer protections. The key terms and conditions, including pricing, fall within the range of reasonableness based on our Independent Monitor’s market benchmarking analysis. Therefore, the Commission approves the Agreement and directs Pepco to integrate the Agreement into Pepco’s procurement of wholesale full requirements service for the SOS program, consistent with the Commission’s SOS rules.
6. Regarding the issue of whether to remove the 5% cap on renewable energy PPAs, the majority has reviewed the results of this most recent bid process and is concerned that keeping a 5% cap will impede the integration of potentially financially beneficial renewable energy PPAs into the SOS program. The majority notes that renewable PPAs, under the District’s Clean Energy DC Plan, were modeled to constitute seventy percent (70%) of SOS load beginning in 2019 and resulting in twenty percent (20%) of the District’s cumulative emissions reductions by 2032.  Expanding the use of PPAs in the SOS program has the potential to help the District meet its climate targets, while simultaneously protecting ratepayers from the wholesale price increases, we are currently seeing. By removing this cap and replacing it with a higher target quantity, Pepco may receive a higher volume of PPA bids with more competitive pricing, which would in turn benefit customers. Therefore, the majority removes the 5% cap on the PPA and is replacing it with a target quantity of 25% of the SOS load procured through renewable energy PPAs.
7. As such, we direct the Company to try and procure the remainder of the 25% target quantity by issuing the same RFP with a target quantity of 20% so that, ultimately, a potential target quantity of 25% of the SOS load will be procured through renewable energy PPAs. If Pepco makes any other changes to the RFP or draft PPA besides the target quantity, Pepco shall file a redlined RFP and draft PPA with their proposed edits and rationale for Commission approval within thirty (30) days of the date of this Order. If Pepco makes no changes to the RFP and draft PPA besides the target quantity, Pepco shall issue the RFP and draft PPA within 30 days of the date of this Order. Pepco shall continue its monthly updates to the Commission that discuss the status of the responses to the RFP and any subsequent PPA negotiations until the 25% target quantity is reached. When Pepco files any PPA pursuant to this Order, parties to this case will have fourteen (14) days to comment. The Commission will only approve such PPAs that it determines to be in the public interest.
8. Finally, we direct Pepco to update the Wholesale Full Requirements Service Agreement (“WFRSA”) and RFP to integrate the Agreement when Pepco files the WFRSA and RFP for the 2027-2028 SOS solicitation. These changes should be discussed with the SOS Working Group at the SOS Post Bid Conference before they are filed with the Commission. Pepco shall make a filing after future PPAs are filed with the Commission, proposing any changes to the SOS procurement process to integrate the Agreement and future PPAs into the SOS program. [ *** ] 

Order (08/14/2025)
FC1017 (02/21/2003) 

(In The Matter Of The Development And Designation Of Standard Offer Service In The District Of Columbia)