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Md. PSC Intends to Issue RFP for 1,800 MW of New Capacity
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December
30, 2010
The Maryland PSC intends to issue a Request for Proposals for up to 1,800 MW of essentially
new capacity to potentially be procured by the investor-
The fact that the Commission has prepared a draft RFP and intends to issue the RFP after a comment period on the RFP's contents, "should not be construed as a finding by the Commission that new generation is required or that the Commission has decided to order any party to construct, acquire, lease or operate new capacity resources in or around Maryland."
The Commission is silent at this stage with how any energy, capacity, or RECs potentially obtained under the RFP would be used (e.g. dedicated for SOS service) or how costs would be recovered.
The PSC had previously invited proposals, not subject to a formal RFP, for new generation in Maryland, but tolled the submission deadline in late 2009. Since then, the Commission has determined that a more formal RFP is required to seek offers for new generating facilities in or around Maryland, "including the possibility that electric distribution companies ('EDCs') could be required to enter into long term contracts with persons that construct a new generating facility in or around Maryland."
"In addition, the Commission anticipates that it will order the EDCs to submit proposals to construct, acquire, or lease, and operate new generation capacity resources in or around Maryland that meet the requirements of the RFP issued in this matter," the PSC said.
Draft RFP Terms
Under the draft RFP, the Commission would request proposals for capacity,
energy and any ancillary services and, where applicable, Maryland Tier 1 RECs. Such
products must be derived from Generation Capacity Resources (as defined in the PJM
Reliability Assurance Agreement) that will be located in or around Maryland, so long
as the Generation Capacity Resource is interconnected to the PJM system such that
the Generation Capacity Resource's output is infed to a node east of the Western
Interface and deliverable to Maryland east of the Western Interface avoiding likely
transmission congestion.
Generation Capacity Resources may be conventional or renewable generation technology, but Generation Capacity Resources do not include demand resources or energy efficiency resources.
The capacity from the Generation Capacity Resources must not have cleared any prior PJM capacity auction.
Generation Capacity Resources may include new up-
Respondents would be able to submit proposals to commit Generation Capacity Resources for an initial term of a maximum period of 20 years beginning no earlier than June 1, 2015 and no later than a date to be determined in the final RFP.
At the respondent's election, pricing for capacity, energy and ancillary services
from dispatchable Generation Capacity Resources may be offered on a cost-
For the supplier's capacity and energy, the financial arrangement between the EDC
and the supplier will be a contract for differences between a) the supplier's contract
capacity price and the Reliability Pricing Model Locational Deliverability Area clearing
price applicable to the Maryland EDC's service territory, and between b) the supplier's
contract energy price and the hourly PJM nodal Locational Marginal Price in the PJM
day-
If the proposed Generation Capacity Resource is offered on a fixed/indexed basis,
respondents may offer certain components of capital costs on a "pass-
Per the draft, the Commission will evaluate the Generation Capacity Resource proposals and proposals from the EDCs to determine whether the proposals will, "enhance electric service reliability and are in the best interests of ratepayers." The Commission would rely on quantitative as well as qualitative evaluation criteria.
Respondents are instructed to describe ratepayer benefits, including the reliability and economic benefits which are likely to be realized by Maryland ratepayers as a result of the Generation Capacity Resource.
Furthermore, respondents may describe benefits to the state of Maryland as a whole, such as other reliability, economic, socioeconomic and, if applicable, environmental benefits that are likely to be realized in Maryland as a result of the Generation Capacity Resource, "e.g., construction jobs, permanent employment during the operating period, tax effects, community improvements, other."
The draft contemplates that the PSC will issue a final RFP on March 18, 2011. No
final date for selecting winners is included; however, the draft contemplates that
the Commission shall hold a hearing and make a selection sometime between the date
for the submission of public comments on the proposals on December 30, 2011 and the
date on which the EDCs would execute Commission-
Need for RFP
The draft RFP cites Sections 7-
The draft RFP states that the, "purpose of this RFP is to ensure the continued, long-
"In a March 2, 2010 presentation provided by PJM as part of Case No. 9149, PJM opined
that the Capacity Emergency Transfer Limit (CETL) of the Mid-
"The Pleasant View constraint is the most recent example of how resource and transmission
limitations, often outside of Maryland, constrain the availability of resources to
serve Maryland's needs. Although the Commission recognizes and appreciates PJM's
role in planning regional transmission solutions, Maryland law directs this Commission
to ensure an adequate and reliable supply of electricity to Maryland citizens. Where
that supply may fall short, Public Utilities Article § 7-
"The reactive deficiencies PJM is predicting for 2015 would, if not cured, limit
the amount of electricity available to import into Maryland. And that potential
capacity shortage could be exacerbated further if new emissions regulations being
considered by the United States Environmental Protection Agency were to cause coal-
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