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Maryland PSC Rejects BGE Proposal To Own Microgrid, Notes Customers Would Have Been Required To Take SOS When In "Island" Mode

July 20, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Maryland PSC has rejected, without prejudice, Baltimore Gas & Electric's proposal to build, own, and operate two microgrids.

The PSC found that BGE had not shown that benefits outweighed any costs, and also found that BGE did not justify its request for a surcharge to fund the project versus ratebasing.

"The Proposal also suffers from a lack of investment in the Project by the intended commercial beneficiaries within the microgrid or the Company’s shareholders. BGE’s pilot program focuses on sustaining merchant services used by residential customers -- e.g., groceries, fuel, restaurants, pharmacies, banks, etc. Although these merchant tenants are the direct beneficiaries of a hardened infrastructure designed to insulate them from extended outages of the larger grid, BGE has not asked any of them to actively participate or share in any responsibility for the microgrid deployment. Similarly, nowhere in the Proposal does BGE indicate a willingness to shift even a portion of this responsibility and risk to its shareholders," the PSC said

The PSC also noted that, "The Proposal also purports to accommodate customer retail choice in electricity suppliers under normal operating conditions. BGE explained, however, that once the microgrid switches to islanded configuration during an outage, all microgrid customers -- i.e., all customers receiving service within the microgrid territory -- must adopt BGE’s Standard Offer Service and will be billed accordingly. In this sense, the Proposal creates a class of customers who will have little to no access to retail choice in microgrid services during islanded operation."

Furthermore, while a task force left unanswered questions concerning the current state of Maryland law and the extent to which third-party providers can participate in public purpose microgrid development and deployment, the PSC said that, "we observe that campus-style microgrids already take advantage of competitive market forces to source generation. This feature is noticeably absent, however, from the BGE Microgrid Proposal, even though third-party generation owners could reasonably assume a portion of the risks associated with microgrids. We note that the spirit of the 'Electric Customer Choice and Competitive Act' envisions a competitive market for energy generation and services; the competitive element is lacking in this Proposal. While the lack of third-party participation in BGE’s design is not by itself dispositive, it lends additional credence to our conclusion that the Proposal is deficient as filed."

The PSC also said that, "the Proposal fails to capture other potentially significant benefits of public purpose microgrids, such as reduced pollution and carbon emissions, greater efficiencies, and customer load management opportunities. For a pilot study, the Proposal overlooks the opportunity to explore sophisticated integration of microgrid resources in any smart grid or grid modernization design, partnerships with third parties to provide microgrid services, integration of customer-owned generation, integration of diversified distributed generation with storage, and demand response capabilities."

The PSC's order is without prejudice to a future proposal which cures any deficiencies identified by the PSC

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