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Choice State PSC Denies Utility-Owned Microgrid Proposal

September 18, 2018

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Maryland PSC issued an order, without prejudice, denying two proposed utility-owned microgrid pilot projects from Pepco

Pepco has made the proposals in compliance with a condition of the Exelon merger approval

"Although Pepco has made a good faith filing as required by Condition No. 13, we find the Proposal lacks critical details that preclude our approval of the proposed pilot microgrid projects at this time. Most significant is the Company’s proposal to recover all microgrid costs solely from its Maryland customer base, which is contrary to the Commission’s direction in Order No. 86990. The Proposal also lacks essential metrics for a pilot study and a definitive sunset date. For the reasons that follow, we deny Pepco’s Microgrid Proposal, as filed, without prejudice. We do not reach the Company’s requests for authorization concerning a regulatory asset for microgrid costs or ownership of microgrid distributed energy resources ('DER'), such as battery storage," the PSC said

Under the proposal, Pepco had proposed to own the battery energy storage systems and the microgrid controllers in each proposed microgrid. Pepco also sought authorization for a third-party project developer to own the natural gas-fired generation and photovoltaic solar arrays at each proposed microgrid.

Pepco proposed to recover the total $63 million in microgrid costs, with contingencies, from all of Pepco’s Maryland electric distribution customers, regardless of the customer’s proximity to either microgrid

Citing its prior order on microgrid cost allocation, in which the PSC did not endorse the concept that ratepayers alone should be solely responsible for funding such projects, the PSC said of Pepco's instant proposal that, "There is no financial risk-sharing by the Company, the developer, the Microgrid Participants, or the Counties, all of which stand to benefit uniquely from the microgrids."

"We are also concerned that Pepco ratepayers will continue to pay this cost for the 20-year service life of the microgrid assets, which in our view exceeds any reasonable time frame for a pilot study," the PSC said

"Whereas we deny the Proposal for cost recovery and other reasons, we do not take up the legal issue concerning Pepco’s ownership of battery storage and, potentially, the DG components at this time," the PSC said

"The Commission is desirous of developing public purpose microgrids within the State. Although having satisfied Condition No. 13, we nevertheless encourage Pepco to submit a different proposal for two pilot public purpose microgrid projects," the PSC said

Case 9361

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