Three Utilities Seek To Compel Retail Suppliers To Transfer Certain PJM Price Responsive Demand Credits To Utilities
July 25, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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Baltimore Gas and Electric, Pepco, and Delmarva have each filed with the Maryland PSC tariff revisions to their Electricity
Supplier Coordination Tariff to establish a process by which retail electric
suppliers must transfer, to the utility, credits, which the suppliers receive from the PJM Interconnection, LLC (PJM),
that are associated with each utility's participation in the PJM capacity market as a price responsive
demand (PRD) resource.
As described in BGE's filing, "PRD was established in PJM in 2012, and eligible to participate in PJM’s capacity Base
Residual Action (BRA) as of the May 2013 BRA. The PRD resource participates in the capacity
auction as a reduction in the demand curve, rather than an addition to supply. If the PRD resource
is accepted as a reduction to the demand curve and cleared as part of the capacity auction, the
resource will have caused the demand curve to shift inward, generally resulting in a lower quantity
of capacity cleared and at a lower cleared price. The PRD resource owner receives from PJM a
financial credit representing the value of the avoided capacity purchase by PJM in the BRA in
return for an obligation to PJM to reduce load under certain conditions throughout the delivery
year. BGE participated in PJM’s capacity market as a PRD resource in the May 2017 and May
2018 BRAs for delivery years June 1, 2020 – May 31, 2021 and June 1, 2021 – May 31, 2022,
respectively, and will likely continue PRD participation in future auctions. BGE’s PRD resource
consists of its residential PeakRewards program. In the 2017 and 2018 BRAs, BGE achieved
$12.1 million and $20.7 million, respectively, of value for residential customers due to its PRD
BGE said that, "PJM’s creation of PRD contemplated that the PRD resource owner would participate on
behalf of their electric supply customers and did not contemplate utilities engaging in PRD on
behalf of their residential distribution customers, regardless of the customers’ electric supplier.
Therefore, PJM’s rules only provide for the PRD credits to be given to the retail suppliers of the
PRD customers. In BGE’s case, the PRD customers are BGE’s residential customers enrolled in
the PeakRewards program. As of June 30, 2019, about 24% of BGE’s residential (and
PeakRewards) customers were receiving their electric supply from third-party suppliers. All PRD
financial value received by BGE will go toward offsetting the PeakRewards surcharge."
BGE said that, "Therefore,
if the PRD crediting process goes unchanged, BGE’s residential customers will forego about 24%
(about $8 million) of the value of the PRD resource in the delivery years 2020 and 2021. Instead,
the $8 million of value will be a wrongful windfall of profit to the third-party suppliers of BGE’s
Pepco said that, "Therefore, if the PRD crediting
process goes unchanged, Pepco's residential customers will forego about 23% (about $4
million) of the value of the PRD resource in the delivery years 2020 and 2021. Instead,
the $4 million of value will be a wrongful windfall of profit to the third-party suppliers of
Pepco's residential customers."
Delmarva said that, "Therefore, if the PRD crediting process goes unchanged,
Delmarva Power's residential customers will forego about 17% (about $665,000) of the
value of the PRD resource in the delivery years 2020 and 2021. Instead, the $665,000 of
value will be a wrongful windfall of profit to the third-party suppliers of Delmarva Power's
BGE said that, "BGE has engaged in thorough conversations with PJM regarding this dilemma of PRD
value receivership. BGE and PJM both agree that a simple way to transfer the value from the
third-party suppliers to BGE, the owner of the resource, is to have the parties (BGE and each third-party
supplier) execute a Billing Line Item Transfer (BLIT) with PJM that would cause PJM to
transfer the financial credits associated with BGE’s PRD resource from the third-party supplier’s
PJM bill to BGE’s PJM bill."
BGE said that, "BLITs are standard practice in PJM, and are executed completely within the PJM systems.
The BLIT is a PJM tool found on the PJM member website that allows a party to transfer a specific
line item of their PJM bill to another party under the condition that the receiving party confirms
the transfer. No other agreements outside of the PJM system are required. In order to require
third-party suppliers of BGE’s PeakRewards customers to execute the PJM BLITs, the proposed
tariff revision will condition the supplier’s eligibility to supply retail electricity in Maryland."
BGE said that, "To garner all of the value of its PRD resource for its residential customers, BGE
recommends that suppliers licensed to participate in Maryland’s retail energy market and
registered with BGE as of March 31, 2020, execute the BLIT no later than May 1, 2020. For
suppliers that become licensed to participate in Maryland’s retail energy market and registered
with BGE after March 31, 2020, the BLIT will be executed by such suppliers as soon as practicable
after the Commission grants the license and as a condition of the supplier being registered with
BGE. The BLITs will be effective during the delivery years in which BGE participates in PJM as
a PRD resource."
Pepco and Delmarva sought essentially the same relief.