PSC Suspends Utilities' Tariffs To Compel Retail Suppliers To Transfer Certain PJM Price Responsive Demand Credits To Utilities

RESA Says Utilities' Current Proposal Would Foreclose Retail Suppliers' Ability To Offer Price Responsive Demand Programs To Their Customers

September 17, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Maryland PSC has suspended for 30 days, from the effective date of October 1, 2019, tariffs from Baltimore Gas and Electric, Pepco, and Delmarva 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.

The EDCs' filing of tariffs to require the transfers of such credits to the utilities had been exclusively first reported by EnergyChoiceMatters.com (see our prior story for the rationale)

As previously reported, the EDCs proposed that the EDCs and each supplier execute a Billing Line Item Transfer (BLIT) with PJM that would cause PJM to transfer the financial credits associated with the EDC's PRD resource from the third-party supplier’s PJM bill to the EDC's PJM bill.

The PSC's suspension of the tariffs follows a request from the Retail Energy Supply Association to grant a three-week deferral of consideration of the tariff filings to allow RESA, PSC Staff, the utilities, and PJM to discuss the alternative Price Responsive Demand (PRD) credit allocation solutions

RESA said that it supports implementation of a competitively neutral mechanism to properly allocate financial credits and penalties to PRD Providers.

However, RESA opposes the Billing Line Item Transfer (BLIT) mechanism proposed by the utilities (as currently structured), "because it would foreclose suppliers from offering PRD programs to their customers."

"The Utilities’ proposed BLIT would have the unintended consequence of preventing suppliers that offer competitive PRD programs for their customers from receiving the PRD credits in future PJM capacity auctions. The Utilities’ proposals are intended to transfer the financial credit 'associated with [the Utility’s] participation in the PJM capacity market as a PRD resource from [the supplier’s PJM] bill to [the Utility’s] bill.' However, the proposals assume that suppliers will not offer any PRD programs. In a future auction, suppliers may want to offer customers the opportunity to participate in a PRD program in which the competitive supplier is the PRD provider. With competitive PRD program options available, some customers may choose to enroll in the competitive supplier PRD program while others may choose to enroll in the Utilities’ offerings," RESA said

"If a supplier offers a program in a future auction, the BLIT would transfer the all financial credits associated with PRD from the supplier to the utility -- including all utility PRD credits (as intended) and any of the competitive supplier’s PRD credits (the unintended consequence). The LSE/supplier’s billing statement contains a single line item based on all the load served by the supplier that was subject to a PRD program -- regardless of who administered the program," RESA said

"If suppliers offer PRD programs in future auctions, the BLIT would result in a windfall to the utilities, reversing the windfall scenario the Utilities intended to prevent through their Tariff revision filings. The effect of the BLIT for PRD credits, as proposed by the Utilities, is that suppliers would be foreclosed from developing and offering a PRD program in Maryland, even though the PJM rules allow suppliers to do so," RESA said

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