Retail Suppliers Seek PSC Order That Suppliers Are Not Required To Pay Offshore Wind Costs Prior To Commercial Operation

October 2, 2019

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

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The Retail Energy Supply Association filed a motion at the Maryland PSC requesting that the PSC hold that retail suppliers are not required to make payments related to offshore wind obligations in advance of a commercial operation date (COD), as RESA said that a provision of COMAR could require such advance payments in contravention of statute.

RESA said that, "it is likely that one of the projects, U.S. Wind, Inc. ('U.S. Wind'), will not meet its project COD of 2020. The other project, Skipjack Offshore Energy, LLC ('Skipjack'), has a scheduled COD of 2022, and RESA is not aware of any public filing indicating whether Skipjack will, or will not, meet that timeline. With upcoming CODs -- especially for U.S. Wind -- RESA requests that the Commission resolve what appears to be a conflict between the language in the Maryland Offshore Wind Energy Act of 20132 ('OWEA' or 'the Act') and the implementing regulations found in Title 20, Subtitle 61, Chapter 06 of the COMARs."

RESA said that, "while the OWEA specifically provides that no payment will be made for an offshore wind renewable energy credit ('OREC') until the project is generating electricity supply, the COMARs could be interpreted to require electricity suppliers, including members of RESA active in the Maryland retail electricity market, to make payments before the offshore wind project is in service."

RESA requests that the Commission enter an order:

(1) directing U.S. Wind and Skipjack to provide public notice of any changes or delays to their expected project CODs;

(2) holding that, under the OWEA, electric suppliers and their customers are not required to pay for ORECs before an offshore wind project begins operating and, if necessary, waiving any regulations in Title 20, Subtitle 61, Chapter 06 of the COMARs that may require OREC payments before an offshore wind project becomes operational; and

(3) modifying the current OREC price schedule to ensure that it goes into effect upon commercial operation of an approved offshore wind project.

RESA said that the Act states that, "An order the Commission issues approving a proposed offshore wind project shall... (iv) provide that: 1. a payment may not be made for an OREC until electricity supply is generated by the offshore wind project..."

However, if there is a delay in a project's COD, RESA said that it appears that the Commission’s regulations could be interpreted to require suppliers to pay for ORECs before an offshore wind project is operational.

"COMAR 20.61.06.16 apparently allows approved offshore wind projects to appoint an administrator that would bill competitive suppliers for ORECs according to the current OREC price schedule even if the project’s COD is delayed. However, these pre-operational payments conflict with the plain language of PUA § 7-704.1," RESA said

Specifically, COMAR states that, for a COD delay up to 730 days, an escrow administrator can be appointed to, among other things, collect payments from electric suppliers according to the existing OREC price schedule in a designated escrow account

"Assuming that the U.S. Wind project COD has been delayed, RESA requests that the Commission enter an order clarifying that, consistent with the OWEA, electricity suppliers and their customers will not be charged for ORECs before the U.S. Wind (or Skipjack) project becomes operational," RESA said

"RESA requests that the Commission: (1) waive any regulations requiring prohibited payments for ORECs before an offshore wind project begins generating electricity; and (2) modify or revoke and re-issue the OREC price schedule so that it takes effect upon the actual project COD. Taking these steps will ensure that the OWEA is implemented as intended and will provide clarity and transparency regarding implementation of offshore wind requirements for electric suppliers and retail customers in Maryland," RESA said

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