PSC Rules On Retail Suppliers' Sought Finding That Suppliers Are Not Required To Pay Offshore Wind Costs Prior To Commercial Operation

November 14, 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 issued an order concerning a motion from the Retail Energy Supply Association which had requested 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 first reported by EnergyChoiceMatters.com, RESA had expressed concerns that a provision of COMAR could be read to require such advance payments in contravention of statute.

See our prior story for more background on the issue

In addressing various relief sought by RESA, the PSC noted that U.S. Wind and Skipjack have provided updates to the Commission regarding changes in turbine models, as required by Commission regulations, but have not publicly announced any change in project COD.

"Nevertheless, given the importance of these projects to Maryland, and given that the change in turbine models has caused concern to stakeholders about possible delays, the Commission directs U.S. Wind and Skipjack to file with the Commission a public notice updating the expected COD of their respective projects," the PSC directed

Regarding RESA’s request for clarification that suppliers are not required to pay for ORECs prior to an offshore wind project becoming operational, "existing law is clear," the PSC said

The PSC noted that Public Utilities Article ('PUA'), Annotated Code of Maryland, § 7-704.1(f)(1)(iv) provides that 'a payment may not be made for an OREC until electricity supply is generated by the offshore wind project.' Furthermore, COMAR 20.61.06.10B prohibits a project from invoicing for ORECs until after the project’s COD. The Commission order authorizing the U.S. Wind and Skipjack projects specifically provides that OREC payments shall not be made 'until and unless electricity is generated by the Qualified Offshore Wind Project.' The conditions contained in that order further state that '[n]o payment may be made for an OREC until electricity supply is generated by the Qualified Offshore Wind Project.'

"Despite the clarity of these provisions, RESA and several other parties to this proceeding have raised concern that certain Commission regulations (most notably COMAR 20.61.06.16) may be inconsistent with the principle that offshore wind projects are prohibited from invoicing for or receiving ORECs prior to project operation," the PSC noted

"Accordingly, the Commission directs Staff to review the Commission’s offshore wind regulations to ensure that no COMAR provision is inconsistent with PUA § 7- 704.1(f)(1)(iv)," the PSC directed

"Staff is directed to review existing Commission offshore wind regulations to ensure that no COMAR provision is inconsistent with the general principle found in PUA § 7-704.1(f)(1)(iv) that a payment may not be made for an OREC until electricity supply is generated by the offshore wind project," the PSC directed

"Staff’s review should be part of a larger evaluation of Commission actions necessary to implement the Clean Energy Jobs Act of 2019. In particular, Staff should review and propose updates to Commission offshore wind regulations in light of the provisions of the Clean Energy Jobs Act, as well as lessons learned from the first offshore wind procurement, which led to the Commission’s selection of the U.S. Wind and Skipjack projects in Order No. 88192. In light of this decision, it would be premature for the Commission to waive any existing COMAR provisions at this time. Accordingly, the Commission denies RESA’s Motion on that issue," the PSC said

The Commission also declined to grant RESA’s request to modify the existing OREC price schedule to ensure that it goes into effect upon commercial operation of an approved offshore wind project. Current COMAR provisions allow for an adjustment to the Renewable Portfolio Standard OREC obligation, but only if the COD is projected to occur later than 730 days after the original estimated project COD. Given that neither U.S. Wind nor Skipjack has provided notice of any modification regarding project COD, RESA’s request is premature," the PSC said

Case 9431

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