PSC Orders Retail Suppliers To Execute Agreement With PJM To Transfer Price Responsive Demand Credits To Utilities

December 4, 2019

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

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The Maryland PSC today accepted modified revisions from Baltimore Gas & Electric, Pepco, and Delmarva to their supplier coordination tariffs, and ordered that all retail electric suppliers serving BGE, Pepco, and Delmarva price responsive demand (PRD) customers shall execute a Billing Line Item Transfer with PJM by no later than May 1, 2020, under which the PRD credits received by the suppliers from PJM for such customers will be transferred to the utilities

The utilities submitted changes to the supplier tariff to require such a Billing Line Item Transfer due to the participation of retail supplier customers in PRD programs run by the utilities which are open to all distribution customers. PJM will only provide the PRD credits to the customer's LSE (which is not necessarily the PRD provider), and the utilities said that the tariff changes are needed to avoid providing a windfall to retail suppliers who, as a customer's LSE, would receive PRD credits associated with utility-run programs

See EnergyChoiceMatters.com's prior story for more details on the PRD issue

The utilities made modifications to their original proposed revisions in response to concerns raised by retail suppliers. The Retail Energy Supply Association still had some concerns after such revisions concerning any future PRD programs offered by retail suppliers, but given that, under the nature of PJM's forward capacity market, any retail supplier PRD offering would not generate credits until three years from now, RESA was not opposed to adoption of the instant revised tariffs to address the current short-term issue, but noted that the tariff may need further revision in the future. WGL Energy continued to oppose the revised tariffs due to its concerns (noted further below).

As an example, the revised BGE tariff proposal noted that suppliers may offer PRD programs and states that, "Absent changes made by PJM to credit the PRD provider for all of its PRD customers, when an Electricity Supplier participates in PJM’s capacity market as a PRD resource in the BGE service territory, the Electricity Supplier shall bill BGE for the financial credits and costs associated with the Electricity Supplier’s PRD customers to ensure that PRD credits and costs are correctly allocated between BGE and the Electricity Supplier." The utilities have also stated that they would work with the suppliers to ensure all parties have the information necessary to correctly allocate PRD credits.

Given than any potential issue from supplier-offered PRD will not become an issue until several years from now, the PSC accepted the utilities' revised modified tariffs as proposed

The PSC also directed that Pepco and Delmarva develop an EDI identifier to inform suppliers if a customer is participating in a utility PRD program (BGE already has such capability)

WGL Energy said that if an electricity supplier participates in PJM’s capacity market as a PRD resource in the Utility’s service territory, the utility should bill the electricity supplier for the financial credits and costs associated with the utility’s PRD customers, not the other way around as proposed by the utilities where the electricity supplier would bill the utility for the financial credits and costs associated with that supplier’s PRD customers.

WGL Energy said that, "There is a significant dollar amount associated with the proposed transfer process between the Utility and the electricity supplier, especially pertaining to non-residential customers participating in a supplier PRD program. Such high credit amounts belong to the supplier and should automatically be taken out by the Utility, not held by the Utility subject to receipt of a supplier invoice. To require the electricity supplier to bill the Utility to receive the supplier’s own credits is not a practical approach and would impose an unnecessary, increased financial risk on an electricity supplier with large commercial & industrial customers participating in a supplier’s PRD program."

WGL Energy also cited cash flow issues and credit implications at PJM if a PRD supplier does not automatically receive the PRD credits, and instead must bill the EDC to receive the credits.

The utilities said that retail suppliers may default, which poses a risk of PRD credits associated with utility distribution customers being stranded and unrecoverable from a defaulting supplier.

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