Maryland PSC Staff: "Not Completely Clear" From Text That Offshore Wind Administrator Is Prevented From Collecting Funds From Retail Suppliers Prior To Commercial Operation
March 27, 2020 Email This Story Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
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Staff of the Maryland PSC said that it is, "not completely clear," in the text of an applicable regulation that an administrator which will bill retail electric suppliers for offshore wind RECs (OREC) is prevented from collecting funds from suppliers prior to commercial operation of an eligible offshore wind project (OSW Project COD)
However, Staff's primary recommendation was to deny a petition from NextEra Energy Marketing (NEM) on the issue, stating that the requirement that no purchase of ORECs by customers of electricity suppliers may occur prior to an OSW Project COD is already expressed in statute, regulation, and Commission order. Still, Staff said that, in the alternative, the Commission may wish to state that no Offshore Wind Renewable Energy Credits (ORECs) from the Offshore Wind (OSW) Project of U.S. Wind, Inc. (U.S. Wind) will be created for purchase by any electricity supplier prior to its current projected Commercial Operation Date (COD) of December 2024.
As previously reported, the PSC denied a petition from RESA on the issue as premature, given that neither Skipjack nor U.S. Wind had provided a notification of project COD delay.
NextEra subsequently filed its own petition after U.S. Wind filed notice of a COD delay
NextEra in its petition said that although the Commission has held that § 7-704.1(f)(1)(iv) of the Act clearly prohibits an OREC payment from being made 'until electricity supply is generated by the offshore wind project,' it remains unclear whether the Commission's offshore wind regulations could be interpreted to allow an appointed administrator to bill OREC purchasers for ORECs prior to project operation.
NextEra sought modification to the RPS/OREC price schedule to remove U.S. Wind's estimated OREC production from the schedule
Staff's primary recommendation is denial of NextEra's petition
"The NEM Motion essentially requests that a Commission order modify the OREC schedule for the U.S. Wind OSW Project and clarify that electric suppliers and their customers are not required to pay for ORECs from this OSW Project before its COD. However, revision of the OREC schedule is not required at this time. The requirement that no purchase of ORECs by customers of electricity suppliers may occur prior to OSW Project COD is already been expressed in statute, regulation, and Commission order," Staff said.
Staff cited the PSC's order which stated, "An order the Commission issues approving a proposed offshore wind project shall ... provide that (1) a payment may not be made for an OREC until electricity supply is generated by the offshore wind project."
Staff further said that Commission regulations do not permit a Project to invoice for OPRECs [sic] until after project COD. "During the initial year in which the offshore wind energy RPS takes effect and so long as project COD shall have occurred with respect to a qualified offshore wind project, the project may deliver the first OREC invoice to its administrator no earlier than the first five business days of the second calendar month immediately following the end of the generation month in respect of which ORECs associated with that project are created by PJM EIS.," Staff said in quoting COMAR 20.61.06.10B.
"The Commission order authorizing the OSW projects has already stated this requirement. 'This Order vests US Wind and Skipjack with the right to receive payments for ORECs according to the terms outlined herein. Nonetheless, such payments shall not be made for ORECs until and unless electricity is generated by the Qualified Offshore Wind Project,'" Staff said
"The approval of the US Wind and Skipjack OSW Projects is also conditioned upon the statement that RESA requested in a Commission order: 'No payment may be made for an OREC until electricity supply is generated by the Qualified Offshore Wind Project,'" Staff said
"As such, there is no need to currently modify the OREC schedule for the U.S. Wind OSW Project at this time. As such, the Motion of NEM should be denied," Staff said
However, Staff further said that, "While the statute prohibits payments for ORECs prior to the COD of the OSW Project, the Commission may state that no payments for ORECs for the U.S. Wind OSW Project may be collected prior to the current projected COD date of December 2024."
Staff said that, "While Pub. Utils. § 7-704.1(f)(1)(iv) is clear and allows for no payments for an OREC until electricity supply is generated by the OSW Project, electricity suppliers have raised concern that COMAR 20.61.06.16C might be interpreted as allowing an administrator to collect funds in an escrow account prior to the generation of ORECs. While § 7-704.1(f)(1)(iv) prevents the administrator from making payments for ORECs, it is not completely clear in the text of the regulation that the administrator is prevented from collecting funds from suppliers. The Commission has stated that electricity suppliers will not be charged before ORECs are generated. As RESA, WGL Energy, NEM, and Exelon all have this concern, a clarifying statement from the Commission may provide these market participants with greater certainty. Staff therefore recommends that any order responding to the NEM Motion clearly state that no ORECs from the OSW Project of U.S. Wind will be created for purchase by any electricity supplier prior to its current projected COD of December 2024."
"Staff recommends that the Commission deny the Motion or, in the alternative, state that no ORECs from the OSW Project of U.S. Wind will be created for purchase by any electricity supplier prior to its current projected COD of December 2024," Staff said