Maryland Utilities File Further Change In Mechanics Of Treatment Of Price Responsive Demand Credits For Customers Of Retail Suppliers

April 20, 2020

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Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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In Maryland, Baltimore Gas & Electric, Pepco, and Delmarva Power have filed further revisions to their supplier coordination tariffs to reflect the treatment of Price Responsive Demand (PRD) credits earned in the PJM capacity market

As previously reported, the PSC ordered that the EDC include in their supplier tariffs a requirement that retail suppliers execute a Billing Line Item Transfer at PJM such that any PRD credits issued to the supplier would be provided to the EDC. Such transfer is intended to prevent a supplier from earning a windfall from PRD credits associated with PRD customers of the EDCs as distribution customers, but for whom the EDC is not the LSE. If the retail supplier has its own PRD customers as is entitled to the credit, it would bill the utility to recoup the credits.

Due to logistical issues at PJM, the EDC propose the same overall concept, but instead of the retail supplier executing a Billing Line Item Transfer with each EDC (and also billing the EDC for any supplier-related PRD), the suppliers would only execute a PJM Billing Line Item Transfer agreement to transfer credits Pepco, as the Holding Account Utility, which would represent each of the EDCs. Retail suppliers would also only bill the Holding Account Utility, rather than each individual EDC, for any PRD credit which belong to the supplier.

BGE explained that, as previously reported, on December 4, 2019, the PSC approved changes to the BGE Supplier Tariff that enable BGE, who will be a PRD provider beginning June 1, 2020, to receive all PRD credits paid by PJM associated with the BGE zone. PJM’s tariff requires that PJM pay the PRD credits to the Load Serving Entities (i.e., retail suppliers) of the PRD customers, rather than the PRD providers. The previous changes approved by the Commission required retail suppliers to agree to a PJM billing line item transfer (BLIT) of the PRD credits from the retail supplier’s PJM bill to BGE’s PJM bill. Under such previously approved changes, when a retail supplier participates in PJM’s capacity market as a PRD resource in the BGE service territory, the retail supplier is to bill BGE for the financial credits and costs associated with the retail supplier’s PRD customers to ensure that PRD credits and costs are correctly allocated between BGE and the retail supplier.

BGE reported that, "BGE, along with Pepco Electric Company (Pepco) and Delmarva Power & Light Company (Delmarva), have been working diligently with PJM to create the PRD credit BLIT in a manner that reduces administrative burdens for all parties involved. The utilities sought a PRD credit line item that was zonal specific (i.e., specific to the BGE, Pepco, and Delmarva zones). A zonal specific line item would allow BGE to receive via the BLIT the PRD credits from retail suppliers doing business in the BGE zone, and Pepco and Delmarva would receive via their BLITs the PRD credits from retail suppliers in their respective zones."

BGE said that, "PJM has refused to create the PRD credit BLIT on a zonal basis and insists that the BLIT be on a Regional Transmission Organization (RTO) basis. An RTO based BLIT, rather than a zonal BLIT creates new problems. For example, if a supplier is doing business in both the BGE and Pepco zones, a BLIT with BGE would transfer to BGE not only the retail supplier’s PRD credits in the BGE zone but also the retail supplier’s PRD credits in the Pepco zone. The same is true in reverse. This situation is clearly unworkable."

BGE said that, "BGE, Pepco, Delmarva, and PJM have only recently developed a solution to this dilemma, but it will require additional changes to the BGE Supplier Tariff. However, the concept remains unchanged in that the utilities will still receive all of the PRD credits to offset costs for their customers. It is the mechanics with PJM and the retail suppliers that must be altered."

BGE said that under the new revisions, "The utilities have agreed to establish a PJM holding account in Pepco’s name. PJM will deposit all PRD credits from across all three zones into the holding account, including credits associated with Standard Offer Service PRD customers and credits associated with PRD customers being served by retail suppliers. The holding account owner, Pepco, will distribute to BGE and Delmarva on a monthly basis their respective share of the credits. The distribution of the credits from Pepco to BGE and Delmarva will be conducted by means of a PJM account transfer."

"Retail suppliers participating in PJM’s capacity market as a PRD resource would bill Pepco for the financial credits and costs associated with the retail supplier’s PRD customers in all three utility zones," BGE said

BGE said that this solution will require the following actions:

• Establish Pepco as the holding account utility with PJM;

• Establish PJM BLITs between BGE and Delmarva and Pepco to transfer the SOS related credits to the holding account;

• Establish PJM BLITs between all retail suppliers doing business in the three utility zones and Pepco, which means that retail suppliers doing business in multiple zones will enter into only one BLIT, rather than a BLIT with each utility;

• Approval of the proposed changes to the BGE Supplier Tariff that enable the new solution are provided in Attachment 1; and

• Communicate with the retail supplier community regarding the new solution and what they need to do.

BGE filed the following tariff language, with the term "Holding Account Utility" used in place of "BGE" in the earlier version.

"PRD Unforced Capacity Financial Credit Billing Line Item Transfer. Electricity Suppliers governed by the Maryland Public Service Commission under this Tariff shall agree to a PJM billing line item transfer of the financial credits and costs associated with BGE’s participation in the PJM capacity market as a PRD resource from their respective PJM bill to Holding Account Utility’s PJM bill. 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 the Holding Account Utility 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."

Pepco and Delmarva filed similar tariff changes

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