After Court Directive, PSC Adopts Findings In Support Of Approving Utility's Renewable SOS Option For Non-shopping Customers

July 1, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Maryland PSC has adopted an order setting forth its conclusions that led to its approval, last year, of the optional renewable electricity Standard Offer Service – Green (SOS-G) rider offered by Southern Maryland Electric Cooperative to its default service customers.

See more background on approval of SMECO's optional green SOS rider in our prior story here

The Retail Energy Supply Association has sought judicial review of the PSC's action adopting the SOS-G rider

While the PSC considered arguments concerning SOS-G, including statutory arguments, and individual commissioners addressed statutory interpretations from the bench during the PSC's administrative meeting, the PSC's approval was effected through a letter order

As such, in addressing RESA's petition for review, the Circuit Court for Baltimore City remanded case to the PSC for the PSC to formally, "render findings of fact and conclusions of law as to its August 19, 2020 decision to approve Southern Maryland Electric Cooperative's (SMECO's) proposed Standard Offer Service-Green rider."

In its new order on remand, the PSC states that, "RESA argues that the Electric Choice Act requires electric utilities to provide a non-competitive backstop SOS while retail suppliers provide competitive products and services."

"The Commission finds, however, that no part of the Electric Choice Act even requires cooperatives to provide SOS, designates suppliers as the only providers of competitive products and services, or states that SOS is not to be a competitive service," the PSC states

"Furthermore, while Section 7-510(c)(3)(ii) of the Electric Choice Act requires electric utilities to provide standard offer service to its customers, that same provision expressly allows cooperatives like SMECO to choose whether or not to provide its members with SOS. This is but one of the many ways in which the Electric Choice Act distinguishes between cooperatives and investor-owned utilities," the PSC states

"The first stated purpose of the Electric Choice Act is to establish customer choice; the second is to create a competitive supply market. The Commission finds that SMECO’s proposed rider is in keeping with the Act’s first stated goal of 'establishing customer choice' in that it creates an additional choice for SMECO’s members. As to 'creating competitive retail electricity supply and electricity supply services markets,' the second stated goal of the Electric Choice Act, SMECO’s proposed rider SOS-G in no way impedes the creation of a competitive supply market. In fact, given the Commission’s finding that SOS is a competitive product, not to mention RESA’s admission that 'some suppliers compete specifically and directly against SOS,' SMECO’s proposed rider SOS-G will actually contribute to the creation of a competitive supply market, as well as enhance customer choice," the PSC states

The PSC states, "The plain language of the Electric Choice Act also allows consumers to choose to receive service from their electric company or from a supplier. In short, the Act allows consumers to choose how and from whom they receive their electric supply service. SMECO’s choice to provide SOS means that its member/owners are able to choose SOS from SMECO, or they may otherwise contract for service from a retail supplier. SMECO’s proposed rider SOS-G in no way alters the choices available to its member/owners, other than by providing an additional option."

The PSC states, "RESA argues that SMECO’s proposed rider SOS-G violates Section 7- 510(c)(8)(i) of the Electric Choice Act by exceeding statutory parameters because it is not needed to meet members’ electricity demands, but the Commission finds that statute does not require SMECO’s proposed rider SOS-G to be 'needed to meet demand.'"

Section 7-510(c)(8)(i) reads as follows:

An electric cooperative that as of July 1, 2006, supplied its standard offer service load through a portfolio of blended wholesale supply contracts of short, medium, and long terms, and other appropriate electricity products and strategies, as needed to meet demand in a cost-effective manner, may choose to continue to use a blended portfolio:

1. as approved and modified by the electric cooperative's board of directors; and

2. with appropriate review for prudent cost recovery as determined by the Commission.

"RESA reads the provision to state that, 'A co-op that as of July 1, 2006 provided SOS through a blended portfolio, may continue to use a blended portfolio as needed to meet demand and as approved and modified by its Board and reviewed by the Commission.' This is contrary to the Commission’s interpretation and the plain language of the statute," the PSC states [emphasis by PSC]

"The Commission finds the phrase 'as needed to meet demand' modifies the preceding content, not the content following. In other words, 'as needed to meet demand' applies to the service that the cooperative was providing as of July 1, 2006, not the service being authorized by the statute. If the Legislature intended to limit the service being authorized by the statute to only that 'needed to meet demand,' it would have placed 'as needed to meet demand' after 'may choose to continue to use a blended portfolio.' Thus, in contrast to RESA’s interpretation, the Commission’s reading of the provision follows the plain language of the statute as written by the legislature," the PSC states

"The Commission holds that an accurate reading of the provision shows that SOS provided by cooperatives through a blended portfolio is not limited by the need to meet demand," the PSC states

"Similarly, no part of the Electric Choice Act states that SOS must be 'plain' or 'basic.' On the contrary, Section 7-510(c)(8)(i) specifically states that cooperatives may supply SOS through a blended portfolio and other appropriate electricity products and strategies. It follows that this express authorization allows a cooperative to provide an SOS product that is more than 'plain,' 'basic,' or 'vanilla.' Accordingly, the Commission finds it clear that there is flexibility for SMECO to offer additional products and services, and that per Section 7-510(c)(8)(i)(1) and (2), SMECO’s blended portfolio is subject only to two limitations -- approval by its Board and review by the Commission," the PSC states

"Finally, the Commission notes that it has previously considered and approved 'green' riders. Tariffs for Pepco’s rate schedules R-PIV and PIV state that service provided to the customer is standard offer service and the 'green' rider is an additional, optional charge for customers to have 100 percent 'green' energy," the PSC states

The PSC further noted that, in the early days of restructuring, "The Commission also approved a settlement agreement that included the development of a retail 'green' SOS program."

Specifically, in Phase I of the Case No. 8908 Settlement Agreement, the PSC said that the parties agreed to consider SOS with a green option. Subsequently, the Commission-approved Phase II Settlement Agreement established an "Other Services Working Group" to consider, among other things, SOS with a green option.

"While no such option was implemented through the Working Group, it does not change the fact that the twenty parties to the matter agreed to consider SOS with a green option, and that the Commission approved the agreement. Maillog No. 88553: Case No. 8908, In the Competitive Selection of Electricity Supplier/Standard Offer Service, Phase II Settlement Agreement, para. 33 (July 2, 2003)," the PSC said

In conclusion, "the Commission affirms its August 19, 2020 decision approving SMECO’s green rider proposal. The Commission finds that SMECO’s proposal does not violate the Electric Choice Act including, specifically, PUA Section 7-510(c)(8)(i)," the PSC said

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