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PSC Changes Default Service Product Design In Light Of New Opt-out Aggregation; Directs That CCA Not Start In Summer
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The Maryland PSC has endorsed a change in the wholesale product design for electricity SOS at Pepco to account for the expected launch of an opt-out municipal aggregation for Montgomery County, with the PSC adopting, in general, a proposal from the Office of People's Counsel, though the PSC ordered that OPC's proposal shall be updated to reflect a PSC directive concerning the aggregation's start date
Pepco is the utility with the most SOS load that is potentially affected by an opt-out aggregation (CCA), and the PSC's order specifically applies only to Pepco
Though parts of Montgomery County are served by BGE and Potomac Edison, parties have generally agreed that the amount of CCA load involved at BGE wouldn't materially impact SOS. At Potomac Edison, parties agreed that the amount of potential load impacted by Montgomery County's CCA will likely fall within the existing "INC/DEC" load variability provisions for wholesale suppliers
As previously reported, OPC's proposal, in brief, would cap the amount of new load for which an SOS supplier would be responsible to 15 MW. This load responsibility cap would cover potential increases in the SOS supplier's load obligations from municipal aggregation opt-outs as well as returns to SOS from competitive retail suppliers, load growth, and the PJM Scalar adjustment
The 15 MW maximum load increase exposure would actually be the combination of two caps, one which is 10 MW, and another which is 5 MW, each applicable at different times
The 10 MW cap would apply to changes between the SOS supplier's PLC established in the SOS auction, and the actual PLC that is expected upon completion of a CCA opt-out period.
After a one-time initial revision is made to the SOS supplier's load obligation subject to this initial 10 MW cap, the SOS supplier's ongoing exposure to a load increase would be capped at 5 MW
To the extent SOS load exceeds the caps described above, Pepco would procure additional supplies based on, and assigned to, the customers in the individual county driving the increased load (e.g. Montgomery County and/or Prince George’s County). As such, different SOS prices could apply to customers based on county, under this scenario
See a full discussion of the details of OPC's proposal here
The PSC favored, for several reasons, OPC's proposal instead of holding a separate auction for only those Montgomery County customers who opt-out of the municipal aggregation (with Prince George’s county having its own separate SOS procurement under the standard timeline and products)
The PSC was concerned that holding a separate SOS procurement only for opt-out customers (with interim PJM market purchases also needed) could lead to volatile rates, which opt-out customers would have little notice to protect against. Opt-out customers have the same right to be shielded from "rate shock" as other SOS customers, the PSC said
Additionally, because a separate SOS procurement for opt-out customers would occur after the CCA opt-out period, the PSC noted that the CCA letter informing customers of their ability to opt-out would not be able to include any comparison of the CCA rate and SOS rate as is required by statute (since the SOS price will not yet have been set)
In contrast, the OPC proposal would allow the CCA opt-out letter to compare the aggregation rate to the indicative SOS rate established prior to any potential price change due to load increases, noted above
The PSC agreed with OPC's approach for modifying the SOS auctions, but ordered that OPC's proposal shall be updated (with respect to timing, etc) in light of the PSC also directing that the Montgomery County CCA shall not commence prior to October 1, 2027
Montgomery County has said that the CCA would not start prior to June 1, 2027, but has not yet established a firm date for the CCA to launch service
The PSC said, "The Commission is concerned that there remains no firm start date for the CCA and that Montgomery County is considering beginning the CCA on June 1, at the start of the
summer cooling season, given the open uncertainties about what rates customers will be paying both within the CCA and for those who opt out."
The PSC said that a June 1 CCA start date produces, "unjustifiable risks of rate shock," for all SOS customers
The PSC thus directed filings, reflecting the changes to the SOS load obligation noted above, which provide for a CCA start date of October 1, 2027
The PSC said that such updated SOS RFP documents shall also include a proposal to address the potential that the Montgomery County aggregation fails to commence service on October 1, 2027.
The PSC also said that Montgomery County should more closely align its CCA supply procurement with SOS auctions
The PSC said, "While it [the adopted OPC approach] provides balance for the immediate question of how to handle SOS, the Commission’s preference would have been for Montgomery County to provide the Commission with a comprehensive proposal that addresses SOS and Montgomery County’s procurement plan together, demonstrating how these would work in tandem. The Commission expects that this will be addressed when Montgomery County files its procurement plan."
"For example, when the Commission reviews Montgomery County’s Aggregation Plan, it will be interested in Montgomery County demonstrating how its procurement will align with SOS, how Montgomery County would address either over-procurement or under-procurement, and how that will interact with and impact any potential SOS spot market purchases as a result of Montgomery County’s procurement practices, and how such over or under-procurement could affect CCA pricing," the PSC said
The PSC noted the pilot nature of the municipal aggregation and said that the PSC expects that its decisions made today will be reviewed in the future as the pilot progresses
The PSC's order was made in the general SOS dockets, Cases 9056 and 9064
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October 1, 2024
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Reporting by Paul Ring • ring@energychoicematters.com
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