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PSC Sets Price Cap For Green Power Products, Rules On RECs Permitted To Be Used
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The Maryland PSC adopted the residential green power price cap as the trailing 12-month average SOS rate plus an adder determined by PSC Staff based on the 2023 Tier 2 REC price
As previously reported, SB 1 only allows retail suppliers to sell "green power" to residential customers at either: 1) a price set by the PSC generically, or 2) a price established through a company-specific petition from a retail supplier
Under SB1, "green power" is defined as, "energy sources or renewable energy credits that are marketed as clean, green, eco–friendly, environmentally friendly or responsible, carbon–free, renewable, 100% renewable, 100% wind, 100% hydro, 100% solar, 100% emission–free, or similar claims." [Public Utilities Article § 7-707(a)]
SB 1 mandates that, for residential customers, a retail supplier may not market a product as "green power" unless, among other things, the product includes green energy or RECs, both of which must meet the standards to qualify for use in Maryland's RPS, in an amount that equals or exceeds the higher of the following: (1) 51% of the product's supply, or (2) is at least 1% higher than the RPS which is applicable in such year
Specifically, under the PSC's green power price cap order issued today, a supplier's price for a residential green power offer shall not exceed, "the service territory’s most recent 12-month average SOS rate, along with the 2023 Tier 2 REC price, including the green power premium factor and green product premium as identified by Staff."
The PSC specifically adopted Staff's green power pricing proposal
Specifically, Staff created a unique per-kWh adder, based on the Tier 2 REC price, for each level of a retail supplier's stated total green power offer, from 51% to 100%, that exceeds the RPS
For 2025, Maryland's total RPS requirement is 38%. Thus, under Staff's design, a retail supplier's 51% green power offer will only be allowed to use a price adder that reflects the 13% of green power above the RPS
Staff calls this difference between the state's RPS and the supplier's offer the "Green Power Premium Factor".
The Green Power Premium Factor will be multiplied by the average of last year's Tier 2 REC price to establish the appropriate adder for a retail supplier's product. The amount of the adder will vary based on the amount of the supplier's green offer that is above the RPS
Using the 2023 Tier 2 REC price of $0.01050, Staff issued a table of applicable adders for each level of a green power offer from 51% to 100%
As an example, for a 51% renewable offer, Staff's calculation reflects the Tier 2 average price of $0.01050 multiplied by the above-RPS component of the offer, 13%, or $0.01050 * 0.13, resulting in an allowable adder of $0.00137 per kWh
The most relevant adders under Staff's proposal are below:
See full details and all adders from Staff's proposal here
The PSC said, "The use of Tier 2 RECs also limits the ability for suppliers to achieve an unfair profit by basing pricing off of the least expensive RECs."
The PSC stressed that retail suppliers remain able to petition the PSC for an alternative, supplier-specific green power rate, above the generic price cap set by the PSC
Regarding RECs for the green power plans, the PSC, "directs retail electric suppliers to retire all RECs composing an approved green product, 51% and above, into a PJM tracking system accessible by the Commission."
While per SB1 the 51% must meet the Maryland RPS as noted above, it's unclear if the PSC's language quoted above allows non-Maryland RPS RECs retired in PJM GATS to be used for the remainder of the green power product, if it is more than 51% green.
Among other things, there has been question among parties as to the level of access the PSC has to PJM REC tracking systems and whether the accessibility requirement de facto requires that all RECs (not just 51%) must be eligible for use in meeting the Maryland RPS (due to different RPS qualifications across states, there may be RECs eligible to be retired in PJM GATS but which don't meet the Maryland RPS, but it's unclear if the PSC can access such non-RPS PJM GATS retirements)
The PSC directed that all retail suppliers shall include the following statements in their green power marketing materials
"
The electricity delivered to your home is generated from a variety of sources, both renewable and nonrenewable. Energy from renewable resources, such as wind and solar, cannot be tracked directly into your home. Instead, the energy your home uses will support renewable energy sources through the purchase of renewable energy credits (“RECs”). A REC represents the environmental and social good associated with 1 megawatt hour of renewable electricity generation. RECs may be sold separately from the electricity itself, so the buyer of a REC may be different than the buyer of the electricity. In your contract, [X]% of the RECs qualify for Maryland’s renewable portfolio standard. The remaining [Y]% of RECs are [the specific product being marketed].
By purchasing RECs that qualify for Maryland’s renewable portfolio standard, you are supporting renewable energy development in the region. Increased demand for, and generation of, renewable electricity can help reduce conventional electricity generation from fossil fuels in the region where the renewable electricity generator is located. It may also have other environmental benefits such as reducing regional air pollution.
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December 30, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
Total
Green Power % Allowed Adder
51% $0.00137 per kWh
75% $0.00389 per kWh
100% $0.00651 per kWh
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