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Choice State PSC Releases White Paper On Models For Building New Generation (Includes Utility-Owned Generation)
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A consultant for the Maryland PSC has released a white paper concerning various models for building new generation
The white paper does not make any recommendations concerning a model for building new generation, but does list pros and cons for various models, in some cases attributing the pros and cons to stakeholder assertions
The white paper lists the evaluation criteria that the PSC's consultant is "considering" employing to assess the relative attractiveness of
each of the generation procurement models, using a multi-criteria decision analysis framework. Such are:
• Demonstrably result in new capacity that would not otherwise be developed under the PJM BRA capacity market
• Rate impact: proposing to use high-level analysis to assess the anticipated rate impacts of different generation
procurement models
• Ratepayer risks: to be assessed along two dimensions (with attention given to the degree that models socialize risks and
by so doing adversely impact customers)
-- Electricity price variability: unlikely to vary among procurement models
-- Potential for stranded costs: a risk that varies depending on the technology, the degree to which ratepayers bear
market price and technology performance risks
• Efficiency of risk allocation: are risks allocated to the party that is best able to manage this risk?
-- Strength of incentives for efficient project construction and operation:
-- Strength of project development incentive
• Minimize distortions in the existing market structure
• Implementation risk
• Administrative complexity: the difficulty of administering the procurement model and associated market or program fixes
(e.g., need for generation capacity credits, a model discussed below)
• Strength of incentive for project development and construction: the degree to which the procurement model is likely to
result in the development of additional generation capacity that will reduce supply adequacy risks for Maryland electricity
customers
Models to build new generation included in the white paper include, among others, the existing PJM capacity auction, utility-owned generation, generation owned by utility affiliates, "build-transfer" (IPP builds and conveys the power plant to utility), PPAs, tolling agreements, the PJM reliability backstop auction, and creation of a generation capacity credit purchase obligation where electricity suppliers purchase Generation Capacity Credits (GCCs) in proportion to the supplier’s load obligations.
Among the "cons" noted in the white paper for the current PJM capacity auction are:
• "Interventions in the market by policymakers indicates that they are reluctant to accept the rate impacts caused by
the high capacity prices needed to incent new entry."
• "Rapid load growth driven largely by datacenters have raised concerns that annual capacity markets are not the right
mechanism to meet this exogenous growth factor."
• "Inability to provide long-term price signals coupled with a slow interconnection process has resulted in capacity shortfalls
that are increasing supply adequacy concerns."
Pros listed in the white paper for utility-owned generation are:
• "[U]tilities can be directed to make generation investments 'to meet long-term anticipated demand in the
State for standard offer service and other electricity supply ... subject to appropriate cost recovery'[.] These generation
investments would presumably address concerns with adequacy of supply and this regulatory oversight can help to
ensure that the investment occurs."
• "Assurances that IPP generation investments will occur are limited to the financial incentives and contractual
provisions in their contracts. Experience indicates that these performance incentives can be insufficient to ensure
performance, particularly during periods of significant market dislocations (e.g., inflationary environment after the
Ukrainian War). Under these market conditions, regulators can employ regulatory oversight to seek to determine
appropriate generation project cost increases that allow projects to continue to advance toward commercial
operation."
Cons listed in the white paper for utility-owned generation include, what the white paper termed as assertions by certain stakeholders, that utility-owned generation increases costs to customers
The white paper notes, "ensuring appropriate regulatory oversight over utility investment decisions is challenging ... in many jurisdictions policymakers elected to move to competitive markets because this regulatory oversight framework wasn’t viewed as offering customers sufficient protections from bad investment decisions that represented an economic burden to them."
The PSC is accepting comments regarding the different generation procurement models described in the white paper,
and the evaluation criteria to be used to assess the models’ relative performance.
"Feedback on these models and additional information provided by stakeholders will inform
assumptions that will be employed in multi-criteria decision analysis of procurement models that
will weight the performance of each model relative to specific criteria including their relative costs
and risks, incentives for efficient construction, contribution to resource adequacy, and alignment
with Maryland’s policy objectives and statutory requirements," the PSC said
The PSC said that it has reviewed prior comments concerning models for building new generation that have been filed in the proceeding previously, and said that, "stakeholders need not repeat themselves."
PC66, PC 66
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April 10, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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