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Exelon Utilities, Which Favor Allowing Utility-Owned Generation, Say No Change Should Be Made To SOS Model As A Result Of Any Potential New Generation Procurement Model
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In comments to the Maryland PSC, the Joint Maryland Exelon Utilities (JMEU) said that no changes to the state's existing SOS model should be made as a result of any generation (capacity) procurement policies adopted by the PSC as a result of the PSC's resource adequacy investigation and consideration of generation procurement models
The JMEU consist of Baltimore Gas and Electric Company ('BGE'), Potomac Electric Power Company ('Pepco') and Delmarva Power & Light Company ('Delmarva Power')
The JMEU were responding to a recently issued white paper from the Maryland PSC's consultant which examined 9 different generation procurement models (see details here)
The JMEU again urged the PSC to, "seriously consider utility-owned generation to complement, but not replace, competitive generation".
However, the JMEU said that regardless of the generation procurement model adopted by the PSC, there should not be any changes in SOS
The JMEU said, "Under the SOS model, the utility enters into two-year 'full requirements' agreements with wholesale suppliers for energy, ancillary services, capacity, and renewable energy credits through bi-annual auctions, with each auction procuring 25% of the retail customer load. The SOS model does not require commitments from any specific generating resources to serve the awarded load. The SOS model has served Maryland well since its inception in the early 2000s with consistently competitive auctions that also provide customers with general price stability. Therefore, any generation procurement model utilized should be able to operate with the SOS model, and no modifications should be made to the SOS model based on these efforts."
The JMEU did not provide further comments concerning the interaction of SOS and new generation procurement, and cost recovery for generation procurement if SOS is not altered from full requirements. In certain other states, new capacity from competitive IPPs has been procured by EDCs (not owned by the EDCs), with any cost or credit treated on a nonbypassable basis, with no impact on the default service rate.
In separately filed comments, the Maryland Energy Administration said that the white paper should recognize that, since the paper's issuance, the 2026 Maryland regular legislative session has concluded, and the General Assembly did not enact legislation allowing utility-owned generation. "MEA recommends the White Paper provide as a pro/con whether each procurement model can be implemented quickly under existing authorities," MEA said
In separately filed comments, the Maryland Office of People's Counsel criticized the white paper for "material omissions and ambiguities" regarding concerns previously raised by OPC during the PSC's resource adequacy investigation
OPC said, "the White Paper does not sufficiently address: (1) the risk of committing customers to long-term procurement in the current market environment; (2) legal and analytical issues relating to Generation Capacity Credits ('GCCs') and SOS-related procurement risk; and (3) certain important procurement-design considerations that bear on the comparative evaluation of the different models."
OPC said, "OPC previously explained that Maryland may be at risk of procuring generation at a market peak and locking customers into excessive costs before a later correction, particularly while PJM
market reforms remain unresolved".
OPC said, reiterating its concerns with utility involvement in new generation, "The more direct the utility role becomes in ownership, offtake, dispatch responsibility, or market-risk assumption, the more scrutiny is needed of whether the arrangement unduly shifts risk to customers or distorts Maryland’s competitive framework."
In separately filed comments, Constellation Energy Generation, LLC said that, "competitively awarded power purchase agreements (PPAs) and partial tolling arrangements can facilitate timely resource development, align with state energy and climate objectives, and preserve incentives for efficient construction and operation while providing greater flexibility as load growth, market conditions, and policy objectives evolve."
Constellation said, "PPAs are a proven way to support new generation development and are compatible with competitive markets. Competitively awarded PPAs provide long-term revenue certainty that enables project financing without transferring ownership or investment risk to ratepayers. Because assets remain competitively owned, PPAs preserve incentives for efficient construction, operation, and continued participation in PJM’s energy, capacity, and ancillary services markets. PPAs promote cost discipline, avoid layered regulated returns, limit stranded-cost risk, and retain flexibility as market and policy conditions evolve."
Maryland PSC Staff did not endorse any specific procurement methodology in comments on the white paper, but addressed concerns about locking-in the price of capacity via generation procurement at what may be the height of the market
Staff said, "A notable concern was raised regarding the risk of 'going-long,' where the RECA [statute which prompted the PSC's investigation of generation procurement] process
results in a long-term commitment at a price determined during market top conditions. This kind
of duration risk is meaningful. Simultaneously, resource adequacy appears to pose an imminent
challenge to the energy system."
Staff said, "Conventional financial wisdom suggests caution in attempting to time the market by calling
tops and bottoms. In the absence of strong conviction of the market’s current position relative to
the future, a common financial strategy applied with respect to reducing duration risk is referred
to as dollar cost averaging where an expected large purchase may be conducted through multiple
incremental purchases that occur on predetermined intervals or under predetermined conditions."
"Applying this principle to a prospective RECA [statute which prompted the PSC's investigation of generation procurement] procurement process may aid in reducing
duration risk to ratepayers and align the process with the least regrets principle. This principle is
similarly applied already in the shorter-term SOS process where utilities, in general, procure
electricity supply contracts twice a year (for smaller sized customers) in partial increments relative
to expected near-term future demand to spread risk and reduce volatility ... This strategy would position the RECA procurement process as a long-term analogue to
the SOS two-year time horizon where accredited capacity could be procured in specified intervals
such that procured capacity prices over time reflect different market conditions. If using
predetermined conditions rather than specified intervals is preferred, an example of a potential way to pre-define conditions could be to establish that a procurement occurs when a Maryland affected
transmission zone procures capacity in the BRA at the price ceiling or if the BRA for the whole
region does not meet the reserve margin target," Staff said
PC66, PC 66
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April 24, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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