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Choice State PSC Approves VPP, DER Aggregation Pilots
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The Maryland PSC has approved several electric distribution system support services (EDSSS) pilot program offerings, such as VPPs, at the electric utilities (the DRIVE Act programs), while rejecting other proposals, as the PSC also addressed the interaction of various statutes governing funding and cost recovery for distribution energy resource aggregator programs
Concerning issues raised by a retail supplier during the proceeding, the PSC affirmed that the utilities must allow grid export for VPP programs upon implementation.
Certain utilities had proposed limits on grid export, or to only offer such functionality in year two of a pilot
In another issue of interest to the retail market, a retail supplier had also proposed that the utilities use device level metering/telemetry for performance measurement and settlement in utility programs
The utilities had proposed as follows: BGE proposed to compensate residential VPP participants based on nameplate capacity. PHI plans to develop technical evidence and operational experience needed to use device-level metering for billing or settlement purposes during the pilot. Potomac Edison proposed to base incentives for BESS and EV devices on device nameplate characteristics and estimated performance. Potomac Edison proposed to monitor performance at the device level through the third-party DERMS provider to compare estimated performance with actual performance. Potomac Edison proposed to settle performance payments for aggregated resources using company-approved device-level metering.
On this issue, the PSC accepted the utilities’ proposals concerning device-level metering in the interim, until the Interconnection Work Group can complete additional investigation into device-level metering.
Concerning the transition of pilot programs to permanent programs, the PSC left such matter to future ruling, but did direct that the utilities should develop and file proposals for permanent VPP programs after the two-year pilot demonstration, "contingent upon ensuring a seamless transition for existing customers and continuous operation of participating devices, in addition to completing a robust pilot evaluation as directed in Order No. 91917".
The specific pilots approved and rejected by the PSC are as follows:
BGE Approved
• BGE’s Bring-Your-Own Device (BYOD) Program - Residential BESS and Bidirectional-Enabled EVs - 4.12 MW of Peak Load Reduction; Compensation: Stationary Energy Storage Devices - $300/ kW-yr direct based on nameplate capacity; Bidirectional EVs - $300/ kW-yr direct based on nameplate capacity; and Residential BYOD Storage+Solar - $150/ kW-yr direct based on nameplate capacity.
• BGE’s Aggregator Participation Program - 135 MW of Peak Load Reduction; Compensation: Reservation - $90/kW-yr based on pledged capacity with payment pass-through via aggregator; and, Event - Up to $6/kWh based on baseline calculation and pledged capacity with payment pass-through via aggregator.
BGE Not Approved:
• BGE’s Utility-Owned Device Programs (2WDLC & Medical BESS) - 49 MW of Peak Load Reduction.
PHI Approved
• PHI Residential/Small Commercial (BESS/EV) - 4.4 MW of Peak Load Reduction; compensation for BESS/V2X at $300/kW/yr;
• PHI Large Non-Residential (C&I) Alternative Scenario - 30 MW of Peak Load Reduction; pay-for-performance compensation (Pepco is $75/ kW-season and Delmarva is $40/ kW-season) based on the average kW curtailed during dispatch events as compared to a baseline.
PHI Not Approved
• BYOD Thermostats and Direct Load Control Program
• PHI Large Non-Residential (C&I) Recommended Scenario - 60 MW of Peak Load Reduction
• PHI Incentives for Underserved Communities
Potomac Edison: Approved
• BYOD Direct Enrollment Pathway - 2.3 MW of Peak Load Reduction; Compensation includes: Performance incentive up to $300/kW year; and Connectivity incentive of up to $150/connected year prorated for enrollment less than 12 months of a connected year
• Aggregated Resources Pathway - 9.87 MW of Peak Load Reduction; Compensation includes up to $65/kW-year based on average event performance with two-hour event dispatch windows. To prevent double counting, events are not called on PJM event days. Also, a 20-percent bonus to the $/kW-year incentive rate may be applied for location-specific participants.
• Potomac Edison Locational Adders; $50 for residential BYOD batteries and EV chargers and 20 percent of the performance payment for Aggregations
Potomac Edison Not Approved
• BYOD Thermostat Program - 6.56 MW of Peak Load Reduction;
• BYOD Direct Enrollment Pathway LMI Enrollment Bonus
• BYOD Direct Enrollment Pathway Connectivity Incentive
In terms of the PSC's decision on rejections, BGE, PHI, and Potomac Edison generally supported or proposed moving various demand response programs, such as utility-owned direct load control (DLC) devices and smart thermostat offerings, to DRIVE Act programs
However, the PSC said that the Commission did not intend for such integration or upgrading of existing EmPOWER demand response programs into DRIVE Act programs. Integration or upgrading of existing EmPOWER demand response programs is better reserved for future consideration of permanent VPP programs, the PSC said
Such PSC determination removed BGE’s 2 Way Direct Load Control Switches (2WDLC) program proposal from inclusion in the DRIVE Act pilots, because this proposal focused on upgrading 50,000 of BGE's existing EmPOWER 125,000+ 1 Way Direct Load Control Switches (1WDLC) to 2WDLC switches in two years.
Such PSC determination also removed PHI’s BYOD Thermostats and Direct Load Control Program, which focused on transitioning and expanding the existing EmPOWER programs for BYOD Thermostats and Direct Load Control from 1WDLC to 2WDLC. Potomac Edison’s BYOD Thermostat Program, which would transition and expand the company’s existing Energy Savings Rewards (ESR) smart thermostat program in EmPOWER, was also removed by the PSC.
The PSC also addressed compensation to net energy metering (NEM) customers who participate in the load pilots
BGE proposed that net energy metering customers receive reduced compensation (up to $150/kW per year versus up to $300/kW for non-NEM) for the BYOD program, and not receive performance payments for distribution energy resource aggregator (DERA)-dispatched events
"Without prejudicing actions the Commission may take on this or other matters involving NEM compensation in the future, the Commission is persuaded that BGE’s NEM compensation proposal to halve NEM compensation for its BYOD pilot program is a good compromise proposal appropriate for a pilot program," the PSC held
However, the PSC said that it is unclear why BGE did not apply the same rationale for NEM compensation
in its aggregator program.
The PSC directed the utilities to propose adjustments to their NEM compensation for their DRIVE Act programs to consider partial compensation, but not full compensation. "While BGE’s 50-percent compensation proposal is a good middle ground, Utilities may propose other amounts of partial compensation as this could be a valuable pilot learning to determine NEM customer responsiveness to partial compensation approaches," the PSC said
The PSC approved PHI’s 30 MW alternative scenario Large Non-Residential C&I program proposal, rather than a 60 MW program, in light of affordability concerns
Several programs were rejected by the PSC due to legislative changes which the PSC said now prohibit "incentives" for DRIVE Act participation for which a utility receives cost recovery.
Notably, the Commission contrasted such "incentives" with distinct payments to customers for grid services, which are acceptable
The PSC interprets a payment for participating in a DRIVE Act program (such as $/kW-yr or $/kW-season) as a payment for providing a grid service in response to a utility dispatch order, and not as an incentive.
Locational adders provide grid service value, and the Commission does not consider them an incentive payment, the PSC said
"Conversely, the Commission considers an incentive to be direct or indirect compensation designed to promote participation in utility DRIVE Act program offerings by reducing cost barriers to entry," the PSC said
The PSC noted that there will be no new utility-owned devices involved in the DRIVE Act pilots, while reiterating that the PSC believes that utility ownership may be appropriate in some instances
"[A]s indicated in Order No. 91917, the Commission finds that there may be appropriate use cases for utility ownership of BTM VPP devices, including future consideration for integration of EmPOWER demand response programs utilizing utility-owned devices into permanent VPP programs as these programs transition to permanent programs. These decisions will be deferred until the completion and evaluation of the EDSSS pilot programs," the PSC said
Case No. 9761
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June 30, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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