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Utilities: Not Viable To Develop Peak Shaving Program Required For PJM Capacity Backstop Opt-out Prior To Oct. 2026 Deadline
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Baltimore Gas and Electric Company (“BGE”), Delmarva Power & Light Company
(“Delmarva Power”), and Potomac Electric Power Company (“Pepco”) (collectively, the “Joint
Maryland Exelon Utilities” or “JMEU”) told the Maryland PSC that the JMEU do not consider it viable to develop a PJM-compliant peak-shaving program that would allow the utilities to opt-out of PJM's Reliability Backstop Procurement (RBP) auction prior to an October 2026 deadline
As previously reported, PJM's RBP provides an opt-out if the relevant utility is addressing its capacity needs through peak shaving adjustment programs that are codified in state law. See more background here
The opportunity to elect the opt-out in PJM’s RBP proposal expires on October 21, 2026
The Maryland Office of People's Counsel has proposed relying on the peak shaving adjustment opt-out for the RBP
In comments to the Maryland PSC concerning OPC's proposal, the JMEU said, "The JMEU do not consider it viable to develop a PJM Tariff-compliant Peak Shaving
Adjustment program prior to October 21, 2026. An Electric Distributor would need to
develop a Peak Shaving Adjustment plan that would be able to meet a 15-year term
consistent with the proposed PJM RBP. More time would be needed to better understand
potential technology necessary to manage load at new customer sites along with outreach to
customers to gauge whether a 15-year commitment to activating the technology is feasible."
"Based on the information presently available and the JMEU’s current understanding of
PJM’s proposal, an RBP opt-out through a peak-shaving program does not appear practicable within the contemplated timeframe. The JMEU do not currently have a PJM-compliant Peak
Shaving Adjustment program and have not identified a viable means of developing and
implementing such a program before October 21, 2026," the JMEU said
However, OPC, which favors use of the RBP opt-out via mandating that large loads participate in a PJM-compliant peak-shaving program (or instead make a binding, financially secured commitment to pay RBP costs assigned to a utility zone), said that the peak shaving program design does not need to be filed with PJM until September 2027. In other words, only the election of the opt-out is required by October 21, 2026, not the final design
OPC said, "The Commission’s order [for an opt-out] does not need to fully develop the peak shaving program in full. Indeed, PJM does not require that utilities submit full peak shaving plans to
qualify for an RBP opt-out. Rather, PJM requires a commitment to submit a peak shaving
adjustment plan that meets Attachment DD-2 by September 2027."
OPC said that, in a recent FERC filing from PJM, "PJM explicitly confirmed that the
'submission of the full peak shaving adjustment plans would not be needed' when a
utility elects the RBP opt-out. PJM states that plans for the 2028/2029 Third Incremental
Auction may be submitted as late as September 2027 under Attachment DD-2. When
requesting to opt-out of the RBP, each utility must commit to submitting a plan that meets
that attachment’s requirements.
Thus, it is not necessary to develop compliant programs
prior to October 21, 2026."
In separate comments, PSC Staff agreed that, "PJM does not require that utilities develop peak-shaving programs
that can be submitted to PJM prior to October 21, 2026," citing PJM's filing at FERC that was noted by OPC above
Staff quoted PJM's filing as stating, "PJM confirms that the submission of the full peak shaving adjustment plans would
not be needed at the time of an election to opt out of the RBP. Specifically, peak
shaving adjustment plans for the 2028/2029 Third Incremental Auction can be
submitted as late as September 2027 in accordance with the existing rules specified
in Tariff, Attachment DD-2.
PJM will simply require an Electric Distributor that elects to opt out of the RBP that a peak shaving adjustment plan will be submitted
in accordance with the requirements set forth in Tariff, Attachment DD-2 at the time
it makes the opt-out request, which will be due within three weeks from the
commencement of the RBP (i.e., if the RBP commences September 30, the requests
would be due by October 21)."
Staff observed that, "Thus, BGE and PE would only need to inform PJM that they elect to opt-out by October 21, 2026."
Staff said, "Staff believes that OPC’s RBP opt-out proposal is worth pursuing because it reduces risk
for non-Large Load customers, including residential customers, and does not have down side risk.
If PJM were to not accept a Maryland utility proposed peak shaving program to enable RBP optout, Maryland ratepayers and the applicable utilities would face the same challenge that exists
absent the opt-out; determining how to allocate RBP costs in a manner that ensures residential and
other non-Large Load customers are not at risk of paying any RBP costs."
While bilateral agreements between large load customers and eligible capacity can be used at PJM to lower a zone's backstop capacity to be procured in RBP, Staff said, "The bilateral contracting that may offset the RBP capacity procurement target is an agreement
between Large Load customers and generation suppliers. Staff does not know of a pathway for
the Commission to require a Large Load customer to enter into a bilateral agreement with a
generation supplier prior to October 21, 2026".
In separate comments which doubted the ability to create a new peak-shaving program compliant with the opt-out by the October 21, 2026 deadline, Amazon
Web Services, Inc. said that the PSC should, "Find that establishing a PJM Tariff Attachment DD-2-compliant peak-shaving program
before October 21, 2026 is not prudently feasible, and that the voluntary flexibility
program under PUA § 4-212(h)(iii) cannot be required for customers who do not elect to
participate".
Amazon said that to the extent the Commission finds that existing protections inadequately address the risk of
stranded capacity procurement costs,
the PSC can require large load customers "electing to retain RBP
cost responsibility" to post collateral in the form of a parental guarantee with the relevant LSE
"A
large load customer that does not otherwise commit to qualifying BYONC or voluntary
curtailment should be required to post collateral for the quantity of MW it desires to remain
within the pending RBP construct, whereby the utility will have a defined structure from which
to both allocate the cost, collateral obligation, and IRAS curtailment off-sets for said
proportional MWs," Amazon said
Amazon said that the PSC should order BGE and Potomac Edison (those territories which will be subject to RBP) to develop proposed RBP allocations for each
large load customer in their current forecasts and solicit each customer’s
commitment to pursue a bilateral opt-out (BYONC), voluntary peak-shaving
participation (codified within ESA), or the RBP path (with collateral posting)
In separate comments, Constellation Energy Generation, LLC said that the peak-shaving opt-out proposed by OPC entails legal risk
and assumes a timeline that does not align with the Reliability Backstop Procurement
Constellation sought the following protections concerning assignment of RBP costs:
• RBP charges should not be assigned to commercial and industrial customers (in other words, protection of residential customers from RBP should not result in cost shifting of RBP charges to C&I customers)
• Large load customers that have procured their
own capacity for RBP should not be assessed RBP charges
"Constellation supports an allocation framework that assigns RBP cost responsibility as closely as
practicable to the specific loads that gave rise to the obligation," Constellation said
To the extent the PSC does mandate a peak shaving program for large loads, Constellation said that any such mandate should not disturb C&I customers' existing retail contracts, including any demand response programs currently used by such customers.
Constellation noted that the PJM tariff provides that the peak-shaving program under the RBP opt-out does not allow such peak-shaving participants to also participate in the PJM markets using demand response (closing off such market-based demand response revenue streams)
Constellation said, "any [peak shaving] program the Commission adopts must be non-discriminatory in its application
and must not undermine competitive retail choice for commercial and industrial customers ... Maryland’s commercial and industrial customers contract for retail supply in a
competitive market, and any peak shaving program terms that encroach upon those arrangements
would erode a framework the General Assembly has long supported. The Commission should
ensure that any enrollment obligations, curtailment terms, and any associated cost consequences
are structured so that a customer’s choice of retail supplier is neither constrained nor penalized."
PC 82, PC82
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PSC Staff, OPC Say PJM Has Confirmed That Actual Program Design Not Needed By PJM Until Sept. 2027
September 18, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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