PSC Commissioner Proposes To Consider New Hedging Options For Default Service, Cites Massachusetts As Success

District of Columbia PSC Commissioner Richard Beverly has proposed in a draft order that the PSC undertake consideration of new hedging options for electricity standard offer service (SOS), and proposed that the PSC issue an RFP for a consultant to assist with a review of hedging policy options

Beverly's proposal to undertake consideration of hedging was made in an omnibus proposed order drafted by Beverly in the PSC's affordability review

Beverly's proposed order was included as part of an inquiry issued pursuant to D.C. Code §34-802, which gives each Commissioner independent authority to pursue any line of inquiry that the Commission itself could pursue. The proposed order is not an action of the full Commission and does not become one unless and until it is adopted by the full Commission.

"Affordability of utility rates is one of the most important issues facing this Commission and other Commissions across the county. As we continue to chart the path forward, I would like to hear from stakeholders on the next steps by allowing them to comment on the attached proposed opinion and order," Beverly said

Beverly noted that several commenters have, "brought up the need for long-term PPAs or other hedging strategies to insulate SOS customers from market fluctuations."

Beverly in the proposed order said, "We agree that hedging options should be considered," with Beverly specifically citing Massachusetts as an example where strategies have led to success

"[W]e ... agree with multiple commenters that other states, such as Massachusetts, have implemented these strategies and succeeded in savings to ratepayers as a result," Beverly's proposed order states

Beverly's proposed order did not further specify the hedging examples in Massachusetts or other states that Beverly's proposed order has concluded are successful. The draft, as noted below, does cite renewable PPAs, which Massachusetts has undertaken, but such long-term contracts in Massachusetts have generally been outside of the default service procurement process, though the total bill cost impact from long-term PPAs may serve as a hedge against default service prices (while not impacting the actual price to compare itself)

In any case, Beverly's proposed order states, "However, we do not have updated analysis of the potential for renewable PPAs available in PJM (or other hedging strategies), with the most recent analysis available from DOEE [District Department of Energy and Environment] completed in Formal Case No. 1017 in 2018. Therefore, we direct the Task Force in Formal Case No. 1183 to draft a Request for Proposals ('RFP') for a Commission-hired consultant to perform a study to recommend hedging strategies for SOS procurement[.]"

The task force in Formal Case 1183 was previously tasked with addressing impacts from PJM capacity market prices

Beverly's proposed affordability order also addresses the retail energy market, though the draft would await the disposition of pending legislation (26-750, B26-0750) prior to acting. Bill 26-750 would, among other things, impose price caps for residential service from retail suppliers (see full background on the bill here)

Beverly's proposed order notes that, "Councilmember Charles Allen and Chairman Phil Mendelson introduced legislation titled the 'Retail Energy Market Consumer Protection Amendment Act of 2026,' which had a mark-up hearing on October 1, 2026. This Commission is currently hearing from stakeholders regarding changes to the Purchase of Receivables ('POR') in PEPPOR-2026-01 and WGPOR-2026-01. Before making those or any additional structural changes to the regulation of energy suppliers, the Commission will wait for the Council of the District of Columbia’s vote on this bill to ensure we proceed according to the letter of the law."

FC 1183

FC 1186