Maryland PSC Consultant Proposes Modifications to Capacity Contract for Differences

Boston Pacific, consultant for the Maryland PSC, has filed several proposed modifications to the contract for differences between CPV Maryland and three of the state's utilities (Case 9214).

The CfD was ordered by the PSC to support construction of a 661 megawatt natural gas-fired combined-cycle generation plant in Charles County, Maryland, with all costs or benefits associated with the CfD borne solely by Standard Offer Service (SOS) customers in the residential and small commercial classes.

Most notably, Boston Pacific recommends modifying the contract to toll the effective date of the contract until all appeals have been resolved.

The modified language makes it clear that the contract will not become effective until all appeals filed by the execution date of the contract have been resolved. Resolution in this case means the issuance of a final and non-appealable order from a court of competent jurisdiction.

If there is a delay, all milestones, including the Commercial Operation Date (COD), will be pushed forward. Boston Pacific noted, however, that the COD of the contract is whenever the unit actually reaches commercial operation. Therefore, even if the milestone for COD is pushed back a year to June 2016, if the unit is operational by June of 2015 (and all appeals have been resolved) contract payments will begin in June 2015

One subject of debate among the parties, which still remains open, concerns what to do if a court remands Commission Order 84815, which ordered the utilities to execute the contract.

"This debate was complicated by the fact that no one can predict why the Order would be remanded," Boston Pacific noted. "Possibilities range from a finding that the Commission simply does not have the jurisdiction to order such a contract, to procedural matters that could be more easily resolved. One school of thought was to automatically void the contract upon any remand and negotiate a new CfD if possible. Another option, recommended by Boston Pacific and embodied in the CfD redline Section 5.1.c, was to first allow for negotiation amongst the parties to remedy any reason for remand. Under this option we would have the potential to salvage the work that has been done so far both in designing and negotiating the CfD," Boston Pacific said.

The PSC directed CPV, BGE, Pepco and Delmarva to file written comments on Boston Pacific's recommended amendments to the Contract for Differences on or before July 20, 2012. In addition, the Commission will hold a hearing to hear from Boston Pacific, CPV, BGE, Pepco, and Delmarva on the recommended amendments to the Contract for Differences on July 31.