PSC To Hold Reserve Procurement After Several Residential Default Service Bids Rejected; Bids Exceeded Price Benchmark

The Maryland PSC will hold a reserve procurement for SOS supplies after several residential product bids were rejected in a recent procurement at Baltimore Gas and Electric Company, Potomac Electric Power Company (Pepco), The Potomac Edison Company, and Delmarva Power and Light Company

The PSC's bid monitor reported that the procurement for residential products at each of these four EDCs, "failed to attract sufficient offers below the Price Anomaly Threshold [PAT] to fill the supply targets."

Specifically, the implementation of the PAT lead to the rejection of six of 14 Baltimore Gas and Electric 24-Month Residential winning bids, five of six Pepco 24-Month Residential winning bids, all eight Pepco 8-Month Residential winning bids, one Potomac Edison 12-Month Residential winning bid, all four Potomac Edison 8-Month Residential winning bids, and one of the two Delmarva Power Residential winning bids.

The bid monitor stated that it is difficult to say with certainty why several bids for the residential products came in over the PAT, but stated that, "rising interest rates, increases in perceived risk of the SOS product and general inflationary pressures have put upward pressure on the returns demanded by bidders to supply a fixed-price product."

"While prices have declined over the past few months they remain volatile – which increase the risk for bidders to supply a fixed-price product. Limited competition also played some part as well," the monitor said

The monitor noted that the residential products included, for Pepco and Potomac Edison, supply needs for various periods extending to September 30, 2025. The monitor noted the potential start of the Montgomery County opt-out municipal aggregation in October of 2024, though Montgomery County has previously informed interested parties that Montgomery County would not begin CCA service before October 1, 2025

Per RFP rules, a reserve procurement is planned for April 24 to fill the remaining supply needs from the recent RFP.

The PSC accepted the results of the April 10, 2023 bid day absent the unfulfilled residential product bids for Baltimore Gas and Electric Company, Potomac Electric Power Company, The Potomac Edison Company, and Delmarva Power and Light Company, and took no action on the award of the contracts for the bids found to be acceptable