PSC Staff Favor People's Counsel's Proposed Schedule For Consideration Of Opting-Out of PJM Backstop Reliability Auction

Staff of the Maryland PSC have recommended that the PSC adopt a proposed expedited schedule filed by the Office of People's Counsel to allow consideration of alternatives to ensure that PJM backstop reliability procurement (RBP) costs are not borne by customers who are not large loads

Staff's recommendation was limited to recommending use of OPC's proposed schedule, and Staff did not address the merits of any allocation of backstop reliability procurement costs or opt-out mechanisms

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 exercise the opt-out in PJM’s RBP proposal expires on October 21, 2026

Separately, if an opt-out is not elected, states will have the opportunity to allocate any RBP costs assigned to a utility to certain specific retail customers (i.e. limiting the assignment to large loads). However, states must provide this retail cost allocation mechanism to PJM. If states do not adopt a specific RBP cost allocation mechanism, PJM will default to assigning RBP costs to all LSEs in a delivery area, in the manner that regular capacity costs are assigned (pro rata)

Given this default allocation mechanism, OPC noted that there is a risk that RBP procurement costs fall on non-large load customers in Maryland, if the PSC does not take action

OPC has recommended a path that would avoid having RBP costs assigned to non-large load customers: provide large load customers in those service territories assigned RBP obligations by PJM the opportunity to commit to paying the RBP costs and, if large load customers do no choose to make that commitment, take advantage of the opt-out opportunity provided by the RBP proposal by requiring, by order, that large load customers that choose not to commit to paying the RBP costs must participate in a peak-shaving program that meets the requirements of the PJM opt-out.

OPC said, "If fully utilized, the opt-out provided in the PJM proposal would prevent PJM from assigning any costs to Maryland zones, thus eliminating the risk that non-large load customers would have to pay those costs".

"The opportunity to exercise the opt-out in PJM’s RBP proposal expires on October 21, 2026, requiring Commission action well before that date if large load customers are to have an opportunity to provide binding commitments to paying RBP costs. Given the timeframe by which an order effectuating OPC’s proposal must be issued, OPC respectfully requests that Commission establish a procedural schedule to consider OPC’s request in time for an order to be issued before October 21, 2026, that includes an opportunity for stakeholder comments and a legislative-style hearing," OPC said

Staff filed comments stating, "Staff recommends that the Commission accept OPC’s proposal to establish a procedural schedule to allow consideration of the OPC RBP opt-out proposal. Additionally, Staff reiterates the need for an expedited timeline to give parties time to provide comments on the OPC proposal, hold a legislative-style hearing, and the Commission to issue an order prior to October 21, 2026."

PC 72, PC72