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Retail Supplier Raises Competitive Concerns With Conditions in Exelon-Pepco Merger Settlement

October 19, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

WGL Energy Services, Inc. has raised concerns about the prospect for utility-owned generation and related services under conditions proposed in a merger settlement agreement among various District of Columbia government agencies and Exelon and Pepco

WGL Energy stated that it, "supports the merger being proposed in this proceeding, the significant benefits the merger would bring to the District of Columbia and electricity customers in the District, and the important enhancements to existing interconnection procedures that the Settlement Agreement promises."

However, "WGL Energy has a limited concern with regard to new competitive energy market commitments that the Joint Applicants [Exelon/Pepco] are making in the Settlement Agreement that have the potential for regulated electric utility development and ownership of solar generation and microgrid facilities that would include generation assets."

As described by WGL Energy, the settlement commits, "the Joint Applicants to offer solar projects (10 Megawatts) in the District, to purchase wind power from PJM markets (100 Megawatts) for resale in the District and to locate, develop and propose for Commission approval at least four ratepayer funded public purpose microgrid projects with generation to serve District customers."

"WGL Energy is concerned ... that the Settlement Agreement appears to contemplate that the regulated electric utility would once again own generation in the District by enabling Pepco to locate and develop ratepayer funded solar facilities and microgrid projects with generation assets ... WGL Energy would like a clarification that the Settlement Agreement does not contemplate that the regulated electric utility in the District should locate, develop and own ratepayer funded generation that may not have to compete with non-utility generation," WGL Energy said

"WGL Energy would like to seek clarification that the competitive markets that presently exist in the District of Columbia for solar power and distributed energy including combined heat and power will continue to exist if this settlement is accepted," WGL Energy said.

Regarding the solar development, the settlement does state, "Exelon shall sell the output of solar generation constructed in fulfillment of this commitment in the market, and shall not seek to recover the costs of this commercial solar development through Pepco District of Columbia distribution or transmission rates."

Regarding the wind development, the settlement states that, "Exelon or its non-utility subsidiaries," shall procure the stated amount, and that, "The costs of implementing this paragraph (including the costs of all procurements and all costs under each PPA) shall not be recovered through Pepco District of Columbia distribution or transmission rates."

However, with respect to microgrids, the settlement states, "Pepco will coordinate with the District to interconnect and develop at least four (4) microgrids. The objectives of Pepco and the District with respect to these microgrids will include the following: (i) to encourage on-site generation, including generation developed by competitive suppliers ... Pepco will, within eighteen (18) months after Merger close, file with the Commission a proposal for at least four (4) pilot public-purpose microgrid projects within the District to provide enhanced energy services during emergency events. The filing shall include a proposal for funding and recovery of Pepco’s costs in connection with the projects through Pepco District of Columbia regulated retail utility rates..."

Such filing, "shall also address alternatives for allocation of the costs of the microgrid projects to customers, including payment by all Pepco customers or payment by a smaller subset of customers who benefit from the project," the settlement states

"The development and implementation of the microgrid pilot projects shall be competitively sourced," the settlement states

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