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People's Counsel: Maryland Utilities Can't Legally Offer Green Power Under SB1
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As a result of SB 1, Maryland electric utilities may not offer green power, as defined by SB 1, the Maryland Office of People’s Counsel said in comments to the Maryland PSC
Currently, three utilities which provide electricity SOS in Maryland also offer a renewable energy option -- Pepco and Delmarva, and the Southern Maryland Electric Cooperative (SMECO)
At Pepco and Delmarva, a green rider (adder) is optional for customers on R-PIV and PIV (two plug in vehicle rate schedules), and is mandatory for a public vehicle charging tariff, schedule PC-PIV. At SMECO, a green product is offered on an optional basis for SOS customers, under a separate rider (Rider G)
The green products limited to plug-in vehicle customers at Pepco and Delmarva drew little attention from stakeholders when proposed and adopted at the PSC.
SMECO's broadly offered renewable add-on was opposed by retail suppliers, but the PSC cited the cooperative's unique statutory authority to rely on a portfolio for SOS as allowing the product (as opposed to PSC-governed competitive SOS procurements at the investor-owned utilities, where such procurements are required to meet various provisions which are enumerated in statute, such as SOS being designed to obtain the "best price"). See a discussion of SMECO's green offering in ECM's prior story here. A court affirmed the PSC's approval of the green rider at SMECO
OPC broadly argued that a utility offering SOS may not offer green power under SB1, in commenting on draft rules from PSC Staff to implement the new law
In its comments, OPC used varying terms to describe the utilities which it argues may not provide green power, using the terms "regulated utilities", "regulated electric utility that provides standard offer service", and "utilities" [no preceding qualifier]. In quoting relevant statute, OPC also uses the term "electric company". The term electric company is generally understood to include SMECO, but OPC was not clear concerning the universe of EDCs it was addressing under its argument. Further, SB1 included provisions allowing the marketing of SOS by, "an electric cooperative," but OPC does not specifically note this provision.
OPC in its comments did not make note of the current green offerings from utilities (both co-op and IOUs), nor did OPC specifically seek the rescission of any prior grant of authority for a utility to offer a green plan, due to the new regime under SB1
Under SB1, "green power" is defined as, "energy sources or renewable energy credits that are marketed as clean, green, eco–friendly, environmentally friendly or responsible, carbon–free, renewable, 100% renewable, 100% wind, 100% hydro, 100% solar, 100% emission–free, or similar claims." [Public Utilities Article § 7-707(a)]
OPC said, "The relevant statutes and corresponding regulations ... when read
together as a whole, indicate that regulated utilities are not permitted to offer customers
electricity supply other than standard offer service."
While OPC cited broader statute, unaffected by SB1 (discussed further below), OPC in particular cited the definition of "green power" under SB1 as prohibiting an SOS provider from offering a green power plan. Additionally, while not explicitly addressed by OPC, OPC's argument appears to rest on the idea that any green power, as defined by SB1, constitutes "supply", and, secondly, that the term "marketed" under SB1 means the description, offering, or sale of such a product as green (or similar term)
In brief, summarizing the apparent view of OPC, because "green power" is supply, the definition of SOS necessarily means that "green power" from an SOS provider is part of the standard offer service, because the supply purchased by a customer from an electric company (i.e. the SOS provider) is, by definition, standard offer service. However, COMAR prohibits the marketing of SOS. Because SB1's "green power" definition refers to green power as power "marketed" as green, SOS providers cannot offer green power, because such offering would constitute prohibited marketing of SOS, if ECM understands OPC's reasoning.
OPC argued that PUA §7-510(c)(2)(i) provides that, "[e]lectricity supply purchased
from a customer’s electric company is known as standard offer service."
OPC argued that, "A utility is prohibited from
marketing or promoting its standard offer service under COMAR 20.40.02.01.B.7," with OPC also noting a provision concerning affiliate marketing that is generally not relevant to the green power discussion
Key in OPC's argument is that, "As green power is defined in PUA §7-707(a) as 'energy
sources or renewable energy credits that are marketed...', this indicates that utilities
cannot offer green power as they cannot market standard offer service." [emphasis added by ECM]
OPC's argument on this specific point appears to hinge on green power being considered "supply" (and thus green power constitutes SOS by definition and is thus subject to rules against marketing SOS), and that the "offering" of green power constitutes "marketing" ("marketing" taking the meaning of the "sale" or availability of a product, and not just a product's "promotion").
In allowing the green rider at SMECO in a 2020 decision, the PSC affirmed that the green rider may not be marketed to customers, but the PSC also found that the provision of information about an optional tariff available to customers (the green rider) is not marketing (details here)
Notably, in 2020 when SMECO's green rider was considered by the PSC, OPC at that time supported SMECO's green rider, and had said that, so long as the materials provided by SMECO to customers about the green rider was informational and unbiased, and not promotional, then the prohibition on marketing SOS is not being violated by SMECO's offering of a green rider.
More broadly, OPC cited Maryland's customer choice construct and statutes as not permitting utilities to offer green power in competition with retail suppliers
"Statutory provisions are not read in a vacuum, but instead 'the plain language must be viewed within
the context of the statutory scheme to which it belongs, considering the purpose, aim, or policy of the
legislature in enacting the statute.' The provisions of the PUA must be read
coherently with one another, presuming that 'the Legislature intends its enactments to operate together as
a consistent and harmonious body of law,' to avoid a reading that is 'unreasonable, illogical, or
inconsistent with common sense,'" OPC said [internal citations omitted from quote]
"[T]he
broader statutory scheme of deregulated energy supply requires that the regulated utilities not be in direct competition with retail suppliers, as the utilities’ entrenched market power stemming from the utility franchise would result in unfair competition," OPC said
The offering by utilities of "green power" as defined under SB1, "cannot exist under the current statutory and regulatory framework," OPC said
OPC's comments were specifically directed at Staff's draft language that would exempt SOS providers from new obligations related to marketing green power, which are proposed to be applicable to retail suppliers, including new disclosures and price caps
OPC said that Staff's proposed exemption should be deleted, since, as argued above, utility SOS providers may not provide green power, and Staff's language contemplates a scenario that is contrary to law (and since SOS providers cannot offer green power, Staff's proposed exemption is rendered moot)
Alternatively, to the extent the PSC believes electric utilities offering SOS may provide to customers "green power" as defined by SB1, OPC said that the PSC should not exempt the utilities from the disclosures, price caps, and other requirements proposed to be applicable to green power offers from retail suppliers. OPC said that, if SOS providers can offer green power, nothing in SB1 exempts SOS providers from the green power provisions of the law (in contrast to SB1 explicitly exempting municipal aggregations from SB1's green power provisions)
RM84
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October 15, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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