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Inconsistency In New Law Bans Retail Suppliers From Offering Out-of-State Green Power, Retail Supplier Says
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An inconsistency in Maryland's SB1 may be read as prohibiting retail electric suppliers from offering green power sourced from any state other than Maryland, WGL Energy said in comments to the Maryland PSC
As previously reported, SB 1 only allows retail suppliers to sell "green power" to residential customers at either: 1) a price set by the PSC generically, or 2) a price established through a company-specific petition from a retail supplier
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)]
SB 1 mandates that, for residential customers, a retail supplier may not market a product as "green power" unless, among other things, the product includes green energy or RECs, both of which must meet the standards to qualify for use in Maryland's RPS, in an amount that equals or exceeds the higher of the following: (1) 51% of the product's supply, or (2) is at least 1% higher than the RPS which is applicable in such year
This provision allows the minimum required amount of green power to be from out-of-state, so long as the power qualifies for the Maryland RPS (generally meaning PJM or delivered into PJM). WGL Energy also argued that, under this provision, 49% of the product could be green power not qualified for the Maryland RPS (from a non-PJM state)
However, WGL Energy noted that SB1 also requires that a REC used by a supplier under a green power offer must be retired in a PJM GATS subaccount, "accessible by the commission [PSC]". [emphasis added]
WGL Energy argued that the requirement for the subaccount to be "accessible by the commission" means only "domestic" RECs may be used, as WGL Energy said that, "states within the PJM footprint can
only access and manage their specific reserve subaccount."
WGL Energy was focused on whether the 49% of a green power offer that is not required to meet the RPS criteria may be from out of state. WGL Energy did not specifically discuss whether the 51% of power, that must be eligible for the Maryland RPS, must be from in-state, or, as allowed under the RPS, may be from another PJM state and/or from a source eligible to be retired in PJM GATS.
WGL Energy said, "with the
requirement that RECs be retired in a reserve subaccount accessible by the commission, the
RECs used for green power must be 100% domestic since states within the PJM footprint can
only access and manage their specific reserve subaccount."
From 2020-2022, WGL Energy noted that only 19% of RECs used to meet Maryland's RPS were from in-state.
WGL Energy's comments came as parties filed proposals for the generic price cap for green power products
WGL Energy recommended that the PSC implement SB1 by allowing the minimum RPS-qualifying renewable content (e.g. 51%) to be from any RPS-qualified resources (not in-Maryland only), with any additional green volumes permitted to be sourced from non-RPS RECs that need not be retired in a GATS subaccount accessible by the PSC. In such case, WGL Energy recommended that the initial generic green power price cap be set at the 12-month trailing SOS rate plus $20/MWh
If the PSC were to interpret SB1 as requiring that retail supplier green power offers may only be comprised of in-state Maryland RECs, WGL Energy proposed that the initial generic green power price cap be set at the 12-month trailing SOS rate plus $60/MWh
PSC Staff's More Restrictive Rate Cap
In newly filed comments, PSC Staff have proposed a more restrictive price cap for the generic green power price cap under SB1, versus Staff's earlier stated general overview
Staff had originally said that the PSC should adopt a maximum
green power price that "includes" the most recent 12-month average SOS rate,
"along with the average Tier 2 REC price in the previous year's RPS report."
While considering only the amount of green power offered by a supplier in excess of the RPS, in developing a Tier 2 REC-based adder, may have been implicit under Staff's original proposal, Staff had not previously explicitly presented how Staff proposed to calculate the adder
Staff has now filed comments arguing that the green power premium allowed to be charged, based on the Tier 2 REC price, should only consider any amount of a retail supplier's green power offer which exceeds the applicable RPS
Specifically, Staff proposed a unique per-kWh adder, based on the Tier 2 REC price, for each level of a retail supplier's stated total green power offer, from 51% to 100%, that exceeds the RPS
For 2025, Maryland's total RPS requirement is 38%. Thus, under Staff's proposal, a retail supplier's 51% green power offer would only be allowed to use a price adder that reflects the 13% of green power above the RPS
Staff calls this difference between the state's RPS and the supplier's offer the "Green Power Premium Factor".
The Green Power Premium Factor would be multiplied by the average of last year's Tier 2 REC price to establish the appropriate adder for a retail supplier's product. The amount of the adder would vary based on the amount of the supplier's green offer that is above the RPS
Using the 2023 Tier 2 REC price of $0.01050, Staff proposed a table of applicable adders for each level of a green power offer from 51% to 100%
As an example, for a 51% renewable offer, Staff's calculation would be the Tier 2 average price of $0.01050 multiplied by the above-RPS component of the offer, 13%, or $0.01050 * 0.13, resulting in an allowable adder of $0.00137 per kWh
The most relevant adders under Staff's proposal are below:
As noted further below, Pepco Maryland currently offers certain EV SOS customers a 100% green adder at a rate of 2.2 cents per kWh, versus the adder of 0.6 cents per kWh proposed by Staff for retail suppliers
Staff does not seem to permit a situation in which a supplier could offer 100% green power wholly above the RPS (e.g. 138% green), as Staff proposed that the $0.00651 per kWh adder be the "maximum" green premium permitted under the generic price cap
Other parties filing comments reiterated previously reported positions
As previously reported, a coalition of retail suppliers, including RESA, recommended that the PSC adopt an initial generic green power price cap equal to 150% of the trailing 12-month average SOS rate, to be put in place on Jan. 1, 2025, with suppliers recommending that the PSC hold hearings to determine a more robust price cap calculation to replace this interim cap
The Maryland Office of People's Counsel warned against the supplier coalition's proposal, warning that it would allow rates in excess of green power costs
OPC cited Pepco's green rider, for EV customers, that provides 100% green power for an adder of $0.02289 per kWh. OPC did not discuss the composition of green power used to supply Pepco's green rider, and whether Pepco's green power would meet the green power definition under SB1
OPC said that, under the supplier coalition's proposed price cap and the applicable SOS average rate, a 51% green power product could be 6 cents higher than the SOS rate, versus the 2 cent premium for Pepco's 100% green adder
Case 9757
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PSC Staff Propose More Restrictive Price Cap For Retail Supplier Green Power
Staff's Capped Green Adder Maxed at 6 Mills per kWh -- While Utility Allowed To Offer Green Power at 2.2 Cents per kWh!
December 6, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
Total
Green Power % Allowed Adder
51% $0.00137 per kWh
75% $0.00389 per kWh
100% $0.00651 per kWh
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