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Consensus Green Power Rules Apply REC Geographic Limit Only To "Residential" Service
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Staff of the Maryland PSC have filed consensus proposed green power product rules to implement SB1 (RM 84)
The consensus draft addresses REC retirement obligations, customer disclosures for green power plans, and requirements for applications to supply green power
The rules do not address the rate cap for green power plans, which is being addressed in a separate proceeding (Case 9757). 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
The latest proposed rules reflect the agreement of all participants to the rulemaking on all issues, except for one substantive issue which remains in dispute
This outstanding issue essentially concerns the reporting obligation related to RECs used for renewable offers and whether this reporting would apply to only residential sales, or all sales
However, most notably, the consensus rules explicitly limit, to residential service only, the obligation of a retail supplier to retire, into PJM GATS, RECs associated with "green power" offers
As first reported by ECM, earlier draft language, due to the draft's lack of any specific limit and the nature of how SB1 was structured, would have applied such PJM GATS retirement obligation to all "green power" sales, including non-residential sales
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," and this definition is not limited to residential service [Public Utilities Article § 7-707(a)]
Apart from this definition, all of the specific green power provisions of SB1, including the price caps and PJM GATS retirement obligation, are limited to residential service
However, because the definition of green power under SB1 was not limited to residential offers, a rule requiring all green power sales to be retired in PJM GATS, absent any limit, would have included non-residential sales
And a PJM GATS retirement requirement imposes a de facto geographic limit on the source of RECs, because only RECs within PJM, or imported into PJM subject to certain conditions (notably, only if the relevant generator has been pre-qualified for the relevant state's RPS), may be retired in PJM GATS
The consensus rule language narrowly provides that a retail supplier shall retire, in a PJM GATS subaccount "accessible" by the PSC, one REC for each megawatt-hour of electricity marketed to "residential customers" as "green power" as defined in Public Utilities Article § 7-707
There is not consensus on what reporting must be provided to PSC Staff concerning retail suppliers' use of RECs that do not qualify for the RPS
The latest draft rule would limit the reporting obligation, and would apply the obligation only to residential green power offers.
Specifically, the rule would state, "A supplier shall document, in a manner chosen by the Commission, the amount of renewable energy credits associated with residential electricity marketed as renewable or green, and that do not qualify as renewable energy credits as defined in Public Utilities Article § 7–701 [e.g. the RPS], Annotated Code of Maryland."
Staff has argued that SB1 requires that RECs for any residential "green power" sales must be retired in PJM GATS, and thus all green power RECs must be eligible for retirement in PJM GATS (thus excluding non-PJM or PJM-imported RECs described above). Thus, Staff does not see any instance in which a residential green power REC does not also qualify for use under the Maryland RPS.
However, the definition of green power under SB1 is broad and includes power marketed as "eco-friendly", "environmentally friendly or responsible", "emissions free", and "carbon–free", among other terms noted above. It is unclear if there are any RECs within PJM which qualify as "green power" due to being "carbon free" or "environmentally friendly or responsible" and which are able to be retired in PJM GATS, but which would not qualify for the Maryland RPS under § 7–701 (which generally could arise from a variety of reasons, including state-specific definitions for certain fuel sources, as one PJM state could have a broader definition of biomass and allow the creation of broader biomass RECs which do not qualify for Maryland RPS, but which a supplier could still market as "environmentally friendly or responsible" and thus be "green power", for example)
Staff says that, "2024's SB 1 ... states that green power RECs must be Maryland certified." Staff's cited provision of SB1 for this conclusion (§ 7-707(e)(2)) requires the retirement of RECs in "a" [emphasis added] PJM GATS reserve subaccount "accessible by the Commission," as described above, but otherwise does not address whether residential RECs must be "certified", unless, under operation of GATS, the stated reserve subaccount is only permitted to hold Maryland RPS-eligible RECs (but, as noted, SB1 only requires that the RECs be retired in "a" subaccount accessible by the PSC, not necessarily an RPS or existing subaccount, so, under a cursory reading of the GATS rules, a new subaccount for non-RPS RECs retired for green power compliance could be developed and made accessible to the PSC)
Staff would strike the term "residential" from the reporting obligation described above, and would require that the REC reporting also apply to C&I renewable sales. To be clear, Staff's position would only require the reporting of information about the RECs used to supply C&I clean energy offers, and would not require retirement in PJM GATS for C&I offers
With respect to other issues, the consensus language includes several changes from Staff's most recent prior draft
Most notably, the proposed rule would now strike -- from both the electricity and natural gas rules -- an obligation for retail suppliers to disclose to customers that the supplier's rate is not regulated by the PSC
Specifically, retail supplier advertisements and solicitations would no longer be required to include a statement that: "The supplier's price is not regulated by the Commission"
While the PSC is now engaged in certain regulation of retail supplier pricing (mostly through imposition of a price cap, or potentially through approval of a supplier's specific green power offer), the PSC does not determine a supplier's price.
As such, it is notable that this rule language is proposed to be struck entirely, rather than modified [such as stating "The supplier's price is not controlled / established / approved by the Commission (except for an approved green power offer)"]
Disclosures to be required from retail suppliers when marketing residential green power offers have been revamped under the consensus draft
The consensus draft strikes the more vague earlier language that would have required the following disclosures, among others, which generally repeated statutory provisions under § 7-707 (g):
(a) what the customer will actually be paying for when the customer purchases green power from the electricity supplier
(b) how the electricity that the customer has purchased is generated
(c) how the green power will benefit the environment
(d) the percentage of electricity that would be provided by the electricity supplier that is eligible for inclusion in meeting the renewable energy portfolio standard
(e) the state in which the electricity was generated
Instead, under the consensus draft, retail suppliers offering green power must include the following disclosure:
"The electricity delivered to your home is generated from a variety of sources, both renewable and nonrenewable. Energy from renewable resources, such as wind and solar, cannot be tracked directly into your home. Instead, the energy your home uses will supports renewable energy sources through the purchase of renewable energy credits ('RECs'). A REC represents the environmental and social good associated with 1 megawatt hour of renewable electricity generation. RECs may be sold separately from the electricity itself, so the buyer of a REC may be different than the buyer of the electricity. In your contract, [X]% of the RECs qualify for Maryland’s renewable portfolio standard. The remaining [Y]% of RECs are [the specific product being marketed].
By purchasing RECs that qualify for Maryland’s renewable portfolio standard, you are supporting renewable energy development in the region. Increased demand for, and generation of, renewable electricity can help reduce conventional electricity generation from fossil fuels in the region where the renewable electricity generator is located. It may also have other environmental benefits such as reducing regional air pollution.
A retail supplier making the consensus draft's required disclosures quoted above would, under the consensus draft, be deemed to have complied with PUA § 7-707 (f) and (g), which generally require the disclosure of the same information as the prior draft's (a) through (e) noted above
The consensus draft requires retail suppliers, including existing retail suppliers, to receive PSC approval in order for the supplier to market any residential green power offer (this represents generic approval for any green power sale, separate from any sought approval for a supplier-specific price)
Under the consensus draft, the information required from green power supplier applicants is somewhat reduced.
Suppliers would not, as proposed earlier, need, by explicit rule, to provide specific information on their green power offer's RECs, including the year, as part of the application
Suppliers would still need to include in any such application a description of the electricity being marketed as green power, including the green power source and percentage of electricity that is green power
For suppliers seeking PSC approval for a green power rate higher than the rate set by the PSC, the consensus rule omits, from the rule's explicit language, certain explicit requirements which merely repeated the statute, but the consensus draft still provides that any such application must be consistent with the statutory requirements
Statute requires that a supplier-specific green power rate application shall include an "independent third–party audit" to demonstrate the supplier's higher costs for green power
Statute also requires that any supplier seeking a higher green power rate shall "demonstrate[]" that the supplier, "has a significant long–term investment in renewable energy," that meets the RPS
RM 84, RM84
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Rules Would No Longer Require Any Retail Supplier Marketing (Not Just Green) To Disclose That Supplier's Rate Is Not Regulated By PSC
December 9, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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