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PSC Report: "Not Network" Co-Located PJM Load May Violate Utilities' Exclusive Franchise Rights
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"Not network" co-located loads and generation, under which the load is not designated as PJM Network load and is entirely served by co-located generation, may violate Maryland statutes concerning utilities' exclusive franchise rights to serve electric customers, the Maryland PSC said in a report to lawmakers on co-location (PC61)
Among other things, the PSC's report examines co-location in which the load is not designated as PJM Network load, and which can be considered "off
system". In such "off
system" co-location, the customer must be entirely served by co-located generation. The PSC report designates such a co-location arrangement as "Type B" co-location
The PSC observed that, under Type B co-location, barring further clarification from lawmakers, "the generator may be infringing on a utility’s franchise rights by
providing electricity to load in a utility’s exclusive service territory."
"Utilities have an exclusive
right to serve retail load (and recover costs in rate base) in their respective service territories.
Legislatures generally grant utilities this monopoly right to a service territory by statute in
exchange for the utility’s obligation to serve customers at just and reasonable rates regulated by
public utility commissions. The commissions, in turn, grant (or revoke) the authority of the
utility to exercise the franchise," the PSC said
The PSC was skeptical of arguments that Type B co-location is permitted under current statute in a manner similar to the lawful provision of electricity by property owners to tenants. The PSC observed that providing electricity in landlord-tenant relationships is "incidental" to the landlord's business, consistent with a limit established under statute, while the sale of electricity under Type B co-location is the primary service provided
Among other recommendations, the PSC recommended that the legislature clarify
whether generators which engage in a Type B co-location arrangement violate utility franchise agreements, or whether such generators should be granted an exception, and what the terms of that exception may be.
Across all co-location models, the PSC recommended that lawmakers clarify whether any co-location party (i.e. load or generator
owner) will be considered an "electric company" or an "electricity supplier", as those terms are used in statute, and whether any co-located party is thus required to meet various RPS and offshore wind obligations
The PSC recommended that the General Assembly confirm in statute that, "the load in a co-location arrangement is a retail electric
customer, addressing the arrangement as a retail electric sale subject to Commission jurisdiction."
The PSC generally said that lawmakers should address what control the state shall have over co-location
The PSC said that "one approach" could be an approval requirement under which the co-location shall, as a condition of proceeding, demonstrate that such co-location is in the public interest, similar to a CPCN process
PC 61, PC61
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PSC Suggests Co-Located Load Be Required To Obtain Approval Similar To CPCN
December 17, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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