Utility Works on Energy Management Abilities

The Maryland Public Commission (PSC), along with utility regulators from New Jersey, Pennsylvania, Delaware and a coalition of electricity buyers and consumer advocates, filed a complaint with the Federal Energy Regulatory Commission (FERC), challenging the imposition of capacity payments for the period of June 2008 through May 2011.

“Last year, we identified these federally imposed capacity payments as a major contributor to rising electricity rates in Maryland and have now concluded, as have other states and parties joining this complaint, that these rates for periods June 2008 through May 2011 are unjust and unreasonable and must be adjusted,” said Steven B. Larsen, chairman of the Maryland Public Service Commission.

The complaint challenges the results of the transitional Reliability Pricing Model (RPM) auctions, administered by the grid operator, PJM Interconnection, and asks FERC to order PJM to ensure that only just and reasonable capacity charges are imposed on buyers and suppliers of electricity in the coming years. The complaint claims that RPM transition auctions failed to accomplish this while yielding inflated capacity prices.

The complaint, filed by a broad coalition called the RPM Buyers, claims that electricity users in the PJM region, which spans 13 states and the District of Columbia, will pay approximately $12 billion in unjust and unreasonable capacity charges over the next three years.

If FERC grants the relief, the PSC estimates that, over the three-year period in question, BGE ratepayers would save $1.068 billion, ratepayers in the Pepco zone would save $544 million, ratepayers in the Delmarva zone would save $122 million and ratepayers in the Allegheny Power zone would save $170 million.

This is the fourth time in a year that the PSC has challenged actions in the wholesale market after announcing a strategy to actively pursue such actions. In May 2008, FERC ruled in favor of the PSC on a complaint challenging the fairness of exempting certain generators from price-caps. Maryland joined a broad coalition, challenging an earlier effort by PJM to increase capacity costs based on the ground that PJM failed to follow the proper procedures, and FERC agreed.

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