Maryland Electric Coops Mount FERC Challenge to Community Solar Garden Retail Prices

On August 23, Southern Maryland Electric Cooperative (SMECO) and Choptank Electric Cooperative jointly filed a petition (Docket No. EL16-107-000)  with the Federal Energy Regulatory Commission (FERC) requesting that the commission review a June decision by the Public Service Commission of Maryland (PSC) regarding a three-year community solar  garden pilot program.

On behalf of their 160,000 and 52,000 ratepayers, respectively, SMECO and Choptank are alleging that the PSC violated federal laws – including the Public Utility Regulatory Policies Act (PURPA) and the Federal Power Act – by making them buy the excess generation from community solar projects at retail rates.

Indeed, according to a report on the website SNL, under the regulations, if a community solar garden produces more energy than is needed by its subscribers, the local electric utility must “use”  that generation and compensate either the program or its subscribers for it. Since the only way the utility can use that generation is to sell it, the co-ops are claiming that such sales are at wholesale and, therefore, subject to the Federal Power Act.

What’s more, the coops also asserting that, under PURPA, the PSC only has ratemaking authority over certain renewable generators of less than 80 megawatts (MW), according to a report on Politico. In those cases, Maryland only can mandate that utilities pay as much it would cost to buy an equivalent amount of power on the wholesale market, which is less costly than retail.

Rates for other, larger -scale renewable generation fall under FERC’s authority, the complainants said.

The cooperatives asked FERC to declare that the PSC would not be violating federal law if it limits the community solar program “to qualifying facilities and lowers payments to the wholesale rates.”

Along with other cases pending nationwide, this complaint could have major ramifications on the growth of both the solar industry as a whole – and, more directly, on the promising utility scale community solar market.

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