Welcome to Pepco Energy Services' Regulatory Changes website. This site is designed to provide our customers with valuable information regarding a number of regulatory rulings that may create an additional charge on your bill for your electric account(s).
Please note that not all changes or charges apply to all customers. Several of the regulatory changes described below are only applicable to customers within certain utility service territories, and certain charges only apply to customers who executed contracts prior to a certain date. Please refer to the table below to determine which charges may be applicable to your account(s).
Given that the changes discussed below are the result of either (i) Orders issued by the Federal Energy Regulatory Commission (FERC), the government agency that oversees wholesale energy markets, or (ii) laws passed by a State legislature, these changes ARE NOT unique to any particular account or energy supplier. Therefore, any competitive supplier or electric utility that uses the PJM Interconnection LLC (PJM) to serve its customers is subject to these costs. PJM is the entity that administers the Mid-Atlantic's transmission system.
Please visit our Frequently Asked Questions section.
Should you have any questions regarding this information, please contact us at
1-888-277-5809.
There are several regulatory changes currently affecting customers:
The following table shows which regulatory changes are applicable to customers within each utility service area:
| Electric Distribution Company |
Adoption of a Locational Generation Capacity Requirement |
Transmission Adjustment Charges & Transmission Enhancement Charges |
Reliability Must Run Charge |
Revised Renewable Portfolio Standards |
| Allegheny Power - MD |
x |
x |
|
x |
| Atlantic City Electric |
x |
x |
x |
|
| Baltimore Gas & Electric |
x |
x |
|
x |
| Commonwealth Edison |
x |
x |
|
|
| Delmarva Power - MD |
x |
x |
|
x |
| Delmarva Power - DE |
x |
x |
|
x |
| Duquesne Light |
x |
x |
|
|
| Pepco - DC |
x |
x |
|
|
| Pepco - MD |
x |
x |
|
x |
| Jersey Central Power & Light |
x |
x |
x |
|
| Public Service Electric & Gas |
x |
x |
x |
|
Adoption of a Locational Generation Capacity Requirement Charge (a.k.a. Reliability Pricing Model (RPM))
The Adoption of a Locational Generation Capacity Requirement Charge applies only to customers whose current PES Exhibit was executed prior to December 27, 2006.
A December 2006 Order issued by the Federal Energy Regulatory Commission (FERC) directed the implementation of a locational capacity requirement for load serving entities who supply electricity to consumers located within the control area managed by the PJM Interconnection (PJM). FERC's Order requires suppliers who serve electricity consumers within a local geographic area to rely on generation capacity located within the same local area. The Order became effective on June 1, 2007. Prior to the implementation of this requirement, electricity suppliers could rely on generation capacity located anywhere within the PJM control area to meet the requirements of consumers, regardless of whether electric energy could be delivered to meet the needs of consumers located within a local area.
In its Order, FERC stated that the implementation of a locational capacity requirement would ensure the reliability of electricity supply for consumers by providing price incentives for generation capacity to supply electricity to meet the future needs of consumers in all of the local areas of PJM. Under the new rules adopted in compliance with FERC's Order, the prices for generation capacity within a local area are determined by the requirements of consumers within that area. FERC's Order also directed the implementation of a Reliability Pricing Model (RPM) and a capacity auction process for establishing future prices for capacity within local areas of PJM. The implementation of FERC's Order has significantly increased the price of generation capacity to meet the needs of consumers within PJM, and these increases are largest in the local areas within the Mid-Atlantic region of PJM.
FERC's Order directing the implementation of a locational capacity requirement and the Reliability Pricing Model can be accessed at the following URL: http://elibrary.ferc.gov/IDMWS/common/opennat.asp?fileID=11214428.
Other documents filed in the FERC proceeding in which the Order was issued can be located under docket nos. ER05-1410-001, EL05-148-001, ER05-1410-000, and EL05-148-000 at elibrary.ferc.gov.
Transmission Adjustment Charges & Transmission Enhancement Charges
FERC has issued Orders approving changes to the rates charged for use of the transmission systems owned by the following entities:
-
Atlantic City Electric
-
Baltimore Gas & Electric
-
Commonwealth Edison
-
Delmarva Power & Light
-
Duquesne Light Company
- Potomac Electric Power Company (Pepco)
These Orders approved the use of formulas to determine each utility�s transmission rate. This formulas rely on inputs that are updated annually. The application of these formulas resulted in changes in the transmission rates for all of the utilities listed above. Updates of transmission rates for each utility became effective on June 1, 2008. Pepco Energy Services anticipates future changes in each entity�s transmission rate to occur annually, as the inputs to the formula are updated.
Links to the FERC case documents and PJM tariffs providing background and specific details regarding the implementation of these transmission adjustment charges are located below:
In addition, during 2007 and 2008 FERC authorized several new Transmission Enhancement Charges associated with the construction of new transmission projects within PJM. These projects are primarily designed to ensure continued reliability of electricity supply for all PJM consumers. The costs associated with these various Transmission Enhancement Charges are determined by PJM based on the benefits provided to consumers within the distribution service territories of PJM. PES anticipates that the costs associated with these Transmission Enhancement Charges will change annually. Several of the Transmission Enhancement Charges currently applicable to customers are discussed in detail below:
- Trans-Allegheny Interstate Line Company:
In 2007 FERC first authorized a new transmission charge associated with the Trans-Allegheny Interstate Line Company (TrAILCo). This charge is designed to support the construction of a new 500-kV transmission line extending from Southwestern Pennsylvania through West Virginia and terminating in Virginia. The annual TrAILCo transmission enhancement charge is set via a formula and the application of the formula has resulted in an increase in transmission charges beginning June 1, 2008. PES anticipates that future changes in the TrAILCo transmission enhancement charge will continue to occur annually, as the inputs to the formula are updated. Information on TrAILCo can be found on its website, located at http://www.aptrailinfo.com/.
- Potomac-Appalachian Transmission Highline:
During the first quarter of 2008, FERC authorized the assessment of a new transmission charge designed to support the construction of the Potomac-Appalachian Transmission Highline (PATH). PATH consists of a new 765-kV transmission line stretching from West Virginia to New Jersey. The annual PATH transmission enhancement charge is set via a formula and charges determined with this formula began on March 1, 2008. PES anticipates that future changes in the PATH transmission enhancement charge will continue to occur annually, as the inputs to the formula are updated. Information on PATH can be found on its website, located at http://www.pathtransmission.com/.
- Mid-Atlantic Power Pathway:
Pepco Holdings, Inc. has announced that it will construct the Mid-Atlantic Power Pathway (MAPP), which is a new interstate transmission line that will help ensure the continued reliability of electricity supply in the mid-Atlantic region. The project consists of a 230-mile transmission line running from Northern Virginia to Southern New Jersey. PES expects that the annual MAPP transmission enhancement charge will be set via a formula and anticipates that the charges will begin in early 2009. PES expects that future changes in the MAPP transmission enhancement charge will continue to occur annually, as the inputs to the formula are updated. Information on MAPP can be found on its website, located at http://www.powerpathway.com/.
- BGE�s Conastone Transformer Replacement Project:
Baltimore Gas & Electric Company (BGE) will replace two existing 500 KV transformers at its Conastone substation with two larger 500 KV transformers. PJM has determined that the replacement of these transformers provides reliability benefits to customers in both the BGE and the Pepco service territories. As a result, suppliers of customers in the BGE zone will be charged for 66% of the cost of the project, and the remaining 34% will be charged to suppliers of customers in the Pepco zone.
- Dominion Virginia Power Transmission Upgrade Projects:
Dominion Virginia Power is working on several transmission upgrade projects that have been selected by PJM for inclusion in its Regional Transmission Expansion Plan. In addition, PJM has determined that the projects provide benefits to customers throughout PJM. These projects include: 1) an upgrade of a 500 KV transmission line between Mt. Storm and Doubs, 2) the installation of 150 MVAR capacitors at the Loudoun, Ashburn, Dranesville, Clifton, and Dooms substations, and 3) the installation of a new 500/230KV transformer at the Clifton substation. All suppliers of customers in PJM will be charged fees associated with the completion of these projects.
Reliability Must Run (RMR) Charge
FERC has authorized the implementation of a fee called the Reliability Must Run (RMR) charge (also known as a Generation Deactivation Charge). This charge is the result of additional costs incurred by PJM to ensure that several older electric generating plants remain available to provide reliable electric service. Customers taking distribution service from the following utilities may be impacted by the RMR charge:
-
Public Service Electric & Gas
-
Jersey Central Power & Light
- Atlantic City Electric
- Delmarva Power & Light
Links to the FERC case documents and PJM tariffs providing background and specific details regarding the implementation of the RMR charge are located below:
Revised Renewable Portfolio Standards
During 2007 and 2008 the Maryland General Assembly and the Delaware General Assembly each approved new laws that significantly modified the existing renewable portfolio standards (RPS) applicable to electricity suppliers serving customers in each State. The new laws increased the cost of RPS compliance by (i) adding a solar generation component to the previously established RPS requirements and (ii) by increasing the total volume of renewable resources that each electricity supplier is required to include in its generation portfolio.
- Revised Maryland Renewable Portfolio Standard
During the 2007 and 2008 sessions of the Maryland General Assembly, the Maryland legislature passed Senate Bill 595 and Senate Bill 209. These new laws significantly modified Maryland�s renewable portfolio standard (RPS) by (i) adding a solar generation requirement to the previously established �Tier 1� RPS requirement, and (ii) by further increasing the total volume of non-solar �Tier 1� resources that each electricity supplier is required to include in its generation portfolio.
- Revised Delaware Renewable Portfolio Standard
In 2007 the Delaware General Assembly revised the State�s existing renewable portfolio standard (RPS) via passage of Senate Bill 19. SB 19 established a new solar energy requirement to be included as part of each electricity supplier�s generation portfolio. In addition, SB 19 increased the overall percentage of renewable resources that each electricity supplier is required to include as part of its generation portfolio.
Frequently Asked Questions
General Questions
Questions about Locational Capacity
Questions about Transmission Adjustment Charge
Questions about RMR Charge
General Questions
-
Why is Pepco Energy Services (PES) billing these new regulatory change fees?
As your electricity supplier, Pepco Energy Services, Inc. (PES) is required to comply with all regulations of the Federal Energy Regulatory Commission (FERC), which regulates the wholesale electricity markets, and the laws of the States in which PES conducts business. FERC is the federal agency charged with regulating wholesale energy markets. FERC has approved the implementation of changes in several fees and requirements that are under its regulation and directed the PJM Interconnection (PJM is the entity who administers the Mid-Atlantic's transmission system) to collect these revised fees and implement the change in requirements for all suppliers serving load on the PJM system. FERC has issued several Orders that impose additional and significant costs on all electricity suppliers, including PES, for supplying your accounts with electricity. Additionally, several States have recently enacted new legislation imposing a material increase in costs on all electricity suppliers, including PES, for supplying your accounts with electricity. The increase in costs associated with these regulatory changes are unavoidable. They are applied to all entities that use the PJM system to serve electricity customers, including both competitive suppliers and utilities. These charges are not unique to PES or to any other supplier.
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Can I avoid these regulatory change fees by returning to the utility and/or another supplier?
No. The changes in regulations identified above apply to all suppliers who serve electricity consumers located within PJM, including both utilities and other competitive suppliers. The tariffs and agreements containing the revised fees and requirements have been issued and PJM has begun the collection of the new fees. Whether you are served by PES, the utility, or another competitive supplier, the charges will be imposed by PJM for service to your load.
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How are you allowed to pass these regulatory change fees along to my business?
PES' standard Master Service Agreement for Electricity Service allows PES to pass through to our customers the costs that result from a change in energy market regulations. In addition, our management and legal staff have reviewed customer contracts to ensure applicability of this charge. PES is passing through these regulatory changes at the same costs that are imposed upon PES. For many customers, the fees amount to a relatively small increase in the monthly bill.
-
How much should I expect to pay?
The amount you can expect to pay will vary based on the utility service territory in which your facility is located, which will determine the charges that apply for your facility. For specific costs associated with the regulatory change fees applicable to your facilities, please refer to your next monthly invoice or contact Pepco Energy Services at 1-888-277-5809.
Locational Capacity
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What is the Locational Capacity Charge?
The Federal Energy Regulatory Commission (FERC) has issued an Order requiring load serving entities who supply electricity to consumers within a local area of the PJM Interconnection (PJM) to rely upon generation capacity located within the same local area. Prior to the implementation of this Order on June 1, 2007, suppliers could rely on generation capacity located anywhere within PJM to meet the requirements of consumers located in each local area, regardless of whether electric energy could be delivered from the generation capacity to meet the requirements of consumers.
In its Order, FERC stated that the rules in place prior to June 1, 2007 threatened the reliability of electric supply in localized areas because they failed to establish prices that are sufficient to encourage enough generation capacity to meet the needs of consumers located within local areas. For example, FERC's Order indicated that multiple violations of reliability standards are anticipated in the mid-Atlantic region of PJM, including portions of Northern New Jersey, Delmarva, and the Baltimore-Washington areas under the rules in place prior to June 1, 2007. Adoption of a locational capacity requirement will result in the establishment of generation capacity prices based on the requirements of consumers located within each localized area. FERC further stated that adoption of a locational capacity requirement would ensure the reliability of electric supply to consumers in all local areas of PJM by providing the appropriate price incentives for generation capacity to locate within localized areas.
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What is generation capacity?
Generation capacity refers to the maximum capability of an electricity generator to produce electricity at a point in time. Each supplier of electricity consumers is required to have sufficient generation capacity resources to meet the maximum usage capability of its customers at a point in time. FERC's recent Order requires the generation capacity to be located in the same local area as the electricity consumers served by a supplier.
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What benefit does the Locational Capacity Requirement provide to customers?
The FERC adopted the Locational Capacity Requirement to ensure that sufficient electric generation capacity is located within localized areas of PJM to meet the electricity requirements of consumers in each area. FERC's Order adopted a Reliability Pricing Model (RPM) and an auction process that are used to set the prices for capacity in local areas in the future. The prices for generation capacity that result will be based on the electricity requirements of consumers located within each localized area. These prices will provide the appropriate price signals for generation capacity to locate within the localized areas of PJM. For local areas in which the requirements of consumers are higher than the current generation capacity within that area, prices will be relatively higher than in areas in which there is a better balance between consumer requirements and existing capacity.
Transmission Adjustment Charges & Transmission Enhancement Charges
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What is the Transmission system?
The electricity transmission system is the system that links electricity generators with the distribution system to which customers' facilities or homes are connected. Transmission systems are typically operated at high voltages and are used to transport power long distances from generators to local distribution companies.
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What makes up Transmission Adjustment & Transmission Enhancement Charges?
Several owners of transmission assets within PJM have received FERC approval to implement an annual formula to determine the prices that they can charge for use of their transmission systems. These formulas, which were approved by FERC, include variables such as expected transmission maintenance expenditures, expected capital investments and expected transmission load. In essence, these formulas allow the transmission owners to increase or decrease their transmission rates to account for costs the utilities will incur in regard to operating and maintaining their transmission networks. In addition, several new transmission projects are underway within PJM that have been determined to provide reliability benefits to customers located within many different areas of PJM.
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What benefits do these Transmission Adjustment & Transmission Enhancement Charges provide to customers?
These transmission adjustment & Transmission Enhancement charges help ensure reliability by providing a means for each entity to recover its cost for the construction, maintenance, and operation of its transmission system. This provides increased system availability to all customers within the impacted service territories.
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What areas within PJM are impacted by these Transmission Adjustment & Transmission Enhancement Charges?
Please refer to the table at the top of this page.
RMR Charge
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What is an RMR Charge?
Reliability Must Run (RMR) Charges were implemented after several owners of generating assets, specifically PSEG Energy Resources & Trade LLC, PSEG Fossil LLC, and Orion Power Midwest L.P., submitted requests to PJM to retire several older generating stations. In response to these requests, PJM analyzed the impact on reliability of electric service of immediately retiring the plants and determined that reliability would be threatened, and directed the owners to not retire the plants. In response to this determination, the generation owners submitted requests to FERC to recover the costs of maintaining the plants in operating condition until PJM determines that they are no longer needed. These requests have been approved by FERC. The charges that were established by these rulings apply to all suppliers, including both competitive suppliers and utilities, serving customers in the areas that would be affected by the closure of the facilities. The proceeds from the RMR Charge are remitted to the generation owners in exchange for keeping these older power plants available.
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What benefit does the RMR Charge provide to customers?
By keeping additional generation online, the RMR Charge increases the reliability of the entire PJM network. In addition, the availability of extra power during times of extreme demand should act to keep hourly spot market prices low (or at least lower than the rates would be without the plants). All customers will benefit from the maintenance of system reliability and lower prices.
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What areas are impacted by the RMR Charge?
The RMR Charge can potentially apply to all suppliers who serve customers located in the utility service territories of Atlantic City Electric, Delmarva Power & Light, Duquesne Light Company, Public Service Electric & Gas, Jersey Central Power & Light, and Peco Energy.
