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Md. regulators reject BGE microgrid proposal

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Md. regulators reject BGE microgrid proposal

Marylandregulators denied a request by Baltimore Gas and Electric Co. to develop two microgridprojects meant to serve as a test for a potentially larger effort.

TheExelon Corp.subsidiary in December 2015 proposed to construct, operate and recover costs for two"public purpose" microgrids: a $9.2 million, 3-MW project in EdmonsonVillage in Baltimore City and a roughly $7.4 million, 2-MW project at the KingsContrivance Village Center in Howard County, Md. BGE said that if the projectswent well, the company could seek approval for additional public purposemicrogrids in each county in its service territory.

BGEpointed to benefits from its proposal, noting that the two locations meetcriteria conducive to testing, including supporting a mix of community servicesbeneficial to the public, including grocery stores, pharmacies, clinics, gasstations and public buildings that could potentially be used for emergencycoordination and shelters during a regional event affecting the power grid.

Butin rejecting BGE'srequest without prejudice July 19, the Maryland Public Service Commission saidthe proposal is "deficient in several key aspects which preclude us fromfinding that the project, despite its stated benefits, would provide adequate,reasonable, and proper electricity service in Maryland."

ThePSC took issue with BGE's cost-recovery request; how the company chose thelocations; and the decision to rely on natural gas, with diesel fuel as abackup, to run the facilities.

BGEis reviewing the decision. "We continue to believe that public purposemicrogrids are an important enhancement to the resiliency of the power grid forcustomers and that electric distribution utilities are ideally suited to pilotand implement microgrids," spokesman Aaron Koos said.

Inits order, the commission questioned BGE's move to recover costs for theprojects through a surcharge rather than seek traditional rate base recovery orlook into the availability of public funding opportunities at the federal,state or local level.

ThePSC also said BGE picked the site locations without input from local or countyofficials, customers or state agencies. The lack of customer and county inputin picking a site "calls into question whether BGE carefully consideredthe particular needs of that location, whether a public purpose microgridpresented the best solution for that location, and whether the anticipatedbenefits to that community would reasonably outweigh the total cost of theproject."

WhileBGE has since engaged officials in Baltimore City and Howard County, thecompany has not expressly agreed to re-evaluate or change either location ifthose officials ultimately object to the proposed location or insist on adifferent one, the commission said.

Stateregulators further said that lack of diversity in fueling the microgrids is anissue, noting that the proposal does not contemplate any renewable energyoptions, combined heat and power, or energy storage to diversify BGE'sgeneration portfolio. "In the absence of diversification, theproposal cannot capture the full breadth of potential benefits that public purposemicrogrids could offer through fuel-diverse generation," the PSC said.

Thecommission also faulted the proposal for failing to capture other possiblebenefits of public purpose microgrids, such as reduced pollution and carbonemissions, greater efficiencies and customer load management opportunities.

"Fora pilot study, the proposal overlooks the opportunity to explore sophisticatedintegration of microgrid resources in any smart grid or grid modernizationdesign, partnerships with third parties to provide microgrid services,integration of customer owned generation, integration of diversifieddistributed generation with storage, and demand response capabilities,"the PSC said.

ThePSC also said the proposal, while addressing improvements to grid resiliency, offersno further explanation of how the public purpose microgrids relate to BGE'slong-term distribution plan and is "unclear" regarding how theprojects would be used specifically for the greater advancement of publicpurpose microgrids in Maryland. (Case No. 9416)