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Pepco MD & Pepco DCRenewable Portfolio Standard Requirements

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Renewable Energy – Maryland and the District

· In Maryland and the District, the law directs electric suppliers to buy renewable energy credits (RECs) – not renewable energy itself – in amounts sufficient to meet each year’s Renewable Portfolio Standard (RPS)

· A “REC” is a credit associated with the verified production of one megawatt hour of electricity from a renewable energy facility

· If a supplier does not purchase enough RECs in any given year, it must pay an alternative compliance fee to make up the difference

· The sellers of electricity in each jurisdiction must meet their portion of that year’s RPS requirement based on their percentage of load in each jurisdiction

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Pepco and the RPS Standard

· Pepco is a supplier of electricity in both jurisdictions· Because of deregulation and customer choice, Pepco

supplies electricity to some but not all of its customers – it’s called Standard Offer Service (SOS)

· HOWEVER, Pepco does not own generating stations, so how can it provide SOS and meet RPS standards?

· Pepco buys the electricity needed to supply SOS customers from other electricity suppliers, through auctions supervised by the PSC

· The SOS supply purchased through those auctions includes the costs of RPS compliance

· The generators that provide electricity for Standard Offer Service supply must either buy their share of RECs, or pay an alternative compliance fee

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RPS Facts – Maryland and the District· RECs are classed as either Tier I or Tier II· Tier I includes wind and solar, among other technologies· Tier II chiefly means large hydro and solid waste· Tier II is to be phased out over time· Most facilities can be located in and around the 13-state PJM

region – not just Maryland or the District· Solar requirements are “carved out” of the total RPS requirements

– a special subset of RECs just for solar, called “SRECs”· Both Maryland and the District have moved to limit SREC

eligibility to solar facilities located within the State/District· New Maryland legislation just proposed by Governor O’Malley

would create a new subset of Tier I RECs, this time for offshore wind facilities

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Pepco MD RPS Requirements

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Pepco MD Projected RPS Requirements

2012 0.10% 6.40% 2.50% 15,195 11 1,352,395 5152013 0.20% 8.00% 2.50% 31,360 22 1,646,416 6262014 0.30% 10.00% 2.50% 47,175 34 1,965,627 7482015 0.40% 10.10% 2.50% 63,146 45 1,989,112 7572016 0.50% 12.20% 2.50% 79,240 57 2,329,671 8862017 0.55% 12.55% 2.50% 87,476 62 2,393,667 9112018 0.90% 14.90% 2.50% 143,673 103 2,777,685 10572019 1.20% 16.20% 0.00% 192,311 137 2,596,196 9882020 1.50% 16.50% 0.00% 241,327 172 2,654,593 10102021 1.85% 16.85% 0.00% 298,762 213 2,721,160 10352022 2.00% 18.00% 0.00% 327,831 234 2,950,481 1123

Approx. REC Capacity (MW)

Pepco MD SREC RequirementOther Tier I Tier IIYear Solar Carve-

Out %Pepco MD REC Requirement

Approx. SREC Capacity (MW)

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Pepco DC RPS Requirements

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Pepco DC Projected RPS Requirements

2012 0.50% 5.00% 2.50% 58,656 42 879,846 3352013 0.50% 6.50% 2.50% 60,242 43 1,084,361 4132014 0.60% 8.00% 2.50% 72,246 52 1,264,308 4812015 0.70% 9.50% 2.50% 84,538 60 1,449,223 5512016 0.83% 11.50% 2.00% 99,886 71 1,634,497 6222017 0.98% 13.50% 1.50% 118,889 85 1,819,729 6922018 1.15% 15.50% 1.00% 139,760 100 2,005,253 7632019 1.35% 17.50% 0.50% 164,410 117 2,192,134 8342020 1.58% 20.00% 0.00% 192,787 138 2,440,340 9292021 1.85% 20.00% 0.00% 226,132 162 2,444,672 9302022 2.18% 20.00% 0.00% 269,846 193 2,481,342 944

Approx. SREC Capacity (MW)

Approx. REC Capacity (MW)Tier IIYear Solar Carve-

Out %Pepco DC REC Requirement

Pepco DC SREC RequirementOther Tier I

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MPSC Slide on Maryland RPS Compliance

RPS Compliance Year Tier 1

(non-solar) Tier 1 Solar Tier 2 Total RPS Obligation (MWh) 520,073 - 1,300,201 1,820,274 Retired RECs (MWh) 552,874 - 1,322,069 1,874,943 2006 ACP Required ($/MWh) $13,293 - $24,917 $38,209 RPS Obligation (MWh) 553,612 - 1,384,029 1,937,641 Retired RECs (MWh) 553,374 - 1,382,874 1,936,248 2007 ACP Required ($/MWh) $12,623 - $23,751 $36,374 RPS Obligation (MWh) 1,183,439 2,934 1,479,305 2,665,678 Retired RECs (MWh) 1,184,174 227 1,500,414 2,684,815 2008 ACP Required ($/MWh) $9,020 $1,218,739 $8,175 $1,235,934

RPS Obligation (MWh) 1,228,521 6,125 1,535,655 2,770,301 2009 Retired RECs (MWh) 1,280,946 3,260 1,509,270 2,793,475 ACP Required ($/MWh) $395 $1,147,600 $270 $1,148,265 RPS Obligation (MWh) 1,922,070 15,985 1,601,723 3,539,778 2010 Retired RECs (MWh) 1,931,367 15,451 1,622,751 3,569,569 ACP Required ($/MWh) $20 $217,600 $0 $217,620

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MPSC Slide on Renewable Resources

# units MW # units MWSolar 2795 62.7 1953 38.4

Non-solar 40 2274 9 129Total 2835 2337 1962 167

69% 7%

RPS TOTAL MD PROJECTS

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Since the inception of Maryland’s RPS (2007), 2337 MW have been registered

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What Else is PHI Doing on Renewable Energy?· In Delaware, PHI utility Delmarva Power buys RECs directly to

meet RPS requirements· Delmarva Power entered into long-term contracts with Maryland

and Pennsylvania wind farms that are operational · Delmarva Power is working with Bloom Energy to build a large

scale fuel cell generation project in Delaware· Delmarva Power is working with developers on large scale solar

projects in Delaware· PHI utility Atlantic City Electric helped pioneer the offshore wind

renewable energy credit carve out in New Jersey, which Governor O’Malley has incorporated into his offshore wind bill

· PHI subsidiary Pepco Energy Services provides energy savings and renewable energy solutions as part of its services to commercial and government customers

· Pepco and Delmarva Power MD are looking into the feasibility of proposing utility-owned, large scale solar projects to the MPSC. However, the SOS procurement process complicates the subject

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QUESTIONS?

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