Maryland PSC Directs State Utilities to Buy Power from New 661-MW Gas Plant

In a move that has been seen as the first step toward partially re-regulating Maryland’s power market, state regulators last week ordered CPV Maryland to build a new $500 million gas-fired power plant in the Charles County town of Waldorf and directed three of the state’s largest power companies to buy power produced from the plant.

The reason for its order, said the Maryland Public Service Commission (PSC), was simply: “there is a need for new generation in the state.” It called on Baltimore Gas and Electric (BG&E), Potomac Electric Power, and Delmarva Power & Light to enter into a contract with CPV to buy power from the 661-MW plant that is expected to come online in June 2015.

The PSC had in 2009 launched a case “to investigate whether [the Commission] should exercise its authority to order electric utilities to enter into long-term contracts to anchor new generation or to construct, acquire, or lease, and operate, new electric generating facilities in Maryland.” According to the regulatory body, state statutes required it to foresee and meet “long-term, anticipated demand in the State for standard offer service [SOS] and other electricity supply.”

Long-term demand exists, which will require between 650 MW and 700 MW of new capacity by 2015, the PSC said. Last week’s order follows a December 2011 order to the state’s companies to issue a request for proposal for a new plant. CPV won the bid, offering the lowest cost, with a projected ratepayer credit of $0.49 per month for residential SOS ratepayers over the 20-year life of the contract.

BG&E, Potomac, and Delmarva had opposed the project, saying the state’s power demand had dropped during the economic slowdown.

Maryland Gov. Martin O’Malley hailed the PSC’s decision, saying the commission was required to ensure an adequate supply of electricity. “In light of the fact that 70 percent of Maryland’s existing power plants are more than 30 years old, I applaud the decision by the Public Service Commission that will lead to the construction of a new natural gas plant in Charles County.”

The plant will be the first of its size to be built in Maryland since June 2003, and with its addition, natural gas would account for over 9% of Maryland’s power generation, the governor said.

Sources: POWERnews, Maryland PSC, Maryland Governor’s Office