PECO Looks for Way Forward on Community Microgrids

Nov. 11, 2016
PECO Energy has put its plan on hold to build community microgrids in Pennsylvania while it gathers together stakeholders into a collaborative to work out differences.

PECO Energy has put its plan on hold to build community microgrids in Pennsylvania while it gathers together stakeholders into a collaborative to work out differences.

The Exelon utility subsidiary hopes to build community microgrids for a high-density neighborhood with an 8.6 MW load.

However, the plan ran into opposition before the Pennsylvania Public Utility Commission after the Retail Energy Supply Association (RESA) and others argued that utility investment in microgrids would drive out private competition.

Similar arguments helped persuade Maryland regulators earlier this year to reject a microgrid proposal from Baltimore Gas & Electric, also an Exelon subsidiary.

PECO had been seeking approval of cost recovery from the PUC. Now the utility plans to bring together stakeholders to see “how we might go about addressing some of their concerns,” said Ben Armstrong, PECO spokesman.

“This will give us the time to review any additional innovative options for implementing microgrids,” he said. “We’re very much interested in continuing to pursue this opportunity.”

PECO says it is building the community microgrids to provide electric reliability and resiliency for its customers. The utility expects the project to cost $35 million. It wants to cover $15.3 million through an existing distribution charge and the remaining $19.6 million from customers in a future rate case.

RESA argues that private developers do not have a similar guaranteed way to recover costs through regulated rates, and therefore are placed at a competitive disadvantage. The advocacy group also contends that since microgrids include generation, utilities cannot own and operate them under Pennsylvania industry restructuring rules. In Pennsylvania, competitive rules allow utilities only to distribute and transmit electricity, not own and operate power plants.

In addition to RESA, those participating in the proceeding before the PUC include the Pennsylvania Bureau of Investigation and Enforcement, Office of Consumer Advocate, Office of Small Business Advocate and Philadelphia Area Industrial Users Group.

Initial plans called for PECO to build the two microgrids on 388 acres in Concord Township. The area includes several critical services, such as healthcare, emergency services, a retirement community, hotels and gas stations. In September, PECO proposed scaling down the project to one microgrid because of cost concerns.

The microgrid would be capable of islanding from the utility. In grid-connected mode, the microgrid’s distributed energy resources would participate in PJM wholesale markets, and the proceeds would go to PECO distribution customers.

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About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

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