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Pepco and Delmarva propose three‑year VPP pilots and expanded TOU outreach; seek regulatory asset recovery
Summary
Pepco Holdings (Pepco and Delmarva) presented three‑year DRIVE Act pilots that aim to recruit thousands of residential devices and pay for performance at roughly $300 per kW; the utilities asked for regulatory asset treatment of costs and outlined a third‑party implementer model to run the VPPs.
Pepco Holdings Inc. told the Maryland Public Service Commission that its Pepco and Delmarva Power companies plan three‑year virtual power plant pilots and updated time‑of‑use (TOU) offerings designed to test pay‑for‑performance compensation, customer outreach and an eventual transition to programmatic grid services.
Pepco and Delmarva said their combined pilots are built around a BYOD model for residential batteries and bidirectional EVs, with an initial system goal of roughly 2.6 megawatts of peak load reduction and a customer enrollment target in the thousands. Eric Moberg, manager of strategic programs for Pepco Holdings, described a pilot design that offers $300 per kilowatt of nominated capacity, plus validation credits and a performance threshold (minimum 80% event participation) to earn full compensation.
Why it matters: Pepco Holdings’ pilots would be among the most ambitious in Maryland in terms of targeted enrollments and planned incentives. The companies presented pay‑for‑performance numbers they said were benchmarked against other U.S. utilities and argued the pilots are necessary to generate data on customer recruitment, measurement & verification (M&V), operational integration and the potential to stack grid value streams beyond peak shaving.
Key features and questions: The companies plan a three‑year timeline, a third‑party implementer selected through an RFP to manage enrollment, dispatch and analytics, and an explicit pledge to explore export (grid injection) over the pilot period. Pepco and Delmarva said they expect to begin pilot development now, with ramping enrollment over first and second years and a final report in 2027.
The utilities asked regulators to authorize recovery of incremental pilot costs through a regulatory asset included in rate base; company witnesses argued traditional cost recovery is necessary to avoid discouraging investment in program development. Staff and some intervenors pushed back, recommending that questions about a return on a regulatory asset be addressed in a future base rate case and that any deferred costs be reviewed for prudence.
Stakeholder concerns at the hearing included: (1) the relative size of Pepco/Delmarva marketing budgets compared with earlier TOU pilots, (2) whether pilot designs will permit fair access to low‑ and moderate‑income customers, (3) whether the pilot design will enable multiple third‑party aggregators to participate, and (4) how to measure and verify performance without consistent AMI/DERMS coverage. Pepco and Delmarva said they will coordinate with the PC‑44 TOU work group on marketing and evaluation and plan targeted outreach and analytics tools for enrollment.
Next steps: Staff recommended deferring determinations about inclusion of a regulatory return for deferred pilot costs until future rate proceedings while permitting deferral of incremental implementation costs. The commission and stakeholders will consider additional clarifications on marketing budgets, M&V, and how the pilot would scale to include commercial/industrial customers and third‑party aggregators.
