PSC staff, Pepco and people’s counsel discuss removal of Fairmont Heights microgrid from Maryland energy storage pilot

The Public Service Commission considered Pepco’s request to remove the Fairmont Heights microgrid pilot from the Maryland energy storage pilot program during its June 11 administrative meeting.

Commission staff recommended amending a prior letter order to reject the Fairmont Heights project’s inclusion in the pilot program, staff said, because Pepco “continue[s] to encounter challenges in completing the construction of the project” and its subcontractor, Block Energy, has ceased operations. Deandre Wilson, commission staff, told commissioners Pepco filed the request on May 5, 2025, and that staff supports removing the project from the pilot so the program still meets statutory size requirements for remaining projects.

Jacob Auslander of the Maryland Office of People’s Counsel said OPC does not oppose Pepco’s request to suspend implementation or remove the project, but asked the commission not to make any determination now that could be read as allowing Pepco to recover project costs. “We don’t oppose PEPCO’s request to suspend implementation of the project, and we don’t oppose its removal from the pilot program,” Auslander said. He added that OPC wants future opportunities to contest any cost-recovery request, because OPC believes the record shows “clear evidence that PEPCO mismanaged this project.”

Pepco told the commission it does not believe continuing the Fairmont Heights project is in the public interest. Matthew Seager, appearing for Pepco, said the subcontractor that supplied the microgrid’s operating system, HALA (working under Block Energy), has ceased operations and the proposed in‑house alternative was untested, posed cybersecurity concerns and would add about $1,300,000 and roughly a year to completion. “The company is not at all happy to be here under these circumstances,” Seager said. He added Pepco “is simply not going to roll the dice when it comes to our cybersecurity.”

Pepco said it is auditing the contractor to determine what materials and funds can be recovered and that it has a parent guaranty from Block Energy to cover certain liabilities. Staff told commissioners the audit is underway and that Pepco had pledged to report lessons learned as part of its pilot reporting. Seager said Pepco was not asking the commission to decide any cost‑recovery or prudence question now, saying that would be appropriate only in a rate case with an evidentiary record.

Commissioner questions focused on what equipment is on site and the homes tied to the project. Gabby Levinson, Pepco manager of smart grid programs, told the commission the homes are connected to Pepco’s distribution system and will receive power regardless of the project’s pilot status. Levinson also told commissioners that the Maryland Energy Administration‑funded partner (HIP) had promised to install the solar roofs so the houses could work toward net‑zero energy.

Commissioners said they wanted a lessons‑learned report and clarity that the commission was not making any prudence finding at this meeting. Commissioner Suchman said the commission would “take this under advisement” so staff could prepare a written order specifying what the commission wants included in the lessons‑learned report and clarifying “any of the actions or non actions going forward.”

No formal vote on cost recovery or prudence was taken at the meeting. Staff recommended amending the earlier order to reject the project’s pilot inclusion; Pepco and OPC both told the commission they do not seek a prudence determination in this administrative action. The commission directed staff to prepare precise written instructions for the lessons‑learned report and to clarify next steps in a written order.