On July 6, 2009, CPV Maryland, LLC (“CPV”) filed a motion with the Maryland Public Service Commission (“Maryland PSC”) to order one or more utilities to negotiate long-term contracts for all the capacity and energy from CPV’s St. Charles Project. CPV has requested that the Maryland PSC issue an order within 60 days. The motion is likely to be challenged by several parties in Maryland’s competitive wholesale and retail market.
The Maryland PSC has previously approved the construction of CPV’s St. Charles Project – a $500 million, 640-megawatt (“MW”) natural gas-fired generation facility. However, CPV claims that the wholesale power market in the PJM Interconnection will not support the project. CPV stated that it cannot proceed unless it has at least one long-term contract to support financing of the project. CPV asserts that the financial markets are not strong enough to finance new generation projects without the revenue streams from such contracts to lower risk for lenders. CPV’s motion noted that the Maryland PSC had approved more than 3,000 MW of new generation in recent years, but that only 200 MW had actually reached commercial operation.
Additionally, CPV claims that the PJM capacity payment does not encourage new construction because it offers a single payment for both existing generation and new generation. Instead, the company suggests a bifurcated system where PJM offers one payment for older generation and a separate payment to encourage new generation in the market.
CPV has requested that the Maryland PSC order one or more investor-owned utilities in the state to purchase power from its proposed power plant under a 20-year contract. CPV requests that such a contract be signed within 30 days of the Maryland PSC’s order. Otherwise, the Maryland PSC would negotiate the contract on the utility’s behalf.
Responses to CPV’s motion are due by August 11, 2009. CPV’s motion is available at: http://webapp.psc.state.md.us/Intranet/Casenum/NewIndex3_VOpenFile.cfm?ServerFilePath=C:\Casenum\9100-9199\9117\\207.pdf.