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--- version:First - Electricity Generation and Storage - Investor-Owned Electric Companies and Front-of-the-Meter Storage (Affordable Energy Act)+++ version:(document, no version)@@ -1,406 +1,407 @@-EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.- [Brackets] indicate matter deleted from existing law.- *hb1561*--HOUSE BILL 1561-C5 6lr3519- CF SB 954-By: Delegate Queen-Introduced and read first time: February 13, 2026-Assigned to: Environment and Transportation--A BILL ENTITLED--AN ACT concerning 1--Electricity Generation and Storage – Investor–Owned Electric Companies and 2-Front–of–the–Meter Storage 3-(Affordable Energy Act) 4--FOR the purpose of requiring the Public Service Commission to require one or more electric 5-companies to develop and submit to the Commission a certain resource adequacy 6-plan if the Commission makes a certain determination; authorizing an 7-investor–owned electric company required or authorized to construct, acquire, own, 8-or lease and operate its own generating facilities to recover certain prudently 9-incurred costs and investments in a certain manner under certain circumstances; 10-altering the circumstances under which the Commission may require or allow an 11-investor–owned electric company to construc t, acquire, own, or lease and operate 12-certain generating facilities and necessary transmission facilities; altering the list of 13-items that the Commission is required to specify in selecting front –of–the–meter 14-transmission energy storage device project prop osals; and generally relating to 15-electric generating facilities and energy storage. 16--BY adding to 17- Article – Public Utilities 18-Section 7–219.1, 7–219.2, and 7–510(c)(6) 19- Annotated Code of Maryland 20- (2025 Replacement Volume and 2025 Supplement) 21--BY repealing 22- Article – Public Utilities 23-Section 7–510(c)(6) 24- Annotated Code of Maryland 25- (2025 Replacement Volume and 2025 Supplement) 26--BY repealing and reenacting, without amendments, 27- Article – Public Utilities 28-2 HOUSE BILL 1561--Section 7–701(a), (s), and (t) and 7–1201(a) and (c) 1- Annotated Code of Maryland 2- (2025 Replacement Volume and 2025 Supplement) 3--BY repealing and reenacting, with amendments, 4- Article – Public Utilities 5-Section 7–1226 6- Annotated Code of Maryland 7- (2025 Replacement Volume and 2025 Supplement) 8-- SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 9-That the Laws of Maryland read as follows: 10--Article – Public Utilities 11--7–219.1. 12-- (A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 13-INDICATED. 14-- (2) “EFFECTIVE LOAD CARRYING CAPABILITY” OR “ELCC” HAS THE 15-MEANING STATED IN § 7–1201 OF THIS TITLE. 16-- (3) “LARGE CAPACITY ENERGY RESOURCE” MEANS A GENERATING 17-FACILITY OR AN ENERGY STORAGE DEVICE THAT HAS A CAPACITY RATING EQUAL TO 18-OR GREATER THAN 20 MEGAWATTS AFTER ACCOUNTING FOR THE EFFECTIVE LOAD 19-CARRYING CAPABILITY. 20-- (4) “PRICE STABILITY EVENT ” MEANS A CLEARING PRI CE IN THE 21-PJM CAPACITY MARKET THAT HAS EXCEEDED OR IS E XPECTED TO EXCEED TH E 22-PROJECTED NET COST OF NEW ENERGY FOR A GENERATING FACILITY OWNED BY AN 23-ELECTRIC COMPANY. 24-- (5) “PJM CAPACITY MARKET ” MEANS THE CAPACITY M ARKET OF 25-PJM INTERCONNECTION, LLC, OR ANY SUCCESSOR ORG ANIZATION THAT 26-SERVICES THE PJM REGION. 27-- (6) “RENEWABLE ENERGY GENERATION” MEANS GENERATION FROM 28-A TIER 1 RENEWABLE SOURCE OR A TIER 2 RENEWABLE SOURCE AS DEFINED IN § 29-7–701 OF THIS TITLE. 30-- (7) “RESOURCE ADEQUACY ” MEANS THE MEASURE OF WHETHER 31-TRANSMISSION LINES H AVE SUFFICIENT CAPAC ITY AND RESERVES TO RELIABLY 32-BALANCE ELECTRICITY SUPPLY AND DEMAND WITHIN THE STATE. 33- HOUSE BILL 1561 3-- (B) (1) THE COMMISSION SHALL REQU IRE ONE OR MOR E ELECTRIC 1-COMPANIES TO DEVELOP AND SUBMIT TO THE COMMISSION A RESOURCE ADEQUACY 2-PLAN IF THE COMMISSION MAKES A DETERMINATION THAT: 3-- (I) THERE IS INSUFFICIEN T RESOURCE ADEQUACY IN THE 4-STATE; OR 5-- (II) A PRICE STABILITY EVENT HAS OCCURRED. 6-- (2) AN E LECTRIC COMPANY SHAL L SUBMIT THE RESOURC E 7-ADEQUACY PLAN TO THE COMMISSION WITHIN 270 DAYS AFTER THE COMMISSION 8-MAKES A DETERMINATION UNDER PARAGRAPH (1) OF THIS SUBSECTION. 9-- (3) THE COMMISSION SHALL APPR OVE, MODIFY, OR DENY EACH 10-RESOURCE ADEQUACY PL AN SUBMITTED UNDER PARA GRAPH (2) OF THIS 11-SUBSECTION WITHIN 1 YEAR AFTER THE COMMISSION MAKES A DE TERMINATION 12-UNDER PARAGRAPH (1) OF THIS SUBSECTION. 13-- (4) A RESOURCE ADEQUACY PLAN: 14-- (I) SHALL INCLUDE THE EL ECTRIC COMPANY ’S PLANS TO 15-INVEST IN, OPERATE, AND MAINTAIN GENERATING FACILITIES OR TRANSM ISSION 16-FACILITIES NECESSARY TO INTERCONNECT THE GENERATING FACILITIES WITH THE 17-ELECTRIC SYSTEM IN O RDER TO ADDRESS THE RESOURCE ADEQUACY 18-INSUFFICIENCIES OR PRICE STABILITY EVENT IDENTIFIED BY THE COMMISSION; 19-- (II) SHALL PRIORITIZE THE DEVELOPMENT OR OPERA TION OF 20-RENEWABLE ENERGY RESOURCES; AND 21-- (III) MAY INCLUDE PLANS FO R THE DEVELOPMENT OF 22-RENEWABLE ENERGY GENERATION AND LARGE CAPACITY ENERGY RESOURCES. 23--7–219.2. 24-- (A) SUBJECT TO SUBSECTION (B) OF THIS SECTION, AN INVESTOR–OWNED 25-ELECTRIC COMPANY REQ UIRED OR AUTHORIZED TO CONSTRUCT, ACQUIRE, OWN, 26-OR LEASE AND OPERATE ITS OWN GENERATING FACILITIES UNDER § 7–510 OF THIS 27-TITLE MAY RECOVER AL L OF THE P RUDENTLY INCURRED AND VERIFIABLE COSTS 28-INCURRED BY THE INVE STOR–OWNED ELECTRIC COMPA NY IN CONSTRUCTING , 29-ACQUIRING, OWNING, OR LEASING AND OPERA TING THE GENERATING FACILITIES 30-PLUS A REASONABLE RETURN. 31--4 HOUSE BILL 1561-- (B) PRUDENTLY INCURRED CO STS UNDER SUBSECTION (A) OF THIS 1-SECTION INCLUDE: 2-- (1) COSTS OF ACQUISITION , DESIGN, SITING, PERMITTING, 3-CONSTRUCTION, OPERATION, MAINTENANCE, TAXES, FUEL, LABOR, CASH WORKING 4-CAPITAL, AND OTHER CARRYING COSTS; AND 5-- (2) ANY EXPENSES OR COST S OF INVESTMENTS THA T BECOME 6-STRANDED FOR ANY REASON. 7-- (C) SUBJECT TO COMMISSION APPROVAL, AN INVESTOR–OWNED ELECTRIC 8-COMPANY MAY CHOOSE T O RECOVER ITS P RUDENTLY INCURRED AND VERIFIABLE 9-COSTS THROUGH A NONBYPASSABLE SURCHARGE. 10-- (D) AN INVESTOR–OWNED ELECTRIC COMPANY REQUIRED OR AUTHORIZED 11-TO CONSTRUCT , ACQUIRE, OWN, OR LEASE AND OPERATE ITS OWN GENERATING 12-FACILITIES UNDER § 7–510 OF THIS TITLE MAY RECOVER ITS PRUDENTLY INCURRED 13-AND VERIFIED COSTS AT AN ANNUAL RATE OF RETURN THAT IS NOT LESS THAN THE 14-RATE OF RETURN ON ITS TRANSMISSION RATE BASE AS APPROVED BY THE FEDERAL 15-ENERGY REGULATORY COMMISSION FOR THAT CALENDAR YEAR. 16-- (E) AN INVESTOR –OWNED ELECTRIC COMPA NY THAT IS A MEMBER OF A 17-REGIONAL TRANSMISSION ORGANIZATION THAT OPERATES A WHOLESALE MARKET 18-MAY: 19-- (1) OPERATE A GENERATING FACILITY AND PARTICI PATE IN THE 20-WHOLESALE MARKET OF THAT REGIONAL TRANSMISSION ORGANIZATION; AND 21-- (2) APPLY ANY NET REVENU ES FROM PARTICIPATIO N IN THE 22-WHOLESALE MARKET OF THAT REGIONAL TRANSMISSION ORGANIZATION AGAINST 23-THE OPERATING COSTS OF THE GENERATING FACILITY. 24--7–510. 25-- (c) [(6) In order to meet long –term, anticipated demand in the State for 26-standard offer service and other electricity supply, the Commission may require or allow 27-an investor–owned electric company to construct, acquire, or lease, and operate, its own 28-generating facilities, and transmission facilities nec essary to interconnect the generating 29-facilities with the electric grid, subject to appropriate cost recovery.] 30-- (6) (I) 1. IN THIS PARAGRAPH THE FOLLOWING WORDS HAVE 31-THE MEANINGS INDICATED. 32-- HOUSE BILL 1561 5-- 2. “PREMIER CREDIT RATING AGENCY” MEANS A 1-NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, AS APPROVED BY 2-THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE 3-FEDERAL CREDIT RATING AGENCY REFORM ACT OF 2006 OR SUBSEQUENT 4-LEGISLATION, THAT IS IN THE TOP T WO NATIONALLY RECOGN IZED STATISTICAL 5-RATING ORGANIZATIONS IN TERMS OF MARKET SHARE. 6-- 3. “RATING ASSESSMENT” MEANS A WRITTEN ANALYSIS 7-PROVIDED BY A PREMIER CREDIT RATING AGENCY THAT INCLUDES: 8-- A. A REVIEW OF A COMMISSION ORDER OR O RDERS TO 9-REQUIRE OR ALLOW AN INVESTOR–OWNED ELECTRIC COMPA NY T O CONSTRUCT , 10-ACQUIRE, OWN, OR LEASE AND OPERATE A GENERATING FACILITY; AND 11-- B. A DETERMINATION OF T HE LIKELY IMPACT OF THE 12-COMMISSION ORDER ON T HE CREDITWORTHINESS OF THE INVESTOR –OWNED 13-ELECTRIC COMPANY AND ANY OF ITS AFFILIATES. 14-- (II) SUBJECT TO T HE REQUIREMENTS OF SUBTITLE 2 OF THIS 15-TITLE, THE COMMISSION MAY REQUIRE OR ALLOW AN INVESTOR–OWNED ELECTRIC 16-COMPANY TO: 17-- 1. CONSTRUCT, ACQUIRE, OWN, OR LEASE AND OPERATE 18-GENERATING FACILITIES; AND 19-- 2. CONSTRUCT, ACQUIRE, OWN, OR LEASE AND OPERATE 20-TRANSMISSION FACILIT IES NECESSARY TO INT ERCONNECT THE GENERA TING 21-FACILITIES WITH THE ELECTRIC SYSTEM. 22-- (III) A COMMISSION ORDER REQU IRING OR ALLOWING AN 23-INVESTOR–OWNED ELECTRIC COMPANY TO CONSTRUCT, ACQUIRE, OWN, OR LEASE 24-AND OPERATE A GENERA TING FACILI TY WITH A NAMEPLATE CAPACITY THAT 25-EXCEEDS 2 MEGAWATTS MAY NOT TAKE EFFECT UNTIL: 26-- 1. THE INVESTOR–OWNED ELECTRIC COMPANY: 27-- A. IDENTIFIES A PREMIER CREDIT RATING AGENCY; 28-- B. PROVIDES A COPY OF T HE COMMISSION ORDER , 29-ALONG WITH ANY TERMS , CONDITIONS, AND CONTINGENCIES TO THE CREDIT 30-RATING AGENCY; AND 31--6 HOUSE BILL 1561-- C. REQUESTS A RATING AS SESSMENT OF THE 1-COMMISSION ORDER FROM THE PREMIER CREDIT RATING AGENCY; AND 2-- 2. THE PREMIER CREDIT R ATING AGENCY ISSUES A 3-RATING ASSESSMENT TH AT FINDS THAT THE T ERMS OF THE COMMISSION ORDER 4-ARE NOT LIKELY TO BE CREDIT NEGATIVE FOR THE INVESTOR–OWNED ELECTRIC 5-COMPANY AND ITS AFFILIATES. 6-- (IV) ON OR BEFORE OCTOBER 31, 2026, THE COMMISSION 7-SHALL PROPOSE REGULA TIONS TO CARRY OUT T HE PROVISIONS OF THI S 8-PARAGRAPH. 9--7–701. 10-- (a) In this subtitle the following words have the meanings indicated. 11-- (s) “Tier 1 renewable source” means one or more of the following types of energy 12-sources: 13-- (1) solar energy, including energy from photovoltaic technologies and solar 14-water heating systems; 15-- (2) wind; 16-- (3) qualifying biomass; 17-- (4) methane from the anaerobic decomposition of organic materials in a 18-landfill or wastewater treatment plant; 19-- (5) geothermal, including energy generated through geothermal exchange 20-from or thermal energy avoided by, groundwater or a shallow ground source; 21-- (6) ocean, including energy from waves, tides, currents, and thermal 22-differences; 23-- (7) a fuel cell that produces electricity from a Tier 1 renewable source 24-under item (3) or (4) of this subsection; 25-- (8) a small hydroelectric power plant of less than 30 megawatts in capacity 26-that is licensed or exempt from licensing by the Federal Energy Regulatory Commission; 27-- (9) poultry litter–to–energy; 28-- (10) thermal energy from a thermal biomass system; and 29-- HOUSE BILL 1561 7-- (11) raw or treated wastewater used as a heat source or sink for a heating 1-or cooling system. 2-- (t) “Tier 2 renewable source” means hydroelectric power other than pump storage 3-generation. 4--7–1201. 5-- (a) In this part the following words have the meanings indicated. 6-- (c) “Effective load carrying capability” or “ELCC” means the expected capacity 7-contribution of an energy resource during PJM Interconnection’s operating hours when 8-there is high electricity demand and low resource output. 9--7–1226. 10-- (a) In selecting a proposal for a front –of–the–meter transmission energy storage 11-device project, the Commission: 12-- (1) shall specify: 13-- (i) 1. a 15–year pricing schedule that uses a monthly fixed price 14-for each megawatt that represents the anticipat ed wholesale value of capacity for the 15-front–of–the–meter transmission energy storage device and the benefits identified in § 16-7–1225(a)(2) of this subtitle; OR 17-- 2. A PRICING SCHEDULE T HAT USES A MONTHLY F IXED 18-PRICE THAT REPRESENTS: 19-- A. THE COST TO CONSTRUC T AND OPERATE THE 20-FRONT–OF–THE–METER TRANSMISSION ENERGY STORAGE DEVICE; AND 21-- B. THE BENEFITS IDENTIFIED FROM THE COST–BENEFIT 22-ANALYSIS UNDER § 7–1225(A)(2) OF THIS SUBTITLE; 23-- (ii) THAT ANY WHOLESALE M ARKET REVENUE RECEIV ED BY 24-THE ENERGY STORAGE PROJECT SHALL BE: 25-- 1. OFFSET BY THE PRICIN G SCHEDULE APPROVED BY 26-THE COMMISSION; AND 27-- 2. TRANSMITTED TO THE COMMISSION TO BE HELD IN 28-ESCROW FOR DISTRIBUT ION TO ELECTRIC COMP ANIES TO BE REFUNDED OR 29-CREDITED TO EACH DISTRIBUTION CUSTOMER; 30--8 HOUSE BILL 1561-- (III) that each electricity supplier shall be responsible for purchasing 1-storage capacity credits at the monthly fixed price schedule proportional to the electricity 2-supplier’s capacity obligation; 3-- [(iii)] (IV) that all PJM capacity marke t revenue earned by the 4-energy storage project be transmitted to the Commission to be held in escrow for 5-distribution to electric companies to be refunded or credited to each distribution customer 6-proportional to the electricity supplier’s monthly capacity purchase obligation; 7-- [(iv)] (V) that the energy storage project shall retain any energy and 8-ancillary services revenue earned; 9-- [(v)] (VI) that electric companies must jointly select an escrow 10-administrator, in consultation with the Commission; and 11-- [(vi)] (VII) for any cost recovery by an electric company, that the 12-recovery shall be done through a nonbypassable surcharge established by the electric 13-company that is added to the electric company’s base distribution rate or supply rate on 14-customer bills; 15-- (2) shall specify that for continued receipt of payment under item (1) of this 16-subsection, an applicant shall demonstrate, to the satisfaction of the Commission, that the 17-applicant’s energy storage device is available AND IS PARTICIPATING IN THE PJM 18-CAPACITY MARKET AT I TS FULL CAPABILITY T O REASONABLY MAXIMIZ E THE 19-PROJECT’S MARKET REVENUES; 20-- (3) shall incorporate penalties for nonperformance and underperformance 21-in the contract, including withholding of payment that reflects the degree of 22-underperformance, for energy storage devices that fail to meet availability metrics; 23-- (4) may terminate energy storage devices from the program if device 24-performance does not improve after appropriate notice and opportunity to cure; 25-- (5) shall consider other nonprice factors to ensure project deliverability 26-within 24 months after the award date, such as: 27-- (i) project maturity dates; 28-- (ii) interconnection queue status; 29-- (iii) site control; 30-- (iv) developer experience, including p rocuring, constructing, and 31-operating front–of–the–meter transmission energy storage devices; 32-- HOUSE BILL 1561 9-- (v) any evidence of key development milestones to substantiate 1-project deliverability within 24 months after the award date; 2-- (vi) safety plans; and 3-- (vii) any other relevant nonprice factors as determined by the 4-Commission; and 5-- (6) shall require, at a minimum, all energy storage devices that utilize 6-lithium–ion batteries to comply with the most up –to–date revision of the National Fire 7-Protection Assoc iation 855: Standard for the Installation of Stationary Energy Storage 8-Systems in effect at the project’s final permit application date. 9-- (b) (1) Each energy storage project shall include a proposed decommissioning 10-plan. 11-- (2) The proposed decommissionin g plan shall include a plan to maximize 12-the recycling or reuse of all qualifying components of each energy storage device. 13-- (3) The owner or operator of an energy storage device may submit a revised 14-recycling and reuse plan that incorporates emerging rec ycling and reuse opportunities up 15-to 1 year before executing the decommissioning plan. 16-- (c) The Commission shall: 17-- (1) after giving public notice, hold one or more public hearings to receive 18-public comment and evaluate the proposals; and 19-- (2) subject to subsection (d) of this section, issue one or more orders to 20-select a proposal or proposals for development. 21-- (d) The Commission may end the solicitation process without selecting a proposal 22-if the Commission finds that none of the proposals adequately support the goals established 23-under this subtitle, including the goal of securing affordable, reliable electrical service for 24-Maryland residents. 25-- SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 26-October 1, 2026. 27+ HB 1561+Department of Legislative Services+Maryland General Assembly+2026 Session++FISCAL AND POLICY NOTE+First Reader+House Bill 1561 (Delegate Queen)+Environment and Transportation++Electricity Generation and Storage - Investor-Owned Electric Companies and+Front-of-the-Meter Storage (Affordable Energy Act)++This bill repeals an existing provision related to the construction, acquisition, or leasing+and operating of a generating facility by an investor -owned electric company and instead+specifies that, subject to the requirements of Title 7, Subtitle 2 of the Public Utilities Article+(Electric Generation and Facility Planning), the Public Service Commission (PSC) may+require or allow an investor -owned electric company to construct, acquire, own, or lease+and operate generating facilities (and related transmissi on facilities). An investor -owned+electric company that is required or allowed to construct, acquire, own, or lease and operate+a generating facility may recover all prudently incurred costs plus a reasonable return, as+specified. Under specified circumsta nces, PSC must (1) require one or more electric+companies to develop and submit a resource adequacy plan to the commission and+(2) approve, modify, or deny the plan in accordance with a specified timeline. Additionally,+the bill alters the list of items t hat PSC must specify in selecting any proposals for+front-of-the-meter transmission energy storage device projects.++Fiscal Summary++State Effect: The overall effect on State finances cannot be reliably determined at this+time, but could be significant, as discussed below. Potential increase in special fund+expenditures for PSC and the Office of People’s Counsel (OPC); to the extent PSC and+OPC special fund expenditures increase, special fund revenues increase correspondingly+from assessments imposed on public service companies. General/special expenditures for+the Department of Natural Resources (DNR) may also increase. The potential effect on+electricity prices is discussed in the Additional Comments section below.++HB 1561/ Page 2+Local Effect: The effect on local finances cannot be reliably determined at this time, but+could be significant, as discussed below. The potential effect on electricity prices i s+discussed in the Additional Comments section below.++Small Business Effect: Potential meaningful. The potential effect on electricity prices is+discussed in the Additional Comments section below.++Analysis++Bill Summary:++Definitions++“Large capacity energy resource” means a generating facility or an energy storage device+that has a capacity rating equal to or greater than 20 megawatts after accounting for the+effective load carrying capacity.++“Price stability event” means a clearing price in the PJM capacity market that has exceeded+or is expected to exceed the projected net cost of new energy for a generating facility owned+by an electric company.++“PJM capacity market” means the capacity market of PJM Interconnection, LLC, or any+successor organization that services the PJM region.++“Resource adequacy” means the measure of whether transmission lines have sufficient+capacity and reserves to reliably balance electricity supply and demand within the State.++Resource Adequacy Plans++PSC must re quire one or more electric companies to develop and submit a resource+adequacy plan to PSC if the commission makes a determination that (1) there is insufficient+resource adequacy in the State or (2) a price stability event has occurred. An electric+company must submit the resource adequacy plan to PSC within 270 days after such a+determination has been made. PSC must approve, modify, or deny each resource adequacy+plan that is submitted within one year after making the determination.++A resource adequacy plan must include the electric company’s plans to invest in, operate,+and maintain generating facilities or transmission facilities necessary to interconnect the+generating facilities with the electric system in order to address the res ource adequacy+insufficiencies or price stability event identified by PSC. Additionally, a resource adequacy+plan (1) must prioritize the development or operation of renewable energy resources and++HB 1561/ Page 3+(2) may include plans for the development of renewable ener gy generation and large+capacity energy resources.++Investor-owned Electric Companies – Constructing, Acquiring, Owning, or Leasing and+Operating Their Own Generating Facilities++Under current law, in order to meet long-term anticipated demand in the State for standard+offer service and other electricity supply, PSC may require or allow an investor -owned+electric company to construct, acquire, or lease and operate its own generating facilities+and related necessary transmission facilities, subject to appropriate cost recovery. The bill+repeals this provision and instead specifies that , subject to the requirements of Title 7,+Subtitle 2 of the Public Utilities Article, PSC may require or allow an investor -owned+electric company to construct, acquire, own, or lease and operate generating facilities and+related necessary transmission facilities.++A PSC order requiring or allowing an investor -owned electric company to construct,+acquire, own, or lease, and operate a generating facility with a nameplate capacity g reater+than 2 megawatts may not take effect until the company obtains a rating assessment from+a premier credit rating agency finding that the terms of the commission’s order are not+likely to be credit negative for the company and its affiliates. “Premier credit rating agency”+means a nationally recognized statistical rating organization approved by the+U.S. Securities and Exchange Commission, as specified, that ranks among the top two such+organizations by market share. “Rating assessment” means a writte n analysis provided by+a premier credit rating agency that includes (1) a review of a PSC order to require or allow+an investor-owned electric company to construct, acquire, own, or lease and operate a+generating facility and (2) a determination of the lik ely impact of the order on the+creditworthiness of the company and any of its affiliates.++By October 31, 2026, PSC must propose regulations to carry out the above provisions.++Investor-owned Electric Companies – Cost Recovery and Wholesale Market Participation++An investor-owned electric company that is required or authorized to construct, acquire,+own, or lease, and operate its own generating facilities may recover all of the prudently+incurred and verifiable costs incurred by the company in constructing, acquiring, owning,+or leasing and operating those facilities, plus a reasonable return.++Prudently incurred costs include (1) costs of acquisition, design, siting, permitting,+construction, operation, maintenance, taxes, fuel, labor, cash working capital, and other+carrying costs and (2) any expenses or costs of investments that become stranded for any+reason. Subject to PSC approval, an investor-owned electric company may recover its+prudently incurred and verifiable costs through a nonbypassable surcharg e. An++HB 1561/ Page 4+investor-owned electric company is entitled to recover its prudently incurred and verified+costs at an annual rate of return that meets or exceeds the rate of return on its transmission+rate base approved by the Federal Energy Regulatory Commission for that calendar year.++An investor-owned electric company that is a member of a regional transmission+organization (RTO) that operates a wholesale market may (1) operate a generating facility+and participate in the RTO’s wholesale market and (2) apply any net revenues earned from+that participation against the operating costs of the generating facility.++Front-of-the-meter Transmission Energy Storage Devices++In accordance with Chapters 625 and 626 of 2025 (discussed below in the Current Law+section), when selecting a proposal for a front -of-the-meter transmission energy storage+device project, PSC must specify either:++ a 15-year pricing schedule that uses a monthly fixed price for each megawatt that+represents the anticipated wholesale value of capacity for the energy storage device+and the benefits identified from a required cost -benefit analysis of the project (the+only option available to PSC under current law); or+ a pricing schedule that uses a monthly fixed price that represents the cost to+construct and operate the energy storage device and the benefits identified from the+required cost-benefit analysis of the project.++In addition to other specifications required under current law, PSC must specify that any+wholesale market revenue received by the energy storage project must be (1) offset by the+pricing schedule approved by PSC and (2) transmitted to PSC to be held in escrow for+distribution to electric companies for refund or credit to distribution customers. PSC must+further specify that, to continue receiving payment for an energy storage device project, an+applicant must demonstrate, to the satisfaction of PSC, that the applicant’s energy storage+device is participating in the PJM capacity market at its full capability to reasonably+maximize the project’s market revenues ( in addition to the existing requirement that the+device be available).++Current Law:++Electric Utility Industry Restructuring++The Electric Customer Choice and Competition Act of 1999 facilitated the restructuring of+the electric utility industry in Maryland, which deregulated the generation, supply, and+pricing of electricity. As part of restructuring, the State’s vertically integrated electric+companies divested themselves of their generation assets. With restructuring, generation+resources are considered competitive, and the competitive market is relied upon to provide++HB 1561/ Page 5+new generation resources and to meet load requirements. Deactivation decisions are made+by facility owners as business decisions. PSC does not have regulatory authority over plant+closures.++Construction and Operation of Generating Facilities and Related Transmission Facilities++In order to meet long-term, anticipated demand in the State for standard offer service and+other electricity supply, PSC may require or allow an investor -owned electric company to+construct, acquire, or lease, and operate, its own generating faci lities, and transmission+facilities necessary to interconnect the generating facilities with the electric grid, subject to+appropriate cost recovery.++PSC is the lead agency for licensing the siting, construction, and operation of power plants+and related facilities in the State through Certificates of Public Convenience and Necessity+(CPCNs). Generally, facilities with generating capacities of up to 2 megawatts do not+require a CPCN. Energy generating systems that produce energy from natural gas are not+prohibited, although the CPCN evaluation process includes consideration of the impact of+the generating station on the quantity of annual and long -term statewide greenhouse gas+(GHG) emissions and consistency of the CPCN application with the State’s climate+commitments for reducing GHG emissions.++Other Related Climate and Renewable Energy Initiatives++The Maryland Department of the Environment’s (MDE) Climate Change Program leads+the State’s efforts to reduce GHG emissions, as required by the Greenhouse Gas Emissions+Reduction Act (GGRA) and participation and oversight in other initiatives, including the+Regional Greenhouse Gas Initiative (RGGI) and the U.S. Climate Alliance. The program+also ensures State compliance with climate -related State and federal law s, such as the+Climate Solutions Now Act (CSNA), discussed below.++The U.S. Climate Alliance is a bipartisan coalition of governors, including the+Governor of Maryland, committed to reducing GHG emissions consistent with the goals+of the Paris Agreement. Maryland participates in the multi -state RGGI in order to reduce+CO2 emissions from the power sector. Each participating state limits CO 2 emissions from+electric power plants, issues CO 2 allowances, and establishes participation in+CO2 allowance auctions. A single CO2 allowance represents a limited authorization to emit+one ton of CO2.++CSNA made broad changes to the State’s approach to reducing statewide GHG emissions+and addressing climate change. Among other things, CSNA accelerated previous statewide+GHG emissions reductions targets originally established under GGRA by requiring the+State to develop plans, adopt regulations, and implement programs to (1) reduce++HB 1561/ Page 6+GHG emissions by 60% from 2006 levels by 2031 and (2) achieve net -zero statewide+GHG emissions by 2045. In December 2023, MDE published Maryland’s Clima te+Pollution Reduction Plan, which was developed to implement CSNA.++Among other actions, Executive Order 01.01.2024.19 directed the Maryland Energy+Administration (MEA) to establish a framework for a clean energy standard to achieve+100% clean electricity in Maryland by 2035 and determine if all or part of the proposed+clean energy standard can be implemented through existing authority. MEA published the+resulting report in January 2025.++Front-of-the-meter Transmission Energy Storage Devices++Chapters 625 and 626 (Next Generation Energy Act) require PSC, by regulation or order,+to establish a competitive process for the procurement of projects for the construction and+deployment of up to 1,600 megawatts of front -of-the-meter transmission energy storage+devices in the State. PSC may end the process without selecting a proposal if PSC makes+specified findings.++Subject to specified requirements, including a public hearing process, PSC must proceed+with two rounds of applications a nd related approval and construction timelines for up to+800 megawatts of front -of-the-meter transmission energy storage capacity each. For the+first round, PSC must issue the procurement solicitation by January 1, 2026, and issue+one or more orders to select a proposal or proposals for development by October 1, 2026.+The deadlines for the second round are one year later.++PSC must include specifications in its procurement solicitations requiring that, among+other things, each proposal contain a proposed pricing schedule and a cost-benefit analysis,+as specified. Additionally, an applicant must include a proposed decommissioning plan for+each energy storage project.++PSC must take certain actions in selecting a proposal, including specifying:++ a 15-year pricing schedule that uses a monthly fixed price for each megawatt that+represents the anticipated wholesale value of capacity for the energy storage device+and the benefits identified from a project’s required cost-benefit analysis;+ that each electricity supplier is responsible for purchasing storage capacity credits+at the monthly fixed price schedule proportional to the electricity supplier’s capacity+obligation;+ that all PJM capacity market revenue earned by the energy storage proj ect be+transmitted to PSC to be held in escrow for distribution to electric companies to be+refunded or credited to each distribution customer proportional to the electricity+supplier’s monthly capacity purchase obligation;++HB 1561/ Page 7+ that the energy storage project must retain any energy and ancillary services revenue+earned;+ that electric companies must jointly select an escrow administrator, in consultation+with PSC; and+ that any cost recovery by an electric company must be done through a+nonbypassable surcharge es tablished by the company that is added to the electric+company’s base distribution rate or supply rate on customer bills.++PSC must also specify that for continued receipt of payment under the above provisions,+an applicant must demonstrate, to the satisfa ction of PSC, that the applicant’s energy+storage device is available.++Generally, any energy storage devices selected under these procurements must be+operational within 24 months of selection. The energy storage devices may be paired with+Tier 1 or Tier 2 renewable sources.++State Fiscal Effect: The overall effect on State finances is unknown, for several reasons.+First, it is unclear whether and to what extent the bill leads to new generating facilities+being constructed in the State. If a new generating facility is constructed in the State as a+direct result of the bill, when it otherwise would not have been, State revenues increase+from the associated economic activity and there are fiscal and operational effects on PSC,+OPC, and DNR. Second, if PSC makes a determination requiring any electric c ompanies+to submit resource adequacy plans, there are likely additional effects on those three+agencies. Finally, PSC may need to retain a third -party manager to implement the bill’s+provisions related to front-of-the-meter transmission energy storage.++Significant effects of the bill are discussed separately below, organized by State agency.+The effect on State expenditures for electricity is discussed in the Additional Comments+section below.++Public Service Commission++To the extent the bill results in the construction, acquisition, ownership, or leasing of new+generating facilities by investor-owned electric companies, PSC must hire additional staff+and retain consultant support. Among other things, PSC anticipates needing multiple+additional staff to na vigate the complexity and breadth of the bill’s cost recovery+provisions, including the development of a surcharge. PSC also anticipates that it needs to+engage consultants to assist with specialized technical, financial, and market analyses,+including reliability and cost-of-service analyses.++Separately, PSC may need additional resources to implement the provisions of the bill+related to resource adequacy plans and front-of-the-meter transmission energy storage. To++HB 1561/ Page 8+the extent that PSC makes a determination, in accordance with the bill, that requires an+electric company to submit a resource adequacy plan, PSC may incur additional consultant+costs to evaluate such a plan. Regarding the bill’s provisions related to front -of-the-meter+transmission energy storage, PSC advises that it is not operationally structured to perform+real-time dispatch, bidding, scheduling, and market optimization of resources in PJM+markets. Thus, PSC anticipates that it likely needs to retain a third-party asset management+or market participation contractor to provide real -time dispatch, scheduling coordination,+performance monitoring, and settlement services to implement these provisions.++Accordingly, special fund expenditures for PSC increase to the extent that (1) any n ew+generating facilities are constructed, acquired, owned, or leased by an investor -owned+electric company as a result of the bill; (2) an electric company is required to submit a+resource adequacy plan to PSC and commission staff require the assistance of a consultant+to evaluate such a plan; and/or (3) PSC hires a third-party manager to implement the bill’s+provisions related to front -of-the-meter transmission energy storage. To the extent that+special fund expenditures for PSC increase, special fund reve nues for PSC increase+correspondingly from assessments imposed on public service companies.++Office of People’s Counsel++To the extent the bill facilitates the construction, acquisition, ownership or leasing of new+generating facilities by investor-owned electric companies and/or leads to the submission+of resource adequacy plans by electric companies, OPC requires additional resources to+handle the increase in work volume.++OPC advises that, given the bill’s potential to affect residential ratepayers, it must actively+participate in any PSC proceedings related to the bill’s implementation and anticipates+needing commensurate additional resources to do so.++Accordingly, special fund expenditures for OPC may increase due to the bill. As OPC is+also funded through assessments on public service companies, any increase in special fund+expenditures is funded through a corresponding increase in special fund revenues from+assessments imposed on public service companies.++Department of Natural Resources++DNR advises that its Power Plant Research Program (PPRP) requires additional staff and+consultant support if investor -owned electric companies seek to construct and operate+generating facilities under the bill. DNR estimates that the bill may result in one additional+CPCN application each year, although the actual number may vary. According to DNR,+for each additional generating facility project resulting from the bill annually, PPRP’s+consultant expenses increase by approximately $125,000.++HB 1561/ Page 9+DNR further advises that, if an electric company is required to develop and submit a+resource adequacy plan to PSC under the bill, PPRP likely needs to review the plan and+make a recommendation to PSC. DNR anticipates that any costs incurred by PPRP to do+so are likely no more than $20,000 per plan.++Thus, general/special fund expenditures for DNR may increase as a result of the bill. In+general, special funds from the Environmental Trust Fund are used to fund a significant+portion of PPRP’s operations. PPRP also receives funding from the Strategic Energy+Investment Fund in the fiscal 2027 budget as introduced (see the Governor’s Fiscal 2027+Budget Books, Volume I , page 462). However, PPRP’s workload and costs have been+increasing and, to the extent sufficient special funds are not available to cover PPRP’s costs+to implement the bill, general funds may be required to cover a portion or all of the costs.++Local Fiscal Effect: The bill’s effect on local government finances and operations is+unclear. To the extent that new generating facilities are constructed in the State as a direct+result of the bill, when they otherwise would not have been, local governments likely incur+an increase in workload associated with planning and zoning reviews, building inspections,+and related activities associated with the local review of projects. On the other hand, local+revenues increase from any related permit fees as well as the associated economic activity+resulting from any new generating facilities constructed in the State as a direct result of the+bill. As discussed in the Additional Comments section below, the bill may also affect the+electricity rates paid by local governments.++Small Business Effect: To the extent that new energy generating facilities are constructed+in the State as a direct result of the bill, small businesses that provide construction and/or+maintenance services for such facili ties benefit. Additionally, all small businesses, and+particularly small businesses with significant electricity use, are affected by any change in+electricity rates, as discussed in the Additional Comments section below.++Additional Comments: The bill’s net effect on electricity rates paid by electric customers,+including the State, local governments, and small businesses, is unclear. If the bill does not+result in investor -owned electric companies constructing and operating new generating+facilities, the impact on ratepayers is likely minimal to none. However, to the extent the+bill leads investor -owned electric companies to construct and operate new generating+facilities, electricity rates could be affected significantly. The extent and direction of any+change in rates depends on several factors, including the construction and financing costs+for the new generating facilities and conditions in the wholesale electricity market.++Accordingly, the Department of Legislative Services advises that, while the bill could have+a significant effect on electricity rates, the direction or magnitude of that effect cannot be+reliably estimated at this time.++HB 1561/ Page 10+Additional Information++Recent Prior Introductions: Similar legislation has not been introduced within the last+three years; however, legislation with similar provisions has been proposed. For example,+see SB 643 and HB 1329 of 2025.++Designated Cross File: SB 954 (Senator Harris) - Education, Energy, and the+Environment.++Information Source(s): Maryland Department of the Environment; Department of+Natural Resources; Office of People’s Counsel; Public Service Commission; Department+of Legislative Services++Fiscal Note History: First Reader - March 10, 2026+ caw/lgc++Analysis by: Ralph W. Kettell Direct Inquiries to:+(410) 946-5510+(301) 970-5510
Diffs are computed deterministically from extracted bill text and show additions, deletions, and section moves. Scanned-PDF text extracted via OCR is flagged where confidence is low; see methodology.