The Utility RELIEF Act has been presented as one of the Maryland General Assembly’s most important pieces of affordability legislation this session, but chamber leadership is starting to fracture over how to best deliver that relief.
The over 100-page bill is a “frankenstein” of energy policy changes, broadly looking to deliver immediate and long-term cost-saving measures to ratepayers, as well as incentivize more clean energy generation within the state to ease the strain on the regional grid.
The act carries a promise of at least $150 in annual utility savings for Maryland ratepayers, or roughly $12 a month.
Those savings will come from a $100 million downpayment on the state’s EmPOWER program, which aims to improve energy efficiency through the incentivization of free or discounted energy audits, weatherization and energy efficient appliances.
EmPOWER is paid for by all ratepayers through a surcharge of around $10 to $20 per utility bill, but the state-led downpayment will cover that fee.
The bill would also roll back the program’s greenhouse gas reduction goal from 2.5 percent each year to 1.75 percent each year from 2027 through 2029 — effectively reducing EmPOWER’s spending, at least temporarily.
The Senate passed its version of the bill on Monday, but several of the chambers’ amendments do not reflect what was passed in the House last month.
One of the most controversial changes is a Republican-introduced amendment, adopted during floor debate, that would allow utilities to pass on the cost of building pipelines for new gas customers to existing customers.
That ability was revoked by the Maryland Public Service Commission (PSC) — the state utility regulator — just last year.
When the PSC instructed utilities to end the line extension allowance (LEA) policy, the Maryland Office of People’s Counsel (OPC) — an independent state agency that advocates for utility consumers — estimated it would save gas customers $150 million annually.
While supporters of the amendment argue the outlawing of LEAs slows down development, consumer advocates — like Maryland PIRG — disagree.
“If a homeowner who's building a new home wants to have gas, or someone wants to add gas to their home that's been electric, they can still do it. We're just not incentivizing that by making other customers pay for that decision,” said Maryland PIRG Senior Advisor Emily Scarr.
Scarr also argues that utilizing electricity instead of gas is ultimately cheaper for consumers and better for the environment.
“It's just really highly profitable for the gas utilities to do these line extensions. They profit up to $3 for every dollar they spend hooking up a new home to gas,” she said. “It's not cheaper to heat your home with gas. We also have more efficient technology for electric heating than gas. So it is not only bad for public health and the environment, it's also bad for our wallets to be encouraging people to adopt gas.”
Senate President Bill Ferguson (D-Baltimore City) has been heavily invested in energy policy this session, but he deferred to the guidance of the Senate Education, Energy and the Environment Committee when asked about the benefit of reinstating LEAs on Friday.
“This was one of the policies that the committee deemed an important one to move forward to try to protect and provide additional payment plans so that folks would have a more affordable opportunity as development is happening,” Ferguson said.
The House version of the bill would end the use of spending forecasts when a utility comes before the PSC and asks for a rate increase, a move applauded by advocates who often point to rising distribution rates as one of the main reasons behind the recent skyrocketing of utility bills.
Distribution rates cover the cost of transmission and infrastructure that delivers electricity into the home.
For the past several years, utility companies have been using multi-year rate plans, which allow them to ask for years’ worth of rate increases in advance of spending money on infrastructure replacement and upgrades.
Without forecast testing, utilities would likely have to base their rate increases on their historic spending, rather than projections.
But the Senate version maintains the use of forecast testing and would instead require the PSC to determine whether it is “prudent” to allow utility companies to continue using forecast test years.
Ferguson says he trusts the PSC to “dive into this and evaluate what is better for ratepayers” — forecast testing, historic spending or a hybrid approach.
But Scarr believes there’s hypocrisy in the Senate’s approach of trusting the PSC’s guidance on some policies, but reinstating policies that the PSC has already ruled to be harming ratepayers, like LEAs.
“It feels disingenuous to say we trust the PSC on a matter that they do have an opportunity to benefit ratepayers, but then not trust the PSC on a matter that was going to benefit utilities,” Scarr said. “I was frustrated by hearing that level of argument being made of ‘We're not going to intervene in the PSC’s action on ratemaking, but we are going to intervene on behalf of utilities around line extension allowances.’”
Advocates aren’t the only ones with concerns — House Speaker Joseline Peña-Melnyk (D-Anne Arundel and Prince George’s Counties) is worried that the Senate changes could weaken how much the bill will ease the strain on ratepayers’ wallets.
“We think the House version of the bill is the strongest posture for ratepayer protection and we’ll be working with the Senate to get a final bill across the finish line,” the speaker’s spokesperson Heather Mizeur said in a statement.
Peña-Melnyk is particularly concerned with the Senate’s decision to preserve the forecast test year provision.
“This important ratepayer protection is a priority for the House,” she said in a statement. “Studies have shown that forecast testing for rates can significantly raise costs for ratepayers due to forecasting errors or biased projections. Forecast testing is an open invitation for the utility companies to throw in every conceivable cost in their projections and hope that the Public Service Commission approves all of it.”
With the incorporation of various Republican ideas and amendments, the bill passed with overwhelming bipartisan support in the Senate by a vote of 38 to 4.
“I believe very strongly that we should push in conference [committee] to add more relief, to do more to get that number, that $12 a month number, higher,” Senate Republican Whip Justin Ready (R-Carroll and Frederick Counties) said on the floor Monday. “I will be voting green, and I do appreciate that there was some bipartisan consideration for some of the ideas we raised.”
With chamber leadership in clear disagreement over some of the changes, the bill is gearing up for a tough conference committee to iron out the differences.
“The good news is that we fundamentally agree on the headline, core, fundamental purposes and framework of the bill. Now it's into the details, and so I feel certain and entirely confident that we will get through these details with solutions that are in the best interest of Maryland ratepayers,” Ferguson said.
Lawmakers have one week to agree upon a final version of the bill, pass it one more time in each chamber and then send it to the governor for signature.
