Maryland Senate Passes Retail Energy Reform Bill -- EnergyChoiceMatters.com

Maryland Senate Passes Retail Energy Reform Bill

Price Cap, End Of POR, Requirement For Individual Sales Agent Licenses, Bans Commissions To Salespersons

March 8, 2024

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Reporting by Paul Ring • ring@energychoicematters.com

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The Maryland Senate has passed on third reading SB0001, the retail energy reform bill

SB0001 has been sent to the House

Aside from a further amendment to ensure the bill's provisions apply only to residential service, the bill was not amended versus the text reported favorably out of committee

SB0001's provisions generally apply only to residential service. Additionally, unless noted otherwise herein, none of the provisions discussed below apply to municipal aggregations or the supplier of a municipal aggregation

The bill provides that a residential electricity supplier may only offer electricity, other than green power as defined below, "at a price that does not exceed the trailing 12–month average of the electric company’s standard offer service rate in the electric company’s service territory as of the date of agreement with the customer[.]"

Similarly, for residential gas service, a retail supplier may offer gas service only at a price that does not exceed the trailing 12–month average of the gas company’s default gas commodity service in the gas company’s service territory as of the date of the agreement with the customer

Residential plans may not exceed 12 months in length.

Non-green plans may be auto-renewed, but renewal is subject to the pricing limits described above

Variable rates would be banned, with the ban excluding rates with seasonal variation or which vary based on therms consumed in a billing period

A residential retail electric supplier would be permitted to market a green product, defined below, without being subject to the SOS-based price cap, but the supplier's price under the green plan would need to be approved by the PSC

Among other things, a residential green power plan must be, based on supply or RECs, either 51% green; or 1% higher than the renewable energy portfolio standard for the year the electricity is provided to the customer

Green power plans would need to have their RECs sourced from the PJM region on a staggered schedule, from a 0% requirement for the 12-month period starting July 1, 2025, increasing to at least 10% for the 12-month period starting July 1, 2027, and further increasing each year until the bill requires that, beginning July 1, 2035, at least 50% of the RECs shall be generated in the PJM region.

Green power plans may not be automatically renewed

The bill would end POR specifically for residential receivables. This provision does not apply to municipal aggregations

The bill states that the price limits described above, "shall be construed to apply to all electricity supply agreements and gas supply agreements entered into or renewed on or after January 1, 2025."

"[T]his act shall be construed to apply only prospectively and may not be applied or interpreted to have any effect on or application to any electricity supply agreement or gas supply agreement that is in effect on or before December 31, 2024," the bill states

SB0001 provides that, beginning July 1, 2025, a person may not engage in the business of an "energy salesperson" in the state unless the person holds a license issued by the PSC.

"Energy salesperson" means an individual who is licensed by the commission to sell: (i) electricity or electricity supply services to residential retail electric customers on behalf of an electricity supplier as an employee or agent of the electricity supplier; or (ii) gas or gas supply services to residential retail gas customers on behalf of a gas supplier as an employee or agent of the gas supplier.

Additionally, under the bill, a licensed energy salesperson may offer or sell electricity supply agreements or gas supply agreements to customers only if the energy salesperson is associated with a licensed electricity supplier or licensed gas supplier, respectively

The PSC is authorized to require that an energy salesperson must post a bond or other similar instrument if, in the Commission’s judgment, the bond or similar instrument is necessary to ensure an energy salesperson’s financial integrity

SB0001 provides that a residential retail supplier, "may not pay a commission or other incentive–based compensation to an energy salesperson for enrolling customers."

The bill would also require entities which serve as sales contractors or subcontractors of retail suppliers to be licensed, by requiring an "energy vendor" to be licensed by the PSC

"Energy vendor" means a person that has a contract or subcontract to provide energy sales services to an electricity supplier or a gas supplier that provides electricity supply services or gas supply services, respectively, to a residential customer.

SB0001 authorizes the PSC to, among other things, require or prohibit the use of specific language in a residential energy retailer’s marketing materials, disclaimers, disclosures, and legal documents, including requiring or prohibiting the use of specific language based on service or product type.

The PSC may also require a residential energy retailer to post notices and disclosures required under the bill on the retailer’s website

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