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Maryland PSC Staff Says "Routing" Storage Purchase Obligation Currently Imposed On Retail Suppliers Through Utilities Would Be "Optimal"; Utilities Suggest That "Ideal" Outcome To Accomplish Such Would Be Change In Statutory Language
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In comments on implementation of an energy storage procurement obligation on retail suppliers and SOS suppliers, Staff of the Maryland PSC said that accomplishing such procurement through the electric utilities via a nonbypassable "utility" charge would be "optimal[]", though Staff said that language in a draft agreement addressing the procurement obligation, which, as first reported by ECM and discussed further below contains ambiguity on allocation and nonbypassable cost recovery, complies with the statute and that Staff is "amenable" to the existing draft language
As noted in EnergyChoiceMatters.com's prior story, while certain of the recommendations from a workgroup specifically propose the use of a central agent procuring ESCCs [storage credits] on behalf of retail suppliers, with a specific nonbypassable "distribution" charge for cost recovery, other provisions in the draft leave open the possibility that ESCC costs would be paid by the central agent "or" the retail suppliers, and the utilities only for SOS customers, with the non-bypassable recovery not necessarily achieved via "distribution" charge
Staff said that there is "complexity" in
assigning the nonbypassable surcharge costs through both SOS and retail supplier rates which, "could be avoided if the costs were instead routed entirely through the utilities."
Staff likened this latter approach to the mechanism used for the offshore wind REC procurement in which, while retail suppliers had obligations associated with their load under statute, the utility assumed collection of costs related to such retail supplier obligations through a competitively neutral nonbypassable delivery charge
Such utility-based approach would also guard against double counting, Staff said
"Optimally, Staff would recommend striking 10(C)(v)(b) [the ambiguous language] in favor of administering the non-bypassable surcharge through only a utility rider. However, the current structure in the proposed Agreement complies with PUA § 7-1226(a)(1)(ii), and Staff is amenable to it," Staff said
However, while Baltimore Gas and Electric Company ("BGE"), Delmarva Power & Light Company ("Delmarva Power"), and Potomac Electric Power Company ("Pepco") (collectively, the "Maryland Joint Exelon Utilities" or "MJEUs") agreed that addressing the storage procurement obligation in a manner similar to that used for the offshore wind REC obligation, "would improve cost-effectiveness and ease implementation," the MJEUs said that, "Addressing this issue through action by the Maryland General Assembly is the ideal outcome for Maryland customers."
Still, the MJEUs seek for the storage project obligations a similar outcome to that used for the offshore wind RECs, and suggested a manner to accomplish such without statutory changes
"Until this concern is addressed by the Maryland General Assembly, the MJEU and other stakeholders propose considering alternatives under which Electricity Suppliers are required to cede their obligations to purchase ESCCs to the customer’s Electric Company. This approach has been referred to as the concept of a 'Central Agent' in the Agreement," the MJEUs said
In separate comments, Potomac Edison said, concerning use of a central agent approach, "Potomac Edison believes that this proposal does not align with the law as is currently written. Maryland Public Utilities Article § 7-1226(a)(1)(ii) states that, in selecting a proposal for a front-of-the-meter- transmission energy projects, the Commission shall specify, amongst other things, 'that each electricity supplier shall be responsible for purchasing storage capacity credits at the monthly fixed price schedule proportional to the electricity supplier’s capacity obligation.' Potomac Edison believes that the law is clear that the obligation belongs to Electricity Suppliers and not the electric distribution utility."
Potomac Edison said, "Potomac Edison recognizes that the law as currently written creates a mismatch for surcharge purposes as customers will pay for the ESCCs through (1) the Electricity Supplier’s rate or (2) the SOS product where the Electricity Supplier will need to add this obligation into their bid and subsequently receive the ESCC revenues through a non-bypassable distribution charge. While this mismatch may misalign costs and revenues, it is how the law permits this program to work, and Potomac Edison believes that anything other than this structure is not currently permissible."
The Retail Energy Supply
Association believes that the draft agreement correctly provides for recovery through a nonbypassable distribution charge, but RESA made note of "one inconsistent section" (as previously reported by EnergyChoiceMatters.com) which RESA said requires revision.
RESA noted that the definition of "Central Agent" in the draft recognizes that the central agent will coordinate the, "nonbypassable distribution charges that shall be applied to all electric customers, ensuring a single recovery pathway to reduce the risk of double-billing."
RESA noted that Section 10.C.v.a. of the draft agreement directs that a, "Non-bypassable Distribution Charge ('NBC') shall be applied to all electric customers to ensure equitable cost recovery."
However, RESA observed that Section 8.E. of the draft refers to use of either a distribution rider on electric companies’ customer bills or, "a supply charge applied by retail electric suppliers or by electric companies for default supply service".
RESA said that such language appears to be an artifact of statute which does not recognize that the same statute also provides the option for the nonbypassable charge to be a distribution charge, and RESA recommended striking this inconsistent language from the draft
RESA also recommended other conforming changes to make clear that it is the EDC, either on its own behalf or acting as a central agent, that receives invoices and is responsible for remitting payment for the storage credits
PC75, PC 75
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July 2, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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