PSC Generally Supports Concept Of Central Agent, Not Retail Suppliers, Purchasing Mandatory Energy Storage Credits, But Withholds Final Decision

The Maryland PSC has generally endorsed a concept that would see a central agent, rather than retail electric suppliers, procure energy storage resource credits as required under recent legislation, but deferred adoption of final language and a specific policy concerning the purchase obligations and cost recovery

The energy storage procurement legislation states that each "electricity supplier" shall be responsible for purchasing storage credits

Maryland Public Utilities Article § 7-1226(a)(1)(ii) states that, in selecting a proposal for a front-of-the-meter transmission energy storage project, the PSC 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."

However, PUA § 7-1226(a)(1)(vi) allows for cost recovery though a non-bypassable surcharge on either the distribution or supply rate on a customer’s bill, which led the PSC to conclude that, "the concept of the utility acting as a 'central agent' is not necessarily prohibited, though the Commission acknowledges that there may be concerns if this becomes an obligation for all suppliers to avail themselves of this."

Parties have proposed to have the utilities serve as central agents for any storage procurement obligation, with nonbypassable cost recovery, similar to the offshore wind REC mechanism. However, Potomac Edison has questioned, notwithstanding the law's use of "non-bypassable" in describing cost recovery, whether the utilities may assume the retail suppliers' purchase obligations, in light of the language in § 7-1226(a)(1)(ii)

The PSC directed that a work group shall address the identified concerns with respect to an escrow account to fund the storage purchases and the cost recovery mechanism for such

The PSC deferred consideration of the establishment of the "non-bypassable surcharge"

"In order to provide the storage units documentation as to how the Commission intends to proceed, the Commission finds either a non-bypassable surcharge or a rider as permitted under PUA § 7–1226 to be the model. We intend to adopt these mechanisms unless changes are proposed by the Work Group and accepted by the Commission in its subsequent decision, or there is a change in law," the PSC said

The PSC said that most parties generally agree that it would be preferable for the General Assembly to enact legislation to make the parties responsible for purchasing the storage credits, and recovering the costs of such, more clear and less administratively burdensome.

The work group shall provide a status update no later than December 18, 2026, as to the group's progress on developing the storage procurement escrow account structure, including any proposed amendments to the statute the group believes would allow for a simpler establishment of the escrow account, and shall provide a timeline for making a final proposal to the Commission regarding the escrow account

Case 9866