EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*hb0622*
HOUSE BILL 622
C5, M5 2lr1749
CF SB 526
By: Delegate Brooks
Introduced and read first time: January 31, 2022
Assigned to: Economic Matters
Committee Report: Favorable with amendments
House action: Adopted
Read second time: March 10, 2022
CHAPTER ______
AN ACT concerning 1
Electricity – Offshore Wind Renewable Energy Portfolio Standard and 2
Renewable Energy Credits – Offshore Wind 3
FOR the purpose of altering the process for purchasing offshore wind renewable energy 4
credits to satisfy the offshore wind energy component of the renewable energy 5
portfolio standard; requiring the Public Service Commission to adopt regulations 6
establishing a certain cost recovery mechanism altering the application of the 7
offshore wind energy component of the renewable energy portfolio standard to apply 8
only to distribution sales of electric companies; altering the manner in which an 9
electric company may reflect and recover offshore wind renewable energy credit 10
costs; altering certain compliance fees for shortfalls from the offshore wind energy 11
component of the renewable energy portfolio standard; and generally relating to 12
offshore wind and the renewable energy portfolio standard. 13
BY repealing and reenacting, without amendments, 14
Article – Public Utilities 15
Section 7–701(a) and (g) 16
Annotated Code of Maryland 17
(2020 Replacement Volume and 2021 Supplement) 18
BY repealing and reenacting, with amendments, 19
Article – Public Utilities 20
Section 7–704.2(c) 7–703(a)(3) and (d), 7–704.2(a) and (c), and 7–705(b) 21
Annotated Code of Maryland 22
(2020 Replacement Volume and 2021 Supplement) 23 2 HOUSE BILL 622
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
That the Laws of Maryland read as follows: 2
Article – Public Utilities 3
7–701. 4
(a) In this subtitle the following words have the meanings indicated. 5
(g) “Offshore wind renewable energy credit” or “OREC” means a renewable 6
energy credit equal to the generation attributes of 1 megawatt–hour of electricity that is 7
derived from offshore wind energy. 8
7–703. 9
(a) (3) The portion of a renewable energy portfolio standard that represents 10
offshore wind energy: 11
(I) APPLIES ONLY TO THE DISTRIBUTION SALES O F ELECTRIC 12
COMPANIES; AND 13
(II) may not apply to [electricity sales at retail] DISTRIBUTION 14
SALES by any [electricity supplier] ELECTRIC COMPANY in excess of: 15
[(i)] 1. 75,000,000 kilowatt–hours of industrial process load to a 16
single customer in a year; and 17
[(ii)] 2. 3,000 kilowatt–hours of electricity in a month to a 18
customer who is an owner of agricultural land and files an Internal Revenue Service form 19
1040, schedule F. 20
(d) (1) Subject to subsections (a) and (c) of this section [and in accordance with 21
§ 7–704.2 of this subtitle], an electricity supplier shall meet the renewable energy portfolio 22
standard FOR ALL TIER 1 AND TIER 2 RENEWABLE SOURCES EX CEPT OFFSHORE 23
WIND by accumulating the equivalent amount of renewable energy credits that equal the 24
percentages required under this section. 25
(2) AN ELECTRIC COMPANY S HALL MEET THE RENEWA BLE ENERGY 26
PORTFOLIO STANDARD F OR OFFSHORE WIND IN ACCORDANCE WITH § 7–704.2 OF 27
THIS SUBTITLE. 28
7–704.2. 29
HOUSE BILL 622 3
(a) (1) The Commission shall determine the offshore wind energy component 1
of the renewable energy portfolio standard under § 7–703(b)(12) through (25) of this subtitle 2
based on the projected annual creation of ORECs by qualified offshore wind projects. 3
(2) The Commission shall establish the renewable energy portfolio 4
standard obligation for ORECs on a forward–looking basis that includes a surplus to 5
accommodate reasonable forecasting error in estimating overall electricity sales in the 6
State. 7
(3) Any positive adjustment to the renewable energy portfolio standard 8
shall be on a forward–looking basis and sufficiently in advance to allow [OREC purchasers] 9
AN ELECTRIC COMPANY to reflect OREC costs [in retail prices offered] AS A 10
NONBYPASSABLE SURCHA RGE to [consumers] DISTRIBUTION CUSTOME RS. 11
(4) The Commission shall adopt regulations that establish: 12
(i) the offshore wind purchase obligation sufficiently in advance to 13
allow [OREC purchasers] AN ELECTRIC COMPANY to reflect OREC costs [in retail prices 14
offered to consumers] AS A NONBYPASSABLE S URCHARGE PAID BY ALL DISTRIBUTION 15
CUSTOMERS OF THE ELECT RIC COMPANY ; [and] 16
(ii) a mechanism to adjust the renewable energy portfolio standard 17
obligation in a given year to accommodate a shortfall of ORECs in one or more earlier years 18
that is the result of the variation between the quantity of ORECs calculated from the 19
renewable energy portfolio standard obligation and the quantity of ORECs approved in the 20
Commission order for the same years; AND 21
(III) A NONBYPASSABLE SURC HARGE THAT ALLOWS AN 22
ELECTRIC COMPANY TO RECOVER ALL COSTS AS SOCIATED WITH THE PURCH ASE OF 23
ORECS FROM ALL DISTRIBUT ION CUSTOMERS OF THE ELECTRIC COMPANY . 24
(c) (1) Each [electricity supplier] ELECTRIC COMPANY shall [purchase from 25
the escrow account established under this section the number of ORECs required] ACT AS 26
AN AGENT ON BEHALF OF E LECTRICITY SUPPLIERS TO FACILITATE THE TR ANSFER 27
OF OREC FUNDING PAYMENTS FRO M RATEPAYERS TO OFFS HORE WIND 28
DEVELOPERS to satisfy the offshore wind energy component of the renewable energy 29
portfolio standard under § 7–703(b)(12) through (25) of this subtitle. 30
(2) (i) Subject to any escrow account reserve requirement the 31
Commission establishes, if there are insufficient ORECs available to satisfy the suppliers’ 32
ELECTRIC COMPANIES ’ OREC obligation, the overpayment shall be distributed to electric 33
companies to be refunded or credited to each ratepayer DISTRIBUTION CUSTOME R based 34
on the ratepayer’s CUSTOMER’S consumption of electricity supply that is subject to the 35
renewable energy portfolio standard. 36
4 HOUSE BILL 622
(ii) Subject to any escrow account reserve requirement the 1
Commission establishes, the calculation of an electricity supplier’s ELECTRIC COMPANY ’S 2
OREC purchase obligation shall be based on final electricity sales data as reported by the 3
PJM Interconnection as measured at the customer meter. 4
(3) For each OREC for which a qualified offshore wind project receives 5
payment, a qualified offshore wind project shall: 6
(i) sell all energy, capacity, and ancillary services associated with 7
the creation of ORECs into the markets operated by PJM Interconnection; and 8
(ii) distribute the proceeds received from the sales to PJM 9
Interconnection markets, under item (i) of this paragraph to electric companies to be 10
refunded or credited to each ratepayer DISTRIBUTION CUST OMER based on the 11
ratepayer’s CUSTOMER’S consumption of electricity supply that is subject to the renewable 12
energy portfolio standard. 13
(4) THE COMMISSION SHALL ADOP T REGULATIONS TO EST ABLISH A 14
COST RECOVERY MECHAN ISM THAT ALLOWS EACH ELECTRIC COMPANY TO ACT AS 15
AN AGENT ON BEHALF O F ELECTRICITY SUPPLI ERS FOR OREC FUNDING PAYMENTS 16
FROM RATEPAYERS . 17
[(4)] (5) Notwithstanding § 7–709 of this subtitle, the Commission shall 18
adopt regulations regarding the transfer and expiration of ORECs created by a qualified 19
offshore wind project in excess of the OREC pricing schedule. 20
7–705. 21
(b) (1) This subsection does not apply to a shortfall from the required Tier 1 22
renewable sources that is to be derived from[: 23
(i) offshore wind energy; or 24
(ii)] post–2022 geothermal systems. 25
(2) If an electricity supplier fails to comply with the renewable energy 26
portfolio standard for the applicable year, the electricity supplier shall pay into the 27
Maryland Strategic Energy Investment Fund established under § 9–20B–05 of the State 28
Government Article: 29
(i) except as provided in item (ii) of this paragraph, a compliance fee 30
of: 31
1. the following amounts for each kilowatt–hour of shortfall 32
from required Tier 1 renewable sources other than the shortfall from the required Tier 1 33
renewable sources that is to be derived from solar energy: 34 HOUSE BILL 622 5
A. 4 cents through 2016; 1
B. 3.75 cents in 2017 and 2018; 2
C. 3 cents in 2019 through 2023; 3
D. 2.75 cents in 2024; 4
E. 2.5 cents in 2025; 5
F. 2.475 cents in 2026; 6
G. 2.45 cents in 2027; 7
H. 2.25 cents in 2028 and 2029; and 8
I. 2.235 cents in 2030 and later; 9
2. the following amounts for each kilowatt–hour of shortfall 10
from required Tier 1 renewable sources that is to be derived from solar energy: 11
A. 45 cents in 2008; 12
B. 40 cents in 2009 through 2014; 13
C. 35 cents in 2015 and 2016; 14
D. 19.5 cents in 2017; 15
E. 17.5 cents in 2018; 16
F. 10 cents in 2019; 17
G. 10 cents in 2020; 18
H. 8 cents in 2021; 19
I. 6 cents in 2022; 20
J. 6 cents in 2023; 21
K. 6 cents in 2024; 22
L. 5.5 cents in 2025; 23
M. 4.5 cents in 2026; 24 6 HOUSE BILL 622
N. 3.5 cents in 2027; 1
O. 3.25 cents in 2028; 2
P. 2.5 cents in 2029; and 3
Q. 2.25 cents in 2030 and later; and 4
3. 1.5 cents for each kilowatt–hour of shortfall from required 5
Tier 2 renewable sources; or 6
(ii) for industrial process load: 7
1. for each kilowatt–hour of shortfall from required Tier 1 8
renewable sources, a compliance fee of: 9
A. 0.8 cents in 2006, 2007, and 2008; 10
B. 0.5 cents in 2009 and 2010; 11
C. 0.4 cents in 2011 and 2012; 12
D. 0.3 cents in 2013 and 2014; 13
E. 0.25 cents in 2015 and 2016; and 14
F. except as provided in paragraph (3) of this subsection, 0.2 15
cents in 2017 and later; and 16
2. nothing for any shortfall from required Tier 2 renewable 17
sources. 18
(3) For industrial process load, the compliance fee for each kilowatt–hour 19
of shortfall from required Tier 1 renewable sources is[: 20
(i) 0.1 cents in any year during which suppliers are required to 21
purchase ORECs under § 7–704.2 of this subtitle; and 22
(ii)] nothing for the year following any year during which, after final 23
calculations, the net rate impact per megawatt–hour from Round 1 offshore wind projects 24
exceeded $1.65 in 2012 dollars. 25
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 26
October 1, 2022. 27