MD
Maryland Senate Bill SB526

Maryland 2022 Regular Session

Maryland Senate Bill SB526 Compare Versions

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1- LAWRENCE J. HOGAN, JR., Governor Ch. 578
21
3-– 1 –
4-Chapter 578
5-(Senate Bill 526)
62
7-AN ACT concerning
3+EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4+ [Brackets] indicate matter deleted from existing law.
5+ Underlining indicates amendments to bill.
6+ Strike out indicates matter stricken from the bill by amendment or deleted from the law by
7+amendment.
8+ *sb0526*
89
9-Electricity – Offshore Wind Renewable Energy Portfolio Standard and
10-Renewable Energy Credits – Offshore Wind
10+SENATE BILL 526
11+C5, M5 2lr1728
12+ CF HB 622
13+By: Senator Feldman
14+Introduced and read first time: January 28, 2022
15+Assigned to: Finance
16+Committee Report: Favorable with amendments
17+Senate action: Adopted
18+Read second time: March 7, 2022
1119
12-FOR the purpose of altering the process for purchasing offshore wind renewable energy
13-credits to satisfy the offshore wind energy component of the renewable energy
14-portfolio standard; requiring the Public Service Commission to adopt regulations
15-establishing a certain cost recovery mechanism altering the application of the
16-offshore wind energy component of the renewable energy portfolio standard to apply
17-only to distribution sales of electric companies; altering the manner in which an
18-electric company may reflect and recover offshore wind renewable energy credit
19-costs; altering certain compliance fees for shortfalls from the offshore wind energy
20-component of the renewable energy portfolio standard; and generally relating to
21-offshore wind and the renewable energy portfolio standard.
20+CHAPTER ______
2221
23-BY repealing and reenacting, without amendments,
24- Article – Public Utilities
25-Section 7–701(a) and (g)
26- Annotated Code of Maryland
27- (2020 Replacement Volume and 2021 Supplement)
22+AN ACT concerning 1
2823
29-BY repealing and reenacting, with amendments,
30- Article – Public Utilities
31-Section 7–704.2(c) 7–703(a)(3) and (d), 7–704.2(a) and (c), and 7–705(b)
32- Annotated Code of Maryland
33- (2020 Replacement Volume and 2021 Supplement)
24+Electricity – Offshore Wind Renewable Energy Portfolio Standard and 2
25+Renewable Energy Credits – Offshore Wind 3
3426
35- SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
36-That the Laws of Maryland read as follows:
27+FOR the purpose of altering the process for purchasing offshore wind renewable energy 4
28+credits to satisfy the offshore wind energy component of the renewable energy 5
29+portfolio standard; requiring the Public Service Commission to adopt regulations 6
30+establishing a certain cost recovery mechanism altering the application of the 7
31+offshore wind energy component of the renewable energy portfolio standard to apply 8
32+only to distribution sales of electric companies; altering the manner in which an 9
33+electric company may reflect and recover offshore wind renewable energy credit 10
34+costs; altering certain compliance fees for shortfalls from the offshore wind energy 11
35+component of the renewable energy portfolio standard; and generally relating to 12
36+offshore wind and the renewable energy portfolio standard. 13
3737
38-Article – Public Utilities
38+BY repealing and reenacting, without amendments, 14
39+ Article – Public Utilities 15
40+Section 7–701(a) and (g) 16
41+ Annotated Code of Maryland 17
42+ (2020 Replacement Volume and 2021 Supplement) 18
3943
40-7–701.
44+BY repealing and reenacting, with amendments, 19
45+ Article – Public Utilities 20
46+Section 7–704.2(c) 7–703(a)(3) and (d), 7–704.2(a) and (c), and 7–705(b) 21
47+ Annotated Code of Maryland 22
48+ (2020 Replacement Volume and 2021 Supplement) 23 2 SENATE BILL 526
4149
42- (a) In this subtitle the following words have the meanings indicated.
4350
44- (g) “Offshore wind renewable energy credit” or “OREC” means a renewable
45-energy credit equal to the generation attributes of 1 megawatt–hour of electricity that is
46-derived from offshore wind energy.
4751
48-7–703.
49- Ch. 578 2022 LAWS OF MARYLAND
52+ SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
53+That the Laws of Maryland read as follows: 2
5054
51-– 2 –
52- (a) (3) The portion of a renewable energy portfolio standard that represents
53-offshore wind energy:
55+Article – Public Utilities 3
5456
55- (I) APPLIES ONLY TO THE DISTRIBUTION SALES O F ELECTRIC
56-COMPANIES; AND
57+7–701. 4
5758
58- (II) may not apply to [electricity sales at retail] DISTRIBUTION
59-SALES by any [electricity supplier] ELECTRIC COMPANY in excess of:
59+ (a) In this subtitle the following words have the meanings indicated. 5
6060
61- [(i)] 1. 75,000,000 kilowatt–hours of industrial process load to a
62-single customer in a year; and
61+ (g) “Offshore wind renewable energy credit” or “OREC” means a renewable 6
62+energy credit equal to the generation attributes of 1 megawatt–hour of electricity that is 7
63+derived from offshore wind energy. 8
6364
64- [(ii)] 2. 3,000 kilowatt–hours of electricity in a month to a
65-customer who is an owner of agricultural land and files an Internal Revenue Service form
66-1040, schedule F.
65+7–703. 9
6766
68- (d) (1) Subject to subsections (a) and (c) of this section [and in accordance with
69-§ 7–704.2 of this subtitle], an electricity supplier shall meet the renewable energy portfolio
70-standard FOR ALL TIER 1 AND TIER 2 RENEWABLE SOURCES EX CEPT OFFSHORE
71-WIND by accumulating the equivalent amount of renewable energy credits that equal the
72-percentages required under this section.
67+ (a) (3) The portion of a renewable energy portfolio standard that represents 10
68+offshore wind energy: 11
7369
74- (2) AN ELECTRIC COMPANY S HALL MEET THE RENEWA BLE ENERGY
75-PORTFOLIO STANDARD F OR OFFSHORE WIND IN ACCORDANCE WITH § 7–704.2 OF
76-THIS SUBTITLE.
70+ (I) APPLIES ONLY TO THE DISTRIBUTION SALES O F ELECTRIC 12
71+COMPANIES; AND 13
7772
78-7–704.2.
73+ (II) may not apply to [electricity sales at retail] DISTRIBUTION 14
74+SALES by any [electricity supplier] ELECTRIC COMPANY in excess of: 15
7975
80- (a) (1) The Commission shall determine the offshore wind energy component
81-of the renewable energy portfolio standard under § 7–703(b)(12) through (25) of this subtitle
82-based on the projected annual creation of ORECs by qualified offshore wind projects.
76+ [(i)] 1. 75,000,000 kilowatt–hours of industrial process load to a 16
77+single customer in a year; and 17
8378
84- (2) The Commission shall establish the renewable energy portfolio
85-standard obligation for ORECs on a forward–looking basis that includes a surplus to
86-accommodate reasonable forecasting error in estimating overall electricity sales in the
87-State.
79+ [(ii)] 2. 3,000 kilowatt–hours of electricity in a month to a 18
80+customer who is an owner of agricultural land and files an Internal Revenue Service form 19
81+1040, schedule F. 20
8882
89- (3) Any positive adjustment to the renewable energy portfolio standard
90-shall be on a forward–looking basis and sufficiently in advance to allow [OREC purchasers]
91-AN ELECTRIC COMPANY to reflect OREC costs [in retail prices offered] AS A
92-NONBYPASSABLE SURCHA RGE to [consumers] DISTRIBUTION CUSTOME RS.
83+ (d) (1) Subject to subsections (a) and (c) of this section [and in accordance with 21
84+§ 7–704.2 of this subtitle], an electricity supplier shall meet the renewable energy portfolio 22
85+standard FOR ALL TIER 1 AND TIER 2 RENEWABLE SOURCES EX CEPT OFFSHORE 23
86+WIND by accumulating the equivalent amount of renewable energy credits that equal the 24
87+percentages required under this section. 25
9388
94- (4) The Commission shall adopt regulations that establish:
95- LAWRENCE J. HOGAN, JR., Governor Ch. 578
89+ (2) AN ELECTRIC COMPANY S HALL MEET THE RENEWA BLE ENERGY 26
90+PORTFOLIO STANDARD F OR OFFSHORE WIND IN ACCORDANCE WITH § 7–704.2 OF 27
91+THIS SUBTITLE. 28
9692
97-– 3 –
98- (i) the offshore wind purchase obligation sufficiently in advance to
99-allow [OREC purchasers] AN ELECTRIC COMPANY to reflect OREC costs [in retail prices
100-offered to consumers] AS A NONBYPASSABLE S URCHARGE PAID BY ALL DISTRIBUTION
101-CUSTOMERS OF THE ELECTRIC COMPANY ; [and]
93+7–704.2. 29
94+ SENATE BILL 526 3
10295
103- (ii) a mechanism to adjust the renewable energy portfolio standard
104-obligation in a given year to accommodate a shortfall of ORECs in one or more earlier years
105-that is the result of the variation between the quantity of ORECs calculated from the
106-renewable energy portfolio standard obligation and the quantity of ORECs approved in the
107-Commission order for the same years; AND
10896
109- (III) A NONBYPASSABLE SURC HARGE THAT ALLOWS AN
110-ELECTRIC COMPANY TO RECOVER ALL COSTS AS SOCIATED WITH THE PURCHASE OF
111-ORECS FROM ALL DISTRIBUT ION CUSTOMERS OF THE ELECTRIC COMPANY .
97+ (a) (1) The Commission shall determine the offshore wind energy component 1
98+of the renewable energy portfolio standard under § 7–703(b)(12) through (25) of this subtitle 2
99+based on the projected annual creation of ORECs by qualified offshore wind projects. 3
112100
113- (c) (1) Each [electricity supplier] ELECTRIC COMPANY shall [purchase from
114-the escrow account established under this section the number of ORECs required] ACT AS
115-AN AGENT ON BEHALF OF ELECTRICIT Y SUPPLIERS TO FACIL ITATE THE TRANSFER
116-OF OREC FUNDING PAYMENTS FRO M RATEPAYERS TO OFFS HORE WIND
117-DEVELOPERS to satisfy the offshore wind energy component of the renewable energy
118-portfolio standard under § 7–703(b)(12) through (25) of this subtitle.
101+ (2) The Commission shall establish the renewable energy portfolio 4
102+standard obligation for ORECs on a forward–looking basis that includes a surplus to 5
103+accommodate reasonable forecasting error in estimating overall electricity sales in the 6
104+State. 7
119105
120- (2) (i) Subject to any escrow account reserve requirement the
121-Commission establishes, if there are insufficient ORECs available to satisfy the suppliers’
122-ELECTRIC COMPANIES ’ OREC obligation, the overpayment shall be distributed to electric
123-companies to be refunded or credited to each ratepayer DISTRIBUTION CUSTOME R based
124-on the ratepayer’s CUSTOMER’S consumption of electricity supply that is subject to the
125-renewable energy portfolio standard.
106+ (3) Any positive adjustment to the renewable energy portfolio standard 8
107+shall be on a forward–looking basis and sufficiently in advance to allow [OREC purchasers] 9
108+AN ELECTRIC COMPANY to reflect OREC costs [in retail prices offered] AS A 10
109+NONBYPASSABLE SURCHA RGE to [consumers] DISTRIBUTION CUSTOME RS. 11
126110
127- (ii) Subject to any escrow account reserve requirement the
128-Commission establishes, the calculation of an electricity supplier’s ELECTRIC COMPANY ’S
129-OREC purchase obligation shall be based on final electricity sales data as reported by the
130-PJM Interconnection as measured at the customer meter.
111+ (4) The Commission shall adopt regulations that establish: 12
131112
132- (3) For each OREC for which a qualified offshore wind project receives
133-payment, a qualified offshore wind project shall:
113+ (i) the offshore wind purchase obligation sufficiently in advance to 13
114+allow [OREC purchasers] AN ELECTRIC COMPANY to reflect OREC costs [in retail prices 14
115+offered to consumers] AS A NONBYPASSABLE S URCHARGE PAID BY ALL DISTRIBUTION 15
116+CUSTOMERS OF THE ELECTRIC COMPANY ; [and] 16
134117
135- (i) sell all energy, capacity, and ancillary services associated with
136-the creation of ORECs into the markets operated by PJM Interconnection; and
118+ (ii) a mechanism to adjust the renewable energy portfolio standard 17
119+obligation in a given year to accommodate a shortfall of ORECs in one or more earlier years 18
120+that is the result of the variation between the quantity of ORECs calculated from the 19
121+renewable energy portfolio standard obligation and the quantity of ORECs approved in the 20
122+Commission order for the same years; AND 21
137123
138- (ii) distribute the proceeds received from the sales to PJM
139-Interconnection markets, under item (i) of this paragraph to electric companies to be
140-refunded or credited to each ratepayer DISTRIBUTION CUST OMER based on the
141-ratepayer’s CUSTOMER’S consumption of electricity supply that is subject to the renewable
142-energy portfolio standard. Ch. 578 2022 LAWS OF MARYLAND
124+ (III) A NONBYPASSABLE SURC HARGE THAT ALLOWS AN 22
125+ELECTRIC COMPANY TO RECOVER ALL COSTS AS SOCIATED WITH THE PURCHASE OF 23
126+ORECS FROM ALL DISTRIBUT ION CUSTOMERS OF THE ELECTRIC COMPANY . 24
143127
144-– 4 –
128+ (c) (1) Each [electricity supplier] ELECTRIC COMPANY shall [purchase from 25
129+the escrow account established under this section the number of ORECs required] ACT AS 26
130+AN AGENT ON BEHALF OF ELECTRICIT Y SUPPLIERS TO FACIL ITATE THE TRANSFER 27
131+OF OREC FUNDING PAYMENTS FRO M RATEPAYERS TO OFFS HORE WIND 28
132+DEVELOPERS to satisfy the offshore wind energy component of the renewable energy 29
133+portfolio standard under § 7–703(b)(12) through (25) of this subtitle. 30
145134
146- (4) THE COMMISSION SHALL ADOP T REGULATIONS TO EST ABLISH A
147-COST RECOVERY MECHAN ISM THAT ALLOWS EACH ELECTRIC COMPANY TO ACT AS
148-AN AGENT ON BEHALF O F ELECTRICITY SUPPLI ERS FOR OREC FUNDING PAYMENTS
149-FROM RATEPAYERS .
135+ (2) (i) Subject to any escrow account reserve requirement the 31
136+Commission establishes, if there are insufficient ORECs available to satisfy the suppliers’ 32
137+ELECTRIC COMPANIES ’ OREC obligation, the overpayment shall be distributed to electric 33
138+companies to be refunded or credited to each ratepayer DISTRIBUTION CUSTOME R based 34
139+on the ratepayer’s CUSTOMER’S consumption of electricity supply that is subject to the 35
140+renewable energy portfolio standard. 36
141+ 4 SENATE BILL 526
150142
151- [(4)] (5) Notwithstanding § 7–709 of this subtitle, the Commission shall
152-adopt regulations regarding the transfer and expiration of ORECs created by a qualified
153-offshore wind project in excess of the OREC pricing schedule.
154143
155-7–705.
144+ (ii) Subject to any escrow account reserve requirement the 1
145+Commission establishes, the calculation of an electricity supplier’s ELECTRIC COMPANY ’S 2
146+OREC purchase obligation shall be based on final electricity sales data as reported by the 3
147+PJM Interconnection as measured at the customer meter. 4
156148
157- (b) (1) This subsection does not apply to a shortfall from the required Tier 1
158-renewable sources that is to be derived from[:
149+ (3) For each OREC for which a qualified offshore wind project receives 5
150+payment, a qualified offshore wind project shall: 6
159151
160- (i) offshore wind energy; or
152+ (i) sell all energy, capacity, and ancillary services associated with 7
153+the creation of ORECs into the markets operated by PJM Interconnection; and 8
161154
162- (ii)] post–2022 geothermal systems.
155+ (ii) distribute the proceeds received from the sales to PJM 9
156+Interconnection markets, under item (i) of this paragraph to electric companies to be 10
157+refunded or credited to each ratepayer DISTRIBUTION CUST OMER based on the 11
158+ratepayer’s CUSTOMER’S consumption of electricity supply that is subject to the renewable 12
159+energy portfolio standard. 13
163160
164- (2) If an electricity supplier fails to comply with the renewable energy
165-portfolio standard for the applicable year, the electricity supplier shall pay into the
166-Maryland Strategic Energy Investment Fund established under § 9–20B–05 of the State
167-Government Article:
161+ (4) THE COMMISSION SHALL ADOP T REGULATIONS TO EST ABLISH A 14
162+COST RECOVERY MECHAN ISM THAT ALLOWS EACH ELECTRIC COMPANY TO ACT AS 15
163+AN AGENT ON BEHALF O F ELECTRICITY SUPPLI ERS FOR OREC FUNDING PAYMENTS 16
164+FROM RATEPAYERS . 17
168165
169- (i) except as provided in item (ii) of this paragraph, a compliance fee
170-of:
166+ [(4)] (5) Notwithstanding § 7–709 of this subtitle, the Commission shall 18
167+adopt regulations regarding the transfer and expiration of ORECs created by a qualified 19
168+offshore wind project in excess of the OREC pricing schedule. 20
171169
172- 1. the following amounts for each kilowatt–hour of shortfall
173-from required Tier 1 renewable sources other than the shortfall from the required Tier 1
174-renewable sources that is to be derived from solar energy:
170+7–705. 21
175171
176- A. 4 cents through 2016;
172+ (b) (1) This subsection does not apply to a shortfall from the required Tier 1 22
173+renewable sources that is to be derived from[: 23
177174
178- B. 3.75 cents in 2017 and 2018;
175+ (i) offshore wind energy; or 24
179176
180- C. 3 cents in 2019 through 2023;
177+ (ii)] post–2022 geothermal systems. 25
181178
182- D. 2.75 cents in 2024;
179+ (2) If an electricity supplier fails to comply with the renewable energy 26
180+portfolio standard for the applicable year, the electricity supplier shall pay into the 27
181+Maryland Strategic Energy Investment Fund established under § 9–20B–05 of the State 28
182+Government Article: 29
183183
184- E. 2.5 cents in 2025;
184+ (i) except as provided in item (ii) of this paragraph, a compliance fee 30
185+of: 31
185186
186- F. 2.475 cents in 2026;
187+ 1. the following amounts for each kilowatt–hour of shortfall 32
188+from required Tier 1 renewable sources other than the shortfall from the required Tier 1 33
189+renewable sources that is to be derived from solar energy: 34 SENATE BILL 526 5
187190
188- G. 2.45 cents in 2027;
189- LAWRENCE J. HOGAN, JR., Governor Ch. 578
190191
191-– 5 –
192- H. 2.25 cents in 2028 and 2029; and
193192
194- I. 2.235 cents in 2030 and later;
193+ A. 4 cents through 2016; 1
195194
196- 2. the following amounts for each kilowatt–hour of shortfall
197-from required Tier 1 renewable sources that is to be derived from solar energy:
195+ B. 3.75 cents in 2017 and 2018; 2
198196
199- A. 45 cents in 2008;
197+ C. 3 cents in 2019 through 2023; 3
200198
201- B. 40 cents in 2009 through 2014;
199+ D. 2.75 cents in 2024; 4
202200
203- C. 35 cents in 2015 and 2016;
201+ E. 2.5 cents in 2025; 5
204202
205- D. 19.5 cents in 2017;
203+ F. 2.475 cents in 2026; 6
206204
207- E. 17.5 cents in 2018;
205+ G. 2.45 cents in 2027; 7
208206
209- F. 10 cents in 2019;
207+ H. 2.25 cents in 2028 and 2029; and 8
210208
211- G. 10 cents in 2020;
209+ I. 2.235 cents in 2030 and later; 9
212210
213- H. 8 cents in 2021;
211+ 2. the following amounts for each kilowatt–hour of shortfall 10
212+from required Tier 1 renewable sources that is to be derived from solar energy: 11
214213
215- I. 6 cents in 2022;
214+ A. 45 cents in 2008; 12
216215
217- J. 6 cents in 2023;
216+ B. 40 cents in 2009 through 2014; 13
218217
219- K. 6 cents in 2024;
218+ C. 35 cents in 2015 and 2016; 14
220219
221- L. 5.5 cents in 2025;
220+ D. 19.5 cents in 2017; 15
222221
223- M. 4.5 cents in 2026;
222+ E. 17.5 cents in 2018; 16
224223
225- N. 3.5 cents in 2027;
224+ F. 10 cents in 2019; 17
226225
227- O. 3.25 cents in 2028;
226+ G. 10 cents in 2020; 18
228227
229- P. 2.5 cents in 2029; and
228+ H. 8 cents in 2021; 19
230229
231- Q. 2.25 cents in 2030 and later; and
230+ I. 6 cents in 2022; 20
232231
233- 3. 1.5 cents for each kilowatt–hour of shortfall from required
234-Tier 2 renewable sources; or
232+ J. 6 cents in 2023; 21
235233
236- (ii) for industrial process load:
237- Ch. 578 2022 LAWS OF MARYLAND
234+ K. 6 cents in 2024; 22
238235
239-– 6 –
240- 1. for each kilowatt–hour of shortfall from required Tier 1
241-renewable sources, a compliance fee of:
236+ L. 5.5 cents in 2025; 23
242237
243- A. 0.8 cents in 2006, 2007, and 2008;
238+ M. 4.5 cents in 2026; 24 6 SENATE BILL 526
244239
245- B. 0.5 cents in 2009 and 2010;
246240
247- C. 0.4 cents in 2011 and 2012;
248241
249- D. 0.3 cents in 2013 and 2014;
242+ N. 3.5 cents in 2027; 1
250243
251- E. 0.25 cents in 2015 and 2016; and
244+ O. 3.25 cents in 2028; 2
252245
253- F. except as provided in paragraph (3) of this subsection, 0.2
254-cents in 2017 and later; and
246+ P. 2.5 cents in 2029; and 3
255247
256- 2. nothing for any shortfall from required Tier 2 renewable
257-sources.
248+ Q. 2.25 cents in 2030 and later; and 4
258249
259- (3) For industrial process load, the compliance fee for each kilowatt–hour
260-of shortfall from required Tier 1 renewable sources is[:
250+ 3. 1.5 cents for each kilowatt–hour of shortfall from required 5
251+Tier 2 renewable sources; or 6
261252
262- (i) 0.1 cents in any year during which suppliers are required to
263-purchase ORECs under § 7–704.2 of this subtitle; and
253+ (ii) for industrial process load: 7
264254
265- (ii)] nothing for the year following any year during which, after final
266-calculations, the net rate impact per megawatt–hour from Round 1 offshore wind projects
267-exceeded $1.65 in 2012 dollars.
255+ 1. for each kilowatt–hour of shortfall from required Tier 1 8
256+renewable sources, a compliance fee of: 9
268257
269- SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
270-October 1, 2022.
258+ A. 0.8 cents in 2006, 2007, and 2008; 10
271259
272-Enacted under Article II, § 17(c) of the Maryland Constitution, May 29, 2022.
260+ B. 0.5 cents in 2009 and 2010; 11
261+
262+ C. 0.4 cents in 2011 and 2012; 12
263+
264+ D. 0.3 cents in 2013 and 2014; 13
265+
266+ E. 0.25 cents in 2015 and 2016; and 14
267+
268+ F. except as provided in paragraph (3) of this subsection, 0.2 15
269+cents in 2017 and later; and 16
270+
271+ 2. nothing for any shortfall from required Tier 2 renewable 17
272+sources. 18
273+
274+ (3) For industrial process load, the compliance fee for each kilowatt–hour 19
275+of shortfall from required Tier 1 renewable sources is[: 20
276+
277+ (i) 0.1 cents in any year during which suppliers are required to 21
278+purchase ORECs under § 7–704.2 of this subtitle; and 22
279+
280+ (ii)] nothing for the year following any year during which, after final 23
281+calculations, the net rate impact per megawatt–hour from Round 1 offshore wind projects 24
282+exceeded $1.65 in 2012 dollars. 25
283+
284+ SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 26
285+October 1, 2022. 27
286+