Maryland 2025 Regular Session

Maryland House Bill HB419 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2
3	3	EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4	4	[Brackets] indicate matter deleted from existing law.
5	5	hb0419
6	6
7	7	HOUSE BILL 419
8	8	C8, K3 5lr2466
9	9	HB 731/24 – ECM
10	10	By: Delegates Embry, Addison, Attar, Boafo, Charkoudian, Edelson , R. Lewis,
11	11	Phillips, Queen, Ruff, Ruth, Simmons, Spiegel, Taylor, Wolek, and Woorman
12	12	Introduced and read first time: January 16, 2025
13	13	Assigned to: Economic Matters
14	14
15	15	A BILL ENTITLED
16	16
17	17	AN ACT concerning 1
18	18
19	19	Natural Gas – Strategic Infrastructure Development and Enhancement 2
20	20	(Ratepayer Protection Act) 3
21	21
22	22	FOR the purpose of altering the required contents of a certain plan that a gas company may 4
23	23	file with the Public Service Commission for proposed eligible infrastructure 5
24	24	replacement projects to include certain descriptions, demonstrations, analyses, and 6
25	25	notifications; altering the required findings of the Commission in considering 7
26	26	whether to approve a certain infrastructure replacement plan; and generally relating 8
27	27	to natural gas and infrastructure management. 9
28	28
29	29	BY repealing and reenacting, with amendments, 10
30	30	Article – Public Utilities 11
31	31	Section 4–210 12
32	32	Annotated Code of Maryland 13
33	33	(2020 Replacement Volume and 2024 Supplement) 14
34	34
35	35	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 15
36	36	That the Laws of Maryland read as follows: 16
37	37
38	38	Article – Public Utilities 17
39	39
40	40	4–210. 18
41	41
42	42	(a) (1) In this section the following words have the meanings indicated. 19
43	43
44	44	(2) “Customer” means a retail natural gas customer. 20
45	45
46	46	(3) “Eligible infrastructure replacement” means a replacement or an 21
47	47	improvement in an existing infrastructure of a gas company that: 22
48	48	2 HOUSE BILL 419
49	49
50	50
51	51	(i) is made on or after June 1, 2013; 1
52	52
53	53	(ii) is designed to improve public safety or infrastructure reliability; 2
54	54
55	55	(iii) does not increase the revenue of a gas company by connecting an 3
56	56	improvement directly to new customers; 4
57	57
58	58	(iv) reduces or has the potential to reduce greenhouse gas emissions 5
59	59	through a reduction in natural gas system leaks; and 6
60	60
61	61	(v) is not included in the current rate base of the gas company as 7
62	62	determined in the gas company’s most recent base rate proceeding. 8
63	63
64	64	(4) “NATURAL GAS ” MEANS METHANE GAS PR ODUCED FROM A 9
65	65	GEOLOGICAL FORMATION BENEATH THE SURFACE OF THE EARTH. 10
66	66
67	67	(5) “NATURAL GAS ALTERNATI VE” MEANS A FUEL THAT CA N BE 11
68	68	BURNED IN TANDEM WIT H OR IN PLACE OF NAT URAL GAS, INCLUDING BIOMETHANE , 12
69	69	RECOVERED METHANE , SYNTHETIC METHANE , AND HYDROGEN . 13
70	70
71	71	[(4)] (6) “Plan” means a plan that a gas company files under subsection 14
72	72	(d) of this section. 15
73	73
74	74	[(5)] (7) “Project” means an eligible infrastructure replacement project 16
75	75	proposed by a gas company in a plan filed under this section. 17
76	76
77	77	(b) It is the intent of the General Assembly that the purpose of this section is to 18
78	78	[accelerate] PROMOTE gas infrastructure improvements in the State, WHEN NECESSARY 19
79	79	AND APPROPRIATE TO E NSURE THE SAFETY OF THE GAS SYSTEM AND T O PROVIDE 20
80	80	CONSISTENCY WITH STATE CLIMATE POLICY , by establishing a mechanism for gas 21
81	81	companies to promptly recover reasonable and prudent costs of investments in eligible 22
82	82	infrastructure replacement projects separate from base rate proceedings. 23
83	83
84	84	(c) This section does not apply to a gas cooperative. 24
85	85
86	86	(d) (1) A gas company may file with the Commission: 25
87	87
88	88	(i) a plan to invest in eligible infrastructure replacement projects; 26
89	89	and 27
90	90
91	91	(ii) in accordance with paragraph (4) of this subsection, a 28
92	92	cost–recovery schedule associated with the plan that includes a fixed annual surcharge on 29
93	93	customer bills to recover reasonable and prudent costs of proposed eligible infrastructure 30
94	94	replacement projects. 31
95	95
96	96	(2) A plan under this subsection shall include: 32 HOUSE BILL 419 3
97	97
98	98
99	99
100	100	(i) A DESCRIPTION OF EACH ELIGIBLE PROJECT , INCLUDING 1
101	101	THE PROJECT’S EXPECTED USEFUL LI FE; 2
102	102
103	103	(II) a time line for the completion of each eligible project; 3
104	104
105	105	[(ii)] (III) the estimated cost of each project; 4
106	106
107	107	[(iii)] (IV) a description of customer benefits under the plan; 5
108	108
109	109	(V) A DEMONSTRATION THAT THE GAS COMPANY HAS SELECTED 6
110	110	AND GIVEN PRIORITY T O PROJECTS BASED ON RISK TO THE PUBLIC A ND 7
111	111	COST–EFFECTIVENESS ; 8
112	112
113	113	(VI) AN ANALYSIS THAT COM PARES THE COSTS OF PRO POSED 9
114	114	REPLACEMENT PROJECTS WITH ALTERNATIVES TO REPLACEMENT , INCLUDING: 10
115	115
116	116	1. LEAK DETECTION AND R EPAIR; AND 11
117	117
118	118	2. THE TARGETED RETIREM ENT OR ABANDONMENT O F 12
119	119	PORTIONS OF THE GAS SYSTEM IN CONJUNCTIO N WITH ELECTRIFICATI ON; 13
120	120
121	121	(VII) A PLAN FOR NOTIFYING C USTOMERS AFFECTED BY 14
122	122	PROPOSED PROJECTS AT LEAST 2 YEARS IN ADVANCE OF CONSTRUCTION TO ALLO W 15
123	123	CUSTOMERS THE OPPORT UNITY TO ELECTRIFY ; and 16
124	124
125	125	[(iv)] (VIII) any other information the Commission considers 17
126	126	necessary to evaluate the plan. 18
127	127
128	128	(3) (i) When calculating the estimated cost of a project under paragraph 19
129	129	(2) of this subsection, a gas company shall include: 20
130	130
131	131	1. the pretax rate of return on the gas company’s investment 21
132	132	in the project; 22
133	133
134	134	2. depreciation associated with the project, based on new 23
135	135	assets less retired plant; and 24
136	136
137	137	3. property taxes associated with the project, based on new 25
138	138	assets less retired plant. 26
139	139
140	140	(ii) The estimated project costs described in subparagraph (i) of this 27
141	141	paragraph are collectible at the same time the eligible infrastructure replacement is made. 28
142	142
143	143	(iii) The pretax rate of return under subparagraph (i)1 of this 29 4 HOUSE BILL 419
144	144
145	145
146	146	paragraph shall: 1
147	147
148	148	1. be calculated using the gas company’s capital structure 2
149	149	and weighted average cost of capital as the Commission approved in the gas company’s 3
150	150	most recent base rate proceeding; and 4
151	151
152	152	2. include an adjustment for bad debt expenses as the 5
153	153	Commission approved in the gas company’s most recent base rate proceeding. 6
154	154
155	155	(4) For a plan filed under this section: 7
156	156
157	157	(i) the cost–recovery schedule shall include a fixed annual 8
158	158	surcharge that: 9
159	159
160	160	1. may not exceed $2 each month on each residential 10
161	161	customer account; and 11
162	162
163	163	2. for each nonresidential customer account, may not be less 12
164	164	than the fixed annual surcharge applicable to a residential customer account, but shall be 13
165	165	capped under item (ii) of this paragraph; and 14
166	166
167	167	(ii) to create a surcharge cap for all customer classes, costs shall be 15
168	168	allocated to nonresidential and residential customers consistent with the proportions of 16
169	169	total distribution revenues that those classes bear in accordance with the most recent base 17
170	170	rate proceeding for the gas company. 18
171	171
172	172	(5) In a base rate proceeding after approval of a plan, the Commission 19
173	173	shall, in establishing a gas company’s revenue requirements, take into account any benefits 20
174	174	the gas company realized as a result of a surcharge approved under the plan. 21
175	175
176	176	(6) Any adjustment for return on equity based on an approved plan only 22
177	177	shall be considered and determined in a subsequently filed base rate case. 23
178	178
179	179	(e) (1) Within 180 days after a gas company files a plan, the Commission: 24
180	180
181	181	(i) may hold a public hearing on the plan; and 25
182	182
183	183	(ii) shall take a final action to approve or deny the plan. 26
184	184
185	185	(2) Within 150 days after a gas company files an amendment to an 27
186	186	approved plan, the Commission shall take final action to approve or deny the amendment. 28
187	187
188	188	(3) The Commission may approve a plan if it finds that the investments 29
189	189	and estimated costs of eligible infrastructure replacement projects are: 30
190	190
191	191	(i) reasonable and prudent; [and] 31
192	192	HOUSE BILL 419 5
193	193
194	194
195	195	(ii) designed to improve public safety or infrastructure reliability 1
196	196	over the short term and long term; 2
197	197
198	198	(III) REQUIRED TO IMPROVE THE SAFETY OF THE GA S SYSTEM 3
199	199	AFTER CONSIDERATION OF ALTERNATIVES TO R EPLACEMENT; 4
200	200
201	201	(IV) CONSISTENT WITH THE NEED TO REDUCE THE U SE OF 5
202	202	NATURAL GAS IN LIGHT OF STATE CLIMATE POLICY ; AND 6
203	203
204	204	(V) CONSISTENT WITH THE PROJECTED AVAILABILI TY AND 7
205	205	COST–EFFECTIVENESS OF NAT URAL GAS ALTERNATIVE S. 8
206	206
207	207	(4) (i) The Commission shall approve the cost–recovery schedule 9
208	208	associated with the plan at the same time that it approves the plan. 10
209	209
210	210	(ii) Costs recovered under the schedule approved in subparagraph (i) 11
211	211	of this paragraph may relate only to the projects within the plan approved by the 12
212	212	Commission. 13
213	213
214	214	(5) The Commission may not consider a revenue requirement or 14
215	215	rate–making issue that is not related to the plan when reviewing a plan for approval or 15
216	216	denial unless the plan is filed in conjunction with a base rate case. 16
217	217
218	218	(f) (1) Subject to paragraph (2) of this subsection, if the Commission does not 17
219	219	take final action on a plan within the time period required under subsection (e) of this 18
220	220	section, the gas company may implement the plan. 19
221	221
222	222	(2) If a gas company implements a plan that the Commission has not 20
223	223	approved, the gas company shall refund to customers any amount of the surcharge that the 21
224	224	Commission later determines is not reasonable or prudent, including interest. 22
225	225
226	226	(g) (1) (i) A surcharge under this section shall be in effect for 5 years from 23
227	227	the date of initial implementation of an approved plan. 24
228	228
229	229	(ii) 1. Before the end of the 5–year period, the gas company shall 25
230	230	file a base rate case application. 26
231	231
232	232	2. In a base rate proceeding filed under subsubparagraph 1 27
233	233	of this subparagraph, if a plan approved by the Commission remains in effect: 28
234	234
235	235	A. eligible infrastructure project costs included in base rates 29
236	236	in accordance with a final Commission order on the base rate case shall be removed from a 30
237	237	surcharge; and 31
238	238
239	239	B. the surcharge mechanism shall continue for eligible future 32
240	240	infrastructure project costs that are not included in the base rate case. 33 6 HOUSE BILL 419
241	241
242	242
243	243
244	244	(2) (i) If the actual cost of a plan is less than the amount collected under 1
245	245	a surcharge, the gas company shall refund to customers the difference on customer bills, 2
246	246	including interest. 3
247	247
248	248	(ii) If the actual cost of a plan is more than the amount collected 4
249	249	under the surcharge and the Commission determines that the higher costs were reasonably 5
250	250	and prudently incurred, the Commission shall authorize the gas company to increase the 6
251	251	surcharge to recover the difference, subject to the rate limit under subsection (d)(4) of this 7
252	252	section. 8
253	253
254	254	(h) Each year a gas company shall file with the Commission a reconciliation to 9
255	255	adjust the amount of a surcharge to account for any difference between the actual cost of a 10
256	256	plan and the actual amount recovered under the surcharge. 11
257	257
258	258	(i) If, after approving a surcharge in a plan, the Commission establishes new base 12
259	259	rates for the gas company that include costs on which the surcharge is based, the gas 13
260	260	company shall file a revised rate schedule with the Commission that subtracts those costs 14
261	261	from the surcharge. 15
262	262
263	263	(j) (1) The Commission may review a previously approved plan. 16
264	264
265	265	(2) If the Commission determines that an investment of a project or cost of 17
266	266	a project no longer meets the requirements of subsection (e)(3) of this section, the 18
267	267	Commission may: 19
268	268
269	269	(i) reduce future base rates or surcharges; or 20
270	270
271	271	(ii) alter or rescind approval of that part of the plan. 21
272	272
273	273	SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 22
274	274	October 1, 2025. 23