Maryland 2025 Regular Session

Maryland Senate Bill SB998 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	sb0998
6	6
7	7	SENATE BILL 998
8	8	C8, K3 5lr3524
9	9	SB 548/24 – EEE CF HB 419
10	10	By: Senators M. Washington, Attar, Brooks, Sydnor, and Hettleman
11	11	Introduced and read first time: February 1, 2025
12	12	Assigned to: Rules
13	13
14	14	A BILL ENTITLED
15	15
16	16	AN ACT concerning 1
17	17
18	18	Natural Gas – Strategic Infrastructure Development and Enhancement 2
19	19	(Ratepayer Protection Act) 3
20	20
21	21	FOR the purpose of altering the required contents of a certain plan that a gas company may 4
22	22	file with the Public Service Commission for proposed eligible infrastructure 5
23	23	replacement projects to include certain descriptions, demonstrations, analyses, and 6
24	24	notifications; altering the required findings of the Commission in considering 7
25	25	whether to approve a certain infrastructure replacement plan; and generally relating 8
26	26	to natural gas and infrastructure management. 9
27	27
28	28	BY repealing and reenacting, with amendments, 10
29	29	Article – Public Utilities 11
30	30	Section 4–210 12
31	31	Annotated Code of Maryland 13
32	32	(2020 Replacement Volume and 2024 Supplement) 14
33	33
34	34	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 15
35	35	That the Laws of Maryland read as follows: 16
36	36
37	37	Article – Public Utilities 17
38	38
39	39	4–210. 18
40	40
41	41	(a) (1) In this section the following words have the meanings indicated. 19
42	42
43	43	(2) “Customer” means a retail natural gas customer. 20
44	44
45	45	(3) “Eligible infrastructure replacement” means a replacement or an 21
46	46	improvement in an existing infrastructure of a gas company that: 22
47	47
48	48	(i) is made on or after June 1, 2013; 23 2 SENATE BILL 998
49	49
50	50
51	51
52	52	(ii) is designed to improve public safety or infrastructure reliability; 1
53	53
54	54	(iii) does not increase the revenue of a gas company by connecting an 2
55	55	improvement directly to new customers; 3
56	56
57	57	(iv) reduces or has the potential to reduce greenhouse gas emissions 4
58	58	through a reduction in natural gas system leaks; and 5
59	59
60	60	(v) is not included in the current rate base of the gas company as 6
61	61	determined in the gas company’s most recent base rate proceeding. 7
62	62
63	63	(4) “NATURAL GAS ” MEANS METHANE GAS PR ODUCED FROM A 8
64	64	GEOLOGICAL FORMATION BENEATH THE SURFACE OF THE EARTH. 9
65	65
66	66	(5) “NATURAL GAS ALTERNATI VE” MEANS A FUEL THAT CA N BE 10
67	67	BURNED IN TANDEM WIT H OR IN PLACE OF NAT URAL GAS, INCLUDING BIOMETHANE , 11
68	68	RECOVERED METHANE , SYNTHETIC METHANE , AND HYDROGEN . 12
69	69
70	70	[(4)] (6) “Plan” means a plan that a gas company files under subsection 13
71	71	(d) of this section. 14
72	72
73	73	[(5)] (7) “Project” means an eligible infrastructure replacement project 15
74	74	proposed by a gas company in a plan filed under this section. 16
75	75
76	76	(b) It is the intent of the General Assembly that the purpose of this section is to 17
77	77	[accelerate] PROMOTE gas infrastructure improvements in the State, WHEN NECESSARY 18
78	78	AND APPROPRIATE TO E NSURE THE SAFETY OF THE GAS SYSTEM AND T O PROVIDE 19
79	79	CONSISTENCY WITH STATE CLIMATE POLICY , by establishing a mechanism for gas 20
80	80	companies to promptly recover reasonable and prudent costs of investments in eligible 21
81	81	infrastructure replacement projects separate from base rate proceedings. 22
82	82
83	83	(c) This section does not apply to a gas cooperative. 23
84	84
85	85	(d) (1) A gas company may file with the Commission: 24
86	86
87	87	(i) a plan to invest in eligible infrastructure replacement projects; 25
88	88	and 26
89	89
90	90	(ii) in accordance with paragraph (4) of this subsection, a 27
91	91	cost–recovery schedule associated with the plan that includes a fixed annual surcharge on 28
92	92	customer bills to recover reasonable and prudent costs of proposed eligible infrastructure 29
93	93	replacement projects. 30
94	94
95	95	(2) A plan under this subsection shall include: 31
96	96	SENATE BILL 998 3
97	97
98	98
99	99	(i) A DESCRIPTION OF EACH ELIGIBLE PROJECT , INCLUDING 1
100	100	THE PROJECT’S EXPECTED USEFUL LI FE; 2
101	101
102	102	(II) a time line for the completion of each eligible project; 3
103	103
104	104	[(ii)] (III) the estimated cost of each project; 4
105	105
106	106	[(iii)] (IV) a description of customer benefits under the plan; 5
107	107
108	108	(V) A DEMONSTRATION THAT THE GAS COMPANY HAS SELECTED 6
109	109	AND GIVEN PRIORITY T O PROJECTS BASED ON RISK TO THE PUBLIC A ND 7
110	110	COST–EFFECTIVENESS ; 8
111	111
112	112	(VI) AN ANALYSIS THAT COM PARES THE COSTS OF P ROPOSED 9
113	113	REPLACEMENT PROJECTS WITH ALTERNATIVES TO REPLACEMENT , INCLUDING: 10
114	114
115	115	1. LEAK DETECTION AND R EPAIR; AND 11
116	116
117	117	2. THE TARGETED RETIREM ENT OR ABANDONMENT O F 12
118	118	PORTIONS OF THE GAS SYSTEM IN CONJUNCTIO N WITH ELECTRIFICATI ON; 13
119	119
120	120	(VII) A PLAN FOR NOTIFYING CUSTOMERS AFFECTED B Y 14
121	121	PROPOSED PROJECTS AT LEAST 2 YEARS IN ADVANCE OF CONSTRUCTION TO ALLO W 15
122	122	CUSTOMERS THE OPPORT UNITY TO ELECTRIFY ; and 16
123	123
124	124	[(iv)] (VIII) any other information the Commission considers 17
125	125	necessary to evaluate the plan. 18
126	126
127	127	(3) (i) When calculating the estimated cost of a project under paragraph 19
128	128	(2) of this subsection, a gas company shall include: 20
129	129
130	130	1. the pretax rate of return on the gas company’s investment 21
131	131	in the project; 22
132	132
133	133	2. depreciation associated with the project, based on new 23
134	134	assets less retired plant; and 24
135	135
136	136	3. property taxes associated with the project, based on new 25
137	137	assets less retired plant. 26
138	138
139	139	(ii) The estimated project costs described in subparagraph (i) of this 27
140	140	paragraph are collectible at the same time the eligible infrastructure replacement is made. 28
141	141
142	142	(iii) The pretax rate of return under subparagraph (i)1 of this 29
143	143	paragraph shall: 30 4 SENATE BILL 998
144	144
145	145
146	146
147	147	1. be calculated using the gas company’s capital structure 1
148	148	and weighted average cost of capital as the Commission approved in the gas company’s 2
149	149	most recent base rate proceeding; and 3
150	150
151	151	2. include an adjustment for bad debt expenses as the 4
152	152	Commission approved in the gas company’s most recent base rate proceeding. 5
153	153
154	154	(4) For a plan filed under this section: 6
155	155
156	156	(i) the cost–recovery schedule shall include a fixed annual 7
157	157	surcharge that: 8
158	158
159	159	1. may not exceed $2 each month on each residential 9
160	160	customer account; and 10
161	161
162	162	2. for each nonresidential customer account, may not be less 11
163	163	than the fixed annual surcharge applicable to a residential customer account, but shall be 12
164	164	capped under item (ii) of this paragraph; and 13
165	165
166	166	(ii) to create a surcharge cap for all customer classes, costs shall be 14
167	167	allocated to nonresidential and residential customers consistent with the proportions of 15
168	168	total distribution revenues that those classes bear in accordance with the most recent base 16
169	169	rate proceeding for the gas company. 17
170	170
171	171	(5) In a base rate proceeding after approval of a plan, the Commission 18
172	172	shall, in establishing a gas company’s revenue requirements, take into account any benefits 19
173	173	the gas company realized as a result of a surcharge approved under the plan. 20
174	174
175	175	(6) Any adjustment for return on equity based on an approved plan only 21
176	176	shall be considered and determined in a subsequently filed base rate case. 22
177	177
178	178	(e) (1) Within 180 days after a gas company files a plan, the Commission: 23
179	179
180	180	(i) may hold a public hearing on the plan; and 24
181	181
182	182	(ii) shall take a final action to approve or deny the plan. 25
183	183
184	184	(2) Within 150 days after a gas company files an amendment to an 26
185	185	approved plan, the Commission shall take final action to approve or deny the amendment. 27
186	186
187	187	(3) The Commission may approve a plan if it finds that the investments 28
188	188	and estimated costs of eligible infrastructure replacement projects are: 29
189	189
190	190	(i) reasonable and prudent; [and] 30
191	191
192	192	(ii) designed to improve public safety or infrastructure reliability 31 SENATE BILL 998 5
193	193
194	194
195	195	over the short term and long term; 1
196	196
197	197	(III) REQUIRED TO IMPROVE THE SAFETY OF THE GA S SYSTEM 2
198	198	AFTER CONSIDERATION OF ALTERNATIVES TO R EPLACEMENT ; 3
199	199
200	200	(IV) CONSISTENT WITH THE NEED TO REDUCE THE U SE OF 4
201	201	NATURAL GAS IN LIGHT OF STATE CLIMATE POLICY ; AND 5
202	202
203	203	(V) CONSISTENT WITH THE PROJECTED AVAILABILI TY AND 6
204	204	COST–EFFECTIVENESS OF NAT URAL GAS ALTERNATIVE S. 7
205	205
206	206	(4) (i) The Commission shall approve the cost–recovery schedule 8
207	207	associated with the plan at the same time that it approves the plan. 9
208	208
209	209	(ii) Costs recovered under the schedule approved in subparagraph (i) 10
210	210	of this paragraph may relate only to the projects within the plan approved by the 11
211	211	Commission. 12
212	212
213	213	(5) The Commission may not consider a revenue requirement or 13
214	214	rate–making issue that is not related to the plan when reviewing a plan for approval or 14
215	215	denial unless the plan is filed in conjunction with a base rate case. 15
216	216
217	217	(f) (1) Subject to paragraph (2) of this subsection, if the Commission does not 16
218	218	take final action on a plan within the time period required under subsection (e) of this 17
219	219	section, the gas company may implement the plan. 18
220	220
221	221	(2) If a gas company implements a plan that the Commission has not 19
222	222	approved, the gas company shall refund to customers any amount of the surcharge that the 20
223	223	Commission later determines is not reasonable or prudent, including interest. 21
224	224
225	225	(g) (1) (i) A surcharge under this section shall be in effect for 5 years from 22
226	226	the date of initial implementation of an approved plan. 23
227	227
228	228	(ii) 1. Before the end of the 5–year period, the gas company shall 24
229	229	file a base rate case application. 25
230	230
231	231	2. In a base rate proceeding filed under subsubparagraph 1 26
232	232	of this subparagraph, if a plan approved by the Commission remains in effect: 27
233	233
234	234	A. eligible infrastructure project costs included in base rates 28
235	235	in accordance with a final Commission order on the base rate case shall be removed from a 29
236	236	surcharge; and 30
237	237
238	238	B. the surcharge mechanism shall continue for eligible future 31
239	239	infrastructure project costs that are not included in the base rate case. 32
240	240	6 SENATE BILL 998
241	241
242	242
243	243	(2) (i) If the actual cost of a plan is less than the amount collected under 1
244	244	a surcharge, the gas company shall refund to customers the difference on customer bills, 2
245	245	including interest. 3
246	246
247	247	(ii) If the actual cost of a plan is more than the amount collected 4
248	248	under the surcharge and the Commission determines that the higher costs were reasonably 5
249	249	and prudently incurred, the Commission shall authorize the gas company to increase the 6
250	250	surcharge to recover the difference, subject to the rate limit under subsection (d)(4) of this 7
251	251	section. 8
252	252
253	253	(h) Each year a gas company shall file with the Commission a reconciliation to 9
254	254	adjust the amount of a surcharge to account for any difference between the actual cost of a 10
255	255	plan and the actual amount recovered under the surcharge. 11
256	256
257	257	(i) If, after approving a surcharge in a plan, the Commission establishes new base 12
258	258	rates for the gas company that include costs on which the surcharge is based, the gas 13
259	259	company shall file a revised rate schedule with the Commission that subtracts those costs 14
260	260	from the surcharge. 15
261	261
262	262	(j) (1) The Commission may review a previously approved plan. 16
263	263
264	264	(2) If the Commission determines that an investment of a project or cost of 17
265	265	a project no longer meets the requirements of subsection (e)(3) of this section, the 18
266	266	Commission may: 19
267	267
268	268	(i) reduce future base rates or surcharges; or 20
269	269
270	270	(ii) alter or rescind approval of that part of the plan. 21
271	271
272	272	SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 22
273	273	October 1, 2025. 23