EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0998*
SENATE BILL 998
C8, K3 5lr3524
SB 548/24 – EEE CF HB 419
By: Senators M. Washington, Attar, Brooks, Sydnor, and Hettleman
Introduced and read first time: February 1, 2025
Assigned to: Rules
A BILL ENTITLED
AN ACT concerning 1
Natural Gas – Strategic Infrastructure Development and Enhancement 2
(Ratepayer Protection Act) 3
FOR the purpose of altering the required contents of a certain plan that a gas company may 4
file with the Public Service Commission for proposed eligible infrastructure 5
replacement projects to include certain descriptions, demonstrations, analyses, and 6
notifications; altering the required findings of the Commission in considering 7
whether to approve a certain infrastructure replacement plan; and generally relating 8
to natural gas and infrastructure management. 9
BY repealing and reenacting, with amendments, 10
Article – Public Utilities 11
Section 4–210 12
Annotated Code of Maryland 13
(2020 Replacement Volume and 2024 Supplement) 14
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 15
That the Laws of Maryland read as follows: 16
Article – Public Utilities 17
4–210. 18
(a) (1) In this section the following words have the meanings indicated. 19
(2) “Customer” means a retail natural gas customer. 20
(3) “Eligible infrastructure replacement” means a replacement or an 21
improvement in an existing infrastructure of a gas company that: 22
(i) is made on or after June 1, 2013; 23 2 SENATE BILL 998
(ii) is designed to improve public safety or infrastructure reliability; 1
(iii) does not increase the revenue of a gas company by connecting an 2
improvement directly to new customers; 3
(iv) reduces or has the potential to reduce greenhouse gas emissions 4
through a reduction in natural gas system leaks; and 5
(v) is not included in the current rate base of the gas company as 6
determined in the gas company’s most recent base rate proceeding. 7
(4) “NATURAL GAS ” MEANS METHANE GAS PR ODUCED FROM A 8
GEOLOGICAL FORMATION BENEATH THE SURFACE OF THE EARTH. 9
(5) “NATURAL GAS ALTERNATI VE” MEANS A FUEL THAT CA N BE 10
BURNED IN TANDEM WIT H OR IN PLACE OF NAT URAL GAS, INCLUDING BIOMETHANE , 11
RECOVERED METHANE , SYNTHETIC METHANE , AND HYDROGEN . 12
[(4)] (6) “Plan” means a plan that a gas company files under subsection 13
(d) of this section. 14
[(5)] (7) “Project” means an eligible infrastructure replacement project 15
proposed by a gas company in a plan filed under this section. 16
(b) It is the intent of the General Assembly that the purpose of this section is to 17
[accelerate] PROMOTE gas infrastructure improvements in the State, WHEN NECESSARY 18
AND APPROPRIATE TO E NSURE THE SAFETY OF THE GAS SYSTEM AND T O PROVIDE 19
CONSISTENCY WITH STATE CLIMATE POLICY , by establishing a mechanism for gas 20
companies to promptly recover reasonable and prudent costs of investments in eligible 21
infrastructure replacement projects separate from base rate proceedings. 22
(c) This section does not apply to a gas cooperative. 23
(d) (1) A gas company may file with the Commission: 24
(i) a plan to invest in eligible infrastructure replacement projects; 25
and 26
(ii) in accordance with paragraph (4) of this subsection, a 27
cost–recovery schedule associated with the plan that includes a fixed annual surcharge on 28
customer bills to recover reasonable and prudent costs of proposed eligible infrastructure 29
replacement projects. 30
(2) A plan under this subsection shall include: 31
SENATE BILL 998 3
(i) A DESCRIPTION OF EACH ELIGIBLE PROJECT , INCLUDING 1
THE PROJECT’S EXPECTED USEFUL LI FE; 2
(II) a time line for the completion of each eligible project; 3
[(ii)] (III) the estimated cost of each project; 4
[(iii)] (IV) a description of customer benefits under the plan; 5
(V) A DEMONSTRATION THAT THE GAS COMPANY HAS SELECTED 6
AND GIVEN PRIORITY T O PROJECTS BASED ON RISK TO THE PUBLIC A ND 7
COST–EFFECTIVENESS ; 8
(VI) AN ANALYSIS THAT COM PARES THE COSTS OF P ROPOSED 9
REPLACEMENT PROJECTS WITH ALTERNATIVES TO REPLACEMENT , INCLUDING: 10
1. LEAK DETECTION AND R EPAIR; AND 11
2. THE TARGETED RETIREM ENT OR ABANDONMENT O F 12
PORTIONS OF THE GAS SYSTEM IN CONJUNCTIO N WITH ELECTRIFICATI ON; 13
(VII) A PLAN FOR NOTIFYING CUSTOMERS AFFECTED B Y 14
PROPOSED PROJECTS AT LEAST 2 YEARS IN ADVANCE OF CONSTRUCTION TO ALLO W 15
CUSTOMERS THE OPPORT UNITY TO ELECTRIFY ; and 16
[(iv)] (VIII) any other information the Commission considers 17
necessary to evaluate the plan. 18
(3) (i) When calculating the estimated cost of a project under paragraph 19
(2) of this subsection, a gas company shall include: 20
1. the pretax rate of return on the gas company’s investment 21
in the project; 22
2. depreciation associated with the project, based on new 23
assets less retired plant; and 24
3. property taxes associated with the project, based on new 25
assets less retired plant. 26
(ii) The estimated project costs described in subparagraph (i) of this 27
paragraph are collectible at the same time the eligible infrastructure replacement is made. 28
(iii) The pretax rate of return under subparagraph (i)1 of this 29
paragraph shall: 30 4 SENATE BILL 998
1. be calculated using the gas company’s capital structure 1
and weighted average cost of capital as the Commission approved in the gas company’s 2
most recent base rate proceeding; and 3
2. include an adjustment for bad debt expenses as the 4
Commission approved in the gas company’s most recent base rate proceeding. 5
(4) For a plan filed under this section: 6
(i) the cost–recovery schedule shall include a fixed annual 7
surcharge that: 8
1. may not exceed $2 each month on each residential 9
customer account; and 10
2. for each nonresidential customer account, may not be less 11
than the fixed annual surcharge applicable to a residential customer account, but shall be 12
capped under item (ii) of this paragraph; and 13
(ii) to create a surcharge cap for all customer classes, costs shall be 14
allocated to nonresidential and residential customers consistent with the proportions of 15
total distribution revenues that those classes bear in accordance with the most recent base 16
rate proceeding for the gas company. 17
(5) In a base rate proceeding after approval of a plan, the Commission 18
shall, in establishing a gas company’s revenue requirements, take into account any benefits 19
the gas company realized as a result of a surcharge approved under the plan. 20
(6) Any adjustment for return on equity based on an approved plan only 21
shall be considered and determined in a subsequently filed base rate case. 22
(e) (1) Within 180 days after a gas company files a plan, the Commission: 23
(i) may hold a public hearing on the plan; and 24
(ii) shall take a final action to approve or deny the plan. 25
(2) Within 150 days after a gas company files an amendment to an 26
approved plan, the Commission shall take final action to approve or deny the amendment. 27
(3) The Commission may approve a plan if it finds that the investments 28
and estimated costs of eligible infrastructure replacement projects are: 29
(i) reasonable and prudent; [and] 30
(ii) designed to improve public safety or infrastructure reliability 31 SENATE BILL 998 5
over the short term and long term; 1
(III) REQUIRED TO IMPROVE THE SAFETY OF THE GA S SYSTEM 2
AFTER CONSIDERATION OF ALTERNATIVES TO R EPLACEMENT ; 3
(IV) CONSISTENT WITH THE NEED TO REDUCE THE U SE OF 4
NATURAL GAS IN LIGHT OF STATE CLIMATE POLICY ; AND 5
(V) CONSISTENT WITH THE PROJECTED AVAILABILI TY AND 6
COST–EFFECTIVENESS OF NAT URAL GAS ALTERNATIVE S. 7
(4) (i) The Commission shall approve the cost–recovery schedule 8
associated with the plan at the same time that it approves the plan. 9
(ii) Costs recovered under the schedule approved in subparagraph (i) 10
of this paragraph may relate only to the projects within the plan approved by the 11
Commission. 12
(5) The Commission may not consider a revenue requirement or 13
rate–making issue that is not related to the plan when reviewing a plan for approval or 14
denial unless the plan is filed in conjunction with a base rate case. 15
(f) (1) Subject to paragraph (2) of this subsection, if the Commission does not 16
take final action on a plan within the time period required under subsection (e) of this 17
section, the gas company may implement the plan. 18
(2) If a gas company implements a plan that the Commission has not 19
approved, the gas company shall refund to customers any amount of the surcharge that the 20
Commission later determines is not reasonable or prudent, including interest. 21
(g) (1) (i) A surcharge under this section shall be in effect for 5 years from 22
the date of initial implementation of an approved plan. 23
(ii) 1. Before the end of the 5–year period, the gas company shall 24
file a base rate case application. 25
2. In a base rate proceeding filed under subsubparagraph 1 26
of this subparagraph, if a plan approved by the Commission remains in effect: 27
A. eligible infrastructure project costs included in base rates 28
in accordance with a final Commission order on the base rate case shall be removed from a 29
surcharge; and 30
B. the surcharge mechanism shall continue for eligible future 31
infrastructure project costs that are not included in the base rate case. 32
6 SENATE BILL 998
(2) (i) If the actual cost of a plan is less than the amount collected under 1
a surcharge, the gas company shall refund to customers the difference on customer bills, 2
including interest. 3
(ii) If the actual cost of a plan is more than the amount collected 4
under the surcharge and the Commission determines that the higher costs were reasonably 5
and prudently incurred, the Commission shall authorize the gas company to increase the 6
surcharge to recover the difference, subject to the rate limit under subsection (d)(4) of this 7
section. 8
(h) Each year a gas company shall file with the Commission a reconciliation to 9
adjust the amount of a surcharge to account for any difference between the actual cost of a 10
plan and the actual amount recovered under the surcharge. 11
(i) If, after approving a surcharge in a plan, the Commission establishes new base 12
rates for the gas company that include costs on which the surcharge is based, the gas 13
company shall file a revised rate schedule with the Commission that subtracts those costs 14
from the surcharge. 15
(j) (1) The Commission may review a previously approved plan. 16
(2) If the Commission determines that an investment of a project or cost of 17
a project no longer meets the requirements of subsection (e)(3) of this section, the 18
Commission may: 19
(i) reduce future base rates or surcharges; or 20
(ii) alter or rescind approval of that part of the plan. 21
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 22
October 1, 2025. 23