<section article="gpu" article_name="Public Utilities" number="4-101" title_number="4" title_name="Rate Regulation" subtitle_number="1" subtitle_name="General Provisions"> <text>In this title, “just and reasonable rate” means a rate that:</text> <level label="1"> <text>does not violate any provision of this article;</text> </level> <level label="2"> <text>fully considers and is consistent with the public good; and</text> </level> <level label="3"> <text>except for rates of a common carrier, will result in an operating income to the public service company that yields, after reasonable deduction for depreciation and other necessary and proper expenses and reserves, a reasonable return on the fair value of the public service company’s property used and useful in providing service to the public.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-102" title_number="4" title_name="Rate Regulation" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>This section does not apply to small rural electric cooperatives.</text> </level> <level label="b"> <text>The Commission shall have the power to set a just and reasonable rate of a public service company, as a maximum rate, minimum rate, or both.</text> </level> <level label="c"> <level label="1"> <text>The Commission shall issue an order, including the rate set under subsection (b) of this section.</text> </level> <level label="2"> <text>The Commission shall serve the order on each affected public service company.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-103" title_number="4" title_name="Rate Regulation" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>In setting just and reasonable rates under this title, the Commission may not discourage the use of employee stock ownership plans by public service companies by denying to the public service companies the full benefits of investment tax credits provided in connection with these plans by the Internal Revenue Code.</text> </level> <level label="b"> <text>A public service company may not charge off lobbying expenses against its ratepayers.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-201" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <text>In accordance with the provisions of this article, a public service company shall charge just and reasonable rates for the regulated services that it renders.</text> </section> <section article="gpu" article_name="Public Utilities" number="4-202" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <text>Except as provided in subsection (c)(1) of this section and subject to subsection (c)(2) of this section, a public service company shall file with the Commission a tariff schedule of its rates and charges for its regulated services and for standard offer service as provided in § 7–505(b)(8) of this article.</text> </level> <level label="b"> <text>As ordered by the Commission, a public service company shall:</text> <level label="1"> <text>plainly print the tariff schedule of its rates and charges for its regulated services;</text> </level> <level label="2"> <text>make available the tariff schedules for public inspection; and</text> </level> <level label="3"> <text>post the tariff schedules to make the tariff schedules readily accessible to and convenient for inspection by the public.</text> </level> </level> <level label="c"> <level label="1"> <level label="i"> <text>A telephone company that is regulated using an alternative form of regulation under § 4–301 of this title for baskets of services is not required to file with the Commission a tariff schedule of its rates and charges for its regulated retail services that are included in Basket 4 “Discretionary Services” and Basket 5 “Competitive Services”.</text> </level> <level label="ii"> <text>A telephone company that is not regulated using an alternative form of regulation under § 4–301 of this title for baskets of services is not required to file with the Commission a tariff schedule of its rates and charges for its regulated retail services that, as determined by the Commission, are similar to the services included in Basket 4 “Discretionary Services” and Basket 5 “Competitive Services”.</text> </level> </level> <level label="2"> <text>Notwithstanding any other law, except as provided in paragraph (1) of this subsection, if the Commission finds after notice and hearing that it is in the public interest, the Commission may allow a telephone company that has 20,000 or fewer subscribers to provide a regulated service without requiring the telephone company to file a tariff schedule of its rates and charges for the regulated service.</text> </level> <level label="3"> <text>The Commission may issue orders or adopt regulations that the Commission determines necessary to regulate a service in which a telephone company is not required to file a tariff schedule of its rates and charges under this subsection.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-203" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <text>Unless otherwise ordered by the Commission, a public service company may not establish a new rate or change in rate unless the public service company:</text> <level label="1"> <text>provides to the Commission notice of the new rate or change in rate at least 30 days before the new rate is established or current rate is changed; and</text> </level> <level label="2"> <text>publishes the new rate or change in rate in accordance with § 4–202 of this subtitle during the entire 30 day notice period in new schedules or plainly indicated amendments to existing schedules.</text> </level> </level> <level label="b"> <text>The public service company shall plainly set forth in the notice and publication:</text> <level label="1"> <text>the changes that it proposes to the rate schedules currently in force; and</text> </level> <level label="2"> <text>the effective date of the changes.</text> </level> </level> <level label="c"> <level label="1"> <text>The technical staff of the Commission may assist a water company or a sewage disposal company in establishing a proposed just and reasonable rate.</text> </level> <level label="2"> <text>In assisting a water company or a sewage disposal company under this subsection, the technical staff may seek information from the water company or the sewage disposal company.</text> </level> <level label="3"> <text>The Commission shall restrict the availability of staff–assisted rate cases authorized under this subsection to water companies or sewage disposal companies whose gross annual revenues, for the most recent calendar year for which data are available, are below an amount determined by the Commission, not to exceed $1,000,000.</text> </level> <level label="4"> <text>The Commission shall adopt regulations to establish formal rules for staff–assisted rate cases authorized under this subsection.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-203.1" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <level label="1"> <text>This section applies only to a public service company that is an investor–owned electric company, a gas company, or a combination gas and electric company.</text> </level> <level label="2"> <text>This section does not apply to a municipal electric utility or an electric cooperative.</text> </level> </level> <level label="b"> <text>In addition to the requirements set forth in § 4–203 of this subtitle, when a public service company initiates a base rate proceeding or another proceeding that may lead to a distribution cost increase in excess of 3.0% for its customers served under a residential tariff, the public service company shall provide those customers, through links on physical or digital customer bills, links in separate e–mails, or links in any other form of communication determined acceptable by the Commission, with notification that:</text> <level label="1"> <text>the public service company is initiating the proceeding; and</text> </level> <level label="2"> <text>information about the proceeding is or will be available on the Commission’s website.</text> </level> </level> <level label="c"> <text>A public service company shall include in each residential customer’s bill and automatic payment e–mail the following statement:</text> <text>“The Maryland General Assembly established the Public Service Commission to regulate public service companies doing business in Maryland, to ensure their activities are consistent with the public interest. For information on how to participate in or observe a proceeding before the Public Service Commission, please visit the Public Service Commission’s website.”.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-204" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <level label="1"> <text>The Commission may suspend, effective immediately and without formal proceedings, any new rate or change in rate proposed by a public service company.</text> </level> <level label="2"> <text>Unless suspended by the Commission, and subject to § 4-203 of this subtitle, a new rate or change in rate proposed by a public service company takes effect on the date specified in the rate application.</text> </level> <level label="3"> <text>The Commission shall furnish to the public service company proposing a rate a written statement of the reasons for the suspension.</text> </level> </level> <level label="b"> <level label="1"> <text>The Commission promptly shall institute proceedings to consider whether the suspended rate is a just and reasonable rate.</text> </level> <level label="2"> <text>The Commission may:</text> <level label="i"> <text>suspend the rate initially for not more than 180 days after the proposed effective date; and</text> </level> <level label="ii"> <text>extend the suspension for up to an additional 90 days if the filing is for an alternative form of ratemaking for a public service company.</text> </level> </level> <level label="3"> <text>Subject to subsection (c) of this section, after the suspension or extension under paragraph (2) of this subsection expires, if the Commission has not entered a final order, the new rate or change in rate proposed by the public service company takes effect.</text> </level> </level> <level label="c"> <level label="1"> <text>If a proposed new rate or rate increase takes effect before the Commission enters a final order in the proceedings, if practicable, the Commission may order the public service company that proposes the rate to keep a detailed and accurate account of:</text> <level label="i"> <text>all amounts received under the new rate or rate increase; and</text> </level> <level label="ii"> <text>the persons on whose behalf the amounts are paid.</text> </level> </level> <level label="2"> <text>After the proceedings conclude, the Commission may require the public service company to refund with interest, to each person listed under paragraph (1)(ii) of this subsection, the part of the new rate or rate increase that the Commission finds unjustified.</text> </level> <level label="3"> <text>If a refund is not practicable, the public service company shall charge off and amortize the difference between the operating revenues under the rate charged and the operating revenues that would have been obtained from the same volume of business from the final set rate, through a temporary rate decrease for the period that the Commission sets.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-205" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <text>The Commission may set a temporary rate for any public service company that is higher or lower than the rate previously in effect.</text> </level> <level label="b"> <text>The Commission may set a temporary rate after hearing only if the Commission finds that:</text> <level label="1"> <text>pending a final rate proceeding, the rate in force is not a just and reasonable rate; and</text> </level> <level label="2"> <text>the temporary rate is necessary in the interest of justice in view of the length of time that must elapse before a final order may be entered.</text> </level> </level> <level label="c"> <text>If the order involves a temporary rate increase, and refund to the consumer is practicable, the public service company shall post a bond, with security and in an amount that the Commission approves, payable to the State and conditioned to ensure prompt refund with interest to each consumer of each amount received by the public service company from the consumer above the final rates that the Commission sets.</text> </level> <level label="d"> <text>Any temporary change in rate shall equal the amount found by the Commission to be higher or lower than a just and reasonable rate.</text> </level> <level label="e"> <level label="1"> <text>The temporary change in rate under subsection (d) of this section shall remain in effect for an initial period of not more than 9 months.</text> </level> <level label="2"> <text>The Commission may order the temporary change to be extended by not more than 3 months.</text> </level> </level> <level label="f"> <level label="1"> <text>If the final rate set is higher than the rate set in the order for a temporary rate, the public service company may amortize and recover over a period that the Commission sets, through a temporary increase over the final rate set, the difference between the operating revenue obtained under the order for a temporary rate and the operating revenue that would have been obtained from the same volume of business from the final rate set.</text> </level> <level label="2"> <text>If the rate in the order for a temporary rate is higher than the final rate set, the Commission shall order a refund, charge off, or amortization under § 4-204(c) of this subtitle.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-206" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <text>At any time, the Commission may investigate and determine the fair value of the property of a public service company used and useful in providing service to the public.</text> </level> <level label="b"> <level label="1"> <text>The valuation:</text> <level label="i"> <text>is not final until the Commission:</text> <level label="1"> <text>serves on the public service company a copy of the order setting the proposed valuation and the method used to set the valuation; and</text> </level> <level label="2"> <text>allows a reasonable time in which to file a protest; and</text> </level> </level> <level label="ii"> <text>is final if a protest is not filed within the time specified in the order.</text> </level> </level> <level label="2"> <text>If a timely protest is filed, the Commission shall enter a final valuation by order after hearing.</text> </level> </level> <level label="c"> <text>All final valuations are prima facie evidence of value in proceedings under this division.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-206.1" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <text>This section applies only to a public service company that is an investor–owned gas company or investor–owned electric company.</text> </level> <level label="b"> <text>In a base rate proceeding to set just and reasonable rates under this title, each public service company shall demonstrate to the Commission the reasonableness of the use of internal labor in comparison to contractual labor.</text> </level> <level label="c"> <text>To demonstrate reasonableness of the use of labor as required under subsection (b) of this section, a public service company shall provide to the Commission, at a minimum:</text> <level label="1"> <text>a comparison of the costs of internal labor and contractual labor;</text> </level> <level label="2"> <text>a demonstration of the reasonableness of the decision to use contractual labor;</text> </level> <level label="3"> <text>a justification for the use of contractual labor when used instead of internal labor, including a cost–based rationale; and</text> </level> <level label="4"> <text>any other information that the Commission requires.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-207" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <text>This section applies only to:</text> <level label="1"> <text>an electric cooperative; and</text> </level> <level label="2"> <text>a gas company, electric company, telephone company, water company, or sewage disposal company whose gross annual revenues, for the most recent calendar year for which data are available, are less than 3% of the total gross annual revenues of all public service companies in the State during the same calendar year.</text> </level> </level> <level label="b"> <level label="1"> <text>When the Commission suspends a proposed new rate for an electric cooperative or a company subject to this section that is based on the existing authorized fair rate of return or, for an electric cooperative, the existing debt service coverage ratio, the Commission promptly shall institute proceedings to determine if additional revenues are required to allow the electric cooperative or the company to earn the existing debt service coverage ratio or the existing fair rate of return authorized in the previous base rate proceeding.</text> </level> <level label="2"> <text>The Commission shall:</text> <level label="i"> <text>serve each of the parties to the previous base rate proceeding of that electric cooperative or that company with a copy of the suspension order;</text> </level> <level label="ii"> <text>order the electric cooperative or the company to publish a display advertisement about the proposal in newspapers of general circulation in its service area; and</text> </level> <level label="iii"> <text>order the electric cooperative to conduct a public hearing in accordance with the requirements of § 3–104 of this article.</text> </level> </level> <level label="3"> <text>Proceedings under this section shall:</text> <level label="i"> <text>account for revenues, expenses, and rate base in the same manner that the Commission employed in determining a just and reasonable rate in the previous base rate proceeding; and</text> </level> <level label="ii"> <text>exclude consideration of any increase in the rate of return, or, for an electric cooperative, the debt service coverage ratio, any change in rate structure, or any change in an accounting approach to any item pertaining to revenues, expenses, or rate base inconsistent with that used by the Commission in determining a just and reasonable rate in the previous base rate proceeding for the electric cooperative or the company.</text> </level> </level> <level label="4"> <text>In proceedings under this section, the Commission may use a more recent past test period than that used in the previous base rate proceeding for the electric cooperative or the company.</text> </level> <level label="5"> <text>The Commission shall enter a final order as to the revenue requirement determined under this section within 90 days after the proposed new rate is filed.</text> </level> <level label="6"> <text>The final order shall:</text> <level label="i"> <text>authorize a new rate distributing any change in the revenue requirement proportionally among the ratepayers without change in the rate structure; and</text> </level> <level label="ii"> <text>state whether further proceedings shall be held.</text> </level> </level> <level label="7"> <text>If, in the final order, the Commission decides to conduct further proceedings under subsection (c) of this section, the final order may provide for refund, consistent with the provisions of § 4–204(c) of this subtitle, of any difference between the new rate authorized under this subsection and the rate the Commission sets under subsection (c) of this section.</text> </level> </level> <level label="c"> <level label="1"> <text>If the Commission decides to conduct further proceedings under subsection (b) of this section, the Commission, after a hearing, may:</text> <level label="i"> <text>modify the rate structure;</text> </level> <level label="ii"> <text>lower the authorized fair rate of return or, for an electric cooperative, lower the debt service coverage ratio; or</text> </level> <level label="iii"> <text>modify the accounting approach to an item that pertains to revenues, expenses, or rate base.</text> </level> </level> <level label="2"> <text>The Commission shall take any action under this subsection within 120 days after entry of a final order under subsection (b) of this section.</text> </level> </level> <level label="d"> <level label="1"> <text>This section does not apply to a proposed new rate that is filed:</text> <level label="i"> <text>less than 1 year after a previously proposed new rate under this section is filed; or</text> </level> <level label="ii"> <text>with a request for temporary rates under § 4–205 of this subtitle.</text> </level> </level> <level label="2"> <level label="i"> <text>An electric cooperative or a company may not file a proposed new rate under this subtitle if any proposed new rate filed by the electric cooperative or the company under this section is pending, or a new rate filed by the electric cooperative or the company under this section has been in effect fewer than 90 days.</text> </level> <level label="ii"> <text>This paragraph does not preclude an electric cooperative or a company from filing a proposed new rate for a new service if the proposal does not affect the authorized rate of return or, for an electric cooperative, the debt service coverage ratio.</text> </level> </level> <level label="3"> <text>Unless the Commission provides otherwise, this section does not apply to a proposed new rate that is filed more than 3 years after the Commission enters a final order authorizing the existing fair rate of return or, for an electric cooperative, the existing debt service coverage ratio in the previous base rate proceeding.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-208" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <text>This section applies to a public service company that:</text> <level label="1"> <text>provides gas or electric services;</text> </level> <level label="2"> <text>is subject to a cost allocation manual approved by the Commission;</text> </level> <level label="3"> <level label="i"> <text>engages in an unregulated business activity; or</text> </level> <level label="ii"> <text>has a subsidiary that engages in an unregulated business activity; and</text> </level> </level> <level label="4"> <text>does not meet the standards for rate proceedings provided for under § 4-207 of this subtitle.</text> </level> </level> <level label="b"> <level label="1"> <text>A public service company subject to this section shall file an independent audit opinion prepared by an entity approved by the Commission on the earliest of:</text> <level label="i"> <text>once every 2 years; or</text> </level> <level label="ii"> <text>when the public service company:</text> <level label="1"> <text>files a request for a change in its base rate under this subtitle; or</text> </level> <level label="2"> <text>has a major change in its corporate organization or structure as determined by the Commission.</text> </level> </level> </level> <level label="2"> <text>The independent auditor shall:</text> <level label="i"> <text>examine:</text> <level label="1"> <text>compliance by the public service company with policies and procedures of the public service company’s cost allocation manual;</text> </level> <level label="2"> <text>proper allocation of costs to an affiliate of the public service company in accordance with the manual; and</text> </level> <level label="3"> <text>appropriate charging of costs and transactions relative to the manual to the public service company and its affiliates; and</text> </level> </level> <level label="ii"> <text>identify adjustments that should be made:</text> <level label="1"> <text>to the manual consistent with prior Commission rulings; and</text> </level> <level label="2"> <text>to the public service company or to an affiliate of the public service company relative to the examination of the allocation of costs and charging of costs and transactions.</text> </level> </level> </level> </level> <level label="c"> <text>The cost of the independent audit opinion filed under subsection (b) of this section shall be borne by the stockholders of the public service company.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-209" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <text>With respect to the net capital costs associated with the relocation underground of utility lines and facilities in connection with projects required by § 8–401 of the Land Use Article, the Commission shall:</text> <level label="1"> <text>set the amount of the monthly surcharge required to support the costs and determine which customers of the applicable utility are subject to the surcharge;</text> </level> <level label="2"> <text>include in the rate base the related net capital costs; or</text> </level> <level label="3"> <text>adopt another method to apportion the costs appropriately.</text> </level> </level> <level label="b"> <text>A utility may not be required to pay more than 50% of the net capital costs of a relocation project.</text> </level> <level label="c"> <text>A county or municipal corporation may appropriate money for a relocation project from appropriate federal, State, and local funds it receives for this purpose.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-210" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Customer” means a retail natural gas customer.</text> </level> <level label="3"> <text>“Eligible infrastructure replacement” means a replacement or an improvement in an existing infrastructure of a gas company that:</text> <level label="i"> <text>is made on or after June 1, 2013;</text> </level> <level label="ii"> <text>is designed to improve public safety or infrastructure reliability;</text> </level> <level label="iii"> <text>does not increase the revenue of a gas company by connecting an improvement directly to new customers;</text> </level> <level label="iv"> <text>reduces or has the potential to reduce greenhouse gas emissions through a reduction in natural gas system leaks; and</text> </level> <level label="v"> <text>is not included in the current rate base of the gas company as determined in the gas company’s most recent base rate proceeding.</text> </level> </level> <level label="4"> <text>“Plan” means a plan that a gas company files under subsection (e) of this section.</text> </level> <level label="5"> <text>“Project” means an eligible infrastructure replacement project proposed by a gas company in a plan filed under this section.</text> </level> </level> <level label="b"> <text>It is the intent of the General Assembly that the purpose of this section is to allow for the appropriate acceleration of gas infrastructure improvements in the State when:</text> <level label="1"> <text>necessary to ensure safety and improve reliability; and</text> </level> <level label="2"> <text>consistent with State policy.</text> </level> </level> <level label="c"> <text>Nothing in this section may be construed to alter a gas company’s obligation under this division to make improvements to a gas system that are necessary to ensure the safety of the gas system.</text> </level> <level label="d"> <text>This section does not apply to a gas cooperative.</text> </level> <level label="e"> <level label="1"> <text>A gas company may file with the Commission:</text> <level label="i"> <text>a plan to invest in eligible infrastructure replacement projects; and</text> </level> <level label="ii"> <text>in accordance with paragraph (5) of this subsection, a cost–recovery schedule associated with the plan that includes a fixed annual surcharge on customer bills to recover reasonable and prudent costs of proposed eligible infrastructure replacement projects.</text> </level> </level> <level label="2"> <text>A plan under this subsection shall include:</text> <level label="i"> <text>a description of each eligible infrastructure replacement project, including the project’s expected useful life;</text> </level> <level label="ii"> <text>a time line for the completion of each eligible project;</text> </level> <level label="iii"> <text>the estimated cost of each project;</text> </level> <level label="iv"> <text>a description of customer benefits under the plan;</text> </level> <level label="v"> <text>a demonstration that the gas company has selected and given priority to projects based on risk to the public and cost–effectiveness;</text> </level> <level label="vi"> <text>an analysis that compares the costs of proposed replacement projects with alternatives to replacement, including leak detection and repair;</text> </level> <level label="vii"> <text>a plan for notifying customers affected by proposed projects at least 6 months in advance of construction; and</text> </level> <level label="viii"> <text>any other information the Commission considers necessary to evaluate the plan.</text> </level> </level> <level label="3"> <text>A customer notification plan required under paragraph (2) of this subsection shall provide for:</text> <level label="i"> <text>an initial notification of construction in a manner determined by the Commission;</text> </level> <level label="ii"> <text>at least two subsequent notifications of construction in a manner determined by the Commission; and</text> </level> <level label="iii"> <text>the communicating of:</text> <level label="1"> <text>a complete and accurate description of project activities; and</text> </level> <level label="2"> <text>any other information the Commission considers necessary to evaluate the plan.</text> </level> </level> </level> <level label="4"> <level label="i"> <text>When calculating the estimated cost of a project under paragraph (2) of this subsection, a gas company shall include:</text> <level label="1"> <text>the pretax rate of return on the gas company’s investment in the project;</text> </level> <level label="2"> <text>depreciation associated with the project, based on new assets less retired plant; and</text> </level> <level label="3"> <text>property taxes associated with the project, based on new assets less retired plant.</text> </level> </level> <level label="ii"> <text>The estimated project costs described in subparagraph (i) of this paragraph are collectible at the same time the eligible infrastructure replacement is made.</text> </level> <level label="iii"> <text>The pretax rate of return under subparagraph (i)1 of this paragraph shall:</text> <level label="1"> <text>be calculated using the gas company’s capital structure and weighted average cost of capital as the Commission approved in the gas company’s most recent base rate proceeding; and</text> </level> <level label="2"> <text>include an adjustment for bad debt expenses as the Commission approved in the gas company’s most recent base rate proceeding.</text> </level> </level> </level> <level label="5"> <text>For a plan filed under this section:</text> <level label="i"> <text>the cost–recovery schedule shall include a fixed annual surcharge that:</text> <level label="1"> <text>may not exceed $2 each month on each residential customer account; and</text> </level> <level label="2"> <text>for each nonresidential customer account, may not be less than the fixed annual surcharge applicable to a residential customer account, but shall be capped under item (ii) of this paragraph; and</text> </level> </level> <level label="ii"> <text>to create a surcharge cap for all customer classes, costs shall be allocated to nonresidential and residential customers consistent with the proportions of total distribution revenues that those classes bear in accordance with the most recent base rate proceeding for the gas company.</text> </level> </level> <level label="6"> <text>For a gas company to recover costs associated with eligible infrastructure replacement projects, a plan shall demonstrate:</text> <level label="i"> <text>customer benefits; and</text> </level> <level label="ii"> <text>that the gas company has:</text> <level label="1"> <text>analyzed available cost–effective options to defer, reduce, or remove the need to replace, construct, or upgrade components of the gas company’s distribution infrastructure, including leak detection and repair; and</text> </level> <level label="2"> <text>met any other requirements established by the Commission when setting rates under this title.</text> </level> </level> </level> <level label="7"> <text>A plan under this subsection shall be filed separately from a base rate proceeding.</text> </level> <level label="8"> <text>In a base rate proceeding after approval of a plan, the Commission shall, in establishing a gas company’s revenue requirements, take into account any benefits the gas company realized as a result of a surcharge approved under the plan.</text> </level> <level label="9"> <text>Any adjustment for return on equity based on an approved plan only shall be considered and determined in a subsequently filed base rate case.</text> </level> </level> <level label="f"> <level label="1"> <text>Within 180 days after a gas company files a plan, the Commission:</text> <level label="i"> <text>may hold a public hearing on the plan; and</text> </level> <level label="ii"> <text>shall take a final action to approve or deny the plan.</text> </level> </level> <level label="2"> <text>Within 150 days after a gas company files an amendment to an approved plan, the Commission shall take final action to approve or deny the amendment.</text> </level> <level label="3"> <text>The Commission may approve a plan if it finds that the investments and estimated costs of eligible infrastructure replacement projects are:</text> <level label="i"> <text>reasonable and prudent;</text> </level> <level label="ii"> <text>designed to improve public safety or infrastructure reliability over the short term and long term; and</text> </level> <level label="iii"> <text>required to improve the safety of the gas system after consideration of alternatives to replacement.</text> </level> </level> <level label="4"> <level label="i"> <text>The Commission shall approve the cost–recovery schedule associated with the plan at the same time that it approves the plan.</text> </level> <level label="ii"> <text>Costs recovered under the schedule approved in subparagraph (i) of this paragraph may relate only to the projects within the plan approved by the Commission.</text> </level> </level> <level label="5"> <text>The Commission may not consider a revenue requirement or rate–making issue that is not related to the plan when reviewing a plan for approval or denial unless the plan is filed in conjunction with a base rate case.</text> </level> </level> <level label="g"> <level label="1"> <text>Subject to paragraph (2) of this subsection, if the Commission does not take final action on a plan within the time period required under subsection (f) of this section, the gas company may implement the plan.</text> </level> <level label="2"> <text>If a gas company implements a plan that the Commission has not approved, the gas company shall refund to customers any amount of the surcharge that the Commission later determines is not reasonable or prudent, including interest.</text> </level> </level> <level label="h"> <text>The Commission may authorize a gas company to use a mechanism to promptly recover reasonable and prudent costs of investments for eligible infrastructure replacement projects that:</text> <level label="1"> <text>are part of a plan approved under this section or implemented under subsection (g) of this section; and</text> </level> <level label="2"> <text>accelerate gas infrastructure improvements in the State.</text> </level> </level> <level label="i"> <level label="1"> <level label="i"> <text>A surcharge under this section shall be in effect for 5 years from the date of initial implementation of an approved plan.</text> </level> <level label="ii"> <level label="1"> <text>Before the end of the 5–year period, the gas company shall file a base rate case application.</text> </level> <level label="2"> <text>In a base rate proceeding filed under subsubparagraph 1 of this subparagraph, if a plan approved by the Commission remains in effect:</text> </level> <level label="A"> <text>eligible infrastructure project costs included in base rates in accordance with a final Commission order on the base rate case shall be removed from a surcharge; and</text> </level> <level label="B"> <text>the surcharge mechanism shall continue for eligible future infrastructure project costs that are not included in the base rate case.</text> </level> </level> </level> <level label="2"> <level label="i"> <text>If the actual cost of a plan is less than the amount collected under a surcharge, the gas company shall refund to customers the difference on customer bills, including interest.</text> </level> <level label="ii"> <text>If the actual cost of a plan is more than the amount collected under the surcharge and the Commission determines that the higher costs were reasonably and prudently incurred, the Commission shall authorize the gas company to increase the surcharge to recover the difference, subject to the rate limit under subsection (e)(5) of this section.</text> </level> </level> </level> <level label="j"> <text>Each year a gas company shall file with the Commission a reconciliation to adjust the amount of a surcharge to account for any difference between the actual cost of a plan and the actual amount recovered under the surcharge.</text> </level> <level label="k"> <text>If, after approving a surcharge in a plan, the Commission establishes new base rates for the gas company that include costs on which the surcharge is based, the gas company shall file a revised rate schedule with the Commission that subtracts those costs from the surcharge.</text> </level> <level label="l"> <level label="1"> <text>The Commission may review a previously approved plan.</text> </level> <level label="2"> <text>If the Commission determines that an investment of a project or cost of a project no longer meets the requirements of subsection (f)(3) of this section, the Commission may:</text> <level label="i"> <text>reduce future base rates or surcharges; or</text> </level> <level label="ii"> <text>alter or rescind approval of that part of the plan.</text> </level> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-211" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <level label="1"> <text>Except as provided in paragraph (3) of this subsection, when determining necessary and proper expenses while setting a just and reasonable rate for a gas company, the Commission may include all costs reasonably incurred by the gas company for performing environmental remediation of real property in response to a State or federal law, regulation, or order if:</text> <level label="i"> <text>the remediation relates to the contamination of the real property; and</text> </level> <level label="ii"> <text>the real property is or was used to provide manufactured or natural gas service directly or indirectly to the gas company’s customers or the gas company’s predecessors.</text> </level> </level> <level label="2"> <text>Environmental remediation costs incurred by a gas company may be included in the gas company’s necessary and proper expenses regardless of whether:</text> <level label="i"> <text>the real property is currently used and useful in providing gas service; or</text> </level> <level label="ii"> <text>the gas company owns the real property when the rate is set.</text> </level> </level> <level label="3"> <text>Environmental remediation costs incurred by a gas company may not be included in the gas company’s necessary and proper expenses if a court of competent jurisdiction determines that the proximate cause of the environmental contamination is a result of the gas company’s failure to comply with a State or federal law, regulation, or order in effect when the contamination occurred.</text> </level> </level> <level label="b"> <text>The Commission shall balance the interests of a gas company with those of the gas company’s customers when setting the recovery schedule for the environmental remediation costs incurred by the gas company.</text> </level> <level label="c"> <level label="1"> <text>In this subsection, “financial benefit” includes any monetary gain on the conveyance of real property, or any portion of real property that was subject to environmental remediation, to a third party and any other financial benefit of the property or portion of the property that subsequently inures to the gas company, including income from rentals and tax credits, deductions, or other financial benefits, less any environmental remediation costs relating to the property that the gas company was not allowed to recover from the gas company’s customers.</text> </level> <level label="2"> <text>If a gas company is allowed to recover environmental remediation costs under this section, any financial benefit accruing to the gas company as a result of the remediation of real property shall be credited to the gas company’s customers in a manner determined by the Commission.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-212" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Contract capacity” means the amount of monthly peak load requirements:</text> <level label="i"> <text>that is mutually agreed to by an electric company and a large load customer for each month remaining in a contract term after the load ramp period has ended; and</text> </level> <level label="ii"> <text>for which:</text> <level label="1"> <text>the electric company agrees to provide all of the components of retail electric service subject to the terms and conditions in its tariffs; and</text> </level> <level label="2"> <text>the large load customer agrees to purchase service at that load level for the stated term of the contract and under the same terms and conditions as those stated in the contract.</text> </level> </level> </level> <level label="3"> <text>“Large load customer” has the meaning stated in § 7–232 of this article.</text> </level> <level label="4"> <text>“Load ramp period” means the period of time from commencement of service until a large load customer’s billing calculation is based on the full contract capacity.</text> </level> </level> <level label="b"> <text>It is the intent of the General Assembly that residential retail electric customers in the State should not bear the financial risks associated with large load customers interconnecting to the electric system serving the State.</text> </level> <level label="c"> <level label="1"> <level label="i"> <text>On or before September 1, 2026, each investor–owned electric company and each electric cooperative shall submit to the Commission for approval a specific rate schedule for large load customers that accomplishes the intent of subsection (b) of this section.</text> </level> <level label="ii"> <text>Each municipal electric utility that receives an application for retail electric service from a large load customer shall submit to the Commission for approval a specific rate schedule for large load customers.</text> </level> </level> <level label="2"> <level label="i"> <text>Service under a specific rate schedule shall be available to large load customers that will use, within the initial contract term:</text> <level label="1"> <text>a monthly maximum demand of more than 25 megawatts at a single location; or</text> </level> <level label="2"> <text>an aggregated contract capacity in the electric company’s service territory of more than 25 megawatts.</text> </level> </level> <level label="ii"> <text>Except as provided in subparagraph (iii) of this paragraph, large load customers that qualify for a specific rate schedule after the effective date of that schedule:</text> <level label="1"> <text>shall take service under the specific rate schedule; and</text> </level> <level label="2"> <text>may not be allowed to take service under any other existing schedule.</text> </level> </level> <level label="iii"> <text>A specific rate schedule does not apply to the facility of an existing large load customer that has signed a service agreement before the effective date of the schedule if:</text> <level label="1"> <text>the large load customer’s existing load does not expand by more than 25 megawatts at that facility under the existing service agreement; or</text> </level> <level label="2"> <text>the large load customer does not sign a new service agreement to expand the facility’s load by more than 25 megawatts above the contract capacity of the existing service agreement.</text> </level> </level> </level> </level> <level label="d"> <text>In making a determination on whether to approve a specific rate schedule submitted under subsection (c) of this section, the Commission shall consider whether the rate schedule:</text> <level label="1"> <text>requires a large load customer to cover the just and reasonable costs associated with any electric transmission or distribution system buildout required to:</text> <level label="i"> <text>interconnect the large load customer to the electric system serving the State; or</text> </level> <level label="ii"> <text>serve the large load customer;</text> </level> </level> <level label="2"> <text>protects residential retail electric customers from the financial risks associated with large load customers through the use of:</text> <level label="i"> <text>load ramp periods;</text> </level> <level label="ii"> <text>minimum billing demand for electric distribution and transmission service that is a high percentage of a large load customer’s contract capacity;</text> </level> <level label="iii"> <text>long–term contractual commitments and exit fees;</text> </level> <level label="iv"> <text>guarantee or collateral requirements; and</text> </level> <level label="v"> <text>penalties and reimbursement requirements for the large load customer if the large load customer delays or cancels a project after the electric company has begun buildout to accommodate the large load customer;</text> </level> </level> <level label="3"> <text>allocates to the large load customer:</text> <level label="i"> <text>any increased or avoided costs that the Commission determines have been caused by the large load customer, including any increased or avoided wholesale costs such as:</text> <level label="1"> <text>transmission costs; and</text> </level> <level label="2"> <text>capacity costs; and</text> </level> </level> <level label="ii"> <text>notwithstanding § 4–503(b) of this title and as authorized under federal law, any direct or indirect costs, fees, and obligations that are normally applied to retail electric customers in the service territory in which the large load customer is located or interconnected if the Commission determines that the direct or indirect costs, fees, and obligations should be attributable to the large load customer; and</text> </level> </level> <level label="4"> <text>sufficiently ensures that the allocation of costs to large load customers under the schedule does not result in customers that are not large load customers unreasonably subsidizing the costs of large load customers under the schedule.</text> </level> </level> <level label="e"> <text>It is the intent of the General Assembly that the costs allocated to a large load customer in accordance with subsection (d)(3) of this section include costs that are incurred by a large load customer that is not providing 100% of its electricity needs and are associated with:</text> <level label="1"> <text>capacity procurement, including backstop reliability procurement; and</text> </level> <level label="2"> <text>costs associated with the interconnection process, including transmission costs.</text> </level> </level> <level label="f"> <text>Before signing a contract for service under a specific rate schedule submitted under subsection (c) of this section, a large load customer under the schedule is required to:</text> <level label="1"> <text>submit a request for a load study to determine the necessary contract capacity for the large load customer and pay any applicable fees associated with the study;</text> </level> <level label="2"> <text>designate a specific site where the large load customer’s project will be constructed and served by the electric company;</text> </level> <level label="3"> <text>own or have the exclusive right to use the land designated in item (2) of this subsection for the project; and</text> </level> <level label="4"> <text>meet any other requirements specified under the rate schedule.</text> </level> </level> <level label="g"> <level label="1"> <text>On or before June 1, 2026, the Commission shall adopt regulations to carry out this section.</text> </level> <level label="2"> <text>The regulations shall:</text> <level label="i"> <text>establish minimum notice requirements and deadlines related to load study requests and contract terminations and adjustments;</text> </level> <level label="ii"> <text>if considered necessary by the Commission, specify common forms of acceptable collateral to satisfy the requirements of this section; and</text> </level> <level label="iii"> <text>establish deadlines related to completion of load studies and payment of fees.</text> </level> </level> </level> <level label="h"> <level label="1"> <text>By order or regulation, the Commission shall:</text> <level label="i"> <text>prohibit behind–the–meter energy storage facilities from being studied by an electric company as an additional load under a load study conducted under this section;</text> </level> <level label="ii"> <text>establish requirements and limitations for charging and discharging behind–the–meter energy storage facilities during peak demand; and</text> </level> <level label="iii"> <text>subject to paragraph (2) of this subsection, establish a voluntary large–load interruptible interconnection process for an electric company to provide voluntary large–load interruptible interconnection service.</text> </level> </level> <level label="2"> <level label="i"> <text>The voluntary large–load interruptible interconnection process established under paragraph (1)(iii) of this subsection shall include:</text> <level label="1"> <text>a load study that reflects the terms of the voluntary interruptible interconnection service; and</text> </level> <level label="2"> <text>methods to ensure compliance with the voluntary large–load interruptible interconnection service.</text> </level> </level> <level label="ii"> <text>The compliance methods required under subparagraph (i)2 of this paragraph may include the imposition of civil penalties for failure to comply with the voluntary large–load interruptible interconnection service.</text> </level> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-213" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <text>This section applies only to a public service company that is an electric company, a gas company, or a combination gas and electric company.</text> </level> <level label="b"> <text>Unless otherwise authorized by law, the Commission may approve the use of a multiyear rate plan for distribution base rates only if the plan:</text> <level label="1"> <text>demonstrates the customer benefits of the investment; and</text> </level> <level label="2"> <text>does not allow for:</text> <level label="i"> <text>the public service company to file for reconciliation of cost or revenue variances of the approved revenue component used by the Commission to establish just and reasonable rates if the reconciliation would result in additional charges to customers; or</text> </level> <level label="ii"> <text>the use of cost–sharing mechanisms that would result in additional charges to customers above the approved revenue component used by the Commission to establish just and reasonable rates.</text> </level> </level> </level> <level label="c"> <text>A public service company that files or has filed an application for a multiyear rate plan may not subsequently file for reconciliation of cost or revenue variances that would result in additional charges to customers due to the public service company spending more than the approved revenue component used by the Commission to establish the multiyear rates unless the filing for reconciliation was made on or before January 1, 2025.</text> </level> <level label="d"> <text>For multiyear rate plans approved after January 1, 2026, the Commission may require a public service company to include a reconciliation procedure in its multiyear rate plan to refund customers the difference between:</text> <level label="1"> <text>the public service company’s approved revenue requirement; and</text> </level> <level label="2"> <text>the public service company’s actual revenue requirement during the term of the multiyear rate plan.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-214" title_number="4" title_name="Rate Regulation" subtitle_number="2" subtitle_name="Rate Setting Proceedings"> <level label="a"> <text>In this section, “nonpipeline alternative” means an investment or activity that defers, reduces, or eliminates the need to construct a new gas pipeline.</text> </level> <level label="b"> <text>Nothing in this section may be construed to restrict an investor–owned gas company’s ability to make improvements to its gas system to ensure the safe and reliable operation of the system.</text> </level> <level label="c"> <text>An investor–owned gas company may recover reasonable and prudent costs associated with a planned gas infrastructure investment if the investor–owned gas company demonstrates at a rate setting proceeding:</text> <level label="1"> <text>the customer benefits of the investment;</text> </level> <level label="2"> <text>that the investor–owned gas company analyzed cost–effective options available to defer, reduce, or eliminate the need to replace, upgrade, or construct new components, including an analysis of:</text> <level label="i"> <text>for new investments unrelated to safety, nonpipeline alternatives; and</text> </level> <level label="ii"> <text>leak detection and repair; and</text> </level> </level> <level label="3"> <text>the estimated risk reduction associated with a safety–related investment, if applicable.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-301" title_number="4" title_name="Rate Regulation" subtitle_number="3" subtitle_name="Specific Rate Regimes"> <level label="a"> <text>Notwithstanding § 4-101 of this title or any other law to the contrary, the Commission may regulate a telephone company through alternative forms of regulation.</text> </level> <level label="b"> <text>The Commission may adopt an alternative form of regulation under this section if the Commission finds, after notice and hearing, that the alternative form of regulation:</text> <level label="1"> <text>protects consumers by, at a minimum:</text> <level label="i"> <text>producing affordable and reasonably priced basic local exchange service, as defined by the Commission; and</text> </level> <level label="ii"> <text>ensuring the quality, availability, and reliability of telecommunications services throughout the State;</text> </level> </level> <level label="2"> <text>encourages the development of competition; and</text> </level> <level label="3"> <text>is in the public interest.</text> </level> </level> <level label="c"> <text>An alternative form of regulation may include:</text> <level label="1"> <text>price regulation;</text> </level> <level label="2"> <text>revenue regulation;</text> </level> <level label="3"> <text>ranges of authorized return;</text> </level> <level label="4"> <text>rate of return;</text> </level> <level label="5"> <text>categories of services; or</text> </level> <level label="6"> <text>price indexing.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-302" title_number="4" title_name="Rate Regulation" subtitle_number="3" subtitle_name="Specific Rate Regimes"> <level label="a"> <level label="1"> <text>In this subsection, “operating ratio” means the relationship of common carrier expenses to common carrier operating revenues.</text> </level> <level label="2"> <text>In considering proper revenue under subsection (b)(3) of this section, the Commission shall determine a fair and equitable operating ratio.</text> </level> </level> <level label="b"> <text>In setting a just and reasonable rate for common carriers, and classifications, regulations, and practices relating to common carriers, the Commission shall consider, among other factors:</text> <level label="1"> <text>the inherent advantages of transportation by common carriers;</text> </level> <level label="2"> <text>the need, in the public interest, of adequate and efficient transportation services by common carriers at the lowest cost consistent with furnishing these services; and</text> </level> <level label="3"> <text>the need of revenues sufficient to enable common carriers to provide these services under honest, economical, and efficient management.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-303" title_number="4" title_name="Rate Regulation" subtitle_number="3" subtitle_name="Specific Rate Regimes"> <level label="a"> <text>The Commission shall establish pilotage fees and charges for pilotage services to vessels at a just and reasonable rate.</text> </level> <level label="b"> <text>The Commission shall give notice and hold a public hearing on each rate proposal as provided in this article.</text> </level> <level label="c"> <text>In determining a just and reasonable rate, the Commission shall consider:</text> <level label="1"> <text>the draft, dimensions, and tonnage of the vessel piloted;</text> </level> <level label="2"> <text>the difficulty and inconvenience of the particular service and the time and skill required to render the service;</text> </level> <level label="3"> <text>the time required to render pilotage service at other United States ports and the fees and charges for the service;</text> </level> <level label="4"> <text>the public interest in maintaining efficient and reliable pilotage service; and</text> </level> <level label="5"> <text>other factors relevant to the determination of a just and reasonable rate.</text> </level> </level> <level label="d"> <text>A pilot may not demand or receive a different compensation for providing pilotage service than the rate set by the Commission under this section.</text> </level> <level label="e"> <text>The Commission shall impose an assessment on the Association of Maryland Pilots based on assessment guidelines established for public service companies under § 2-110 of this article. The assessment imposed under this subsection may not be less than $25,000.</text> </level> <level label="f"> <text>All pilotage fees and charges provided by applicable law shall remain in effect until changed by the Commission.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-303.1" title_number="4" title_name="Rate Regulation" subtitle_number="3" subtitle_name="Specific Rate Regimes"> <level label="a"> <text>The Commission shall establish fees and charges for a licensed docking master to provide docking services in the Ports of Maryland at a just and reasonable rate.</text> </level> <level label="b"> <text>The Commission shall give notice and hold a public hearing on each rate proposal as provided in this article.</text> </level> <level label="c"> <text>In determining a just and reasonable rate, the Commission shall consider:</text> <level label="1"> <text>the draft, dimensions, and tonnage of the vessel;</text> </level> <level label="2"> <text>the difficulty and inconvenience of the particular service and the time and skill required to render the service;</text> </level> <level label="3"> <text>the time required to render docking service at other United States ports and the fees and charges for the service;</text> </level> <level label="4"> <text>the public interest in maintaining efficient and reliable docking service; and</text> </level> <level label="5"> <text>other factors relevant to the determination of a just and reasonable rate.</text> </level> </level> <level label="d"> <text>A docking master licensed under Title 5.5 of the Business Occupations and Professions Article may not demand or receive a different compensation for providing docking services than the rate set by the Commission under this section.</text> </level> <level label="e"> <text>The Commission shall impose an assessment on the association based on assessment guidelines established for public service companies under § 2-110 of this article.</text> </level> <level label="f"> <text>All fees and charges provided by applicable law shall remain in effect until changed by the Commission.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-304" title_number="4" title_name="Rate Regulation" subtitle_number="3" subtitle_name="Specific Rate Regimes"> <level label="a"> <text>In this section, “jurisdiction” means a county or municipal corporation.</text> </level> <level label="b"> <text>This section does not apply if rates for sewage disposal service are specified in a contract between the jurisdictions that supply and receive the sewage disposal service.</text> </level> <level label="c"> <text>The Commission shall set only the rates for sewage disposal service that one jurisdiction supplies within the taxable limits of another jurisdiction:</text> <level label="1"> <text>on written application by the jurisdiction that receives the service; and</text> </level> <level label="2"> <text>in the same way as rates are set for sewage disposal companies.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-305" title_number="4" title_name="Rate Regulation" subtitle_number="3" subtitle_name="Specific Rate Regimes"> <level label="a"> <text>In this section, “jurisdiction” means a county, sanitary district, or municipal corporation.</text> </level> <level label="b"> <text>This section does not affect §§ 35-138, 35-140, 35-141, and 35-145 of the Code of Public Local Laws of Baltimore County.</text> </level> <level label="c"> <text>The Commission shall set only the rates for water that one jurisdiction supplies within another jurisdiction:</text> <level label="1"> <text>on written application by the jurisdiction that receives the water; and</text> </level> <level label="2"> <text>in the same way as rates are set for water companies.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-306" title_number="4" title_name="Rate Regulation" subtitle_number="3" subtitle_name="Specific Rate Regimes"> <level label="a"> <text>This section applies to any municipal corporation in Talbot County that supplies water to an area outside the boundaries of the municipal corporation.</text> </level> <level label="b"> <text>On written application, the Commission may grant the applicant a certificate of authority to establish a service area outside of its boundaries and to supply that service area with water.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-307" title_number="4" title_name="Rate Regulation" subtitle_number="3" subtitle_name="Specific Rate Regimes"> <level label="a"> <text>In this section, “rate consolidation” means the use of the same or similar rates or tariff schedules of rates for customers of the same class for two or more water or sewage disposal systems even if the systems are not physically interconnected.</text> </level> <level label="b"> <text>After notice to customers and holding a public hearing and an evidentiary hearing, the Commission may authorize a rate consolidation of two or more water or sewage disposal systems if:</text> <level label="1"> <text>the water or sewage disposal systems have common ownership; and</text> </level> <level label="2"> <text>the rate consolidation is in the public interest.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-308" title_number="4" title_name="Rate Regulation" subtitle_number="3" subtitle_name="Specific Rate Regimes"> <level label="a"> <text>On or before January 1, 2023, the Commission shall by regulation or order establish an administrative process to approve supply offers for electricity or gas for households in the State that receive energy assistance through a program administered by the Office of Home Energy Programs.</text> </level> <level label="b"> <level label="1"> <text>Beginning July 1, 2023, unless the Commission has approved the supply offer in accordance with subsection (a) of this section, a third–party retail supplier may not offer to:</text> <level label="i"> <text>provide electricity or gas to households in the State that have received energy assistance during the previous fiscal year;</text> </level> <level label="ii"> <text>renew a contract to provide electricity or gas to households in the State that are enrolled in an energy assistance program; or</text> </level> <level label="iii"> <text>charge a termination fee to households in the State that have received energy assistance during the previous fiscal year.</text> </level> </level> <level label="2"> <text>An approved supply offer from a third–party retail supplier shall include a commitment, for the entirety of the term of the supply offer, to charging at or below the standard offer service rate or gas commodity rate for customers receiving energy assistance.</text> </level> <level label="3"> <text>If a third–party retail supplier’s offer is not approved by the Commission, the third–party retail supplier may not:</text> <level label="i"> <text>receive funds from an energy program administered by the Office of Home Energy Programs; or</text> </level> <level label="ii"> <text>charge a customer receiving assistance from an energy program administered by the Office of Home Energy Programs.</text> </level> </level> </level> <level label="c"> <text>The Office of Home Energy Programs may allocate funding toward supplier charges as part of arrearage assistance for contracts that preceded a customer’s application for energy assistance from the Office of Home Energy Programs.</text> </level> <level label="d"> <level label="1"> <text>On or before September 1 each year, the Commission shall publish a report on the Commission’s website that includes:</text> <level label="i"> <text>the names and the total number of suppliers that applied for approval to sell to energy assistance households;</text> </level> <level label="ii"> <text>the names and the total number of suppliers that were approved under subsection (a) of this section;</text> </level> <level label="iii"> <text>the total number of suppliers that were rejected, if any;</text> </level> <level label="iv"> <text>the total number of energy assistance households that were signed up with a third–party supplier, as reported by the supplier;</text> </level> <level label="v"> <text>the total number of submitted supplier enrollments that were denied because the supplier was not approved to serve energy assistance households, as reported by the utility; and</text> </level> <level label="vi"> <text>the total number of self–identified energy assistance households that filed complaints about their third–party supplier.</text> </level> </level> <level label="2"> <text>The Commission shall send a copy of the report to the Office of People’s Counsel, the Office of Home Energy Programs, and, subject to § 2–1257 of the State Government Article, the Senate Finance Committee and the House Economic Matters Committee.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-309" future_version_removed="true" title_number="4" title_name="Rate Regulation" subtitle_number="3" subtitle_name="Specific Rate Regimes"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Eligible limited–income customer” means a residential customer of a utility company with annual income that:</text> <level label="i"> <level label="1"> <text>is at or below 175% of the federal poverty level; or</text> </level> <level label="2"> <text>for a customer at least 67 years of age, is at or below 200% of the federal poverty level; or</text> </level> </level> <level label="ii"> <text>meets a broader designation approved by the Commission.</text> </level> </level> <level label="3"> <text>“Limited–income mechanism” or “mechanism” means a process approved by the Commission under this section to benefit an eligible limited–income customer of a utility company.</text> </level> <level label="4"> <text>“Payment plan” means an agreement between an eligible limited–income customer and a utility company to pay an arrearage balance over a specific period of time to avoid disconnection of a utility service.</text> </level> <level label="5"> <level label="i"> <text>“Utility company” means an electric company, a gas and electric company, or a gas company.</text> </level> <level label="ii"> <text>“Utility company” does not include a small rural electric cooperative.</text> </level> </level> </level> <level label="b"> <text>The General Assembly finds and declares that the societal benefits of a well–constructed limited–income mechanism to benefit Maryland’s eligible limited–income customers are in the public interest.</text> </level> <level label="c"> <level label="1"> <text>Subject to the approval of the Commission, a utility company shall adopt a limited–income mechanism to benefit an eligible limited–income customer.</text> </level> <level label="2"> <text>Notwithstanding § 4–503(b) of this title, the mechanism may take the form of a program, tariff provision, credit, rate, rider, or other means to assist an eligible limited–income customer to afford a utility service.</text> </level> <level label="3"> <text>A municipal electric utility may adopt a limited–income mechanism subject to the approval of the Commission in the same manner as a utility company in accordance with this section.</text> </level> </level> <level label="d"> <level label="1"> <text>A utility company that proposes a limited–income mechanism for Commission approval under subsection (c) of this section shall include the proposal in:</text> <level label="i"> <text>a separate application for approval of the mechanism; or</text> </level> <level label="ii"> <text>only with the prior approval of the Commission, an application for a base rate proceeding, including an alternative rate proceeding, or any other proceeding to alter the utility company’s base rates under the authority of the Commission.</text> </level> </level> <level label="2"> <text>A proposal submitted under this section shall allocate the prudently incurred costs of the limited–income mechanism across rate classes.</text> </level> <level label="3"> <text>The proposal shall include:</text> <level label="i"> <text>a detailed description of the proposed mechanism;</text> </level> <level label="ii"> <text>the proposed method for allocating the mechanism’s costs across customer classes;</text> </level> <level label="iii"> <text>the rationale supporting the utility company’s proposal for a mechanism to benefit the eligible limited–income customers in the utility company’s service territory;</text> </level> <level label="iv"> <text>a time frame and process for the Commission to review the effectiveness of the mechanism after implementation; and</text> </level> <level label="v"> <text>any other information the Commission considers necessary or useful to evaluate the proposal.</text> </level> </level> </level> <level label="e"> <text>In evaluating a limited–income mechanism, the Commission shall consider:</text> <level label="1"> <text>the degree to which the mechanism promotes affordability of electricity or natural gas for limited–income customers;</text> </level> <level label="2"> <text>the public interest in allocating the costs of the mechanism between the utility company’s shareholders and rate payers;</text> </level> <level label="3"> <text>the impact on rates, utility operating costs, customer arrearages, customer disconnections, uncollectible costs, and successful completion of payment plans;</text> </level> <level label="4"> <text>the ability of a limited–income customer to continue to receive benefits when relocating within the same service territory;</text> </level> <level label="5"> <text>coordination of benefits under the mechanism with any other public or private assistance that may be available to the customer;</text> </level> <level label="6"> <text>a minimum level of support or assistance structure to provide equitable availability of limited–income assistance across the State; and</text> </level> <level label="7"> <text>any other information the Commission considers appropriate.</text> </level> </level> <level label="f"> <text>If an approved limited–income mechanism requires that the Office of Home Energy Programs must certify an eligible limited–income customer’s qualifications to participate in a limited–income mechanism, the Office shall certify an eligible limited–income customer’s qualifications before the customer may participate in the mechanism.</text> </level> <level label="g"> <text>An eligible limited–income customer who participates in a mechanism under this section may also be eligible for other assistance programs offered in the State, including those offered by a utility company or the Office of Home Energy Programs, the Department of Housing and Community Development, or any other public or private source.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-401" title_number="4" title_name="Rate Regulation" subtitle_number="4" subtitle_name="Fuel Rate Adjustments"> <text>As it considers necessary, and in accordance with the requirements of § 4-402 of this subtitle, the Commission may allow a gas company or electric company to establish a sliding scale to adjust costs of its fuel, purchased power, or purchased gas.</text> </section> <section article="gpu" article_name="Public Utilities" number="4-402" title_number="4" title_name="Rate Regulation" subtitle_number="4" subtitle_name="Fuel Rate Adjustments"> <level label="a"> <level label="1"> <text>This section applies to:</text> <level label="i"> <text>electric fuel rate adjustment clauses;</text> </level> <level label="ii"> <text>purchased power adjustment clauses; and</text> </level> <level label="iii"> <text>purchased gas adjustment clauses.</text> </level> </level> <level label="2"> <text>This section does not apply to a small rural electric cooperative.</text> </level> </level> <level label="b"> <text>A gas company or electric company that directly passes on to its customers changes in fuel costs, costs of purchased power, or costs of purchased gas shall verify and justify the adjusted costs to the Commission each month.</text> </level> <level label="c"> <text>The Commission shall order a company to charge off and amortize, by means of a temporary decrease of rates, any charge the Commission finds is unjustified because:</text> <level label="1"> <text>the company failed to show that the charges were based solely on increased costs of fuel, purchased power, or purchased gas;</text> </level> <level label="2"> <text>the company failed to follow competitive practices in procuring and purchasing fuel, power, or gas; or</text> </level> <level label="3"> <text>the company failed to show that its practices in procuring and purchasing fuel were reasonable.</text> </level> </level> <level label="d"> <text>At least once every 12 months, the Commission shall conduct a public evidentiary hearing on any changes in costs that a company directly passes on to its customers under this section.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-501" title_number="4" title_name="Rate Regulation" subtitle_number="5" subtitle_name="Prohibitions"> <level label="a"> <text>In its utility operations, a public service company may not:</text> <level label="1"> <text>sell, render services, or furnish a commodity until the public service company files and publishes its rate schedules in accordance with § 4–202 of this title; or</text> </level> <level label="2"> <text>demand or collect:</text> <level label="i"> <text>compensation that differs from compensation specified in its rate schedules that are in force at the time of the demand or collection; or</text> </level> <level label="ii"> <text>a charge that violates this division.</text> </level> </level> </level> <level label="b"> <text>A person may not assist, allow, or attempt to assist or allow the actions prohibited under this section by any means, including false billing, false classification, false weighing, or false report of weight, even if a public service company or its personnel consents to or connives with the prohibited action.</text> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-502" title_number="4" title_name="Rate Regulation" subtitle_number="5" subtitle_name="Prohibitions"> <text>In an action by a public service company to collect a charge, the public service company may not recover any amount if, in the transaction that is the subject of the action, the public service company demanded a rate greater than that lawful under this division when the charge was made.</text> </section> <section article="gpu" article_name="Public Utilities" number="4-503" title_number="4" title_name="Rate Regulation" subtitle_number="5" subtitle_name="Prohibitions"> <level label="a"> <text>This section does not apply to service rendered or commodities furnished:</text> <level label="1"> <text>to the officers, employees, pensioners, and immediate family members of the officers, employees, and pensioners of a public service company;</text> </level> <level label="2"> <text>to the United States, the State, or a local government;</text> </level> <level label="3"> <text>to provide relief in cases of general epidemic, pestilence, flood, or other similar calamity;</text> </level> <level label="4"> <text>in the case of common carriers, to transport:</text> <level label="i"> <text>personnel of another common carrier that reciprocates for personnel of the transporting common carrier;</text> </level> <level label="ii"> <text>hospital patients;</text> </level> <level label="iii"> <text>indigent, destitute, and homeless individuals;</text> </level> <level label="iv"> <text>persons exclusively engaged in charitable work;</text> </level> <level label="v"> <text>residents of federal or State veterans homes, including those about to enter a home or those returning from a home;</text> </level> <level label="vi"> <text>railway mail service employees and baggage agents;</text> </level> <level label="vii"> <text>post office, customs, and immigration inspectors;</text> </level> <level label="viii"> <text>newspaper vendors;</text> </level> <level label="ix"> <text>property for exhibition carried to or from fairs and expositions;</text> </level> <level label="x"> <text>employees of sleeping car companies, express companies, telegraph companies, and telephone companies doing business along the line of the common carrier;</text> </level> <level label="xi"> <text>persons and property incident to or connected with contracts for construction, operation, or maintenance of the plant of the transportation company, to the extent provided in the contracts;</text> </level> <level label="xii"> <text>individuals injured in accidents and physicians, nurses, or other necessary caretakers attending the injured individuals in transit;</text> </level> <level label="xiii"> <text>children under the age of 5 years for no charge;</text> </level> <level label="xiv"> <text>children under 12 years for half fare; or</text> </level> <level label="xv"> <text>persons at free or reduced rates that are otherwise authorized by law;</text> </level> </level> <level label="5"> <text>in the case of common carriers, for the issuance of mileage, excursion, or commuter tickets;</text> </level> <level label="6"> <text>to free steamboat excursion transportation from May through August of each year, from Baltimore City to any place in the State, in exchange for services rendered in advertising the excursion business;</text> </level> <level label="7"> <text>to obtain essential data by a method that uses a limited sample of customers, in connection with a rate structure study conducted under formal proceedings before the Commission;</text> </level> <level label="8"> <text>to telephone lifeline service provided to eligible subscribers under § 8–201 of this article; or</text> </level> <level label="9"> <text>to electricity or gas service provided to eligible limited–income customers through an approved limited–income mechanism under § 4–308 of this title.</text> </level> </level> <level label="b"> <text>For any service rendered or commodity furnished, a public service company may not directly or indirectly, by any means, including special rates, rebates, drawbacks, or refunds:</text> <level label="1"> <text>charge, demand, or receive from a person compensation that is greater or less than from any other person under substantially similar circumstances;</text> </level> <level label="2"> <text>extend a privilege or facility to a person, except those privileges and facilities that are extended uniformly to all persons under substantially similar circumstances;</text> </level> <level label="3"> <text>discriminate against a person, locality, or particular class of service; or</text> </level> <level label="4"> <text>give undue or unreasonable preference to or cause undue or unreasonable prejudice to a person, locality, or particular class of service.</text> </level> </level> </section> <section article="gpu" article_name="Public Utilities" number="4-504" title_number="4" title_name="Rate Regulation" subtitle_number="5" subtitle_name="Prohibitions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <level label="i"> <text>“Bonus” means a form of direct or indirect payment, consideration, or compensation that is paid or conveyed to an employee of a public service company in addition to the employee’s base pay.</text> </level> <level label="ii"> <text>“Bonus” includes:</text> <level label="1"> <text>compensation that the public service company does not formally label as a bonus payment;</text> </level> <level label="2"> <text>any form of incentive compensation the fact and amount of which is under the discretion of the public service company until a time close to the end of the period for which the incentive payment is paid; and</text> </level> <level label="3"> <text>payments given in addition to base pay that are contingent on the occurrence of one or more events or conditions.</text> </level> </level> </level> <level label="3"> <level label="i"> <text>“Compensation” means a form of payment or consideration conveyed to or for the benefit of an employee of a public service company, the parent company of a public service company, or any other affiliate of a public service company in connection with the employee’s work for a public service company.</text> </level> <level label="ii"> <text>“Compensation” includes:</text> <level label="1"> <text>direct and indirect methods of conferring benefits;</text> </level> <level label="2"> <text>cash and noncash benefits;</text> </level> <level label="3"> <text>salary, bonuses, period payments, and severance pay; and</text> </level> <level label="4"> <text>the value of a perquisite, compensatory or paid leave, or other benefit not excluded under subparagraph (iii) of this paragraph.</text> </level> </level> <level label="iii"> <text>“Compensation” does not include any expenditure of a public service company for health, medical, dental, vision, or life insurance or disability pay.</text> </level> </level> <level label="4"> <text>“Supervisor” means an employee of a public service company, the parent company of a public service company, or any other affiliate of a public service company who:</text> <level label="i"> <text>using the employee’s independent judgment:</text> <level label="1"> <text>is authorized by the employee’s employer to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees;</text> </level> <level label="2"> <text>is responsible for directing the work performance of other employees; and</text> </level> <level label="3"> <text>is responsible for responding to employee complaints; or</text> </level> </level> <level label="ii"> <text>is employed in a bona fide executive capacity under the federal Fair Labor Standards Act.</text> </level> </level> </level> <level label="b"> <text>This section applies only to a public service company that is an investor–owned electric company, gas company, or combination gas and electric company.</text> </level> <level label="c"> <text>A public service company may not recover through rates any costs associated with:</text> <level label="1"> <text>membership, dues, sponsorships, or contributions to an industry trade association, group, or related entity exempt from taxation under § 501(c)(6) of the Internal Revenue Code;</text> </level> <level label="2"> <text>the acquisition, use, or allocation of costs associated with a private plane that is owned or leased by the public service company or its holding company; or</text> </level> <level label="3"> <text>compensation for a supervisor that exceeds 110% of the maximum annual salary payable to the chair of the Commission for the same calendar year.</text> </level> </level> <level label="d"> <level label="1"> <text>The board of directors of each public service company shall adopt a company–wide policy placing reasonable cost limitations on expenditures that the public service company intends to recover through rates for:</text> <level label="i"> <text>entertainment and events;</text> </level> <level label="ii"> <text>office and facility renovations;</text> </level> <level label="iii"> <text>transportation services, including aviation;</text> </level> <level label="iv"> <text>staff development activities or events;</text> </level> <level label="v"> <text>performance incentives; and</text> </level> <level label="vi"> <text>other activities outside the scope of the normal course of business operations.</text> </level> </level> <level label="2"> <text>Each public service company shall send a copy of the policy adopted under paragraph (1) of this subsection to the Commission:</text> <level label="i"> <text>as soon as practicable; and</text> </level> <level label="ii"> <text>each time the policy is updated, but not less than once every 5 years.</text> </level> </level> <level label="3"> <text>The Commission may review in a base rate proceeding the reasonableness of the cost limitations in a policy adopted under paragraph (1) of this subsection.</text> </level> </level> </section>