In this subtitle the following words have the meanings indicated. “Beneficial electrification” means replacing direct fossil fuel use with electricity. “Bidirectional electric vehicle” means an electric vehicle that is capable of both receiving and discharging electricity. “Distributed energy resource” means an energy resource located on a customer’s premises that: produces or stores electricity; or modifies the timing or amount of the customer’s electricity consumption. “Electric distribution system support services” means the dispatch and control of a distributed energy resource to provide services that contribute to the efficient and reliable operation of the electric distribution system by: an electric company; or an aggregator acting at the direction of an electric company. “Electric distribution system support services” includes: local or system peak demand reduction; demand response; the avoidance or deferral of a transmission or distribution upgrade or capacity expansion; and facilitating hosting capacity to accommodate additional distributed energy resources. “Eligible customer–generator” has the meaning stated in § 7–306 of this title. “Net energy metering” has the meaning stated in § 7–306 of this title. “Net excess generation” has the meaning stated in § 7–306 of this title. “Renewable on–site generating system” means an energy system located on a customer’s premises that: generates or stores electricity from a Tier 1 renewable source or a Tier 2 renewable source that does not release greenhouse gases; is capable of providing electricity to: a home, business, or other structure serviced by an electric company; and the electric distribution system; is paired with an energy storage device that is configured to charge from: the renewable source; and the electric distribution system unless, for the purpose of eligibility for net energy metering, the device is required to be charged only from the renewable source; and is interconnected and operates in parallel with an electric company’s transmission and distribution facilities. “Renewable on–site generating system” may include bidirectional electric vehicle service equipment located on a customer’s premises. “Tier 1 renewable source” has the meaning stated in § 7–701 of this title. “Tier 2 renewable source” has the meaning stated in § 7–701 of this title.

The General Assembly finds and declares that: well–designed time–of–use pricing of electricity can help mitigate the impacts of electrification on the electric distribution system, reduce greenhouse gas emissions during peak hours, and encourage customer adoption of beneficial electrification measures through off–peak cost savings; widespread beneficial electrification will increase demand on the electric distribution system and potentially require significant system upgrades if consumers adopting beneficial electrification measures do not engage in a form of load management to mitigate the need for system upgrades and reduce the greenhouse gas intensities associated with generation emissions during peak hours; pairing the adoption of renewable on–site generating systems with beneficial electrification measures may: further reduce the State’s greenhouse gas emissions; provide on–site resilience to consumers; and facilitate load flexibility to mitigate impacts on the electric distribution system from load growth due to beneficial electrification; and it is reasonable to provide additional incentives and protections to low– and moderate–income households: to ensure access to the benefits of electrification and on–site energy systems; and to protect those households from negative bill impacts during a transition to time–of–use rates.

On or before July 1, 2025, each investor–owned electric company shall file with the Commission one or more time–of–use tariffs for appropriate customer classes, to be made available to customers on an opt–in basis. Each time–of–use tariff shall establish a sufficient price discount for off–peak hours compared to peak hours, as determined by the market or an investor–owned electric company’s cost of service, to encourage customers to adjust electricity use to off–peak hours. An investor–owned electric company shall propose with each tariff or tariffs required under subsection (a) of this section a reasonable enrollment target to try to achieve by January 1, 2028. The investor–owned electric company shall attempt to achieve the enrollment target through a combination of marketing, customer education, and other means to communicate the benefits and risks of time–of–use rates. The Commission may require an investor–owned electric company to automatically enroll in a time–of–use tariff customers that receive an incentive from the investor–owned electric company as part of a beneficial electrification program. The Commission shall require an investor–owned electric company to provide to customers that are automatically enrolled in a time–of–use tariff in accordance with subparagraph (i) of this paragraph notice and an opportunity to opt out of the time–of–use tariff. On or before July 1, 2026, each investor–owned electric company shall submit a report to the Commission evaluating: the potential to avoid or defer electric distribution system capital projects through the use of time–of–use rates, demand–response and demand–side programs, and renewable on–site generating systems; and the merits and feasibility of transitioning all customers to a time–of–use tariff on an opt–out basis. In accordance with § 2–1257 of the State Government Article, on or before December 31, 2027, the Commission shall submit a report to the General Assembly on: the impacts of opt–in time–of–use tariffs on the electric distribution system; the timeline, feasibility, and merits of transitioning all customers to a time–of–use tariff on an opt–out basis; and whether a full transition to time–of–use rates is justified. An investor–owned electric company may recover all reasonable and prudent costs, including marketing costs, to achieve its proposed enrollment targets and execute its responsibilities in accordance with this section. For good cause shown, the Commission may delay for a reasonable period of time the deadline for an investor–owned electric company to comply with the provisions of this section. A municipal electric utility or electric cooperative may file with the Commission one or more time–of–use tariffs in the same manner as an investor–owned electric company under this section. If a municipal electric utility or electric cooperative elects to file with the Commission a time–of–use tariff under this section, the provisions of this section that apply to an investor–owned electric company shall also apply to the municipal electric utility or electric cooperative.

On or before May 1, 2025, the Commission shall adopt regulations to: establish expedited processes for interconnecting the following systems to the electric distribution system: bidirectional electric vehicle systems capable of providing electricity to the electric distribution system; and bidirectional electric vehicle systems that do not provide electricity to the electric distribution system but do provide electricity to a home, business, or other structure serviced by an investor–owned electric company; and provide investor–owned electric companies with adequate time to ensure electric distribution system reliability in advance of the interconnections described in item (1) of this subsection. An investor–owned electric company: may require a customer to provide notice to the investor–owned electric company if the customer installs a bidirectional electric vehicle system described in subsection (a)(1)(ii) of this section; and shall require a customer to apply for interconnection if the customer configures a bidirectional electric vehicle system to provide electricity to the electric distribution system. A municipal electric utility or an electric cooperative may comply with the requirements of subsection (b) of this section in the same manner as an investor–owned electric company.

The Commission shall develop a program for each investor–owned electric company to establish a pilot program or temporary tariff to compensate owners and aggregators of distributed energy resources for electric distribution system support services through an incentive mechanism determined by the Commission. On or before July 1, 2025, each investor–owned electric company shall submit to the Commission for approval a pilot program or temporary tariff for electric distribution system support services that provides reasonable compensation through a mechanism determined by the Commission. The pilot program or temporary tariff submitted under subparagraph (i) of this paragraph shall provide that electric distribution system support services to on–site energy storage devices be used for system peak reduction. A municipal electric utility or an electric cooperative may establish a pilot program, temporary tariff, or performance mechanism under this section. If a municipal electric utility or electric cooperative establishes a pilot program, temporary tariff, or performance mechanism under this section, the provisions of this section and §§ 7–1006 and 7–1007 of this subtitle that apply to an investor–owned electric company shall also apply to the municipal electric utility or electric cooperative. Notwithstanding any provision of this subtitle, an investor–owned electric company may propose and submit to the Commission a performance mechanism to cover the cost of using distributed energy resources or an aggregator of distributed energy resources under this subtitle. The Commission may approve a performance mechanism submitted under paragraph (1) of this subsection if the Commission determines that the performance mechanism is in the public interest. The Commission shall approve, deny, or approve with amendments a pilot program or temporary tariff submitted under this section for each investor–owned electric company in an expedited manner. If the Commission determines that transitioning a pilot program or temporary tariff to a permanent program or tariff is in the public interest, the Commission may establish a process for an investor–owned electric company to transition a pilot program or temporary tariff to a permanent program or tariff for electric distribution system support services. If the Commission determines the transition to a permanent program or tariff is in the public interest, each customer participating in a pilot program or temporary tariff approved under paragraph (1) of this subsection may be transitioned to a permanent program or tariff for electric distribution system support services when the program or tariff is approved by the Commission. The Commission may allow the energy generated by a renewable on–site generating system that provides electric distribution system support service under a pilot program or temporary tariff approved under subsection (d)(1) of this section to count towards the investor–owned electric company’s greenhouse emissions reduction goals under § 7–211 of this title. Subject to subparagraph (ii) of this paragraph, the cumulative energy storage capacity of any energy storage devices installed on a customer’s property in accordance with this subtitle shall count towards the targets established under § 7–216.1 of this title. Subparagraph (i) of this paragraph does not include the energy storage capacity of: electric vehicles that are part of a renewable on–site generating system; or mobile energy storage devices. The cumulative nameplate capacity of renewable on–site generating systems participating in a pilot program or temporary tariff approved under this section may not exceed 2% of the investor–owned electric company’s highest recorded coincident peak demand.

Subject to available funding, the Maryland Energy Administration, in consultation with the Commission, may offer upfront incentives or rebates to customers to acquire and install renewable on–site generating systems if the customer: enrolls in a pilot program or temporary tariff established under § 7–1005 of this subtitle; and allows the system to be used for electric distribution system support services for a period of not less than 5 years. The Maryland Energy Administration, in consultation with the Commission, may prioritize the offer of incentives or rebates under this section to low– or moderate–income customers. The Maryland Energy Administration, when approving an incentive or rebate under this section, shall ensure that the incentive or rebate is designed to supplement, to the greatest extent possible, other available State and federal incentives for customer adoption of renewable on–site generating systems.

An investor–owned electric company may recover all reasonable costs incurred in participating in and administering a program under § 7–1005 of this subtitle. To the extent feasible, the costs in subsection (a) of this section shall be recovered by the investor–owned electric company within the calendar year in which those costs were incurred. Notwithstanding any provision of this subtitle, an investor–owned electric company may pursue and use a performance incentive mechanism to cover the cost of using distributed energy resources or an aggregator of distributed resources under this subtitle.