# Public Utilities (GPU)

## Title 7. Gas, Electric, and Water Companies

### Subtitle 5. Electric Industry Restructuring

#### Section 7-501

(a) In this subtitle the following words have the meanings indicated.

(b) "Affiliate" means a person that directly or indirectly, or through one or more intermediaries, controls, is controlled by, or is under common control with, or has, directly or indirectly, any economic interest in another person.

(c)

  (1) "Assignee" means a person to whom an electric company assigns or transfers all or a portion of its interest in intangible transition property, other than as security.

  (2) "Assignee" includes a person to whom all or a portion of the interest is subsequently assigned or transferred.

(d) "Competitive transition charge" means a rate, charge, credit, or other appropriate mechanism authorized to be imposed for the recovery of transition costs as determined by the Commission under Sec. 7-513 of this subtitle.

(e) "Consumer" and "customer" each means a retail electric customer.

(f) "Customer choice" means the right of electricity suppliers and customers to utilize and interconnect with the electric distribution system on a nondiscriminatory basis at rates, terms, and conditions of service comparable to the electric company's own use of the system to distribute electricity from an electricity supplier to a customer, under which a customer has the opportunity to purchase electricity from the customer's choice of licensed electricity suppliers.

(g) "Distribution territory" means the geographic area in which an electric company was providing electric transmission or distribution services to customers on July 1, 1999.

(h) "Independent system operator" means an entity authorized by the Federal Energy Regulatory Commission to control a regional transmission grid.

(i) "Initial implementation date" means:

  (1) July 1, 2000, for investor-owned electric companies;

  (2) the date or dates determined by the Commission for Electric Cooperatives and Municipal Electric Utilities; or

  (3) another date or dates determined by the Commission under Sec. 7-510(b) of this subtitle.

(j) "Intangible transition charge" means a nonbypassable rate, charge, or similar appropriate mechanism for the provision, availability, or termination of electric service, authorized to be imposed for the recovery of qualified transition costs under a qualified rate order of the Commission.

(k) "Intangible transition property" means the right, title, and interest of an electric company or assignee in a qualified rate order, including:

  (1) all rights in, to, and under the order, including rights to revenues, collections, claims, payments, money, or other property and amounts arising from the imposition of intangible transition charges under the order; and

  (2) in the hands of an assignee:

    (i) the right to require the electric company to provide electric services, and to collect and remit the intangible transition charges authorized in the qualified rate order; but

    (ii) not the right or duty to provide electric services.

(l)

  (1) "Public purpose program" means a program implemented with the intention of furthering a public purpose.

  (2) "Public purpose program" includes:

    (i) a universal service program;

    (ii) a program encouraging renewable energy resources;

    (iii) a demand side management or other energy efficiency or conservation program; and

    (iv) a consumer education program.

(m) "Qualified rate order" means an order of the Commission approving one or more intangible transition charges.

(n) "Standard offer service" means electric service that an electric company must offer to its customers under Sec. 7-510(c) of this subtitle.

(o) "Transition bond" means a bond, debenture, note, certificate of participation or beneficial interest, or other evidence of indebtedness or ownership, approved in a qualified rate order and issued under an executed trust indenture or other agreement of an electric company or assignee, and which is secured by, evidences ownership interest in, or is payable from intangible transition property.

(p) "Transition cost" means a cost, liability, or investment that:

  (1) traditionally would have been or would be recoverable under rate-of-return regulation, but which may not be recoverable in a restructured electricity supply market; or

  (2) arises as a result of electric industry restructuring and is related to the creation of customer choice.

(q)

  (1) "Universal service program" means a program that helps low-income customers maintain electric service.

  (2) "Universal service program" includes customer bill assistance and payment programs, termination of service protection, and policies and services that help low-income customers to reduce or manage energy consumption in a cost-effective manner.

#### Section 7-502

(a) Except as required under subsection (b) of this section, the provisions of this subtitle may not be applied to a small rural electric cooperative that:

  (1) has less than 10% of its distribution territory within the State;

  (2) maintains its principal place of business outside the State; and

  (3) is subject to, and conducts its operations within the State in compliance with, the laws of the state in which its principal place of business is located.

(b)

  (1) A small rural electric cooperative, as described in subsection (a) of this section, shall be subject to all requirements and prohibitions adopted under the authority of Sec.Sec. 7-505(b)(1) through (4), (6), (7), (11), and (12) and 7-507(e), (h), (i), (k), and (l) of this subtitle.

  (2) In addition to the requirements for a small rural electric cooperative set forth in paragraph (1) of this subsection, a member of a small rural electric cooperative that receives electricity or electricity supply services from an entity other than the small rural electric cooperative may receive these services only from an entity that is licensed under Sec. 7-507 of this subtitle.

#### Section 7-504

The General Assembly finds and declares that the purpose of this subtitle is to:

(1) establish customer choice of electricity supply and electricity supply services;

(2) create competitive retail electricity supply and electricity supply services markets;

(3) deregulate the generation, supply, and pricing of electricity;

(4) provide economic benefits for all customer classes; and

(5) ensure compliance with federal and State environmental standards.

#### Section 7-505

(a)

  (1) In assessing and approving each electric company's restructuring plan, and overseeing the transition process and regulation of the restructured electric industry, the Commission shall provide that the transition to a competitive electricity supply and electricity supply services market shall be orderly, maintain electric system reliability, and ensure compliance with federal and State environmental regulations, be fair to customers, electric company investors, customers of municipal electric utilities, electric companies, and electricity suppliers, and provide economic benefits to all customer classes.

  (2) The Commission shall consider the restructuring plans of municipal electric utilities, as specified under Sec. 7-510 of this subtitle.

(b)

  (1) The Commission shall issue the orders or adopt the regulations required under this subsection before the implementation of customer choice.

  (2) The Commission shall order a universal service program, to be made available on a statewide basis, to benefit low-income customers, in accordance with Sec. 5-5A-08 of the Human Services Article.

  (3) The Commission shall order an electric company to adopt policies and practices reasonably designed to prevent:

    (i) discrimination against a person, locality, or particular class of service or giving undue or unreasonable preference in favor of the electric company's own electricity supply, other services, divisions, or affiliates, if any; and

    (ii) any other forms of self-dealing or practices that could result in noncompetitive electricity prices to customers.

  (4)

    (i) The Commission shall, by regulation or order, require each electric company and electricity supplier to provide adequate and accurate information to each customer on the available electric services of the electric company or electricity supplier, including disclosure, every 6 months, of a uniform common set of information about:

      (1) the fuel mix of the electricity purchased by customers, including categories of electricity from coal, natural gas, nuclear, oil, hydroelectric, solar, biomass, wind, and other resources, or disclosure of a regional fuel mix average; and

      (2) the emissions, on a pound per megawatt-hour basis, of pollutants identified by the Commission, or disclosure of a regional fuel mix average.

    (ii) The Commission may require an electric company or an electricity supplier to provide documentation supporting the disclosures required under subparagraph (i) of this paragraph.

  (5)

    (i) The Commission shall, by regulation or order, require the unbundling of electric company rates, charges, and services into standardized categories determined by the Commission.

    (ii) The Commission shall, by regulation or order, require that customers' bills for electricity service indicate charges for:

      (1) distribution and transmission;

      (2) transition charge or credit;

      (3) universal service program charges;

      (4) customer charges;

      (5) taxes; and

      (6) other charges identified by the Commission.

  (6) The Commission shall issue orders or regulations to prevent an electric company and an electricity supplier from disclosing a retail electric customer's billing, payment, and credit information without the retail electric customer's consent, except as allowed by the Commission for bill collection or credit rating reporting purposes.

  (7) An electricity supplier may not engage in marketing, advertising, or trade practices that are unfair, false, misleading, or deceptive.

  (8) The Commission shall determine the terms, conditions, and rates of standard offer service in accordance with:

    (i) Title 4 of this article; or

    (ii) as applicable, Sec. 7-510(c)(4) of this subtitle.

  (9) In connection with Sec. 7-513 of this subtitle, the Commission may not require an electric company to divest itself of a generation asset or prohibit an electric company from divesting itself voluntarily of a generation asset.

  (10)

    (i) On or before July 1, 2000, the Commission shall issue orders or adopt regulations reasonably designed to ensure the creation of competitive electricity supply and electricity supply services markets, with appropriate customer safeguards.

    (ii) On or before July 1, 2000, the Commission shall require:

      (1) an appropriate code of conduct between the electric company and an affiliate providing electricity supply and electricity supply services in the State;

      (2) access by electricity suppliers and customers to the electric company's transmission and distribution system on a nondiscriminatory basis;

      (3) appropriate complaint and enforcement procedures; and

      (4) any other safeguards deemed necessary by the Commission to ensure the creation and maintenance of a competitive electricity supply and electricity supply services market.

    (iii) On or before July 1, 2000, the Commission shall require, among other factors, functional, operational, structural, or legal separation between the electric company's regulated businesses and its nonregulated businesses or nonregulated affiliates.

  (11) Nothing in this title may be construed as preventing the application of State and federal consumer protection and antitrust laws to electric companies and their affiliates, and to electricity suppliers.

  (12) The Commission, in consultation with the Department of the Environment, shall adopt appropriate measures to maintain environmental standards, adapt existing programs, and develop new programs as appropriate to ensure compliance with federal and State environmental protection standards.

  (13)

    (i) An electric company shall comply with all requirements of the Commission in conducting regulated operations in compliance with this division.

    (ii) The Commission shall require each electric company to adopt a code of conduct to be approved by the Commission by a date to be determined by the Commission to prevent regulated service customers from subsidizing the services of unregulated businesses or affiliates of the electric company.

(c)

  (1) Notwithstanding any other provision of law, including subsection (d) of this section, and subject to Sec. 4-213 of this article, the Commission may regulate the regulated services of an electric company through alternative forms of regulation.

  (2) 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:

    (i) protects consumers;

    (ii) ensures the quality, availability, and reliability of regulated electric services; and

    (iii) is in the interest of the public, including shareholders of the electric company.

  (3) Alternative forms of regulation may include:

    (i) price regulation, including price freezes or caps;

    (ii) revenue regulation;

    (iii) ranges of authorized return;

    (iv) rate of return;

    (v) categories of services; or

    (vi) price-indexing.

  (4)

    (i) Subject to subparagraph (ii) of this paragraph, the Commission shall conduct a proceeding and determine whether allowing the use of forecast test years, historic test years, or a hybrid model is in the best interests of and protects ratepayers.

    (ii) The Commission may not approve a requested rate increase that is based on a forecast test year in a base rate proceeding until the later of:

      (1) the completion of the proceeding under subparagraph (i) of this paragraph; or

      (2) April 1, 2027.

    (iii) On or before April 1, 2027, the Commission shall report to the General Assembly, in accordance with Sec. 2-1257 of the State Government Article, on the results of the proceeding held under subparagraph (i) of this paragraph, including any Commission recommendations for legislative action.

(d)

  (1) The Commission shall cap, for 4 years after initial implementation of customer choice in the electric company's distribution territory, the total of the rates of an electric company charged to a retail electric customer at the actual level of the rates in effect or authorized by the Commission on the date immediately preceding the initial implementation of customer choice in the electric company's distribution territory.

  (2)

    (i) Except as provided in subparagraph (ii) of this paragraph, the cap required under paragraph (1) of this subsection does not apply to the recovery of costs added after January 1, 2000, in accordance with Sec. 7-512(c) of this subtitle.

    (ii) The cap required under paragraph (1) of this subsection applies to the recovery of:

      (1) any transition costs under Sec. 7-513 of this subtitle;

      (2) any costs included in rates on January 1, 2000, in accordance with Sec. 7-512(c) of this subtitle; and

      (3) costs for the universal service program established under Sec. 5-5A-08 of the Human Services Article.

  (3) As part of a settlement, the Commission may approve a cap for a different time period or an alternative price protection plan that the Commission determines is equally protective of ratepayers.

  (4)

    (i)

      (1) Subject to the provisions of paragraph (5) of this subsection, the Commission shall reduce residential rates for each investor-owned electric company by an amount between 3% and 7.5% of base rates, as measured on June 30, 1999.

      (2) The reduction required under subsubparagraph 1 of this subparagraph shall begin on the initial implementation date and remain in effect for 4 years.

      (3) The Commission shall determine the allocation of the rate reduction among the generation, transmission, and distribution residential rate components.

    (ii) In achieving the rate reduction required under subparagraph (i) of this paragraph, the Commission shall consider:

      (1) the expiration of any surcharge;

      (2) changes in the electric company's tax liability;

      (3) cost of service determinations ordered by the Commission;

      (4) net transition costs or benefits;

      (5) the effect on the competitive electricity supply market;

      (6) whether the rate reduction and rate cap will unduly impair the electric company's financial condition;

      (7) the costs associated with the universal service program; and

      (8) the interests of the public, including shareholders of the electric company.

    (iii) The Commission may, within the parameters provided in subparagraph (i) of this paragraph, increase or decrease the actual rate reduction required.

    (iv) The Commission may allow the recovery of any extraordinary costs based on the circumstances of an individual electric company if the Commission determines that the action is necessary and in the public interest.

    (v) In determining the rate reduction required under subparagraph (i) of this paragraph, the Commission may not increase rates for nonresidential customers.

  (5) The requirements of paragraph (4) of this subsection do not apply to an electric company if the Commission approves or has in effect a settlement that the Commission determines is equally protective of ratepayers.

#### Section 7-506

(a) The electric company in a distribution territory shall provide and be responsible for distribution services in the territory.

(b) The electric company shall provide distribution services in its distribution territory to all customers and electricity suppliers on rates, terms of access, and conditions that are comparable to the electric company's own use of its distribution system.

(c) Each electric company shall maintain the reliability of its distribution system in accordance with Sec. 7-213 of this title and applicable orders, tariffs, and regulations of the Commission.

(d) The electric company shall connect customers and deliver electricity on behalf of electricity suppliers consistent with the provisions of this division.

(e) The electric company shall provide standard offer service under Sec. 7-510(c) of this subtitle.

#### Section 7-506.1

(a)

  (1) This section applies only to:

    (i) an electricity supplier or other owner of a generating station that enters into a contract for the provision of the direct supply of electricity to a commercial or industrial customer in a way that bypasses:

      (1) interconnection of the load with the electric transmission and distribution systems; or

      (2) the distribution services of an electric company; and

    (ii) a commercial or industrial customer that enters into a contract with an electricity supplier or other owner of a generating station for the provision of the direct supply of electricity as specified in item (i) of this paragraph.

  (2) This section does not apply to the use of electricity from an on-site generating station that has been approved under Sec. 7-207.1 of this title.

(b) The Commission may apply to a commercial or industrial customer and any generating station supplying electricity to the commercial or industrial customer in the manner specified in subsection (a)(1) of this section:

  (1) any direct or indirect costs, fees, and obligations that are normally applied to retail electric customers in the service territory in which the commercial or industrial customer or generating station is located or interconnected if the Commission determines that the direct or indirect costs, fees, and obligations should be attributable to the commercial or industrial customer and any generating station supplying electricity to the commercial or industrial customer; and

  (2) any avoided wholesale costs that the Commission determines have been or may be shifted inappropriately to other retail electric customers as a result of the provision of the direct supply of electricity as specified in subsection (a)(1) of this section, including:

    (i) transmission costs;

    (ii) energy costs;

    (iii) capacity costs; and

    (iv) ancillary services costs.

#### Section 7-507

(a) A person, other than an electric company providing standard offer service under Sec. 7-510(c) of this subtitle, a municipal electric utility serving customers solely in its distribution territory, the Department of General Services selling energy under Sec. 7-704.4 of this title, or a community choice aggregator under Sec. 7-510.3 of this subtitle, may not engage in the business of an electricity supplier in the State unless the person holds a license issued by the Commission.

(b)

  (1) An application for an electricity supplier license shall:

    (i) be made to the Commission in writing on a form adopted by the Commission;

    (ii) be verified by oath or affirmation; and

    (iii) contain information that the Commission requires, including:

      (1) proof of technical and managerial competence;

      (2) proof of compliance with all applicable requirements of the Federal Energy Regulatory Commission, and any independent system operator or regional or system transmission operator to be used by the licensee;

      (3) a certification of compliance with applicable federal and State environmental laws and regulations that relate to the generation of electricity; and

      (4) payment of the applicable licensing fee.

  (2)

    (i) The term of a residential electricity supplier license is 3 years.

    (ii) The terms of licenses may be staggered as determined by the Commission.

    (iii) Unless a license for a residential electricity supplier is renewed for a 3-year term in accordance with this subsection, the license expires on the date that the Commission sets.

    (iv) A licensee may renew a license for a 3-year term before the license expires if the licensee:

      (1) otherwise is entitled to be licensed;

      (2) submits to the Commission a renewal application on the form that the Commission provides; and

      (3) pays to the Commission the applicable renewal fee set by the Commission.

(c) The Commission shall, by regulation or order:

  (1) require proof of financial integrity;

  (2) require a licensee to post a bond or other similar instrument if, in the Commission's judgment, the bond or similar instrument is necessary to insure an electricity supplier's financial integrity;

  (3) require a licensee to:

    (i) provide proof that the licensee is qualified to do business in the State with the Department of Assessments and Taxation; and

    (ii) agree to be subject to all applicable taxes; and

  (4) adopt any other requirements the Commission finds to be in the public interest, which may include different requirements for:

    (i) electricity suppliers that serve only large customers; and

    (ii) the different categories of electricity suppliers.

(d) A license issued under this section may not be transferred without prior Commission approval.

(e) The Commission shall adopt regulations or issue orders to:

  (1) protect consumers, electric companies, electricity suppliers, energy salespersons, and energy vendors from anticompetitive and abusive practices;

  (2) require each electricity supplier, each energy salesperson, and each energy vendor to provide, in addition to the requirements under Sec. 7-505(b)(5) of this subtitle, adequate and accurate customer information to enable customers to make informed choices regarding the purchase of any electricity services offered by the electricity supplier;

  (3) establish reasonable restrictions on telemarketing;

  (4) establish procedures for contracting with customers;

  (5) establish requirements and limitations relating to deposits, billing, collections, and contract cancellations;

  (6) establish provisions providing for the referral of a delinquent account by an electricity supplier to the standard offer service under Sec. 7-510(c) of this subtitle; and

  (7) establish procedures for dispute resolution.

(f) In accordance with regulations or orders of the Commission, electricity bills, for competitive and regulated electric services, provided to consumers may provide, in addition to the requirements of Sec. 7-505(b)(5) of this subtitle and subsection (e)(2) of this section, the following information:

  (1) the identity and phone number of the electricity supplier of the service;

  (2) sufficient information to evaluate prices and services; and

  (3) information identifying whether the price is regulated or competitive.

(g)

  (1) An electricity supplier, an energy salesperson, an energy vendor, or any person or governmental unit may not, without first obtaining the customer's permission:

    (i) make any change in the electricity supplier for a customer; or

    (ii) add a new charge for a new or existing service or option.

  (2) The Commission shall adopt regulations or issue orders establishing procedures to prevent the practices prohibited under paragraph (1) of this subsection.

(h)

  (1) An electricity supplier, an energy salesperson, or an energy vendor may not discriminate against any customer based wholly or partly on race, color, creed, national origin, gender identity, disability, sexual orientation, or sex of an applicant for service or for any arbitrary, capricious, or unfairly discriminatory reason.

  (2) An electricity supplier, an energy salesperson, or an energy vendor may not refuse to provide service to a customer except by the application of standards that are reasonably related to the electricity supplier's economic and business purposes.

(i) An electricity supplier, an energy salesperson, and an energy vendor shall be subject to all applicable federal and State environmental laws and regulations.

(j) An electricity supplier shall post on the Internet information that is readily understandable about its services and rates for small commercial and residential electric customers.

(k)

  (1) Subject to subsection (r) of this section, for just cause on the Commission's own investigation or on complaint of the Office of People's Counsel, the Attorney General, or an affected party, the Commission may:

    (i) deny a license to, or revoke, suspend, or refuse to renew the license of, an electricity supplier, an energy salesperson, or an energy vendor;

    (ii) impose a civil penalty or other remedy;

    (iii) order a refund or credit to a customer; or

    (iv) impose a moratorium on adding or soliciting additional customers by the electricity supplier, energy salesperson, or energy vendor.

  (2) A civil penalty may be imposed in addition to the Commission's decision to deny, revoke, suspend, or refuse to renew a license or impose a moratorium.

  (3) Just cause includes:

    (i) intentionally providing false information to the Commission;

    (ii) switching, or causing to be switched, the electricity supply for a customer without first obtaining the customer's permission;

    (iii) failing to provide electricity for its customers;

    (iv) committing fraud or engaging in deceptive practices;

    (v) failing to maintain financial integrity;

    (vi) violating a Commission regulation or order;

    (vii) failing to pay, collect, remit, or calculate accurately applicable State or local taxes;

    (viii) violating a provision of this article or any other applicable consumer protection law of the State;

    (ix) conviction of a felony by the licensee or principal of the licensee or any crime involving fraud, theft, or deceit;

    (x) denial, suspension, or revocation of or refusal to renew a license by any State or federal authority; and

    (xi) commission of any of the acts described in items (i) through (x) of this paragraph by a person that is an affiliate of the licensee or that is under common control with the licensee.

(l)

  (1) An electricity supplier, an energy vendor, or any other person, except for an energy salesperson, selling or offering to sell electricity in the State in violation of this section or Sec. 7-318 of this title, after notice and an opportunity for a hearing, is subject to:

    (i) a civil penalty of not more than $25,000 for the violation;

    (ii) license denial, revocation, or suspension or refusal to renew the license; or

    (iii) both.

  (2) An energy salesperson selling or offering to sell electricity in the State in violation of this section or Sec. 7-317 of this title, after notice and an opportunity for a hearing, is subject to license denial, revocation, or suspension or refusal to renew the license.

  (3) Each day or part of a day a violation continues is a separate violation.

  (4) Each customer to whom electricity is sold or offered in violation of this section is a separate violation.

  (5) The Commission shall determine the amount of any civil penalty after considering:

    (i) the number of previous violations of any provision of this division by the electricity supplier, energy vendor, or other person;

    (ii) the gravity of the current violation;

    (iii) the good faith of the electricity supplier, energy vendor, or other person charged in attempting to achieve compliance after notification of the violation; and

    (iv) any other matter that the Commission considers appropriate and relevant.

(m) In connection with a consumer complaint or Commission investigation under this section or Sec. 7-317 or Sec. 7-318 of this title, an electricity supplier, an energy salesperson, energy vendor, and any other person selling or offering to sell electricity in the State shall provide to the Commission access to any accounts, books, papers, and documents that the Commission considers necessary to resolve the matter at issue.

(n) The Commission may order the electricity supplier, energy salesperson, an energy vendor, or other person to cease adding or soliciting additional customers or to cease serving customers in the State.

(o) The Commission shall consult with the Consumer Protection Division of the Office of the Attorney General before issuing regulations designed to protect consumers.

(p) The People's Counsel shall have the same authority in licensing, complaint, and dispute resolution proceedings as it has in Title 2 of this article.

(q) Nothing in this subtitle may be construed to affect the authority of the Division of Consumer Protection in the Office of the Attorney General to enforce violations of Titles 13 and 14 of the Commercial Law Article or any other applicable State law or regulation in connection with the activities of electricity suppliers, energy salespersons, and energy vendors.

(r) The Commission may not impose a civil penalty on an energy salesperson under subsection (k) or (l) of this section.

#### Section 7-508

(a) An electric company may transfer any of its generation facilities or generation assets to an affiliate.

(b) The transfer of a generation facility or generation asset to an affiliate may not affect or restrict the Commission's determination of the value of a generation asset for purposes of transition costs or benefits under Sec. 7-513(b) of this subtitle.

(c)

  (1) This subsection is in effect until the later of the date when:

    (i) all customers of the electric company are eligible for customer choice under Sec. 7-510 of this subtitle; and

    (ii) the amount of transition costs or benefits arising from the generation to be transferred has been finally determined by the Commission under Sec. 7-513(a) through (c) of this subtitle.

  (2) The Commission may review and approve the transfer for the sole purpose of determining:

    (i) that the appropriate accounting has been followed;

    (ii) that the transfer does not or would not result in an undue adverse effect on the proper functioning of a competitive electricity supply market; and

    (iii) the appropriate transfer price and rate making treatment.

  (3) The Commission shall act on the transfer of a generation facility or generation asset under this subsection within 180 days after the electric company files its proposed transfer application and any required supporting information.

#### Section 7-509

(a)

  (1) On and after the initial implementation date, the generation, supply, and sale of electricity, including all related facilities and assets, may not be regulated as an electric company service or function except to:

    (i) establish the price for standard offer service under Sec. 7-510(c) of this subtitle; and

    (ii) review and approve transfers of generation assets under Sec. 7-508 of this subtitle.

  (2) This subsection does not apply to:

    (i) regulation of an electricity supplier under Sec. 7-507 of this subtitle; or

    (ii) the costs of nuclear generation facilities or purchased power contracts that, as part of a settlement approved by the Commission, remain regulated or are recovered through the distribution function.

(b)

  (1) Subject to paragraph (2) of this subsection, this section does not apply to an investor-owned electric company until the electric company:

    (i) transfers generation facilities and generation assets to an affiliate of the electric company, and the affiliate operates the facilities and assets; or

    (ii) sells the generation facilities and generation assets to a nonaffiliate.

  (2)

    (i) Notwithstanding the provisions of paragraph (1) of this subsection, this section applies to an investor-owned electric company that does not transfer its generation facilities and generation assets to an affiliate or sell its generation facilities and generation assets to a nonaffiliate if, on January 1, 1999, the retail peak load of the investor-owned electric company in the State was less than 1,000 megawatts.

    (ii) An investor-owned electric company to which this section applies through subparagraph (i) of this paragraph shall, by January 1, 2001:

      (1) transfer its generation facilities and generation assets to an affiliate of the investor-owned electric company that operates the facilities and assets; or

      (2) sell the generation facilities and generation assets to a nonaffiliate.

(c) The exceptions in subsection (a)(1) of this section as to any electric company shall remain in effect until the latest of:

  (1) the date when all customers of that electric company are eligible for customer choice under Sec. 7-510 of this subtitle;

  (2) the date when the amount of transition costs or benefits arising from the generation that is deregulated has been finally determined by the Commission under Sec. 7-513(a) through (c) of this subtitle; or

  (3) the date on which the obligation of the electric company to provide standard offer service under Sec. 7-510(c)(3)(ii) of this subtitle terminates.

#### Section 7-510

(a)

  (1) Subject to subsection (b) of this section, the phased implementation of customer choice shall be implemented as follows:

    (i) on July 1, 2000, one-third of the residential class in the State of each electric company shall have the opportunity for customer choice;

    (ii) on January 1, 2001, the entire industrial class and the entire commercial class in the State of each electric company shall have the opportunity for customer choice;

    (iii) on July 1, 2001, two-thirds of the residential class in the State of each electric company shall have the opportunity for customer choice;

    (iv) on July 1, 2002, all customers of each electric company shall have the opportunity for customer choice; and

    (v) by July 1, 2003, under a separate schedule adopted by the Commission, all customers of each electric cooperative shall have the opportunity for customer choice.

  (2)

    (i) In accordance with this paragraph, the Commission may adopt a separate schedule for municipal electric utilities for the implementation of customer choice.

    (ii) A municipal electric utility may not be required to make its service territory available for customer choice unless it elects to do so.

    (iii) If a municipal electric utility elects to allow customer choice, the municipal electric utility shall file a proposed plan and schedule with the Commission.

    (iv) The Commission may approve each municipal electric utility plan and schedule after considering the features that distinguish the municipal electric utility from other electric companies.

    (v) Nothing in this subtitle may be construed to require the functional, operational, structural, or legal separation of the regulated and nonregulated operations of the municipal electric utility.

  (3) If a municipal electric utility serves customers outside its distribution territory, electricity suppliers licensed under Sec. 7-507 of this subtitle may serve the customers in the distribution territory of the municipal electric utility.

(b) For good cause shown and if the Commission finds the action to be in the public interest, the Commission may:

  (1) accelerate or delay the initial implementation date of July 1, 2000, by up to 3 months; or

  (2) accelerate any of the other implementation dates and phase-in percentages in subsection (a) of this section.

(c)

  (1) Beginning on the initial implementation date, an electric company's obligation to provide electricity supply and electricity supply service is stated by this subsection.

  (2)

    (i) Electricity supply purchased from a customer's electric company is known as standard offer service.

    (ii) A customer is considered to have chosen the standard offer service if the customer:

      (1) is not allowed to choose an electricity supplier under the phase in of customer choice in subsection (a) of this section;

      (2) contracts for electricity with an electricity supplier and it is not delivered;

      (3) cannot arrange for electricity from an electricity supplier;

      (4) does not choose an electricity supplier;

      (5) chooses the standard offer service; or

      (6) has been denied service or referred to the standard offer service by an electricity supplier in accordance with Sec. 7-507(e)(6) of this subtitle.

  (3)

    (i) An electric company has the obligation to provide standard offer service to residential and small commercial customers at a market price that permits recovery of the verifiable, prudently incurred costs to procure or produce the electricity plus a reasonable return.

    (ii) On or before December 31, 2008, and every 5 years thereafter, the Commission shall report to the Governor and, in accordance with Sec. 2-1257 of the State Government Article, to the General Assembly on the status of the standard offer service and the development of competition.

  (4)

    (i)

      (1) On or before July 1, 2001, the Commission shall adopt regulations or issue orders to establish procedures for the competitive selection of wholesale electricity suppliers, including an affiliate of an electric company, to provide electricity for standard offer service to customers of electric companies under paragraph (2) of this subsection, except for customers of electric cooperatives and municipal electric utilities.

      (2) Unless delayed by the Commission, the competitive selection shall take effect no later than July 1, 2003.

    (ii)

      (1) Under the obligation to provide standard offer service in accordance with this subsection, the Commission, by regulation or order, and in a manner that is designed to obtain the best price for residential and small commercial customers in light of market conditions at the time of procurement and the need to protect these customers from excessive price increases:

      (A) shall require each investor-owned electric company to obtain its electricity supply for residential and small commercial customers participating in standard offer service through a competitive process in accordance with this paragraph; and

      (B) may require or allow an investor-owned electric company to procure electricity for these customers directly from an electricity supplier through one or more bilateral contracts outside the competitive process.

      (2)

        (A) As the Commission directs, the competitive process shall include a series of competitive wholesale bids in which the investor-owned electric company solicits bids to supply anticipated standard offer service load for residential and small commercial customers as part of a portfolio of blended wholesale supply contracts of short, medium, or long terms, and other appropriate electricity products and strategies, as needed to meet demand in a cost-effective manner.

      (B) The competitive process may include different bidding structures and mechanisms for base load, peak load, and very short-term procurement.

      (C) By regulation or order, as a part of the competitive process, the Commission shall require or allow the procurement of cost-effective energy efficiency and conservation measures and services with projected and verifiable energy savings to offset anticipated demand to be served by standard offer service, and the imposition of other cost-effective demand-side management programs.

      (3)

        (A) In order to prevent an excessive amount of load being exposed to upward price risks and volatility, the Commission may stagger the dates for the competitive wholesale auctions.

      (B) By regulation or order, the Commission may allow a date on which a competitive wholesale auction takes place to be altered based on current market conditions.

      (4) By regulation or order, the Commission may allow an investor-owned electric company to refuse to accept some or all of the bids made in a competitive wholesale auction in accordance with standards adopted by the Commission.

      (5) The investor-owned electric company shall publicly disclose the names of all bidders and the names and load allocation of all successful bidders 90 days after all contracts for supply are executed.

  (5) An electric company may procure the electricity needed to meet its standard offer service electricity supply obligation from any electricity supplier, including an affiliate of the electric company.

  (6) In order to meet long-term, anticipated demand in the State for standard offer service and other electricity supply, the Commission may require or allow an investor-owned electric company to construct, acquire, or lease, and operate, its own generating facilities, and transmission facilities necessary to interconnect the generating facilities with the electric grid, subject to appropriate cost recovery.

  (7)

    (i) To determine whether an appropriate phased implementation of electricity rates that is necessary to protect residential customers from the impact of sudden and significant increases in electricity rates, the Commission in the case of an increase of 20% or more over the previous year's total electricity rates, shall conduct evidentiary proceedings, including public hearings.

    (ii)

      (1) A deferral of costs as part of a phased implementation of electricity rates by an investor-owned electric company shall be treated as a regulatory asset to be recovered in accordance with a rate stabilization plan under Part III of this subtitle or any other plan for phased implementation approved by the Commission.

      (2) A deferral of costs under this paragraph must be just, reasonable, and in the public interest.

    (iii) The Commission shall approve the recovery of deferred costs under subparagraph (ii) of this paragraph as:

      (1) long-term recovery in accordance with a rate stabilization plan under Part III of this subtitle; or

      (2) short-term recovery through a rate proceeding mechanism approved by the Commission.

    (iv) The Commission may approve a phasing in of increased costs by:

      (1) placing a cap on rates and allowing recovery over time; or

      (2) allowing rates to increase and providing for a rebate to customers of any excess costs paid.

  (8)

    (i) An electric cooperative that as of July 1, 2006, supplied its standard offer service load through a portfolio of blended wholesale supply contracts of short, medium, and long terms, and other appropriate electricity products and strategies, as needed to meet demand in a cost-effective manner, may choose to continue to use a blended portfolio:

      (1) as approved and modified by the electric cooperative's board of directors; and

      (2) with appropriate review for prudent cost recovery as determined by the Commission.

    (ii) The Commission may not set or enforce a termination date for the procurement of supply through a managed portfolio previously approved by the Commission.

  (9)

    (i) The Commission, on request by an electric cooperative or on its own initiative, shall initiate a proceeding to investigate options for a rate stabilization plan to assist residential electric customers to gradually adjust to market rates over an extended period of time.

    (ii) If an electric cooperative determines that total electric rates for residential customers are anticipated to increase by more than 20% in a 12-month period resulting from an increase in the cost of generation, the electric cooperative shall survey its membership to determine whether to make a request to the Commission to initiate a proceeding under subsection (a) of this section.

    (iii) Notwithstanding subparagraphs (i) and (ii) of this paragraph, as approved by the Commission, an electric cooperative may receive a modification in distribution and transmission rates.

  (10)

    (i) This paragraph does not apply to a member-regulated cooperative as defined in Sec. 5-601 of the Corporations and Associations Article.

    (ii) An electric cooperative may advertise, market, and promote standard offer service and related products in its service territory, including availability, price, and other terms, in compliance with appropriate consumer protections consistent with those that apply to electricity suppliers under Sec. 7-507 of this subtitle.

(d)

  (1) This subsection applies to residential electricity supply other than supply offered through:

    (i) standard offer service;

    (ii) the Department of General Services' sale of energy under Sec. 7-704.4 of this title; or

    (iii) a community choice aggregator under Sec. 7-510.3 of this subtitle.

  (2) A residential electricity supplier:

    (i) except as provided in paragraph (3)(iii) of this subsection, may offer electricity, other than green power, only at a price that does not exceed the following percentages of the electric company's standard offer service rate in the electric company's service territory as of the date of agreement with the customer:

      (1) for a term not to exceed 23 months, 100%;

      (2) for a term of 24 months to 35 months, 105%; and

      (3) for a term of 36 months, 110%;

    (ii) may offer residential electricity supply only for a term not to exceed 36 months at a time;

    (iii) may, for electricity supply other than green power, automatically renew the term only if the electricity supplier provides notice to the customer 90 days before and 30 days before renewal;

    (iv) may offer green power that meets the requirements of Sec. 7-707 of this title, but may not automatically renew the term with the customer;

    (v) except as provided in paragraph (3) of this subsection, may not offer a variable rate; and

    (vi) may not pay a commission or other incentive-based compensation to an energy salesperson for enrolling customers.

  (3) A residential electricity supplier may offer a variable rate that:

    (i) uses time-of-use rates that establish different rates for periods within a single day;

    (ii) adjusts for seasonal variation not more than twice in a single year; or

    (iii) does not exceed the electric company's standard offer service rate in the electric company's service territory at any time during the agreement with the customer.

  (4) A residential electricity supplier may not sell to an electric company, and an electric company may not purchase from the electricity supplier, accounts receivable.

(e)

  (1) This subsection does not apply to:

    (i) the Department of General Services' sale of energy under Sec. 7-704.4 of this title; or

    (ii) a community choice aggregator under Sec. 7-510.3 of this subtitle.

  (2) An electric company and a residential electricity supplier shall establish a mechanism for a customer whose account number or customer choice identification number has been compromised to receive a replacement account number or customer choice identification number on request, subject to verification in a manner approved by the Commission.

(f)

  (1) This subsection does not apply to:

    (i) the Department of General Services' sale of energy under Sec. 7-704.4 of this title; or

    (ii) a community choice aggregator under Sec. 7-510.3 of this subtitle.

  (2) Except as provided in paragraph (3) of this subsection, as approved by the Commission by regulation or order, each electric company and each residential electricity supplier shall allow a customer to indicate the customer's intention to remain on standard offer service indefinitely and not to receive directed marketing contacts from electricity suppliers through the implementation of a "do not transfer" list onto which the customer may request to be placed.

  (3) A residential electricity supplier may contact a customer on a "do not transfer" list until the electricity supply agreement entered into between the electricity supplier and the customer expires.

(g)

  (1) In this subsection, "billing entity" means an electric company, a licensed electricity supplier, or any other entity that is responsible for issuing an electric bill to a residential customer.

  (2) On or before the 15th day of each month, each billing entity shall submit a report to the Commission on customer choice in its service territory for the preceding month, including:

    (i) the total kilowatt-hours distributed to customers purchasing electricity from a third-party electricity supplier;

    (ii) the total supply cost charged to customers purchasing electricity from a third-party electricity supplier;

    (iii) the total cost that customers specified in item (ii) of this paragraph would have paid under standard offer service;

    (iv) the net third-party total cost compared to the net standard offer service cost;

    (v) the total third-party average rate;

    (vi) the standard offer service average rate;

    (vii) the difference between the total third-party average rate and the standard offer service average rate;

    (viii) the third-party average residential rates broken out by supplier and the variance between each of these rates and the standard offer service average rate;

    (ix) the third-party average general service nondemand rates broken out by supplier and the variance between each of these third-party rates and the standard offer service average rate;

    (x) the third-party average general service demand rates broken out by supplier and the variance between each of these third-party rates and the standard offer service average rate;

    (xi) the third-party average large power demand rates broken out by supplier and the variance between each of these third-party rates and the standard offer service average rate; and

    (xii) other pertinent information the Commission considers appropriate.

(h) The Commission shall, by regulation or order, adopt procedures to implement this section.

(i) Except as provided in Sec. 7-510.3 of this subtitle, a county or municipal corporation may not act as an aggregator unless the Commission determines there is not sufficient competition within the boundaries of the county or municipal corporation.

#### Section 7-510.1

(a) The Commission shall educate customers about customer choice in accordance with this section.

(b)

  (1) The Commission shall:

    (i) host and regularly update a user-friendly customer choice education section on its website that complies with standards issued under Sec. 508 of the federal Rehabilitation Act of 1973; and

    (ii) prominently display a link to that section of the Commission's website on the home page of the Commission's website.

  (2) The customer choice education section of the Commission's website shall include:

    (i) a clear and simple description of:

      (1) customer choice;

      (2) how customers can shop for an electricity supplier;

      (3) what kinds of competitive electricity supply options customers have, including:

      (A) renewable energy supply;

      (B) fixed and variable pricing; and

      (C) other common contract terms;

      (4) the current price of standard offer service in the service territory of each electric company; and

      (5) the continuing role of the electric company in delivering electricity to a customer that chooses an electricity supplier;

    (ii) fact sheets that:

      (1) answer common questions about customer choice;

      (2) advise customers about the questions customers should ask when choosing an electricity supplier;

      (3) list the kinds of disclosures that electricity suppliers must make to customers;

      (4) describe common issues about contracts for electricity supply and available options; and

      (5) describe consumer rights and protections that are available and the means of making use of them;

    (iii) a list of all electricity suppliers that have open offers to supply electricity in a customer's service area, searchable by service territory or jurisdiction;

    (iv) a statement indicating that customers who have entered into a contract with a competitive electricity supplier for electricity supply should be aware of the ending date of the contract so that they may determine, before being placed into a renewal contract with the current electricity supplier, whether they would like to:

      (1) shop for an alternative electricity supplier;

      (2) renew with the current electricity supplier; or

      (3) return to the standard offer service which may be offered at a price that is less than the renewal price offered by the current electricity supplier; and

    (v) a link to the customer choice shopping websites established under Sec. 7-510.2 of this subtitle and Sec. 7-604.1 of this title.

  (3) To the extent practicable, the list of electricity suppliers required under paragraph (2)(iii) of this subsection shall include:

    (i) the terms of any open offers to supply electricity, including:

      (1) the duration of the contract;

      (2) the cost of electricity per kilowatt-hour; and

      (3) any cancellation fees; and

    (ii) a link to the website of each electricity supplier with an open offer to supply electricity.

(c)

  (1) To ensure the currency and accuracy of information required under subsection (b)(2)(iii) of this section, the Commission shall maintain a secure portal on its website to receive information about offers to supply electricity from electricity suppliers.

  (2) Each electricity supplier that is actively seeking residential customers in a service territory in the State shall maintain at least one open offer to supply electricity to residential customers on the Commission's website at all times.

  (3) At least once each month, each electricity supplier with an open offer to supply electricity shall submit detailed information about the offer to the Commission through a secure portal maintained by the Commission on the Commission's website for this purpose.

(d) The Commission shall work with media outlets in the State to develop and air public service announcements publicizing customer choice and directing customers to the Commission's website for additional information.

(e) The Commission shall recover the cost of complying with this section in accordance with Sec. 2-110 of this article.

#### Section 7-510.2

(a) The Commission shall establish a customer choice shopping website that allows a customer to sort electricity suppliers that have open offers to supply electricity to residential customers in the customer's service area.

(b) The website shall include:

  (1) a list of all electricity suppliers that have open offers to supply electricity to residential customers in a customer's service area, sortable by:

    (i) cost of service;

    (ii) cost of electricity per kilowatt-hour;

    (iii) rate structure;

    (iv) duration of the contract;

    (v) cancellation fee; and

    (vi) any other aspect of service that the Commission considers necessary;

  (2) a way to compare electricity suppliers based on the sortable items specified under item (1) of this subsection;

  (3) a link to the website of each electricity supplier with an open offer to supply electricity to residential customers;

  (4) a link to the customer education webpage established under Sec. 7-510.1 of this subtitle;

  (5) a link to a complaint process that provides access for the customer to protect the customer's rights and make use of consumer protections through the Commission; and

  (6) fact sheets on the process for comparing offers from electricity suppliers on the website, including relevant contract terms, requirements, limitations, and fees.

(c) The Commission shall use the information received from an electricity supplier under Sec. 7-510.1 of this subtitle to maintain the information on the website.

(d) The Commission shall recover the cost of complying with this section in accordance with Sec. 2-110 of this article.

#### Section 7-510.3

(a) In this section, "small commercial electric customer" means a commercial electric customer that has a peak electric load of not more than 25 kilowatts and includes master-metered multiple occupancy residences that have a peak electric load of not more than 25 kilowatts.

(b) This section applies only in Montgomery County.

(c)

  (1) There is a Community Choice Aggregation Pilot Program.

  (2) Beginning December 31, 2023, a county may form a community choice aggregator under this section.

(d)

  (1) At least 60 days before initiating the process to form a community choice aggregator, a county shall:

    (i) develop an aggregation plan;

    (ii) give written notice of the aggregation plan to each residential and small commercial electric customer in the county;

    (iii) publish a fair summary of the aggregation plan in at least one newspaper of general circulation in the county;

    (iv) if the county maintains a website, publish the full text of the aggregation plan on the website; and

    (v) give, for the Commission's approval, written notice of its intention to initiate a process to form a community choice aggregator.

  (2) The aggregation plan shall:

    (i) detail the processes related to participating in the aggregation activities of a community choice aggregator;

    (ii) contain information on the operations, funding, and organizational structure of the community choice aggregator;

    (iii) provide details on:

      (1) the rate setting and costs to participants, including an analysis of historical and forecasted trends in electricity prices and a purchasing plan designed to save ratepayers money;

      (2) methods that the community choice aggregator must use for entering into and terminating agreements with other entities;

      (3) the rights and responsibilities of participating electric customers; and

      (4) the termination of the aggregation program, if any; and

    (iv) provide for universal electricity access, reliability, and equitable treatment of all residential and small commercial electric customers in the county.

(e)

  (1) At least 60 days after developing an aggregation plan and giving the notice required under subsection (d) of this section, a county may initiate the process of forming a community choice aggregator by filing with the Commission:

    (i) a notice of intent to form a community choice aggregator;

    (ii) a copy of the aggregation plan developed in accordance with subsection (d) of this section;

    (iii) a draft local law forming a community choice aggregator; and

    (iv) proposed terms of service, rates, and categories of charges, fees, or any other costs to customers unrelated to the actual cost of the electricity supply.

  (2) The notice of intent shall include the name of the county in the community choice aggregator.

  (3) A county is a community choice aggregator after:

    (i) submitting the notice of intent and aggregation plan required under this subsection;

    (ii) the Commission has approved its aggregation plan and proposed terms filed in accordance with paragraph (1)(iv) of this subsection; and

    (iii) enacting a local law that provides that the county shall act as a community choice aggregator.

(f)

  (1) In accordance with a schedule established by the Commission under subsection (l) of this section, if a county enacts a local law to act as a community choice aggregator, the county shall provide or cause its selected electricity supplier, if any, to provide written notice of the formation of the community choice aggregator to all residential and small commercial electric customers in the county.

  (2) The notice required under this subsection shall include:

    (i) the identity and Commission-issued license numbers of any selected electricity supplier;

    (ii) terms and conditions of service;

    (iii) new rates, charges, and fees for service under the community choice aggregator;

    (iv) a comparison of the new rates and the rates under the current standard offer service;

    (v) information on how to access the standard offer service available from an electric company; and

    (vi) the total renewable component of the electricity to be supplied through a community choice aggregator, including the specific sources of any renewable energy compared to the requirements under current law, if any.

  (3) In the notice required under this subsection, the county shall provide to the residential and small commercial electric customers in the county the opportunity to refuse to participate in the aggregation activities of the community choice aggregator:

    (i) by return submission of the notice to the community choice aggregator or the electric company indicating the customer's decision to refuse to participate in the aggregation activities of the community choice aggregator; or

    (ii) by contracting for service with a retail electricity supplier or by choosing standard offer service from an electric company.

  (4) A county that enacts a local law to act as a community choice aggregator under this section may not exclude from the ability to participate in the aggregation activities of the community choice aggregator:

    (i) any residential or small commercial electric customer in the county; or

    (ii) for the provision of electric service for facilities located within the jurisdiction of the community choice aggregator, any governmental entity.

(g) A residential or small commercial electric customer is deemed to have given permission to the county to act on the customer's behalf as a community choice aggregator:

  (1) when the county receives from the customer:

    (i) a reply from the notice required under subsection (f) of this section by which the customer explicitly grants permission for the customer to receive service with the community choice aggregator; or

    (ii) an application to receive service with the community choice aggregator;

  (2) in the case of a customer receiving standard offer service, within 30 days after the notice required by subsection (f) of this section is given if:

    (i) the county has not received a returned notice by that date; or

    (ii) after the creation of the community choice aggregator and receipt of the notice, the customer has not contracted with a retail electricity supplier or contacted an electric company to select standard offer service; or

  (3) on applying for new electric service within the territory served by the community choice aggregator, unless the customer has:

    (i) contracted with a retail electricity supplier for service; or

    (ii) contacted an electric company to select standard offer service.

(h) Except for a contract that automatically renews, at the end of a contract term with an electricity supplier a residential or small commercial electric customer in the jurisdiction of a community choice aggregator shall be automatically enrolled as a participant in the aggregation activities of the community choice aggregator unless the customer:

  (1) gives written notice to the county declining to participate in the aggregation activities of the community choice aggregator; or

  (2) contracts for service with a retail electricity supplier or contacts an electric company to select standard offer service.

(i) This section may not be construed to prevent a residential or small commercial electric customer in the county from choosing at any time:

  (1) to enter into a contract with an electricity supplier other than the community choice aggregator; or

  (2) the standard offer service offered by an electric company.

(j)

  (1) A community choice aggregator may not assess any new fee, tax, or other charge in the aggregation charges or rates that is not related to the cost of:

    (i) providing electricity supply and electricity supply service, including service from a generating station owned by the community choice aggregator;

    (ii) promoting the use of renewable energy; and

    (iii) providing and promoting energy efficiency programs promoted under paragraph (2) or (3) of this subsection.

  (2) A community choice aggregator, in consultation with all investor-owned electric companies whose service territories include all or part of the county and the Department of Housing and Community Development, may promote energy efficiency programs that are:

    (i) offered by the investor-owned electric companies; or

    (ii) filed by the investor-owned electric companies with the Commission for its approval in accordance with Subtitle 2, Part II of this title.

  (3) In addition to the authority granted under paragraph (2) of this subsection, a community choice aggregator may provide and promote energy efficiency programs that are supplemental to any programs that are promoted under paragraph (2) of this subsection.

(k)

  (1) Except for the purposes of meeting the requirements of the renewable energy portfolio standard under Subtitle 7 of this title, a community choice aggregator may not be considered to be an electricity supplier under Sec. 7-507(a) of this subtitle.

  (2)

    (i) A community choice aggregator may own an electric generating facility or an electric storage facility in accordance with this article if the facility is designed to provide energy primarily for use by the participants of the community choice aggregator.

    (ii) When a community choice aggregator builds or acquires an electric generating facility or electric storage facility, the community choice aggregator shall submit to the Commission a plan for the use or disposition of the facility if the community choice aggregator is dissolved.

  (3)

    (i) A community choice aggregator may contract for service from an electric generating facility in accordance with this article if the amount of contracted electricity supply from the facility is not greater than the amount estimated to be necessary to meet the electrical demand of the participants of the community choice aggregator.

    (ii) When a community choice aggregator contracts for service from an electric generating facility for a period exceeding 2 years, the community choice aggregator shall submit to the Commission a plan for the transfer of the contract to another electricity supplier if:

      (1) the community choice aggregator is dissolved; or

      (2) the pilot program ends without an extension or the creation of a permanent community choice aggregator.

  (4) Any contract relating to the provision of electric service by a community choice aggregator, including any contract for the supply of electricity or the procurement or financing of electric generation services shall allow for or anticipate the potential adoption of an alternative resource adequacy mechanism that could apply in the State.

(l)

  (1) Based on a determination of the mitigation of volumetric risk, the Commission may establish by order or regulation a schedule that may not exceed a period of 2 years, by which a community choice aggregator may transfer load from standard offer service to retail or wholesale contracts under an aggregation plan.

  (2) The Commission shall consider the impacts to the price and stability of the procurement of standard offer service when considering a schedule under paragraph (1) of this subsection.

(m)

  (1) A county that is forming a community choice aggregator is deemed to have obtained electric customer authorization to retrieve preenrollment usage data for residential and small commercial electric customers in the county.

  (2) In accordance with procedures established by the Commission, an electric company shall provide to a community choice aggregator any relevant data for customers in the jurisdiction of the community choice aggregator, including:

    (i) preenrollment usage data; and

    (ii) any other appropriate billing and electrical load data.

  (3) An electric company shall provide to a county that is forming a community choice aggregator data under this subsection as follows:

    (i) only aggregate data when the county initiates the process of forming a community choice aggregator; and

    (ii) any customer-specific data after the aggregation plan is approved by the Commission.

(n) The Commission shall review applicable fees, request formats, and the format of data provided to facilitate the intent of this section.

(o) The Commission shall establish procedures for an electric customer that is receiving electricity supply through a community choice aggregator to receive any bill assistance credit or arrearage assistance to which the customer may be entitled under Sec. 5-5A-08 of the Human Services Article or any other federal or State bill and arrearage assistance administered by the Office of Home Energy Programs.

(p) The Commission may allocate the portion of delinquent accounts receivable that is attributable to electricity supply between the electric customers participating in the aggregation activities of a community choice aggregator and the electric customers throughout the electric company's service territory if the Commission determines that:

  (1) the amount of delinquent accounts receivable attributable to electric customers receiving standard offer service is projected to increase to an extent that will materially adversely impact the cost of providing standard offer service; and

  (2) the projected increase in the amount of delinquent accounts receivable attributable to electric customers receiving standard offer service is directly or indirectly caused by the migration of a substantial number of electric customers from standard offer service to participation in the aggregation activities of a community choice aggregator.

(q) Bills sent to electric customers that participate in the aggregation activities of a community choice aggregator shall identify the community choice aggregator as the electricity supplier.

(r)

  (1) In this subsection, "Workgroup" means the Community Choice Energy Workgroup established in accordance with this subsection.

  (2) On or before September 1, 2021, the Commission shall establish a Community Choice Energy Workgroup.

  (3) The Workgroup shall consist of at least the following members:

    (i) one representative of the Montgomery County government;

    (ii) one representative of the Office of People's Counsel;

    (iii) one representative of each investor-owned electric company whose service territory includes all or part of a county that participates in the pilot program;

    (iv) one representative of any competitive electricity supplier;

    (v) one representative of residential and small commercial electric customers;

    (vi) one representative of low-income communities;

    (vii) one representative of minority residential communities;

    (viii) one representative with expertise in implementing community choice aggregation programs; and

    (ix) any other individuals identified by the Commission.

  (4) The Commission shall provide staff for the Workgroup.

  (5) Nothing in this subsection may be construed to limit the authority of the Commission to take any action, including the adoption of regulations, without a recommendation from the Workgroup.

  (6)

    (i) During any year that a community choice aggregator operates in the State, the Workgroup shall submit an annual report on the status of the community choice aggregator to the Commission.

    (ii) The Workgroup shall include in the annual report information regarding:

      (1) rates, charges, and fees for service under each community choice aggregator;

      (2) renewable energy;

      (3) customer satisfaction;

      (4) enrollment; and

      (5) any other information or metric determined by the Workgroup or requested by the Commission.

(s)

  (1) The Commission shall by regulation establish standards and procedures to protect the consumer rights of residential customers within the territory of a community choice aggregator that receive electricity supply through the community choice aggregator.

  (2) The regulations shall prohibit discrimination against a customer on the basis of the location of the customer.

  (3) The Commission shall seek the advice and recommendation of the Community Choice Energy Workgroup established under subsection (r) of this section when carrying out the provisions of this section and adopting regulations.

(t)

  (1) The pilot program shall:

    (i) begin on the earlier of:

      (1) the date that a county gives notice to the Commission of its intention to initiate a process to form a community choice aggregator, in accordance with subsection (d)(1)(v) of this section; or

      (2) April 1, 2026; and

    (ii) end 9 years after the beginning date, but not sooner than April 1, 2031.

  (2) On or before April 1 of the seventh year after the beginning of the pilot program, the Commission shall, in accordance with Sec. 2-1257 of the State Government Article, report to the General Assembly on the status and effectiveness of the pilot program.

(u)

  (1) At the conclusion of the pilot program described in this section, the Commission shall study:

    (i) the overall costs and benefits of the pilot program;

    (ii) whether there were any incremental costs borne by standard offer service customers resulting from the migration of customers between the community choice aggregator and standard offer service; and

    (iii) what mechanisms could be implemented to hold standard offer service customers harmless from any incremental costs borne by standard offer service customers identified under item (ii) of this paragraph.

  (2) The Commission shall seek the advice and recommendation of the Community Choice Energy Workgroup in the study required under this subsection.

  (3) On or before December 31, 2035, the Commission shall report the findings of the study to the Governor and the General Assembly, in accordance with Sec. 2-1257 of the State Government Article.

(v) On or before December 31, 2023, the Commission shall adopt regulations to implement this section, including regulations for:

  (1) consumer protection;

  (2) procedures to consider and review the analysis of historical and forecasted trends in electricity prices and a purchasing plan designed to save ratepayers money, submitted by county;

  (3) a tariff structure for community choice aggregation noncommodity fees and charges;

  (4) a protocol for data exchange between community choice aggregators, retail suppliers, and electric companies, including prohibitions on the community choice aggregator from sharing, disclosing, or otherwise making accessible to a third party a customer's personal information;

  (5) procedures by which a community choice aggregator may transfer load from standard offer service to retail or wholesale contracts under an aggregation plan;

  (6) the method by which the cost of delinquent accounts of a community choice aggregator may be recovered from customers;

  (7) procedures for enrolling a customer for service with a community choice aggregator on expiration of the customer's retail supply contract;

  (8) procedures to protect a customer's privacy and confidential data collected or held by a community choice aggregator;

  (9) procedures to mitigate any risk to standard offer service customers caused by the potential for customers to migrate from a community choice aggregator to standard offer service;

  (10) procedures by which a community choice aggregator may be dissolved, including procedures for the transfer of customers to standard offer service and the resale of contracted electricity supply;

  (11) the approval of a tariff structure for community choice aggregrator interactions with electric companies, including:

    (i) billing and payment collection;

    (ii) dispute resolution;

    (iii) financial settlement;

    (iv) losses;

    (v) metering services;

    (vi) PJM Interconnection requirements;

    (vii) scheduling; and

    (viii) utility charges; and

  (12) procedures to require that:

    (i) a community choice aggregator that transfers all customers back to standard offer service is considered to be dissolved; and

    (ii) if a community choice aggregator is considered to be dissolved, it may not be reformed except through the process of forming a new community choice aggregator in accordance with this section.

(w) The Montgomery County government shall:

  (1) be solely responsible for the costs associated with any stranded costs for:

    (i) contracts entered into by the community choice aggregator for electric supply; or

    (ii) generation owned by a community choice aggregator; and

  (2) pay for any costs the Montgomery County government is responsible for under item (1) of this subsection.

#### Section 7-511

(a) Except for electric cooperatives and municipal electric utilities:

  (1) competitive billing shall begin on July 1, 2000;

  (2) competitive metering for large customers shall begin on January 1, 2002; and

  (3) competitive metering for all other customers shall begin on April 1, 2002, or earlier if requested by the electric company.

(b) The Commission shall adopt regulations or issue orders to implement this section.

(c)

  (1) A person other than an electric company or a municipal electric utility may not engage in the business of competitive billing services in a local jurisdiction that assesses a local energy tax, unless the person holds a license issued by that jurisdiction.

  (2) An application for a local competitive billing services license shall be made in accordance with the requirements of the local jurisdiction.

  (3)

    (i) A local jurisdiction may require an applicant or licensee to:

      (1) hold a license issued by the Commission, as provided under Sec. 7-507 of this subtitle;

      (2) post a bond or other similar instrument in an amount equal to 15% of the bond required under Sec. 7-507 of this subtitle; and

      (3) have a resident agent in the State.

    (ii) A local jurisdiction may not require an applicant or licensee to pay a fee or other charge for the local license.

(d)

  (1) A local jurisdiction may revoke or suspend the local license if the licensee fails, within 15 days of the due date established by the local jurisdiction, to pay or remit all of the applicable local energy taxes on services.

  (2) A local jurisdiction may reinstate the license after payment of all local energy taxes due.

  (3) A local jurisdiction may choose not to reinstate a license that has been revoked or suspended 3 times in a 12-month period.

  (4) A local jurisdiction shall report any revocation or suspension of a license to the Commission.

(e) The Commission shall adopt regulations or issue an order to establish procedures for the assumption of billing responsibilities by the electric company that distributes electricity in the relevant service territory if a local license is revoked or suspended.

#### Section 7-512

(a) This section and Sec. 7-513 of this subtitle apply to an entity that was regulated as an electric company on June 30, 1999, whether or not the entity or any of its businesses, services, or assets continues to be regulated under this article after that date.

(b) An electric company may recover costs under this section to the extent that the Commission finds costs to be just and reasonable.

(c)

  (1) An electric company shall be provided a fair opportunity to recover fully all costs that have been or will be incurred by the electric company under public purpose programs established by law or ordered by the Commission.

  (2)

    (i) Except as provided in paragraph (3) of this subsection, the costs subject to this subsection shall be funded by a surcharge or other cost recovery mechanism collected on a statewide basis that:

      (1) fully recovers from customers the costs of the plans and programs; and

      (2) subject to subparagraph (ii) of this paragraph, with respect to any of these costs not included in rates on January 1, 2000, is not subject to any otherwise applicable cap.

    (ii) The recovery by an electric company of costs for a universal service program is subject to any applicable cap regardless of when the costs are included in rates.

  (3) During the fiscal year ending June 30, 2000, an electric company may not, under paragraph (2) of this subsection, recover costs of a consumer education program established by law, regulation, or order.

#### Section 7-513

(a)

  (1) In accordance with this subsection, an electric company shall be provided a fair opportunity to recover all of its prudently incurred and verifiable net transition costs, subject to full mitigation, following the Commission's determination under subsection (b) of this section.

  (2) A competitive transition charge, or other appropriate mechanism that the Commission determines, may be included for customers who access the transmission or distribution system of the electric company in whose distribution territory the customer is located. The costs authorized by the Commission to be recovered shall be allocated to customer classes in a manner that, as nearly as reasonably possible, does not exceed the cost of providing the service to those classes of customers, avoiding where reasonably possible any interclass or intraclass cross subsidy.

  (3)

    (i) The competitive transition charge may be included on bills to customers for a period determined by the Commission.

    (ii) The Commission may establish recovery periods of different lengths for each electric company and for different categories of transition costs.

  (4) A competitive transition charge, or other appropriate mechanism determined by the Commission, may not apply to any on-site generated electricity to the extent of:

    (i) the existing facilities' installed generating capacity as of January 1, 1999;

    (ii) the generating capacity of an existing facility to be installed under a legally binding contract:

      (1) executed on or before January 1, 1999; or

      (2) executed on or before September 29, 1999, if the Commission, on a case by case review of the evidence, determines that negotiations in good faith concerning the contract were ongoing as of January 1, 1999; or

    (iii) for a facility with a capacity of 500 kilowatts or less:

      (1) the first 80 megawatts of the aggregate statewide generating capacity of on-site generating facilities;

      (2) the generating capacity of the facility if the facility:

      (A) is installed between January 1, 2000, and December 31, 2003;

      (B) derives electricity from fuel cells, photovoltaics, wind machines, or microturbines; and

      (C) has an energy conversion efficiency greater than 40%; or

      (3) the generating capacity of the facility if the facility:

      (A) is installed after January 1, 2004;

      (B) derives electricity from fuel cells, photovoltaics, wind machines, or microturbines; and

      (C) has an energy conversion efficiency greater than 50%.

(b) The Commission shall determine the transition costs and the amounts of the transition costs that an electric company shall be provided an opportunity to recover under its restructuring plan through the competitive transition charge or other appropriate mechanism.

(c)

  (1) After July 1, 1999, an electric company may apply to the Commission for a qualified rate order for some or all of its transition costs.

  (2) If the Commission issues a qualified rate order and the transition bonds approved by that order are successfully issued:

    (i) the electric company shall impose and collect, through its customer bills, the intangible transition charges approved by the qualified rate order; and

    (ii) at the same time, the electric company's competitive transition charge shall be reduced by an amount equal to that portion of the competitive transition charge related to the transition costs for which transition bonds have been successfully issued, together with any costs of capital related to the transition costs for which recovery was provided in the competitive transition charge, as provided in the qualified rate order.

(d)

  (1) The Commission shall establish procedures for the annual review of the competitive transition charge for each electric company to reconcile the annual revenues received from the charge with the annual amortization of transition costs approved by the Commission under this section to take account of actual kilowatt-hour sales in the prior year compared with previously estimated kilowatt-hour sales. The Commission shall adjust the competitive transition charge based on any under recovery or over recovery with respect to the authorized amortization amount.

  (2) Nothing in this subtitle may be construed as preventing the Commission from approving for an investor-owned electric company:

    (i) an adjustment mechanism proposed by the investor-owned electric company in its initial restructuring proposal filed prior to January 1, 1999, that takes into account differences other than differences in kilowatt-hour sales, taking into consideration any requirements related to any transition bonds;

    (ii) an adjustment that takes into account generation asset sales by an electric company or an affiliate to a nonaffiliate that are consummated on or before June 30, 2005; or

    (iii) any other mechanism as part of a settlement.

(e)

  (1) In determining the appropriate transition costs or benefits for each electric company's generation-related assets, the Commission shall:

    (i) conduct public hearings; and

    (ii) consider, in addition to other appropriate evidence of value:

      (1) book value and fair market value;

      (2) auctions and sales of comparable assets;

      (3) appraisals;

      (4) the revenue the company would receive under rate-of-return regulation;

      (5) the revenue the company would receive in a restructured electricity supply market; and

      (6) computer simulations provided to the Commission.

  (2) The Commission shall determine any equitable allocation of costs or benefits between shareholders and ratepayers. In determining the allocation of transition costs or benefits, the Commission shall consider the following factors:

    (i) the prudence and verifiability of the original investment;

    (ii) whether the investment continues to be used and useful;

    (iii) whether the loss is one of which investors can be said to have reasonably borne the risk; and

    (iv) whether investors have already been compensated for the risk.

(f) This section does not apply to rate stabilization costs established or qualified rate orders issued under Part III or Part IV of this subtitle.

#### Section 7-514

(a)

  (1) On complaint or on its own motion, for good cause shown, the Commission may conduct an investigation of the retail electricity supply and electricity supply services markets and determine whether the function of one of these markets is being adversely affected by market power or any other anticompetitive conduct.

  (2) The Commission shall monitor the retail electricity supply and electricity supply services markets to ensure that the markets are not being adversely affected by market power or any other anticompetitive conduct.

(b) If, as a result of an investigation conducted under this section, the Commission determines that market power or any other anticompetitive conduct in the relevant market under the Commission's jurisdiction is preventing the electric customers in the State from obtaining the benefits of properly functioning retail electricity supply and electricity supply services markets, the Commission may take remedial actions within its authority to address the impact of the market power or any other anticompetitive conduct activities.

(c) The Commission shall include antitrust principles in performing its analysis under this section.

(d) The Commission shall cooperate with and share information with the Antitrust Division of the Office of the Attorney General.

(e) The rights and remedies provided in this section supplement any other rights or remedies that may exist under State or federal law or common law.

#### Section 7-515

An electricity supplier that also provides distribution service, or that has an affiliate that provides distribution service, in Pennsylvania, Delaware, West Virginia, Virginia, or the District of Columbia may not provide retail electricity supply service, directly, indirectly, or through an aggregator, marketer, or broker, in the distribution territory of an unaffiliated electric company unless there is electricity supply competition in at least a portion of the distribution service area of the electricity supplier or affiliate.

#### Section 7-516

(a)

  (1) In recognition of the potential environmental impacts of restructuring the electric industry, it is the intent of the General Assembly to minimize the effects of electric restructuring on the environment.

  (2) Electric companies in Maryland shall conduct a study that tracks shifts in generation and emissions as a result of restructuring the electric industry.

  (3) The study shall be submitted to the Department of the Environment and the Commission one year after the initial date of implementation of customer choice.

  (4) Electric companies in Maryland shall update the study twice and submit each updated study to the Department of the Environment and the Commission on or before December 31, 2003, and on or before December 31, 2005.

(b) If, after review of the study required under subsection (a) of this section, the Department of the Environment determines that the emissions levels impose a higher emission burden in Maryland, the Department of the Environment, in consultation with the Commission, shall study the appropriateness, constitutionality, and feasibility of establishing an air quality surcharge or other mechanism to protect Maryland's environment in connection with the implementation of customer choice of electricity suppliers.

#### Section 7-517

This subtitle may be referred to as the "Electric Customer Choice and Competition Act of 1999".

#### Section 7-520

(a) In this part the following words have the meanings indicated.

(b) "Assignee" means any individual, corporation, or other legally recognized entity to which an electric company transfers all or a portion of its interest in rate stabilization property, other than as security, including any assignee of that party.

(c)

  (1) "Financing party" means a holder of rate stabilization bonds.

  (2) "Financing party" includes a trustee, collateral agent, and any other person acting for the benefit of the holder.

(d) "Qualified rate order" means an order of the Commission approving one or more qualified rate stabilization charges.

(e) "Qualified rate stabilization charge" means that portion of a usage-based nonbypassable rate, charge, or similar appropriate mechanism for the provision, availability, or termination of electric service, approved in connection with a rate stabilization plan in accordance with Sec. 7-522 or Sec. 7-548 of this subtitle, that a qualified rate order of the Commission authorizes to be imposed for the recovery of rate stabilization costs.

(f) "Rate stabilization bond" means a bond, debenture, note, certificate of participation or beneficial interest, or other evidence of indebtedness or ownership that:

  (1) is authorized in a qualified rate order and issued under an executed trust indenture or other agreement of an electric company or assignee; and

  (2) is secured by, evidences an ownership interest in, or is payable from rate stabilization property.

(g)

  (1) "Rate stabilization cost" means a cost, liability, or investment that an electric company incurs or will incur under a rate stabilization plan approved by the Commission.

  (2) "Rate stabilization cost" includes:

    (i) the excess of the contracted price incurred by an electric company for the purchase of energy supplies to be required for retail customers to whom it provides standard offer service, over the amounts that it is authorized to charge currently to those customers under the rate stabilization plan;

    (ii) the approved costs of issuing, supporting, and servicing rate stabilization bonds; and

    (iii) any approved costs for retiring and refunding existing debt and equity securities of the electric company issued to temporarily finance those rate stabilization costs.

(h) "Rate stabilization plan" means a plan approved by the Commission in accordance with this part.

(i)

  (1) "Rate stabilization property" means the right, title, and interest of an electric company or assignee in a qualified rate order.

  (2) "Rate stabilization property" includes:

    (i) all rights in, to, and under a qualified rate order, including the right to impose and collect rate stabilization charges and rights to revenues, collections, claims, payments, money, or other property and amounts arising from the imposition of rate stabilization charges under the qualified rate order; and

    (ii) in the hands of an assignee, the right to require the electric company to provide electric services and to collect and remit the qualified rate stabilization charges authorized in the qualified rate order, but not the right or duty to provide electric services.

#### Section 7-521

This part applies to an electric company that:

(1) has an obligation to provide standard offer service to residential electricity customers in accordance with Sec. 7-510(c) of this subtitle; and

(2) is not subject to a rate cap or price freeze under Sec. 7-505(d) of this subtitle during the period for which a rate stabilization plan is requested under this part.

#### Section 7-522

(a) An electric company subject to this part may file a rate stabilization plan with the Commission for approval.

(b) The rate stabilization plan may include both short-term and long-term deferrals of incremental expenses of electricity supplies.

#### Section 7-523

(a) The Commission may require that a deferral of expenses under a rate stabilization plan be either voluntary or mandatory if the Commission finds that the required type of deferral is in the public interest.

(b) The rate stabilization plan may provide that a deferral shall be secured through the issuance of rate stabilization bonds authorized by a qualified rate order under this part.

#### Section 7-524

(a) Tariffs implementing a rate stabilization plan may provide that:

  (1) residential customers shall be charged the full cost of residential standard offer service necessary to recover the electric company's costs under Sec. 7- 510(c)(3) of this subtitle; and

  (2) any credits or recoveries required or authorized under this part shall be reflected as nonbypassable credits or charges on the electric distribution portion of each residential customer's bill.

(b) As part of the submission of a rate stabilization plan, an electric company may apply to the Commission for a qualified rate order for the financing and recovery of its approved rate stabilization costs in accordance with this part.

#### Section 7-525

(a) The Commission may authorize an electric company to recover, as additional rate stabilization costs, the actual cost to the electric company of carrying the deferred expenses as regulatory assets under short-term and long-term deferral plans.

(b) The actual cost is equal to the deferred expenses as regulatory assets multiplied by the electric company's cost of debt.

(c) If the electric company secures the debt in accordance with this part, the cost of the secured debt is substituted for the electric company's cost of debt.

#### Section 7-526

(a) An electric company may apply to the Commission for a qualified rate order for the financing and recovery of its rate stabilization costs.

(b) On application of an electric company, the Commission may adopt a qualified rate order if the Commission finds that the total amount of revenue to be collected under the qualified rate order is less than the rate stabilization costs revenue that would be recovered over the same period using the electric company's weighted average cost of capital.

(c) The rate stabilization costs to be financed and recovered under a qualified rate order may be reduced by funds contributed from other sources.

#### Section 7-527

(a) The qualified rate order shall set forth the rate stabilization costs to be recovered and the period over which the nonbypassable qualified rate stabilization charges shall be recovered.

(b) The recovery period may not exceed 12 years.

#### Section 7-528

(a) A qualified rate order shall become effective in accordance with its terms.

(b) After a qualified rate order becomes effective, the qualified rate order and the qualified rate stabilization charges authorized in the qualified rate order are irrevocable and are not subject to reduction, impairment, or adjustment by further action of the Commission except in accordance with Sec.Sec. 7-531, 7-533, and 7-534 of this subtitle.

(c)

  (1) A qualified rate order is not subject to rehearing by the Commission.

  (2) A qualified rate order may be reviewed by appeal only to the Circuit Court of Baltimore City by a party to the proceeding filed within 15 days after the qualified rate order is signed by the Commission.

  (3) The judgment of the circuit court may be reviewed only by direct appeal to the Supreme Court of Maryland filed within 15 days after entry of judgment.

  (4) All appeals shall be heard and determined by the circuit court and by the Supreme Court of Maryland as expeditiously as possible with lawful precedence over other matters.

  (5) Review on appeal shall be based solely on the record before the Commission and briefs to the courts and shall be limited to whether the qualified rate order conforms to the Constitution and laws of this State and the United States and is within the authority of the Commission under this subtitle.

  (6) The review process in this subsection shall be the exclusive remedy to challenge or review a qualified rate order.

#### Section 7-529

The Commission shall make a final decision on the issuance of a qualified rate order under this part no later than 60 days after the electric company files its request for the qualified rate order.

#### Section 7-530

A qualified rate order approved by the Commission shall include terms ensuring that the imposition and collection of qualified rate stabilization charges authorized in the order are nonbypassable.

#### Section 7-531

The Commission shall establish specific procedures and time frames for the review and adjustment of qualified rate stabilization charges at least once each year, within 90 days before the anniversary date of the issuance of the rate stabilization bonds, to correct any overcollections or undercollections of the preceding 12 months and to ensure the expected recovery of amounts sufficient to timely provide all payments of debt service and other required amounts and charges in connection with the rate stabilization bonds.

#### Section 7-532

(a) A qualified rate order shall terminate and expire 1 year after the date of its adoption if, during that period, no rate stabilization bonds authorized in the qualified rate order shall have been issued.

(b) This period shall be extended by any period during which judicial proceedings for review may be pending in accordance with Sec. 7-528(c) of this subtitle.

#### Section 7-533

(a) At the request of an electric company, the Commission may adopt a qualified rate order providing for retiring and refunding rate stabilization bonds if the Commission finds that the future qualified rate stabilization charges required to service the new rate stabilization bonds, including transaction costs, will be less than the future qualified rate stabilization charges required to service the rate stabilization bonds being refunded.

(b) On the retirement of the refunded rate stabilization bonds, the Commission shall adjust the related qualified rate stabilization charges accordingly.

#### Section 7-534

(a) At the request of an electric company, the Commission may modify an existing qualified rate order, or issue an additional qualified rate order, providing for the issuance of:

  (1) additional rate stabilization bonds for rate stabilization costs not recovered under an original qualified rate order; or

  (2) new rate stabilization bonds for the combined purposes of:

    (i) financing and recovering rate stabilization costs not recovered under an original qualified rate order; and

    (ii) subject to Sec. 7-533 of this subtitle, retiring and refunding existing rate stabilization bonds.

(b) Unless otherwise provided in the modified or additional qualified rate order or in the trust agreement securing the additional or new rate stabilization bonds, the additional or new rate stabilization bonds are:

  (1) considered to be of the same issue as the original issue; and

  (2) entitled to payment from the same funds as the original issue, without preference or priority of the rate stabilization bonds of the original issue.

#### Section 7-535

(a) A rate stabilization bond issued under this part is not a debt, liability, or a pledge of the full faith and credit of the State or any other governmental unit.

(b) The issuance of a rate stabilization bond under this part is not directly, indirectly, or contingently a moral or other obligation of the State or any other governmental unit to levy or pledge any tax or to make an appropriation to pay the rate stabilization bond.

(c) Each rate stabilization bond issued under this part shall state on its face that:

  (1) the State and any governmental unit are not obliged to pay the principal of or interest on the bond; and

  (2) neither the full faith and credit nor the taxing power of the State or any other governmental unit is pledged to the payment of the principal of or interest on a rate stabilization bond.

(d)

  (1) The State pledges, for the benefit and protection of financing parties and the electric company, that it will not take or allow any action that would impair the value of rate stabilization property, or, except as allowed in accordance with Sec.Sec. 7-531, 7-533, and 7-534 of this subtitle, reduce, alter, or impair the qualified rate stabilization charges to be imposed, collected, and remitted to financing parties, until the principal, interest, and premium, and any other charges incurred and contracts to be performed in connection with the related rate stabilization bonds have been paid and performed in full.

  (2) Any party issuing rate stabilization bonds is authorized to include this pledge in any documentation relating to those bonds.

#### Section 7-536

A qualified rate order under this part that authorizes the issuance of rate stabilization bonds may:

(1) state the rights and remedies of bondholders and any assignee; and

(2) contain provisions to protect and enforce the rights and remedies of bondholders and any assignee.

#### Section 7-537

(a) The rights and interests of an electric company or successor under a qualified rate order, including the right to impose, collect, and receive qualified rate stabilization charges authorized in the order:

  (1) become rate stabilization property when they are first transferred to an assignee or are pledged in connection with the issuance of rate stabilization bonds; but

  (2) are only contract rights before that first transfer or pledge.

(b) Rate stabilization property constitutes a present property right:

  (1) for purposes of contracts concerning the sale or pledge of property, even though the imposition and collection of qualified rate stabilization charges depends on further acts of the electric company or others that have not yet occurred; and

  (2) for all purposes until the later of:

    (i) the period provided in the qualified rate order, to the extent provided in that order; or

    (ii) the payment in full of the rate stabilization bonds, including all principal, interest, premium, costs, and arrearages on the bonds.

(c) All revenues and collections resulting from qualified rate stabilization charges are proceeds only of the rate stabilization property arising from the qualified rate order.

#### Section 7-538

A transaction that involves the transfer and ownership of rate stabilization property and the receipt of rate stabilization charges are exempt from State and local income, sales, franchise, gross receipts, and other taxes or similar charges.

#### Section 7-539

(a) An agreement by an electric company or assignee to transfer rate stabilization property that expressly states that the transfer is a sale or other absolute transfer signifies that:

  (1) the transaction is a true sale and is not a secured transaction; and

  (2) legal and equitable title has passed to the entity to which the rate stabilization property is transferred.

(b) The status of the transfer as a true sale prevails regardless of any recourse the purchaser may have against the seller, or any other term of the parties' agreement, including:

  (1) the seller's retention of an equity interest in the rate stabilization property;

  (2) the fact that the electric company acts as the collector of qualified rate stabilization charges relating to the rate stabilization property; and

  (3) the treatment of the transfer as a financing for tax, financial reporting, or other purposes.

#### Section 7-540

(a) The interest of an assignee or pledgee in rate stabilization property and in the revenues and collections arising from that property is not subject to setoff, counterclaim, surcharge, or defense by the electric company or any other person or in connection with the bankruptcy of the electric company or any other entity.

(b) A qualified rate order remains in effect and unabated notwithstanding the bankruptcy of the electric company, its successors, or assignees.

#### Section 7-541

(a)

  (1) The electric bill of an electric company that has obtained a qualified rate order and issued rate stabilization bonds must:

    (i) explicitly reflect that a portion of the charges on the bill represents qualified rate stabilization charges approved in a qualified rate order issued to the electric company; and

    (ii) if the rate stabilization property has been transferred to an assignee, include a statement to the effect that:

      (1) the assignee is the owner of the rights to qualified rate stabilization charges; and

      (2) the electric company or any other entity, if applicable, is acting as a collection agent or servicer for the assignee.

  (2) The tariff applicable to customers must indicate the qualified rate stabilization charge and the ownership of that charge.

(b) The failure of an electric company to comply with this section may not invalidate, impair, or affect any qualified rate order, rate stabilization property, qualified rate stabilization charge, or rate stabilization bonds.

#### Section 7-542

(a)

  (1) Rate stabilization property does not constitute an account or general intangible under Sec. 9-102 of the Commercial Law Article.

  (2) The creation, granting, perfection, and enforcement of liens and security interests in rate stabilization property, including all proceeds of that property, are governed by this section and not by the Maryland Uniform Commercial Code.

(b)

  (1) A valid and enforceable lien and security interest in intangible rate stabilization property, including all proceeds of that property, may be created only by a qualified rate order and the execution and delivery of a security agreement with a financing party in connection with the issuance of rate stabilization bonds.

  (2)

    (i) The lien and security interest shall attach automatically from the time that value is received for the bonds.

    (ii) On perfection through the filing of notice with the State Department of Assessments and Taxation in accordance with the procedures prescribed under subsection (d) of this section:

      (1) the lien and security interest shall be a continuously perfected lien and security interest in the rate stabilization property; and

      (2) all proceeds of the property, whether accrued or not, shall have priority in the order of filing and take precedence over any subsequent judicial or other lien creditor.

  (3) The security interest shall be perfected:

    (i) retroactive to the date value was received if notice is filed within 10 days after value is received for the rate stabilization bonds; or

    (ii) as of the date of filing, if notice is not filed within that 10-day period.

(c)

  (1) Subject to paragraph (2) of this subsection, transfer of an interest in rate stabilization property to an assignee shall be perfected against all third parties, including subsequent judicial or other lien creditors, when:

    (i) the qualified rate order becomes effective;

    (ii) transfer documents have been delivered to the assignee; and

    (iii) a notice of that transfer has been filed in accordance with procedures adopted under subsection (d) of this section.

  (2) If notice of the transfer has not been filed in accordance with this subsection within 10 days after the delivery of transfer documentation, the transfer of the interest is not perfected against third parties until the notice is filed.

(d) The State Department of Assessments and Taxation shall implement this section by establishing and maintaining a separate system of records for the filing of notices under this section and prescribing the procedures for those filings based on Title 9 of the Maryland Uniform Commercial Code, as adapted to this subtitle and using the terms defined in this subtitle.

(e)

  (1) The priority of a lien and security interest perfected under this section is not impaired by:

    (i) any later modification of the qualified rate order under Sec. 7-531, Sec. 7-533, or Sec. 7-534 of this subtitle; or

    (ii) the commingling of funds arising from qualified rate stabilization charges with other funds.

  (2) Any other security interest that may apply to those funds shall be terminated when they are transferred to a segregated account for the assignee or a financing party.

  (3) If rate stabilization property has been transferred to an assignee, any proceeds of that property shall be held in trust for the assignee.

(f) If a default or termination occurs under the rate stabilization bonds:

  (1) the financing parties or their representatives may foreclose on or otherwise enforce their lien and security interest in any intangible rate stabilization property as if they were secured parties under Title 9 of the Maryland Uniform Commercial Code;

  (2) the Commission may order that amounts arising from qualified rate stabilization charges be transferred to a separate account for the financing parties' benefit, to which their lien and security interest shall apply; and

  (3) on application by or on behalf of the financing parties, the Circuit Court for Baltimore City, Business and Technology Case Management Program, shall order the sequestration and payment to the financing parties of revenues arising from the qualified rate stabilization charges.

(g) The court order under subsection (f) of this section shall remain in full force and effect notwithstanding any reorganization, bankruptcy, or other insolvency proceedings with respect to the electric company or its successors or assignees.

(h) This section does not limit any other remedies available to the applying party.

#### Section 7-543

(a) This section applies to a person that is a successor to an electric company, whether through:

  (1) a reorganization, bankruptcy, or other insolvency proceeding;

  (2) a merger or acquisition, sale, or other business combination; or

  (3) a transfer by operation of law.

(b) A successor to an electric company shall perform and satisfy all obligations of, and have the same rights under a qualified rate order as, the electric company under the qualified rate order in the same manner and to the same extent as the electric company, including:

  (1) collecting the revenues, collections, payments, or proceeds of the rate stabilization property; and

  (2) paying them to the person entitled to receive them.

#### Section 7-544

An assignee or financing party may not be considered to be a public service company or an electricity supplier solely by virtue of the transactions described in this part.

#### Section 7-547

This part applies to an investor-owned electric company that has an obligation to provide standard offer service under Sec. 7-510(c) of this subtitle to residential electric customers for whom rate cap or price freeze service established under a settlement agreement approved in accordance with Sec. 7-505(d) of this subtitle expires at the end of June 30, 2006.

#### Section 7-548

(a)

  (1)

    (i) Notwithstanding any other provision of this article, but subject to paragraphs (2) through (4) of this subsection, an electric company to which this part applies shall file tariffs with the Commission that implement a rate stabilization plan consistent with this part.

    (ii)

      (1) The Commission shall review the tariffs required under subparagraph (i) of this paragraph.

      (2) Within 20 days after the filing of the tariffs required under subparagraph (i) of this paragraph, the Commission shall issue an order implementing the rate stabilization plan in accordance with this part and Part III of this subtitle.

      (3) The order issued by the Commission shall include a requirement that the electric company establish regulatory assets to account for the rate stabilization costs deferred under the rate stabilization plan.

  (2) Under the rate stabilization plan, the residential standard offer service rate shall recover the costs to the electric company under Sec. 7-510(c)(3) of this subtitle deferred during the period July 1, 2006 through May 31, 2007.

  (3) Any credit or charges to the cost of standard offer service for residential electric customers required or authorized under this part shall be included as a nonbypassable credit or charge on the electric distribution portion of the bill of each residential electric customer of the electric company.

  (4) An electric company may apply to the Commission for a qualified rate order under Part III of this subtitle for the financing and recovery of its rate stabilization costs.

(b)

  (1) The increase in the total rates charged to each residential electric customer on standard offer service, as compared with the total rates for residential electric customers in effect on June 30, 2006, shall be:

    (i) from July 1, 2006 through May 31, 2007, 15% of the total rate in effect on June 30, 2006; and

    (ii) from June 1, 2007, at the option of the customer, to:

      (1) the full market rate; or

      (2) an intermediate level under an opt-in short-term rate stabilization plan as allowed under Sec. 7-510(c) of this subtitle which will smooth the transition to the full market rate for residential customers without adversely affecting the creditworthiness of the electric company.

  (2) Standard offer service for residential electric customers shall be at full market rates under this part starting January 1, 2008.

  (3) A rate stabilization cost may not be recovered before January 1, 2007.

  (4) For purposes of calculating the rates to be charged under paragraph (1) of this subsection, the rate stabilization charge may not be considered to be part of the total rates charged to residential electric customers.

  (5) The Commission need not conduct evidentiary proceedings under Sec. 7-510(c)(7)(i) of this subtitle to determine the second or subsequent phase of the transition to full market rates under this part.

(c)

  (1) The electric company shall provide each residential electric customer a deferral credit equal to the difference between the cost incurred by the electric company under Sec. 7-510(c)(3) of this subtitle and the rates authorized in subsection (b)(1) of this section.

  (2)

    (i) The total amount of cost recovery deferred through deferral credits provided to residential electric customers shall be a rate stabilization cost to be recovered as a regulatory asset.

    (ii) The total cost deferred may be secured under Part III of this subtitle.

  (3)

    (i) Subject to subparagraph (ii) of this paragraph, the electric company shall perform a reconciliation of any overcollection or undercollection of the deferred costs and expenses resulting from this rate stabilization plan:

      (1) each year during the rate stabilization plan; and

      (2) within 90 days after the end of the rate stabilization plan.

    (ii) To the extent that securitization is implemented under Part III of this subtitle, any reconciliations made in accordance with subparagraph (i) of this paragraph shall be in addition to any reconciliations made under Part III of this subtitle.

(d) Rate stabilization costs shall be recovered by the electric company from the residential electric customers through a usage-based rate stabilization charge over a period not to exceed 10 years.

(e) Notwithstanding any other provision of this subtitle, as approved by the Commission, an electric company may receive a modification in distribution and transmission rates while the rate stabilization plan is in effect. However, the modification may not alter the rate stabilization charges approved in accordance with Part III of this subtitle.

#### Section 7-549

(a) In this section, "actual cost" means the costs and expenses deferred as regulatory assets multiplied by:

  (1) the electric company's cost of debt; or

  (2) if the electric company secures the debt under Part III of this subtitle, the cost of the secured debt.

(b) An electric company shall recover, as an additional rate stabilization cost, the actual cost to the electric company of carrying the costs and expenses deferred as regulatory assets under the rate stabilization plan.

---

Md. Code Ann., Pub. Util. (as displayed at mgaleg.maryland.gov, October 16, 2026)