Title 20 — Subtitle 40. Electric and Gas Companies — Affiliate Regulations
Chapter 01. General
Regulation .01 Scope.LinkCopy Citation
A.
Except as provided in §B of this regulation, this subtitle applies to all electric, gas, and combination electric and gas utilities.
B.
This subtitle does not apply:
(1)
To a municipal electric or gas utility;
(2)
To a combination municipal electric and gas utility;
(3)
To an electric or gas utility that supplies electric or gas service to less than 1,000 meters in the State;
(4)
To a gas utility that distributes only propane gas; or
(5)
During an emergency.
Regulation .02 Purpose.LinkCopy Citation
The purpose of this subtitle is to establish regulations that promote competitive markets and ensure that an electric or gas utility does not subsidize its affiliates.
Regulation .03 Definitions.LinkCopy Citation
A.
In this subtitle, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Asset” means property of a type included in the rate base of a utility.
(2)
“Asymmetric pricing” means the transfer of an asset:
(a)
From a utility to an affiliate recorded at the greater of book cost or market value; or
(b)
From an affiliate to a utility recorded at the lesser of book cost or market value.
(3)
“Core service” means a gas or electric supply service that was provided to the public in Maryland by a utility as a monopoly service, within the utility's distribution territory, before the introduction of customer choice programs.
(4)
Core Service Affiliate.
(a)
“Core service affiliate” means a person that is controlled by a utility or an entity that controls the utility, directly or indirectly, and that provides a core service.
(b)
“Core service affiliate” includes a person that provides core and non-core service.
(5)
“Cost allocation manual (CAM)” means a compilation of policies and procedures for the allocation and assignment of costs, which are shared between a utility and its affiliate.
(6)
“Emergency” means:
(a)
A natural disaster, including a hurricane, tornado, or snow storm, that impacts utility service;
(b)
Any national or State-declared state of emergency or condition resulting in federal, State, or local government closing its respective offices;
(c)
An abnormal utility system condition requiring manual or automatic action to:
(i)
Maintain system frequency; or
(ii)
Prevent loss of firm load, equipment damage, disconnection of system elements that could adversely affect utility service, the reliability of a utility electric system or natural gas system, or the safety of persons or property; or
(d)
Acts of others including riots, sabotage, acts of terrorism, insurrections, nationalization, or wars, which adversely affect utility service or the reliability of a utility electric system or natural gas system.
(7)
“Image advertisement” means a corporate public announcement that does not include core or non-core service affiliate contact information.
(8)
“Non-core service” means any service offered or provided to the public in Maryland that is not a core service.
(9)
“Non-core service affiliate” means a person that is controlled by either a utility or a person that controls the utility, directly or indirectly, and that provides only non-core services to the public in Maryland.
(10)
Operational Personnel.
(a)
“Operational personnel” means an employee, contractor, consultant, or agent of an electric or gas utility who conducts distribution system operations or reliability functions, including those who are engaged in day-to-day duties and responsibilities for planning, directing, organizing, or carrying out distribution-related operations.
(b)
“Operational personnel” does not include support personnel or field and maintenance employees of a utility.
(11)
“Standard offer service (SOS)” has the meaning stated in COMAR 20.52.01.02B(8).
(12)
“Utility” means an electric or gas company as defined in Public Utilities Article, §1-101, Annotated Code of Maryland.
Regulation .04 Waiver of Regulations.LinkCopy Citation
A.
Except as provided §B of this regulation, a regulation in this subtitle may be waived by the Commission for good cause shown.
B.
COMAR 20.40.02.07 may not be waived.
Chapter 02. Utility Code of Conduct
Regulation .01 Prohibited Utility Conduct with Affiliate.LinkCopy Citation
A.
This regulation does not apply to the practice of a utility holding company advertising companies within the utility holding company corporate family.
B.
Services Generally. A utility may not:
(1)
Represent to a customer or potential customer that any advantage or superior service will accrue because of the relationship between the utility and a core service affiliate or non-core service affiliate;
(2)
Give any preference to a core service affiliate, or non-core service affiliate, or a customer of either in providing regulated utility service;
(3)
Condition or tie the provision of regulated utility service to any other product or service;
(4)
Except as provided in Regulation .02 of this chapter, engage in promotions, marketing, or advertising with a core or non-core service affiliate;
(5)
Except with the informed consent of the customer and in compliance with the Commission's consumer protection regulations, disclose any customer-specific information obtained in connection with the provision of regulated utility service;
(6)
Offer discounts, rebates, fee waivers, penalty waivers, or other special provisions for a tariff service to an affiliate or a customer of an affiliate, unless it makes the offer available to all similarly situated persons, and makes the offer in a manner designed to allow all an equal ability to utilize the offering;
(7)
Except as provided in Regulation .02 of this chapter, market or promote its standard offer service;
(8)
Provide sales leads to its core or non-core service affiliate; or
(9)
Circumvent the provisions of this subtitle through the use of an affiliate as a conduit between the utility and its core service affiliate.
C.
Core Service. A utility may not:
(1)
Initiate a joint sales call with its core service affiliate, except when requested by a customer or when the customer has a contractual relationship with the utility and its core service affiliate;
(2)
Operate from the same physical location used by a core service affiliate;
(3)
Share core service information with a core service affiliate that could provide a competitive advantage in a discriminatory manner;
(4)
Unless a utility has sufficient safeguards in place to prevent a core service employee from gaining access to utility information that it is prohibited from sharing under this subtitle, share electronic databases or electronic files with its core service affiliate; or
(5)
Speak or appear to speak on behalf of its core service affiliate.
Regulation .02 Authorized Utility — Affiliate Activity.LinkCopy Citation
A.
Use of Corporate Name, Trade Names, Trademarks, and Logos.
(1)
A utility may authorize its affiliate to use advertising, which uses the utility's corporate name, trade names, trademarks, and logos.
(2)
Disclaimer.
(a)
Except as provided in §A(3) of this regulation, when a utility authorizes an affiliate to use its corporate name, trade name, trademark, or logo in an advertisement for a core or non-core service, the utility shall require the affiliate to include a disclaimer in the advertisement.
(b)
The disclaimer required under §A(2)(a) of this regulation is: “(affiliate name) is not the same company as (utility name), a regulated utility”.
(3)
When a utility authorizes an affiliate to use its corporate name, trade name, trademark, or logo in an image advertisement, regulatory filing, or materials intended to provide information about corporate securities, the utility is not required to mandate that its affiliate include the disclaimer prescribed in §A(2) of this regulation.
B.
A utility may engage in a joint promotion with a core service affiliate if:
(1)
It affords all similarly situated non-affiliated licensed electricity or gas suppliers the opportunity to participate in the promotion; and
(2)
The offer to participate is made in a manner designed to allow an equal opportunity to utilize the promotion.
C.
A utility may provide unbiased information about the availability and terms of standard offer service.
Regulation .03 Required Utility Conduct.LinkCopy Citation
A.
Information.
(1)
If a customer requests information about a competitive core service and the utility responds by identifying licensed electricity or gas suppliers, the utility shall provide the names of all licensed electricity or gas suppliers of core services operating within its Maryland service territory in a nonpreferential manner.
(2)
A utility may not promote its core service affiliate when responding to a customer request for information.
B.
Service Requests. A utility shall process all requests for service by a licensed electricity or gas supplier in the same nonpreferential manner and within the same period of time as it processes similar requests for service from its core service affiliate.
C.
Electricity and Gas Suppliers. When providing utility service, a utility shall treat a licensed electricity or gas supplier and their customers in the same manner as the utility treats its core service affiliate or its core service affiliate's customers.
D.
Public Disclosure.
(1)
Except as provided in §D(3) of this regulation, a utility shall contemporaneously disclose to all licensed retail electricity or gas suppliers on its system all information it provides to a retail electricity or gas supplier about:
(a)
Its system;
(b)
The marketing or sale of energy to a customer or potential customer; or
(c)
The delivery of energy to or on its system.
(2)
A utility shall comply with the requirements of §D(1) of this regulation by posting information:
(a)
On its electronic bulletin board;
(b)
On its web site; or
(c)
In any commercially reasonable and nonpreferential manner.
(3)
A utility may share the following information without making the disclosure required in §D(1) of this regulation:
(a)
Information relating to the administration of a contract to supply standard offer service, or default energy service, or to carry out an interconnection agreement;
(b)
Information to a supplier as necessary for the supplier to bill or provide services to its customers; or
(c)
Information with its associated holding company to the extent necessary to comply with federal and State laws and regulations.
Regulation .04 Utility and Utility-Affiliate Shared Personnel.LinkCopy Citation
A.
Exceptions. This regulation does not apply to:
(1)
Employee-sharing between a utility and another utility, or any operating division of the same utility, regulated by the Commission or another state's utility regulatory body; or
(2)
Personnel sharing permitted by the Federal Energy Regulatory Commission.
B.
Permitted Personnel Sharing. Except as provided in §C of this regulation, a utility may share personnel with its affiliate.
C.
Restrictions on Personnel Sharing. A utility may not share with its core service affiliate:
(1)
Operational, advertising, marketing, or market research personnel; or
(2)
Any other individual, if that individual:
(a)
Possesses information that is competitively sensitive to the electric or gas supply markets; and
(b)
Will use this information in the course of performing the shared job function.
Regulation .05 Asset Transactions Involving an Affiliate.LinkCopy Citation
A.
This regulation does not apply to transactions between a utility and another utility, or any operating division of the same utility, which is regulated by the Commission or another state's utility regulatory body.
B.
Subject to §C of this regulation, a utility may enter into an asset transfer or receipt transaction with its affiliate.
C.
If a utility enters into a transaction with an affiliate involving the transfer or receipt of an asset that has a book value of more than $75,000 per item, or a total book value of $1,000,000, other than a transaction resulting from an open bidding process, including an auction or a request for proposal with an independent evaluator, the utility shall record the transaction in its financial records based on asymmetric pricing to the extent permitted by federal law or regulation.
Regulation .06 Utility Loans or Debt Guarantees to an Affiliate.LinkCopy Citation
A.
This regulation does not apply to a utility's participation in a cash management or money pool subject to federal regulation.
B.
Except as provided under §C of this regulation, a utility may make a loan or provide a debt guarantee to its affiliate.
C.
Restrictions on Loans or Debt Guarantees.
(1)
If a loan or guarantee by a utility to its affiliate creates a reasonable likelihood that the utility's cost of capital, creditworthiness, or ability to provide regulated service will be adversely affected in a material manner, a utility may not:
(a)
Lend money to its affiliate; or
(b)
Guarantee the debt of its affiliate.
(2)
New Loan or Debt Guarantee.
(a)
If a new loan or debt guarantee by a utility to its affiliate is in excess of $25,000,000 or 2 percent of the equity capital of the utility, whichever is greater, or the loan causes the utility's proprietary capital ratio to fall below 30 percent, the utility shall inform the Commission that it is making the loan or guarantee at least 90 days before the transaction is closed.
(b)
If, within 90 days of receiving the notice under §C(2)(a) of this regulation, the Commission finds that the loan or guarantee creates a reasonable likelihood that the utility's cost of capital, creditworthiness, or ability to provide regulated service will be adversely affected, it may disapprove the loan or guarantee.
(c)
If the Commission does not act within 90 days of receiving notice of the loan or guarantee, the utility may undertake the loan or guarantee.
D.
A utility loan under this regulation shall include an interest rate equal to the:
(1)
Fair market interest rate at the time of execution of the loan; or
(2)
Rate directed or approved by a federal agency having jurisdiction over the loan.
Regulation .07 Cost Allocation Manual (CAM).LinkCopy Citation
A.
This regulation does not apply to a utility that does not have a core or non-core service affiliate.
B.
Any time a utility files a general rate case, a utility shall file its CAM with the Commission.
(2)
A utility shall file with the Commission any change to a CAM policy that allocates or assigns cost, within 30 days of the effective date of the change.
(3)
A utility filing required under §B(2) of this regulation shall include a detailed narrative that describes and justifies each change including a showing of the estimated impact of the change.
(4)
A CAM shall contain the:
(a)
Corporate organization chart;
(b)
Officers of the parent or holding company, the utility, and the service company, as applicable;
(c)
Complete description of the types of all costs shared with an affiliate; and
(d)
Methodology and procedure used to allocate costs.
Regulation .08 Record and Reporting Requirements.LinkCopy Citation
A.
Each Cost Allocation Manual filed as directed in Regulation .07 of this chapter shall contain the following items:
(1)
The amount the utility allocated or assigned the previous calendar year for each type of cost identified in its CAM;
(2)
An affidavit stating that its cost allocation and the transfer pricing of an asset complies with this subtitle; and
(3)
A certification that a training program is in place to train personnel as necessary to comply with this subtitle.
B.
On or before May 15 of each calendar year a utility shall file with the Commission a report for the previous calendar year ending December 31 titled “Ring Fencing Report” containing the following items:
(1)
A summary of all measures intended to protect the utility's financial strength and credit ratings from the activities of core service and non-core service affiliates;
(2)
A corporate organization chart identifying the utility and its core service and non-core service affiliates;
(3)
A description of each core service and non-core service affiliate's business;
(4)
If available, a copy of each core service and non-core service affiliate's most recently published credit rating report made by a nationally recognized credit rating agency;
(5)
If a utility shares personnel with a core service or non-core service affiliate, a personnel-sharing report listing the shared personnel's position title and function;
(6)
A list of asset transactions between a utility and its core service and non-core service affiliate consistent with the following guidelines:
(a)
For an asset transferred to or from a utility where the book value is above $75,000, the report shall:
(i)
Describe the transferred asset;
(ii)
Indicate the affiliate providing or receiving the asset;
(iii)
Provide the value received or given for the transferred asset; and
(iv)
Provide an external appraisal or the market value of the transferred asset; and
(b)
For an individual asset transferred to or from a utility where the book value is below $75,000, the report shall identify the type of asset transferred and the affiliate providing or receiving the asset;
(7)
A list of all assets, if individually accounted for, or asset categories owned by the utility which were loaned or shared with a core service or non-core service affiliate;
(8)
A list of all assets jointly owned with a core service or non-core service affiliate; and
(9)
A list of all core service or non-core service affiliate debt guaranteed by the utility or secured by any utility asset.
C.
A utility shall maintain a detailed monthly record of any cost allocation and assignment and make this record available for Commission review and audit.
D.
A utility shall permit the Commission to have access to any report and associated work papers prepared for a utility by an independent auditor hired to perform an audit under Public Utilities Article, §4-208, Annotated Code of Maryland.
E.
A utility shall notify the Commission within 7 days after the utility or its affiliate:
(1)
Files for bankruptcy; or
(2)
Is in material breach of any debt obligation which is guaranteed by the utility or secured by its assets.