Investor-Owned Electric, Gas, and Gas and Electric Companies - Cost Recovery - Limitations

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
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HOUSE BILL 1
C5 6lr0844
(PRE–FILED) CF SB 2
By: Delegate Crosby Delegates Crosby, Allen, Amprey, Bagnall, Behler, Boafo,
Cardin, Edelson, Foley, Forbes, Fraser–Hidalgo, Guyton, Healey, Kaufman,
Korman, Lewis, J. Long, Moon, Odom, Phillips, Ruff, Shetty, Solomon,
Stein, Toles, and Watson
Requested: September 15, 2025
Introduced and read first time: January 14, 2026
Assigned to: Environment and Transportation
Committee Report: Favorable with amendments
House action: Adopted
Read second time: February 5, 2026

CHAPTER ______

AN ACT concerning 1

Investor–Owned Electric, Gas, and Gas and Electric Companies – Cost Recovery 2
– Limitations 3

FOR the purpose of prohibiting certain public service companies from recovering through 4
rates any costs associated with paying certain employees a bonus except under 5
certain circumstances; prohibiting certain public service companies from recovering 6
through rates any costs associated with a supervisor’s annual compensation once the 7
compensation exceeds a certain amount; requiring the boards of directors of certain 8
public service companies to adopt certain policies to place reasonable cost limitations 9
on certain types of expenditures; requiring the Public Service Commission to publish 10
certain guidance; requiring each public service company to send a copy of the policy 11
adopted under this Act to the Commission at certain times; and generally relating to 12
cost recovery by public service companies. 13

BY repealing and reenacting, with amendments, 14
Article – Public Utilities 15
Section 4–504 16
Annotated Code of Maryland 17
(2025 Replacement Volume and 2025 Supplement) 18

2 HOUSE BILL 1

SECTION 1. BE IT E NACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
That the Laws of Maryland read as follows: 2

Article – Public Utilities 3

4–504. 4

(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 5
INDICATED. 6

(2) (I) “BONUS” MEANS A FORM OF DIRE CT OR INDIRECT 7
PAYMENT, CONSIDERATION, OR COMPENSATION THAT IS PAID OR CONVEYED TO AN 8
EMPLOYEE OF A PUBLIC SERVICE COMPANY IN ADDITION TO THE EMPLOYEE’S BASE 9
PAY. 10

(II) “BONUS” INCLUDES: 11

1. COMPENSATION THAT TH E PUBLIC SERVICE 12
COMPANY DOES NOT FORMALLY LABEL AS A BONUS PAYMENT; 13

2. ANY FORM OF INCENTIV E COMPENSATION THE F ACT 14
AND AMOUNT OF WHICH IS UNDER THE DISCRET ION OF THE PUBLIC SE RVICE 15
COMPANY UNTIL A TIME CLOSE TO THE END OF THE PERIOD FOR WHICH THE 16
INCENTIVE PAYMENT IS PAID; AND 17

3. PAYMENTS GIVEN IN ADDITION TO BASE PAY THAT 18
ARE CONTINGENT ON THE OCCURRENCE OF ONE OR MORE EVENTS OR CONDITIONS. 19

(3) (I) “COMPENSATION” MEANS A FORM OF PAYM ENT OR 20
CONSIDERATION CONVEY ED TO OR FOR THE BEN EFIT OF A SUPERVISOR AN 21
EMPLOYEE OF A PUBLIC SERVICE COMPANY, THE PARENT COMPANY OF A PUBLIC 22
SERVICE COMPANY, OR ANY OTHER AFFILIA TE OF A PUBLIC SERVI CE COMPANY IN 23
CONNECTION WITH THE SUPERVISOR’S EMPLOYEE’S WORK FOR A PUBLIC SE RVICE 24
COMPANY. 25

(II) “COMPENSATION” INCLUDES: 26

1. DIRECT AND INDIRECT METHODS OF CONFERRING 27
BENEFITS; 28

2. CASH AND NONCASH BENEFITS; 29

3. SALARY, BONUSES, PERIOD PAYMENTS , AND 30
SEVERANCE PAY; AND 31
HOUSE BILL 1 3

4. THE VALUE OF A PERQU ISITE, COMPENSATORY OR 1
PAID LEAVE, OR OTHER BENEFIT NOT EXCLUDED UNDER SUBPA RAGRAPH (III) OF 2
THIS PARAGRAPH. 3

(III) “COMPENSATION” DOES NOT INCLUDE ANY EXPENDITURE 4
OF A PUBLIC SERVICE COMPANY FOR HEALTH, MEDICAL, DENTAL, VISION, OR LIFE 5
INSURANCE OR DISABILITY PAY. 6

(4) “SUPERVISOR” MEANS AN INDIVIDUAL EMPLOYEE OF A PUBLIC 7
SERVICE COMPANY, THE PARENT COMPANY OF A PUBLIC SERVICE COMPANY, OR ANY 8
OTHER AFFILIATE OF A PUBLIC SERVICE COMPANY WHO: 9

(I) USING THE INDIVIDUAL’S EMPLOYEE’S INDEPENDENT 10
JUDGMENT: 11

1. IS AUTHORIZED BY THE INDIVIDUAL’S EMPLOYEE’S 12
EMPLOYER TO HIRE , TRANSFER, SUSPEND, LAY OFF , RECALL, PROMOTE, 13
DISCHARGE, ASSIGN, REWARD, OR DISCIPLINE OTHER EMPLOYEES; 14

2. IS RESPONSIBLE FOR D IRECTING THE WORK 15
PERFORMANCE OF OTHER EMPLOYEES; AND 16

3. IS RESPONSIBLE FOR R ESPONDING TO EMPLOYE E 17
COMPLAINTS; OR 18

(II) IS EMPLOYED IN A BONA FIDE EXECUTIVE CAPACITY UNDER 19
THE FEDERAL FAIR LABOR STANDARDS ACT. 20

[(a)] (B) This section applies only to a public service company that is an 21
investor–owned electric company, gas company, or combination gas and electric company. 22

[(b)] (C) A public service company may not recover through rates any costs 23
associated with: 24

(1) membership, dues, sponsorships, or contributions to an industry trade 25
association, group, or related entity exempt from taxation under § 501(c)(6) of the Internal 26
Revenue Code; [or] 27

(2) the acquisition, use, or allocation of costs associated with a private 28
plane that is owned or leased by the public service company or its holding company; OR 29

(3) EXCEPT AS PROVIDED I N SUBSECTION (D) OF THIS SECTION , 30
PAYING A BONUS TO AN EMPLOYEE OF A PUBLIC SERVICE COMPANY; OR 31
4 HOUSE BILL 1

(4) (3) COMPENSATION FOR A S UPERVISOR THAT EXCEE DS 110% 1
OF THE MAXIMUM ANNUA L SALARY PAYABLE TO A MEMBER THE CHAIR OF THE 2
COMMISSION FOR THE SAME CALENDAR YEAR. 3

(D) A PUBLIC SERVICE COMPA NY MAY RECOVER THE C OSTS ASSOCIATED 4
WITH PAYING AN EMPLOYEE A BONUS THROUGH RATES IF: 5

(1) THE EMPLOYEE HAS A W RITTEN EMPLOYMENT CO NTRACT THAT 6
WAS EXECUTED ON OR BEFORE DECEMBER 31, 2025; OR 7

(2) THE EMPLOYEE IS COVE RED BY A VALID COLLECTIVE 8
BARGAINING AGREEMENT. 9

(E) (D) (1) THE BOARD OF DIRECTOR S OF EACH PUBLIC SER VICE 10
COMPANY SHALL ADOPT A COMPANY –WIDE POLICY PLACING REASONABLE COST 11
LIMITATIONS, IN ACCORDANCE WITH G UIDANCE PUBLISHED BY THE COMMISSION 12
UNDER PARAGRAPH (2) OF THIS SUBSECTION, ON EXPENDITURES THAT THE PUBLIC 13
SERVICE COMPANY INTENDS TO RECOVER THROUGH RATES FOR: 14

(1) (I) ENTERTAINMENT AND EVENTS; 15

(2) (II) OFFICE AND FACILITY RENOVATIONS; 16

(3) (III) TRANSPORTATION SERVICES, INCLUDING AVIATION; 17

(4) (IV) STAFF DEVELOPMENT ACTIVITIES OR EVENTS; 18

(5) (V) PERFORMANCE INCENTIVES; AND 19

(6) (VI) OTHER ACTIVITIES OUTSIDE OF THE SCOPE OF THE NORMAL 20
COURSE OF BUSINESS OPERATIONS. 21

(2) THE COMMISSION SHALL PUBL ISH GUIDANCE DEFININ G 22
“REASONABLE COST LIMITATIONS” FOR EXPENDITURES UNDER THIS SUBSECTION. 23

(3) EACH PUBLIC SERVICE C OMPANY SHALL SEND A COPY OF THE 24
POLICY ADOPTED UNDER PARAGRAPH (1) OF THIS SUBSECTION T O THE 25
COMMISSION: 26

(I) AS SOON AS PRACTICABLE; AND 27

(II) EACH TIME THE POLICY IS UPDATED, BUT NOT LESS THAN 28
EVERY 5 YEARS. 29
HOUSE BILL 1 5

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 1
October June 1, 2026. 2

Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.