Gas Companies - Infrastructure Investments - Cost Recovery and Customer Notification (Break STRIDE Act)

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb1253*

HOUSE BILL 1253
C5 6lr2332

By: Delegates Behler, Boafo, Allen, Charkoudian, Embry, Lewis, Ruff, and Ruth
Introduced and read first time: February 12, 2026
Assigned to: Environment and Transportation

A BILL ENTITLED

AN ACT concerning 1

Gas Companies – Infrastructure Investments – Cost Recovery and Customer 2
Notification 3
(Break STRIDE Act) 4

FOR the purpose of repealing certain provisions authorizing a gas company to file a plan 5
to invest in eligible infrastructure replacement projects with the Public Service 6
Commission and recover related costs through a certain surcharge ; prohibiting the 7
Commission from allowing a gas company or a combination gas and electric company 8
to recover certain infrastructure replacement costs using an alternative form of 9
regulation beginning on a certain date; altering the list of items that an 10
investor–owned gas company must demonstrate to recover certain costs associated 11
with a planned gas infrastructure investment; requiring an investor –owned gas 12
company to provide certain advance notice of construction to c ustomers affected by 13
certain planned gas infrastructure investments; and generally relating to gas 14
company infrastructure investments. 15

BY repealing 16
Article – Public Utilities 17
Section 4–210 18
Annotated Code of Maryland 19
(2025 Replacement Volume and 2025 Supplement) 20

BY repealing and reenacting, with amendments, 21
Article – Public Utilities 22
Section 4–213 and 4–214 23
Annotated Code of Maryland 24
(2025 Replacement Volume and 2025 Supplement) 25

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 26
That the Laws of Maryland read as follows: 27

2 HOUSE BILL 1253

Article – Public Utilities 1

[4–210. 2

(a) (1) In this section the following words have the meanings indicated. 3

(2) “Customer” means a retail natural gas customer. 4

(3) “Eligible infrastructure replacement” means a replacement or an 5
improvement in an existing infrastructure of a gas company that: 6

(i) is made on or after June 1, 2013; 7

(ii) is designed to improve public safety or infrastructure reliability; 8

(iii) does not increase the revenue of a gas company by connecting an 9
improvement directly to new customers; 10

(iv) reduces or has the potential to reduce greenhouse gas emissions 11
through a reduction in natural gas system leaks; and 12

(v) is not included in the current rate base of the gas company as 13
determined in the gas company’s most recent base rate proceeding. 14

(4) “Plan” means a plan that a gas com pany files under subsection (e) of 15
this section. 16

(5) “Project” means an eligible infrastructure replacement project proposed 17
by a gas company in a plan filed under this section. 18

(b) It is the intent of the General Assembly that the purpose of this sec tion is to 19
allow for the appropriate acceleration of gas infrastructure improvements in the State 20
when: 21

(1) necessary to ensure safety and improve reliability; and 22

(2) consistent with State policy. 23

(c) Nothing in this section may be construed to al ter a gas company’s obligation 24
under this division to make improvements to a gas system that are necessary to ensure the 25
safety of the gas system. 26

(d) This section does not apply to a gas cooperative. 27

(e) (1) A gas company may file with the Commission: 28

HOUSE BILL 1253 3

(i) a plan to invest in eligible infrastructure replacement projects; 1
and 2

(ii) in accordance with paragraph (5) of this subsection, a 3
cost–recovery schedule associated with the plan that includes a fixed annual surcharge on 4
customer bills to reco ver reasonable and prudent costs of proposed eligible infrastructure 5
replacement projects. 6

(2) A plan under this subsection shall include: 7

(i) a description of each eligible infrastructure replacement project, 8
including the project’s expected useful life; 9

(ii) a time line for the completion of each eligible project; 10

(iii) the estimated cost of each project; 11

(iv) a description of customer benefits under the plan; 12

(v) a demonstration that the gas company has selected and given 13
priority to projects based on risk to the public and cost–effectiveness; 14

(vi) an analysis that compares the costs of proposed replacement 15
projects with alternatives to replacement, including leak detection and repair; 16

(vii) a plan for notifying customers af fected by proposed projects at 17
least 6 months in advance of construction; and 18

(viii) any other information the Commission considers necessary to 19
evaluate the plan. 20

(3) A customer notification plan required under paragraph (2) of this 21
subsection shall provide for: 22

(i) an initial notification of construction in a manner determined by 23
the Commission; 24

(ii) at least two subsequent notifications of construction in a manner 25
determined by the Commission; and 26

(iii) the communicating of: 27

1. a complete and accurate description of project activities; 28
and 29

2. any other information the Commission considers 30
necessary to evaluate the plan. 31
4 HOUSE BILL 1253

(4) (i) When calculating the estimated cost of a project under paragraph 1
(2) of this subsection, a gas company shall include: 2

1. the pretax rate of return on the gas company’s investment 3
in the project; 4

2. depreciation associated with the project, based on new 5
assets less retired plant; and 6

3. property taxes associated with the project, based o n new 7
assets less retired plant. 8

(ii) The estimated project costs described in subparagraph (i) of this 9
paragraph are collectible at the same time the eligible infrastructure replacement is made. 10

(iii) The pretax rate of return under subparagraph ( i)1 of this 11
paragraph shall: 12

1. be calculated using the gas company’s capital structure 13
and weighted average cost of capital as the Commission approved in the gas company’s 14
most recent base rate proceeding; and 15

2. include an adjustment for bad de bt expenses as the 16
Commission approved in the gas company’s most recent base rate proceeding. 17

(5) For a plan filed under this section: 18

(i) the cost –recovery schedule shall include a fixed annual 19
surcharge that: 20

1. may not exceed $2 each month o n each residential 21
customer account; and 22

2. for each nonresidential customer account, may not be less 23
than the fixed annual surcharge applicable to a residential customer account, but shall be 24
capped under item (ii) of this paragraph; and 25

(ii) to create a surcharge cap for all customer classes, costs shall be 26
allocated to nonresidential and residential customers consistent with the proportions of 27
total distribution revenues that those classes bear in accordance with the most recent base 28
rate proceeding for the gas company. 29

(6) For a gas company to recover costs associated with eligible 30
infrastructure replacement projects, a plan shall demonstrate: 31

(i) customer benefits; and 32
HOUSE BILL 1253 5

(ii) that the gas company has: 1

1. analyzed available cost–effective options to defer, reduce, 2
or remove the need to replace, construct, or upgrade components of the gas company’s 3
distribution infrastructure, including leak detection and repair; and 4

2. met any other requirements established by the 5
Commission when setting rates under this title. 6

(7) A plan under this subsection shall be filed separately from a base rate 7
proceeding. 8

(8) In a base rate proceeding after approval of a plan, the Commission 9
shall, in establishing a gas company’s revenue requirements, take into account any benefits 10
the gas company realized as a result of a surcharge approved under the plan. 11

(9) Any adjustment for return on equity based on an approved plan only 12
shall be considered and determined in a subsequently filed base rate case. 13

(f) (1) Within 180 days after a gas company files a plan, the Commission: 14

(i) may hold a public hearing on the plan; and 15

(ii) shall take a final action to approve or deny the plan. 16

(2) Within 150 days after a gas company files an amendme nt to an 17
approved plan, the Commission shall take final action to approve or deny the amendment. 18

(3) The Commission may approve a plan if it finds that the investments 19
and estimated costs of eligible infrastructure replacement projects are: 20

(i) reasonable and prudent; 21

(ii) designed to improve public safety or infrastructure reliability 22
over the short term and long term; and 23

(iii) required to improve the safety of the gas system after 24
consideration of alternatives to replacement. 25

(4) (i) The Commission shall approve the cost –recovery schedule 26
associated with the plan at the same time that it approves the plan. 27

(ii) Costs recovered under the schedule approved in subparagraph (i) 28
of this paragraph may relate only to the projects within the plan approved by the 29
Commission. 30

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(5) The Commission may not consider a revenue requirement or 1
rate–making issue that is not related to the plan when reviewing a plan for approval or 2
denial unless the plan is filed in conjunction with a base rate case. 3

(g) (1) Subject to paragraph (2) of this subsection, if the Commission does not 4
take final action on a plan within the time period required under subsection (f) of this 5
section, the gas company may implement the plan. 6

(2) If a gas company impleme nts a plan that the Commission has not 7
approved, the gas company shall refund to customers any amount of the surcharge that the 8
Commission later determines is not reasonable or prudent, including interest. 9

(h) The Commission may authorize a gas company t o use a mechanism to 10
promptly recover reasonable and prudent costs of investments for eligible infrastructure 11
replacement projects that: 12

(1) are part of a plan approved under this section or implemented under 13
subsection (g) of this section; and 14

(2) accelerate gas infrastructure improvements in the State. 15

(i) (1) (i) A surcharge under this section shall be in effect for 5 years from 16
the date of initial implementation of an approved plan. 17

(ii) 1. Before the end of the 5–year period, the gas company shall 18
file a base rate case application. 19

2. In a base rate proceeding filed under subsubparagraph 1 20
of this subparagraph, if a plan approved by the Commission remains in effect: 21

A. eligible infrastructure project costs included in base rates 22
in accordance with a final Commission order on the base rate case shall be removed from a 23
surcharge; and 24

B. the surcharge mechanism shall continue for eligible future 25
infrastructure project costs that are not included in the base rate case. 26

(2) (i) If the actual cost of a plan is less than the amount collected under 27
a surcharge, the gas company shall refund to customers the difference on customer bills, 28
including interest. 29

(ii) If the actual cost of a plan is more than the amount collected 30
under the surcharge and the Commission determines that the higher costs were reasonably 31
and prudently incurred, the Commission shall authorize the gas company to increase the 32
surcharge to recover the difference, subject to the rate limit under subsection (e)(5) o f this 33
section. 34

HOUSE BILL 1253 7

(j) Each year a gas company shall file with the Commission a reconciliation to 1
adjust the amount of a surcharge to account for any difference between the actual cost of a 2
plan and the actual amount recovered under the surcharge. 3

(k) If, after approving a surcharge in a plan, the Commission establishes new base 4
rates for the gas company that include costs on which the surcharge is based, the gas 5
company shall file a revised rate schedule with the Commission that subtracts those costs 6
from the surcharge. 7

(l) (1) The Commission may review a previously approved plan. 8

(2) If the Commission determines that an investment of a project or cost of 9
a project no longer meets the requirements of subsection (f)(3) of this section, the 10
Commission may: 11

(i) reduce future base rates or surcharges; or 12

(ii) alter or rescind approval of that part of the plan.] 13

4–213. 14

(a) This section applies only to a public service company that is an electric 15
company, a gas company, or a combination gas and electric company. 16

(b) Unless otherwise authorized by law, AND SUBJECT TO SUBSECTION (D) OF 17
THIS SECTION , the Commission may approve the use of a multiyear rate plan for 18
distribution base rates only if the plan: 19

(1) demonstrates the customer benefits of the investment; and 20

(2) does not allow for the public service company to file for reconciliation of 21
cost or revenue variances of the approved revenue component used by the Commission to 22
establish just and reasonable rates. 23

(c) A public service company that files or has filed an application for a multiyear 24
rate plan may not subsequently file for reconciliation of cost or revenue variances of the 25
approved revenue component used by the Commission to establish the multiyear rates 26
unless the filing for reconciliation was made on or before January 1, 2025. 27

(D) BEGINNING OCTOBER 1, 2026, THE COMMISSION MAY NOT ALLOW A GAS 28
COMPANY OR A COMBINATION GAS AND ELECTRIC COMPANY TO RECOVER THE 29
COSTS OF ANY GAS INF RASTRUCTURE REPLACEMENT PROJECTS USING AN 30
ALTERNATIVE FORM OF REGULATION, INCLUDING A MULTIYEAR RATE PLAN. 31

4–214. 32

8 HOUSE BILL 1253

(a) (1) In this section [, “nonpipeline alternative”] THE FOLLOWING WORDS 1
HAVE THE MEANINGS INDICATED. 2

(2) “NONPIPELINE ALTERNATIVE” means an investment or activity that 3
defers, reduces, or eliminates the need to construct a new gas pipeline. 4

(3) “PLANNED GAS INFRASTRU CTURE INVESTMENT ” MEANS ANY 5
NON–EMERGENCY INVESTMENT IN THE REPLACEMENT , UPGRADE, OR 6
CONSTRUCTION OF A PORTION OF A GAS COMPANY’S GAS SYSTEM. 7

(b) Nothing in this section may be construed to restrict an investor –owned gas 8
company’s ability to make improvements to its gas system to ensure the safe and reliable 9
operation of the system. 10

(c) An investor–owned gas company may recover reasonable and prudent costs 11
associated with a planned gas infrastructure investment if the investor –owned gas 12
company demonstrates at a rate setting proceeding: 13

(1) the customer benefits of the investment; 14

(2) that the investor–owned gas company analyzed [cost–effective] options 15
available to defer, reduce, or eliminate the need to replace, upgrade, or construct new 16
components, including an analysis of: 17

(i) [for new investments unrelated to safety, ] nonpipeline 18
alternatives; and 19

(ii) leak detection and repair; [and] 20

(3) the estimated risk reduction associated with a safety –related 21
investment, if applicable; AND 22

(4) THAT THE INVESTOR –OWNED GAS COMPANY PR OVIDED THE 23
CUSTOMER NOTICE REQUIRED UNDER SUBSECTION (D) OF THIS SECTION. 24

(D) (1) FOR ANY PLANNED GAS I NFRASTRUCTURE INVESTMENT WHERE 25
AN INVESTOR –OWNED GAS COMPANY HA S DETERMINED THAT A NONPIPELINE 26
ALTERNATIVE IS NOT FEASIBLE , THE INVESTOR –OWNED GAS COMPANY SHALL 27
PROVIDE AT LEAST 2 YEARS’ ADVANCE NOTICE OF CONSTRUCTION TO CUSTOMERS 28
AFFECTED BY THE PLANNED INVESTMENT. 29

(2) THE CUSTOMER NOTIFICATION SHALL INCLUDE: 30

(I) AN INITIAL NOTIFICAT ION OF CONSTRUCTION , IN A FORM 31
DETERMINED BY THE COMMISSION; 32
HOUSE BILL 1253 9

(II) AT LEAST TWO SUBSEQU ENT NOTIFICATIONS OF 1
CONSTRUCTION, IN A FORM DETERMINED BY THE COMMISSION; 2

(III) A COMPLETE AN D ACCURATE DESCRIPTION OF THE 3
PLANNED GAS INFRASTRUCTURE INVESTMENT; AND 4

(IV) ANY OTHER INFORMATIO N THE COMMISSION CONSIDERS 5
NECESSARY. 6

SECTION 2. AND BE IT FURTHER ENACTED, That a presently existing obligation 7
or contract right may not be impaired in any way by this Act. 8

SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 9
October 1, 2026. 10