Electricity Generation and Storage - Investor-Owned Electric Companies and Front-of-the-Meter Storage (Affordable Energy Act)

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb1561*

HOUSE BILL 1561
C5 6lr3519
CF SB 954
By: Delegate Queen
Introduced and read first time: February 13, 2026
Assigned to: Environment and Transportation

A BILL ENTITLED

AN ACT concerning 1

Electricity Generation and Storage – Investor–Owned Electric Companies and 2
Front–of–the–Meter Storage 3
(Affordable Energy Act) 4

FOR the purpose of requiring the Public Service Commission to require one or more electric 5
companies to develop and submit to the Commission a certain resource adequacy 6
plan if the Commission makes a certain determination; authorizing an 7
investor–owned electric company required or authorized to construct, acquire, own, 8
or lease and operate its own generating facilities to recover certain prudently 9
incurred costs and investments in a certain manner under certain circumstances; 10
altering the circumstances under which the Commission may require or allow an 11
investor–owned electric company to construc t, acquire, own, or lease and operate 12
certain generating facilities and necessary transmission facilities; altering the list of 13
items that the Commission is required to specify in selecting front –of–the–meter 14
transmission energy storage device project prop osals; and generally relating to 15
electric generating facilities and energy storage. 16

BY adding to 17
Article – Public Utilities 18
Section 7–219.1, 7–219.2, and 7–510(c)(6) 19
Annotated Code of Maryland 20
(2025 Replacement Volume and 2025 Supplement) 21

BY repealing 22
Article – Public Utilities 23
Section 7–510(c)(6) 24
Annotated Code of Maryland 25
(2025 Replacement Volume and 2025 Supplement) 26

BY repealing and reenacting, without amendments, 27
Article – Public Utilities 28
2 HOUSE BILL 1561

Section 7–701(a), (s), and (t) and 7–1201(a) and (c) 1
Annotated Code of Maryland 2
(2025 Replacement Volume and 2025 Supplement) 3

BY repealing and reenacting, with amendments, 4
Article – Public Utilities 5
Section 7–1226 6
Annotated Code of Maryland 7
(2025 Replacement Volume and 2025 Supplement) 8

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 9
That the Laws of Maryland read as follows: 10

Article – Public Utilities 11

7–219.1. 12

(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 13
INDICATED. 14

(2) “EFFECTIVE LOAD CARRYING CAPABILITY” OR “ELCC” HAS THE 15
MEANING STATED IN § 7–1201 OF THIS TITLE. 16

(3) “LARGE CAPACITY ENERGY RESOURCE” MEANS A GENERATING 17
FACILITY OR AN ENERGY STORAGE DEVICE THAT HAS A CAPACITY RATING EQUAL TO 18
OR GREATER THAN 20 MEGAWATTS AFTER ACCOUNTING FOR THE EFFECTIVE LOAD 19
CARRYING CAPABILITY. 20

(4) “PRICE STABILITY EVENT ” MEANS A CLEARING PRI CE IN THE 21
PJM CAPACITY MARKET THAT HAS EXCEEDED OR IS E XPECTED TO EXCEED TH E 22
PROJECTED NET COST OF NEW ENERGY FOR A GENERATING FACILITY OWNED BY AN 23
ELECTRIC COMPANY. 24

(5) “PJM CAPACITY MARKET ” MEANS THE CAPACITY M ARKET OF 25
PJM INTERCONNECTION, LLC, OR ANY SUCCESSOR ORG ANIZATION THAT 26
SERVICES THE PJM REGION. 27

(6) “RENEWABLE ENERGY GENERATION” MEANS GENERATION FROM 28
A TIER 1 RENEWABLE SOURCE OR A TIER 2 RENEWABLE SOURCE AS DEFINED IN § 29
7–701 OF THIS TITLE. 30

(7) “RESOURCE ADEQUACY ” MEANS THE MEASURE OF WHETHER 31
TRANSMISSION LINES H AVE SUFFICIENT CAPAC ITY AND RESERVES TO RELIABLY 32
BALANCE ELECTRICITY SUPPLY AND DEMAND WITHIN THE STATE. 33
HOUSE BILL 1561 3

(B) (1) THE COMMISSION SHALL REQU IRE ONE OR MOR E ELECTRIC 1
COMPANIES TO DEVELOP AND SUBMIT TO THE COMMISSION A RESOURCE ADEQUACY 2
PLAN IF THE COMMISSION MAKES A DETERMINATION THAT: 3

(I) THERE IS INSUFFICIEN T RESOURCE ADEQUACY IN THE 4
STATE; OR 5

(II) A PRICE STABILITY EVENT HAS OCCURRED. 6

(2) AN E LECTRIC COMPANY SHAL L SUBMIT THE RESOURC E 7
ADEQUACY PLAN TO THE COMMISSION WITHIN 270 DAYS AFTER THE COMMISSION 8
MAKES A DETERMINATION UNDER PARAGRAPH (1) OF THIS SUBSECTION. 9

(3) THE COMMISSION SHALL APPR OVE, MODIFY, OR DENY EACH 10
RESOURCE ADEQUACY PL AN SUBMITTED UNDER PARA GRAPH (2) OF THIS 11
SUBSECTION WITHIN 1 YEAR AFTER THE COMMISSION MAKES A DE TERMINATION 12
UNDER PARAGRAPH (1) OF THIS SUBSECTION. 13

(4) A RESOURCE ADEQUACY PLAN: 14

(I) SHALL INCLUDE THE EL ECTRIC COMPANY ’S PLANS TO 15
INVEST IN, OPERATE, AND MAINTAIN GENERATING FACILITIES OR TRANSM ISSION 16
FACILITIES NECESSARY TO INTERCONNECT THE GENERATING FACILITIES WITH THE 17
ELECTRIC SYSTEM IN O RDER TO ADDRESS THE RESOURCE ADEQUACY 18
INSUFFICIENCIES OR PRICE STABILITY EVENT IDENTIFIED BY THE COMMISSION; 19

(II) SHALL PRIORITIZE THE DEVELOPMENT OR OPERA TION OF 20
RENEWABLE ENERGY RESOURCES; AND 21

(III) MAY INCLUDE PLANS FO R THE DEVELOPMENT OF 22
RENEWABLE ENERGY GENERATION AND LARGE CAPACITY ENERGY RESOURCES. 23

7–219.2. 24

(A) SUBJECT TO SUBSECTION (B) OF THIS SECTION, AN INVESTOR–OWNED 25
ELECTRIC COMPANY REQ UIRED OR AUTHORIZED TO CONSTRUCT, ACQUIRE, OWN, 26
OR LEASE AND OPERATE ITS OWN GENERATING FACILITIES UNDER § 7–510 OF THIS 27
TITLE MAY RECOVER AL L OF THE P RUDENTLY INCURRED AND VERIFIABLE COSTS 28
INCURRED BY THE INVE STOR–OWNED ELECTRIC COMPA NY IN CONSTRUCTING , 29
ACQUIRING, OWNING, OR LEASING AND OPERA TING THE GENERATING FACILITIES 30
PLUS A REASONABLE RETURN. 31

4 HOUSE BILL 1561

(B) PRUDENTLY INCURRED CO STS UNDER SUBSECTION (A) OF THIS 1
SECTION INCLUDE: 2

(1) COSTS OF ACQUISITION , DESIGN, SITING, PERMITTING, 3
CONSTRUCTION, OPERATION, MAINTENANCE, TAXES, FUEL, LABOR, CASH WORKING 4
CAPITAL, AND OTHER CARRYING COSTS; AND 5

(2) ANY EXPENSES OR COST S OF INVESTMENTS THA T BECOME 6
STRANDED FOR ANY REASON. 7

(C) SUBJECT TO COMMISSION APPROVAL, AN INVESTOR–OWNED ELECTRIC 8
COMPANY MAY CHOOSE T O RECOVER ITS P RUDENTLY INCURRED AND VERIFIABLE 9
COSTS THROUGH A NONBYPASSABLE SURCHARGE. 10

(D) AN INVESTOR–OWNED ELECTRIC COMPANY REQUIRED OR AUTHORIZED 11
TO CONSTRUCT , ACQUIRE, OWN, OR LEASE AND OPERATE ITS OWN GENERATING 12
FACILITIES UNDER § 7–510 OF THIS TITLE MAY RECOVER ITS PRUDENTLY INCURRED 13
AND VERIFIED COSTS AT AN ANNUAL RATE OF RETURN THAT IS NOT LESS THAN THE 14
RATE OF RETURN ON ITS TRANSMISSION RATE BASE AS APPROVED BY THE FEDERAL 15
ENERGY REGULATORY COMMISSION FOR THAT CALENDAR YEAR. 16

(E) AN INVESTOR –OWNED ELECTRIC COMPA NY THAT IS A MEMBER OF A 17
REGIONAL TRANSMISSION ORGANIZATION THAT OPERATES A WHOLESALE MARKET 18
MAY: 19

(1) OPERATE A GENERATING FACILITY AND PARTICI PATE IN THE 20
WHOLESALE MARKET OF THAT REGIONAL TRANSMISSION ORGANIZATION; AND 21

(2) APPLY ANY NET REVENU ES FROM PARTICIPATIO N IN THE 22
WHOLESALE MARKET OF THAT REGIONAL TRANSMISSION ORGANIZATION AGAINST 23
THE OPERATING COSTS OF THE GENERATING FACILITY. 24

7–510. 25

(c) [(6) In order to meet long –term, anticipated demand in the State for 26
standard offer service and other electricity supply, the Commission may require or allow 27
an investor–owned electric company to construct, acquire, or lease, and operate, its own 28
generating facilities, and transmission facilities nec essary to interconnect the generating 29
facilities with the electric grid, subject to appropriate cost recovery.] 30

(6) (I) 1. IN THIS PARAGRAPH THE FOLLOWING WORDS HAVE 31
THE MEANINGS INDICATED. 32

HOUSE BILL 1561 5

2. “PREMIER CREDIT RATING AGENCY” MEANS A 1
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, AS APPROVED BY 2
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE 3
FEDERAL CREDIT RATING AGENCY REFORM ACT OF 2006 OR SUBSEQUENT 4
LEGISLATION, THAT IS IN THE TOP T WO NATIONALLY RECOGN IZED STATISTICAL 5
RATING ORGANIZATIONS IN TERMS OF MARKET SHARE. 6

3. “RATING ASSESSMENT” MEANS A WRITTEN ANALYSIS 7
PROVIDED BY A PREMIER CREDIT RATING AGENCY THAT INCLUDES: 8

A. A REVIEW OF A COMMISSION ORDER OR O RDERS TO 9
REQUIRE OR ALLOW AN INVESTOR–OWNED ELECTRIC COMPA NY T O CONSTRUCT , 10
ACQUIRE, OWN, OR LEASE AND OPERATE A GENERATING FACILITY; AND 11

B. A DETERMINATION OF T HE LIKELY IMPACT OF THE 12
COMMISSION ORDER ON T HE CREDITWORTHINESS OF THE INVESTOR –OWNED 13
ELECTRIC COMPANY AND ANY OF ITS AFFILIATES. 14

(II) SUBJECT TO T HE REQUIREMENTS OF SUBTITLE 2 OF THIS 15
TITLE, THE COMMISSION MAY REQUIRE OR ALLOW AN INVESTOR–OWNED ELECTRIC 16
COMPANY TO: 17

1. CONSTRUCT, ACQUIRE, OWN, OR LEASE AND OPERATE 18
GENERATING FACILITIES; AND 19

2. CONSTRUCT, ACQUIRE, OWN, OR LEASE AND OPERATE 20
TRANSMISSION FACILIT IES NECESSARY TO INT ERCONNECT THE GENERA TING 21
FACILITIES WITH THE ELECTRIC SYSTEM. 22

(III) A COMMISSION ORDER REQU IRING OR ALLOWING AN 23
INVESTOR–OWNED ELECTRIC COMPANY TO CONSTRUCT, ACQUIRE, OWN, OR LEASE 24
AND OPERATE A GENERA TING FACILI TY WITH A NAMEPLATE CAPACITY THAT 25
EXCEEDS 2 MEGAWATTS MAY NOT TAKE EFFECT UNTIL: 26

1. THE INVESTOR–OWNED ELECTRIC COMPANY: 27

A. IDENTIFIES A PREMIER CREDIT RATING AGENCY; 28

B. PROVIDES A COPY OF T HE COMMISSION ORDER , 29
ALONG WITH ANY TERMS , CONDITIONS, AND CONTINGENCIES TO THE CREDIT 30
RATING AGENCY; AND 31

6 HOUSE BILL 1561

C. REQUESTS A RATING AS SESSMENT OF THE 1
COMMISSION ORDER FROM THE PREMIER CREDIT RATING AGENCY; AND 2

2. THE PREMIER CREDIT R ATING AGENCY ISSUES A 3
RATING ASSESSMENT TH AT FINDS THAT THE T ERMS OF THE COMMISSION ORDER 4
ARE NOT LIKELY TO BE CREDIT NEGATIVE FOR THE INVESTOR–OWNED ELECTRIC 5
COMPANY AND ITS AFFILIATES. 6

(IV) ON OR BEFORE OCTOBER 31, 2026, THE COMMISSION 7
SHALL PROPOSE REGULA TIONS TO CARRY OUT T HE PROVISIONS OF THI S 8
PARAGRAPH. 9

7–701. 10

(a) In this subtitle the following words have the meanings indicated. 11

(s) “Tier 1 renewable source” means one or more of the following types of energy 12
sources: 13

(1) solar energy, including energy from photovoltaic technologies and solar 14
water heating systems; 15

(2) wind; 16

(3) qualifying biomass; 17

(4) methane from the anaerobic decomposition of organic materials in a 18
landfill or wastewater treatment plant; 19

(5) geothermal, including energy generated through geothermal exchange 20
from or thermal energy avoided by, groundwater or a shallow ground source; 21

(6) ocean, including energy from waves, tides, currents, and thermal 22
differences; 23

(7) a fuel cell that produces electricity from a Tier 1 renewable source 24
under item (3) or (4) of this subsection; 25

(8) a small hydroelectric power plant of less than 30 megawatts in capacity 26
that is licensed or exempt from licensing by the Federal Energy Regulatory Commission; 27

(9) poultry litter–to–energy; 28

(10) thermal energy from a thermal biomass system; and 29

HOUSE BILL 1561 7

(11) raw or treated wastewater used as a heat source or sink for a heating 1
or cooling system. 2

(t) “Tier 2 renewable source” means hydroelectric power other than pump storage 3
generation. 4

7–1201. 5

(a) In this part the following words have the meanings indicated. 6

(c) “Effective load carrying capability” or “ELCC” means the expected capacity 7
contribution of an energy resource during PJM Interconnection’s operating hours when 8
there is high electricity demand and low resource output. 9

7–1226. 10

(a) In selecting a proposal for a front –of–the–meter transmission energy storage 11
device project, the Commission: 12

(1) shall specify: 13

(i) 1. a 15–year pricing schedule that uses a monthly fixed price 14
for each megawatt that represents the anticipat ed wholesale value of capacity for the 15
front–of–the–meter transmission energy storage device and the benefits identified in § 16
7–1225(a)(2) of this subtitle; OR 17

2. A PRICING SCHEDULE T HAT USES A MONTHLY F IXED 18
PRICE THAT REPRESENTS: 19

A. THE COST TO CONSTRUC T AND OPERATE THE 20
FRONT–OF–THE–METER TRANSMISSION ENERGY STORAGE DEVICE; AND 21

B. THE BENEFITS IDENTIFIED FROM THE COST–BENEFIT 22
ANALYSIS UNDER § 7–1225(A)(2) OF THIS SUBTITLE; 23

(ii) THAT ANY WHOLESALE M ARKET REVENUE RECEIV ED BY 24
THE ENERGY STORAGE PROJECT SHALL BE: 25

1. OFFSET BY THE PRICIN G SCHEDULE APPROVED BY 26
THE COMMISSION; AND 27

2. TRANSMITTED TO THE COMMISSION TO BE HELD IN 28
ESCROW FOR DISTRIBUT ION TO ELECTRIC COMP ANIES TO BE REFUNDED OR 29
CREDITED TO EACH DISTRIBUTION CUSTOMER; 30

8 HOUSE BILL 1561

(III) that each electricity supplier shall be responsible for purchasing 1
storage capacity credits at the monthly fixed price schedule proportional to the electricity 2
supplier’s capacity obligation; 3

[(iii)] (IV) that all PJM capacity marke t revenue earned by the 4
energy storage project be transmitted to the Commission to be held in escrow for 5
distribution to electric companies to be refunded or credited to each distribution customer 6
proportional to the electricity supplier’s monthly capacity purchase obligation; 7

[(iv)] (V) that the energy storage project shall retain any energy and 8
ancillary services revenue earned; 9

[(v)] (VI) that electric companies must jointly select an escrow 10
administrator, in consultation with the Commission; and 11

[(vi)] (VII) for any cost recovery by an electric company, that the 12
recovery shall be done through a nonbypassable surcharge established by the electric 13
company that is added to the electric company’s base distribution rate or supply rate on 14
customer bills; 15

(2) shall specify that for continued receipt of payment under item (1) of this 16
subsection, an applicant shall demonstrate, to the satisfaction of the Commission, that the 17
applicant’s energy storage device is available AND IS PARTICIPATING IN THE PJM 18
CAPACITY MARKET AT I TS FULL CAPABILITY T O REASONABLY MAXIMIZ E THE 19
PROJECT’S MARKET REVENUES; 20

(3) shall incorporate penalties for nonperformance and underperformance 21
in the contract, including withholding of payment that reflects the degree of 22
underperformance, for energy storage devices that fail to meet availability metrics; 23

(4) may terminate energy storage devices from the program if device 24
performance does not improve after appropriate notice and opportunity to cure; 25

(5) shall consider other nonprice factors to ensure project deliverability 26
within 24 months after the award date, such as: 27

(i) project maturity dates; 28

(ii) interconnection queue status; 29

(iii) site control; 30

(iv) developer experience, including p rocuring, constructing, and 31
operating front–of–the–meter transmission energy storage devices; 32

HOUSE BILL 1561 9

(v) any evidence of key development milestones to substantiate 1
project deliverability within 24 months after the award date; 2

(vi) safety plans; and 3

(vii) any other relevant nonprice factors as determined by the 4
Commission; and 5

(6) shall require, at a minimum, all energy storage devices that utilize 6
lithium–ion batteries to comply with the most up –to–date revision of the National Fire 7
Protection Assoc iation 855: Standard for the Installation of Stationary Energy Storage 8
Systems in effect at the project’s final permit application date. 9

(b) (1) Each energy storage project shall include a proposed decommissioning 10
plan. 11

(2) The proposed decommissionin g plan shall include a plan to maximize 12
the recycling or reuse of all qualifying components of each energy storage device. 13

(3) The owner or operator of an energy storage device may submit a revised 14
recycling and reuse plan that incorporates emerging rec ycling and reuse opportunities up 15
to 1 year before executing the decommissioning plan. 16

(c) The Commission shall: 17

(1) after giving public notice, hold one or more public hearings to receive 18
public comment and evaluate the proposals; and 19

(2) subject to subsection (d) of this section, issue one or more orders to 20
select a proposal or proposals for development. 21

(d) The Commission may end the solicitation process without selecting a proposal 22
if the Commission finds that none of the proposals adequately support the goals established 23
under this subtitle, including the goal of securing affordable, reliable electrical service for 24
Maryland residents. 25

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 26
October 1, 2026. 27