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EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*sb0850*
SENATE BILL 850
C5, M5 6lr3261
By: Senators Gallion, Hester, Watson, and Carozza
Introduced and read first time: February 6, 2026
Assigned to: Education, Energy, and the Environment
A BILL ENTITLED
AN ACT concerning 1
Electric and Gas Companies – Energy Efficiency, Conservation, and Demand 2
Response Programs – Alterations 3
(Utility Affordability and Ratepayer Protection Act of 2026) 4
FOR the purpose of requiring that certain energy efficiency, conservation, and demand 5
response programs include bill savings to residential customers; altering the date by 6
which certain unpaid and unamortized costs must be eliminated; requiring the 7
Public Service Commission to establish, on or before a certain date, certain caps or 8
limit certain assessments; and generally relating to electric company and gas 9
company energy efficiency and demand response programs. 10
BY repealing and reenacting, with amendments, 11
Article – Public Utilities 12
Section 7–222 and 7–223(a) 13
Annotated Code of Maryland 14
(2025 Replacement Volume and 2025 Supplement) 15
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 16
That the Laws of Maryland read as follows: 17
Article – Public Utilities 18
7–222. 19
(a) (1) Subject to review and approval by the Commission, each electric 20
company, each gas company other than a gas company subject to § 4–207(a) of this article, 21
the Department, and, if required in accordance with subsection (c) of this section, each 22
midsize electric cooperative shall develop and implement programs and services in 23
accordance with §§ 7–223, 7–224, and 7–225 of this subtitle to encourage and promote the 24
efficient use and conservation of energy, demand response, and beneficial electrification by 25
2 SENATE BILL 850
consumers, electric companies, gas companies, and the Department in support of the 1
greenhouse gas emissions reduction goals and targets required under Title 2, Subtitle 12 2
of the Environment Article. 3
(2) ANY PROGRAM O R SERVICE DEVELOPED BY AN ELEC TRIC 4
COMPANY OR A GAS COMPANY, OTHER THAN A GAS COMPANY SUBJECT TO § 4–207(A) 5
OF THIS ARTICLE, AND APPROVED BY THE COMMISSION UNDER PARAGRAPH (1) OF 6
THIS SUBSECTION SHALL INCLUDE DEMONSTRABLE BILL SAVINGS TO RESIDENTIAL 7
CUSTOMERS. 8
(b) As directed by the Commission, each gas company subject to § 4–207(a) of this 9
article, each municipal electric or gas utility, each small rural electric cooperative, and, if 10
required in accordance with subsection (c) of this section, each midsize electric cooperative 11
shall include energy efficiency and conservation, demand response, and beneficial 12
electrification programs or services THAT INCLUDE DEMONSTRABLE BILL SAVINGS TO 13
RESIDENTIAL CUSTOMERS as part of their service to their customers. 14
(c) (1) In accordance with this subsection, each midsize electric cooperative 15
shall be subject to either subsection (a) or subsection (b) of this section. 16
(2) Each midsize electric cooperative shall offer programs and services to 17
customers in accordance with: 18
(i) subsection (b) of this section through December 31, 2026; and 19
(ii) on or after January 1, 2027, and as the Commission directs, 20
either subsection (a) or subsection (b) of this section. 21
(3) Not later than October 1, 2025, the Commission shall determine if it is 22
in the public interest for a midsize electric cooperative to offer programs and services to 23
customers in accordance with subsection (a) or subsection (b) of this section starting 24
January 1, 2027, and for all subsequent years. 25
(4) Each midsize electric cooperative shall provide the following 26
information to the Commission to assist in making a determination under paragraph (3) of 27
this subsection: 28
(i) anticipated costs and bill impacts; 29
(ii) a description of the anticipated program offerings; 30
(iii) the anticipated cost–effectiveness of the residential, commercial, 31
and industrial sector subportfolios based on the cost –effectiveness tests in § 7–225(d)(3)(i) 32
of this subtitle; 33
SENATE BILL 850 3
(iv) the anticipated electricity savings and greenhouse gas emissions 1
reductions; and 2
(v) any other information the Commission requires. 3
(5) The information provided to the Commission under paragraph (4) of 4
this subsection shall be based on a plan to offer programs and services to customers t hat 5
complies with the requirements of an electric company subject to subsection (a) of this 6
section for the 3–year program cycle starting January 1, 2027. 7
(6) When making a public interest determination under paragraph (3) of 8
this subsection the Commiss ion, at a minimum, shall consider the requirements under § 9
7–225(d)(3) of this subtitle that are considered when approving a plan of an electric 10
company that is subject to subsection (a) of this section. 11
(7) Starting October 1, 2025, if the Commission determines that it is in the 12
public interest for a midsize electric cooperative to be subject to subsection (a) of this 13
section, the midsize electric cooperative shall comply with all requirements of an electric 14
company subject to subsection (a) of this se ction for program cycles starting on and after 15
January 1, 2027. 16
(8) On or before March 1 each year, starting in 2026, each midsize electric 17
cooperative directed by the Commission to include programs or services under subsection 18
(b) of this section shall submit to the Commission a report quantifying the gains in energy 19
efficiency and reductions in greenhouse gas emissions achieved during the previous year. 20
(d) The Commission shall encourage and promote the efficient use and 21
conservation of energy in sup port of the greenhouse gas emissions reduction goals and 22
targets required under Title 2, Subtitle 12 of the Environment Article, established by the 23
Commission under § 7–223(b) of this subtitle, and specified in § 7–224(a)(2) of this subtitle 24
by: 25
(1) requiring each electric company and gas company to establish any 26
program or service that: 27
(I) the Commission determines to be appropriate and cost–effective; 28
(II) DEMONSTRABLY REDUCES RESIDENTIAL CUSTOMER BILLS; 29
AND 30
(III) USES DEMAND REDUCTION OR OTHER COST CONTAINMENT 31
MECHANISMS TO REDUCE ENERGY CONSUMPTION A ND LOWER RESIDENTIAL 32
CUSTOMER BILLS; 33
(2) adopting rate–making policies that provide, through a surcharge line 34
item on customer bills: 35
4 SENATE BILL 850
(i) full cost recovery of reasonably incurred costs for programs and 1
services established under item (1) of this subsection, including full recovery on a current 2
basis on or before January 1, 2028; 3
(ii) on or before December 31, [2032] 2040, the elimination of any 4
unpaid costs and unamortized costs that: 5
1. A. existed on December 31, 2024; or 6
B. were incurred before January 1, 2028; and 7
2. were accrued for the purpose of achieving statutory 8
targets for annual incremental gross energy savings; 9
(iii) compensation for any unpaid costs and unamortized costs under 10
item (ii) of this item at not more than each electric company’s and each gas company’s 11
average cost of outstanding debt; and 12
(iv) reasonable financial performance incentives and penalties for 13
investor–owned electric companies and gas companies, as appropriate; and 14
(3) ensuring that adoption of electric customer choice under Subtitle 5 of 15
this title and gas customer choice under Subtitle 6 of this title does not adversely impact 16
these goals and targets. 17
(e) The Commission shall, by regulation or order, require each electric company 18
and each gas company subject to subsection (a) of this section that has submitted to the 19
Commission, on or before July 1, 2024, a plan for achieving electricity or gas sav ings and 20
demand reduction targets to disclose the following information in a form and format readily 21
understandable to the average customer: 22
(1) that the surcharge imposed in accordance with subsection (d) of this 23
section includes the cost of paying down the unpaid costs and unamortized costs that were 24
accrued over time by programs and services required by the Commission dating back to 25
2008; and 26
(2) the period of time that the surcharge will include excess charges to pay 27
down the unpaid costs and unamortized costs. 28
(F) ON OR BEFORE JULY 1, 2027, THE COMMISSION SHALL ESTABLISH, BY 29
ORDER OR REGULATION , CAPS OR LIMIT ASSESS MENTS TO RESIDENTIAL 30
CUSTOMERS UNDER THIS SECTION IN ORDER TO REDUCE COSTS TO RESI DENTIAL 31
CUSTOMERS. 32
7–223. 33
SENATE BILL 850 5
(a) On or before J anuary 1, 2025, and on or before January 1 every 3 years, 1
starting in 2027, the Commission shall, by regulation or order, require each electric 2
company and each gas company subject to § 7 –222(a) of this subtitle to develop and 3
implement a plan that: 4
(1) covers appropriate ratepayer classes; 5
(2) starting in 2027, covers a 3–year program cycle; [and] 6
(3) achieves the greenhouse gas emissions reduction target established for 7
the electric company or gas company under subsection (b) of this section thro ugh 8
cost–effective energy efficiency and conservation programs and services, demand response 9
programs and services, and beneficial electrification programs and services; AND 10
(4) ACHIEVES DEMONSTRABL E SAVINGS TO RESIDEN TIAL 11
CUSTOMERS. 12
SECTION 2. AND BE IT FURTHER ENACTED, That, on or before July 1, 2027, the 13
Public Service Commission shall report to the Senate Education, Energy , and the 14
Environment Committee and the House Environment and Transportation Committee, in 15
accordance with § 2–1257 of the State Government Article, on the implementation of this 16
Act. 17
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 18
October 1, 2026. 19