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On October 1, 2026 the Maryland PSC issued order regarding Round 1 Next Generation Energy Act Transmission Connected Energy Storage Proposals.

“The positions in this case are widely divergent in that the Sierra Club urges the Commission not to delay full approval of all three remaining transmission-connected energy storage projects totaling 940 MW whereas OPC urges full rejection, with other parties holding positions in between. Sierra Club contends that full approval is the best available response to Maryland’s rising electricity costs, grid constraints, reliability needs, and statutory energy-storage targets. Conversely, OPC urges the Commission to reject arguments that general storage policy goals alone justify project approval and to use its statutory discretion to select no project if the remaining proposals do not adequately support affordable and reliable service. The Commission’s decision in this case strikes a balance between these competing views and also aligns with Staff’s recommendation.”

In terms of specific projects, the Commission ordered:

(1) that the 400 MW Chalk Point Reliability Storage Project and the 40 MW Jade Meadow III Battery Storage Project are both granted an ESCC award using a flat 15-year ESCC Term subject to the conditions in the Standard Obligations;

(2) that Chalk Point’s proposed 535 MW upsize option is denied an ESCC award in Round 1 and that Chalk Point Reliability Storage LLC is hereby invited to participate in Round 2 as described herein;

(3) that the Chalk Point Storage Project and Jade Meadow III Battery Storage Project shall notify the Commission within 30 calendar days from the issue date of this Order whether they accept the list of conditions in the Standard Obligations, or if they propose project specific changes to the Standard Obligations before accepting an ESCC award; and

(4) that the Oystercatcher Energy Storage Project is denied an ESCC award in Round 1 and that Cardinal Energy Storage East, LLC is hereby invited to participate in Round 2 as described herein.

In summary, the Commission finds:

“In summary, we have selected two projects with a combined capacity of 440 MW in Round 1,360 MW short of the NGEA 800 MW Round 1 target. We are disappointed that the Fourth Quarter BESS Project and Pulaski Energy Storage Project withdrew their Applications as their offers were competitive with positive BCA results and projected net savings to ratepayers. However, Maryland will still reap the energy storage capacity benefits since “RWE has decided to pursue an alternative path forward to construct and commercialize the Fourth Quarter Project as planned.

When reflecting on the Round 1 results, the competitiveness of our Round 1 solicitation was limited, but we expect more competitive offers in Round 2. This is due to the fact that the pool of eligible projects will expand to include projects in PJM Cycle 1 that closed April 27, 2026. The results for PJM Cycle 1 include over 40 energy storage New Service Requests (“NSRs”)114 in Maryland entering the PJM interconnection process with a total energy storage capacity exceeding 8,000 MWs. The Commission concludes that this large influx of NSRs in PJM Cycle 1 has the potential to make Round 2 more competitive than Round 1. Therefore, the results for Round 1 should not be used by potential Applicants to benchmark the cost-effectiveness ranges of the projects that will likely be accepted in Round 2.

Finding Chalk Point and Jade Meadow to both be cost-effective Projects, having several attractive characteristics, we therefore approve the proposals of both of those applicants, subject to the Standard Obligations set forth in the Appendix to this Order, which we consider to be conditions of our approval as contemplated by PUA § 7-1227(a) and, therefore, not subject to modification without prior Commission approval. If for some reason a Project has a financing issue due to a Standard Obligation set forth in the Appendix, we encourage the Project to notify the Commission as soon as practical but no later than 30 calendar days from the issue date of this Order.

In regard to the terms regarding the escrow account, the Commission has decided to remove language associated with the escrow account from the standardized agreement filed with the Commission on June, 11, 2026 in PC 75. It is clear there is still significant work that needs to be completed such that putting the details as to the operation of the escrow account into the document now would be improper, especially considering they may change. The cover letter associated with the proposed agreement noted that the Work Group has been involved in two separate work streams, one focused on the development of the draft agreement, which was amended and included as within. The second workstream is focused on the establishment of the escrow account and noted that a recommendation regarding the escrow account “cannot be made at this time as there are many complexities involved that still must be addressed.”115 The letter further clarifies hat the escrow account, and comments from the hearing indicate, that the escrow account does not need to be in place until October 1, 2028.

At the hearing Work Group Leader and Senior Commission Advisor, John Borkoski discussed issues such as who will be responsible for the escrow account including that the complexity may make it harder to attract an administrator. It was also discussed at the hearing that the escrow account language may be reduced in the final order; Mr. Borkoski acknowledged that less detail may be acceptable, but stated that the storage projects may want some assurances.117 Evan Vaugh, a representative of MidAtlantic Renewable Energy Coalition at the hearing, acknowledged that storage developers envisioned there would be a separate process where the escrow account administrator responsibilities would be determined.118 Colin Schofield, another storage representative, indicated support for a skeletal proposal that defers decision making on how the escrow account will work later, but noted that developers wanted the document to establish a non-bypassable charge because they wanted to be able to point to the funding mechanism behind the revenue stream when taking the document through the financing process.

One of the key issues that has complicated the escrow account is that the enabling legislation requires suppliers to purchase the energy storage capacity credits. Parties argue that this creates a complication and that it would be simpler for the utilities to pay for the credits. To accomplish this outcome, it was recommended that utilities act as “central agents” and purchase the credits on behalf of the suppliers, which is generally supported by all parties except by The Potomac Edison Company (“Potomac Edison”). Potomac Edison challenges the legality of this claiming the law clearly puts the obligation upon the electricity supplier and not the utility.120 Most parties generally agree it would be preferable for the General Assembly to enact legislation to make it more clear and less administratively burdensome.

The Commission recognizes that the proposed central agent concept is generally consistent with the law. Although, PUA § 7-1226(a)(1)(ii) places the obligation to purchase storage capacity credits on each electric supplier, PUA § 7-1226(a)(1)(vi) allows for cost recovery though a non-bypassable surcharge on either the distribution or supply rate on a customer’s bill. Therefore, the concept of the utility acting as a “central agent” is not necessarily prohibited, though the Commission acknowledges that there may be concerns if this becomes an obligation for all suppliers to avail themselves of this. The Commission will be delegating the task of working out the details regarding an escrow account to the Work Group to work through this identified concern and address it in the subsequent report to the Commission.

Also as discussed at the hearing, was the Commission’s concern with the document attempting to place obligations upon parties that are not the direct subject of the solicitation. This Order and the subsequent attachment dictate the obligations of the winning storage units and not obligations of other parties, which will be determined once the escrow account structure is finalized.

For all of these reasons, the Commission will remove from the attached obligations discussion of the escrow account, which will continue to be worked upon and edited by parties. This includes the official establishment of the “non-bypassable surcharge.” The Commission will retain the statement that it shall not take any action that would materially impair the timely flow of ESCC Payments to the Project during the ESCC Term of this Agreement, except as expressly provided herein, as clearly the project needs assurance they will receive payment, but how that occurs is still being finalized and frankly, should be the main concern of the projects.

In order to provide the storage units documentation as to how the Commission intends to proceed, the Commission finds either a non-bypassable surcharge or a rider as permitted under PUA § 7–1226 to be the model. We intend to adopt these mechanisms unless changes are proposed by the Work Group and accepted by the Commission in its subsequent decision, or there is a change in law. The Commission also includes the escrow account language in Appendix B, as proposed by the parties, as the strawman the parties should continue to work from as they develop the final escrow account proposal for Commission consideration.

The Commission also supports, to the extent possible, that utilities shall collect and remit payment to the escrow account as this appears to be the simplest approach but will not go so far as to incorporate the language from the RECA as the Commission is expecting further work on this subject.

The Commission notes that the parties or the escrow account administrator, through the request for proposals that will subsequently be issued, need to determine how the escrow account will continue to be funded if a supplier or utility fails to make timely payments. Failure to pay timely is unacceptable and the appropriate financial disincentives in place to prohibit this. That said, failure to pay by any of these parties should not ultimately afford the Project the opportunity to exit its obligations under this order. This should only occur if the escrow account fails to timely remit or remediate untimely payment to the Project. The Commission also reminds all parties to the case that the liability for untimely payment to the escrow account or payment to the project by the escrow administrator lies with the suppliers, utilities, and the project; not the Commission. This should be reflected in any revised proposal submitted by the Commission.

Therefore, the Work Group is directed to continue to work upon the structure of the escrow account and develop a final recommendation for Commission consideration and acceptance. The Commission has attached the removed escrow language as Appendix B as a strawman for parties to work from. Additionally, as noted previously, the parties thought legislation might be prudent, even if the Commission went forward with the central administrator approach. The Work Group shall provide a status update no later than December 18, 2026, as to their progress on developing the escrow account structure, include any proposed amendments to the statue they believe would allow for a more simple establishment of the escrow account, and provide a timeline for making a final proposal to the Commission regarding the escrow account. The Work Group’s timeline shall provide the utilities with enough time to procure an Escrow Account administrator prior to October 2028 and provide certainty to the storage projects as they are developed.

PUA § 7-1224(b)(2) provides that “On or before October 1, 2026, the Commission shall issue a decision on whether to approve one or more proposals in accordance with § 7-1226(c) of this subtitle. After considering the matters raised in this proceeding for the award of energy storage capacity credits to transmission-connected energy storage devices.