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The Maryland Commission’s solar net metering workgroup filed a petition stating that the Work Group has reached an impasse regarding which specific methodology should be used to implement consolidated billing. The Petition considered three different consolidated billing methodologies: Net Crediting 1 (or “NC1”), Net Crediting 2 (or “NC2”), and Purchase of Receivables (or “POR”). The Work Group requests that the Commission provide guidance as to which specific methodology should be implemented in Maryland for community solar.

Previously on February 4, 2025, the MD PSC held final rulemaking session to adopt the proposed community solar pilot regulations.  COMAR Rulemaking Session.

As background the MD PSC Staff had proposed rules governing the community solar pilot program enacted by the state legislature earlier this year.

Excerpts from the MD Commission Order:

As background, {***} “[O]n October 9, 2024, Commission Technical Staff (“Staff”), on behalf of the Net Metering Working Group (the “Work Group”), filed a Petition in the Rulemaking 56 (“RM 56”) proceeding, requesting that the Commission provide policy guidance to the Work Group on consolidated billing methodologies being considered for the Maryland community solar program. The Commission issued a notice on October 10, 2024, inviting interested parties to submit comments on the matter by October 28, 2024.2 On November 26, 2024, the Commission held a public hearing. Having considered the comments of stakeholders, the Commission now provides direction to the Work Group, as discussed below.

The Petition
The Petition states that the Work Group has reached an impasse regarding which specific methodology should be used to implement consolidated billing. The Petition considered three different consolidated billing methodologies: Net Crediting 1 (or “NC1”), Net Crediting 2 (or “NC2”), and Purchase of Receivables (or “POR”). The Work Group requests that the Commission provide guidance as to which specific methodology should be implemented in Maryland for community solar. The Net Crediting 1 methodology provides that a subscription credit is generated that is first applied to the community solar subscription fee and is then applied to the applicable utility charges. This methodology is similar to the net crediting methodology that has been implemented in New York (and is currently being contemplated in New Jersey). The Net Crediting 2 methodology provides that a subscription credit is generated that is first applied to utility charges and is then applied to the community solar subscription fee (the reverse order from NC1). This methodology is similar to the net crediting methodology that has been implemented in Illinois. The POR methodology provides that subscription charges are purchased by the electric company from the subscriber organization at a pre-determined discount rate reflecting the socialized costs among subscriber organizations. The POR methodology is similar to the approach that has been used by retail supply companies within Maryland for utility consolidated billing. The Petition also requests Commission direction on the development of the administrative charges that will be used to recover utility costs associated with the development of consolidated billing. Both consolidated billing and the administrative charges are requirements of the implementation of a community solar permanent program as laid out in Annotated Code of Maryland, Public Utilities Article (“PUA”) § 7-306.2.

Commission Decision
Staff’s original Petition and the subsequent comments from parties focused on two main topics: (1) determining which consolidated billing mechanism (NC1, NC2, or POR) is the optimal approach for the community solar industry in Maryland; and (2) determining how the administrative fee as specified in PUA § 7-306.2(c)(16) should be set. The Commission therefore provides the following guidance on these two topics for the Net Metering Work Group and the Maryland community solar industry in order to move towards adopting regulations on community solar consolidated billing, pursuant to PUA § 7-306.2(G)(1). 

Consolidated Billing
Regarding the consolidated billing mechanism to be used for community solar, the Commission appreciates the parties’ comments on this topic and understands the various merits and deficiencies that can be associated with the NC1, NC2, and POR mechanisms. 13 The Commission understands that one of the main differences between the NC1 and NC2 methodologies hinges on which entity has the risk of bill collections, the electric companies or the subscriber organizations.

In turn, the POR mechanism offers efficiencies due to the electric companies’ familiarity with the mechanism from its use in the retail supply market. However, concerns and volatility with the POR mechanism have arisen with its use in the retail supply market surrounding the transition to Supplier Consolidated Billing in Case No. 9461 and the alteration of the retail supply market due to the implementation of Senate Bill 1 (2024). 

Of the three options, the Commission is persuaded that the NC1 methodology will be the best fit for Maryland. The Commission is encouraged that New York currently uses an NC1 approach to community solar consolidated billing and has been using this approach since it was authorized by the New York Public Service Commission in 2019. Since New York’s implementation of an NC1 methodology, the state has experienced tremendous growth in community solar projects. Additionally, the Commission notes that an NC1 methodology will be implemented in New Jersey, and a number of New Jersey utilities share a parent company with various Maryland utilities (the Exelon Utilities in particular). Between the familiarity that community solar organizations have with New York’s NC1 methodology, and the familiarity that the New Jersey utilities have with the development of an NC1 methodology, the Commission finds that these experiences could provide a strong advantage when carrying out the implementation of an NC1 methodology in Maryland. 

Furthermore, as discussed above, the NC1 methodology largely shifts bill collections risks to the utilities rather than having the bill collections risk be on subscriber 14 organizations. The Commission notes that risk placed on any entity is not ideal; however, bill collections risk is already assumed by the utilities regardless of whether or not a customer is subscribed to a community solar project. The utilities also have extensive collections procedures that have been established over decades providing them with experience in this realm, whereas subscriber organizations do not have this experience in collections procedures. 

Therefore, for the reasons stated above, the Commission hereby directs the Net Metering Working Group to develop a consolidated billing mechanism for community solar in Maryland that is consistent with the Net Crediting methodology as outlined in the Petition for the purpose of developing regulations pursuant to PUA § 7-306.2(G)(1). 

Administrative Fee
Regarding the community solar administrative fee provided for in PUA § 7- 306.2(c)(16), the Commission acknowledges the parties’ comments regarding the specific cost components that should or should not be included in this fee. With the current record, the Commission would prefer to decide on specific cost components when there is more information available on utility implementation and uncollectible costs. Utilities should be prepared to present a supporting record on costs when they file tariffs. 

Conclusion
The Commission therefore directs the Work Group to file draft regulations by March 31, 2025. The Commission is mindful of the need to meet the statutory schedule and the limited time available. Accordingly, the Work Group should focus its efforts on those areas that are critical for the operation of the permanent program. The Commission will consider non-critical elements in a subsequent rulemaking. Toward that end, the 15 Commission directs Staff to file a letter detailing recommended next steps by October 1, 2025.” {***}

Order  (02/10/2025)
RM56
(Revisions to COMAR 20.62 – Community Solar Energy Generation Systems)