News Stories

From the Maryland Public Service Commission (PSC) Order’s Introduction:

“On November 21, 2024, the Commission requested that interested parties submit proposals on maximum green product pricing for each choice service territory in accordance with Annotated Code of Maryland, Public Utilities Article (“PUA”) § 7- 707(d)(2). Proposals were submitted through filings and at a legislative hearing held on December 11, 2024. The Commission hereby establishes the product pricing to be based on the trailing 12-month average SOS rate, along with the 2023 Tier 2 REC price.”

Excerpts from the COMMISSION DECISION 

{***} “PUA § 7–707(c) states that retail electricity suppliers marketing to residential customers may not market electricity as green power unless the percentage of the green power being offered exceeds the greater of 51%, or 1% higher than the current RPS for the year the electricity is provided to the customer. PUA § 7-707(c)(2) requires retail electricity suppliers who market and sell green power to charge rates that do not exceed a Commission-approved baseline. 

PUA § 7-707(d)(2) requires that the Commission hold a proceeding each year to set a price per MWh for electricity marketed as green power. This price may not be exceeded by an electricity supplier unless a supplier requests that the Commission hold a proceeding for that supplier’s green product pursuant to PUA § 7-707(d)(3), at which their green product price may be established. 

PUA § 7-707(d)(2)(iii) requires the Commission to consider the following factors in setting the baseline green power price: 

1. the price of the energy purchased, including the total cost of the renewable energy credits; 
2. the amount of electricity that is eligible for inclusion in meeting the renewable energy portfolio standard; 
3. the state in which the electricity was generated; and 
4. applicable market data. 

PUA §7-707(d)(2)(iii) also allows the Commission to consider whether the purchase of RECs was bundled with a power purchase agreement from the energy sources associated with the credit. 

The General Assembly passed SB 1 to strengthen consumer protections against deceptive practices in the retail electricity market. The legislation calls for increased Commission oversight in order to prevent unfair retail supplier price gouging. The Commission is tasked with establishing a maximum price that suppliers may charge 9 residential customers for green power. The Commission recognizes its responsibility to set a price guideline that limits a supplier’s ability to make an unfair profit, as well as the challenges that go with setting the price cap, given the ways in which green products may vary, including the type and source of the green power as well as how “green” the product actually is. 

After careful consideration of the filings and testimony received in this matter, as well as the requirements and guidance provided by SB 1, the Commission approves Staff’s proposal for green product pricing under PUA § 7-707(d)(2). The Commission directs retail electricity suppliers in each service territory that offer green power to residential customers to do so at a price not exceeding the service territory’s most recent 12-month average SOS rate, along with the 2023 Tier 2 REC price, including the green power premium factor and green product premium as identified by Staff. 

The trailing 12-month average SOS rate is a benchmark referenced in nearly all of the interested party proposals, either as an immediate or alternative proposal. It provides actual, known figures that do not risk overestimation, require the need for speculation, or cause delay, as the use of prospective SOS rates might, given that SOS procurement auction prices for 2025 will not be fully verified until April 2025. Trailing average SOS rates are required to be posted on utility websites to enforce transparency and enable supplier compliance, thereby allowing the Commission, suppliers, and the general public to access “price to compare” data on trailing SOS rates regularly. The Commission finds the Supplier Coalition’s proposed use of 150 percent of the trailing average SOS rate would not be in keeping with the intent of SB 1, as such an increase over the trailing average would result 10 in unfair supplier profits, whereas the use of the trailing 12-month average SOS conforms to the statutory intent of SB 1. 

Similarly, the proposal by Staff to utilize the Tier 2 REC price for compliance year 2023 allows for the use of accessible, substantiated data, as the Commission’s annual RPS report verifies the cost of Tier 2 RECs. The use of Tier 2 RECs also limits the ability for suppliers to achieve an unfair profit by basing pricing off of the least expensive RECs. This decision does not prevent retail electricity suppliers from making a fair profit, as PUA §7- 707(d)(3) provides a means for suppliers that wish to use the more expensive Tier 1 RECs to seek the Commission’s authority to charge a price higher than the established baseline. Furthermore, Staff’s proposal enables variation in the amount of RECs composed in a green power product through the green power premium factor. As a result, it incentivizes green power by reducing greenhouse gas emissions and eliminating carbon-fueled generation, establishing a market for electricity from renewable elements within the State, and enabling flexibility based on the amount of RECs eligible for inclusion in meeting the renewable portfolio standard. 

Staff noted that, outside of a PJM Interconnection, LLC (“PJM”)-specific tracking system, it is unable to verify the retirement of RECs that exceed the 51% requirement. The Commission interprets SB 1 to encourage procurement of verifiable RECs within PJM markets and therefore directs retail electric suppliers to retire all RECs composing an approved green product, 51% and above, into a PJM tracking system accessible by the Commission. 

The Commission notes that SB 1 has a built-in review mechanism in that PUA § 7- 707(d)(2) requires the Commission to establish a maximum green product price annually. 11 Each proceeding that follows will allow the Commission and interested parties to review and adjust in accordance with lessons learned, price fluctuations, and market indicators. The Commission’s directive today, however, is intended to reflect reasonable, low-risk considerations as a starting point for the newly enacted green power pricing requirements. The Commission reiterates that its decision does not preclude a retail electric supplier from specifically petitioning the Commission for a price that exceeds the amount dictated herein, as PUA § 7-707(d)(3) allows suppliers to petition for a higher price based on independently verified data submitted to the Commission. 

Additionally, PUA § 7-707(f) requires a supplier to include the following or similar Commission-approved disclosure language in marketing materials involving the purchase of green power: 

We deliver energy through the purchase of Renewable Energy Credits (RECs). A REC represents the social good that accompanies 1 megawatt-hour of renewable electricity generation. RECs may be sold separately from renewable electricity itself. Renewable electricity and RECs may be sold to different entities. The purchase of a REC does not indicate that renewable electricity itself has been purchased by the entity that purchased the REC. 

Similarly, PUA § 7-707(g) requires the Commission to adopt regulations that require retail electric suppliers offering green power for sale to include in marketing materials a disclosure that explains the following: 

1. what the customer will actually be paying for when the customer purchases green power from the electricity supplier; 
2. how the electricity that the customer has purchased is generated; 
3. how the green power will benefit the environment; 
4. the percentage of electricity that would be provided by the electricity supplier that is eligible for inclusion in meeting the renewable energy portfolio standard; and 12 (5) the state in which electricity was generated. 

In accordance with PUA § 7-707(f) and (g), the Commission directs all retail electric suppliers offering green products for sale to include the following statement in its marketing materials: 

The electricity delivered to your home is generated from a variety of sources, both renewable and nonrenewable. Energy from renewable resources, such as wind and solar, cannot be tracked directly into your home. Instead, the energy your home uses will support renewable energy sources through the purchase of renewable energy credits (“RECs”). A REC represents the environmental and social good associated with 1 megawatt hour of renewable electricity generation. RECs may be sold separately from the electricity itself, so the buyer of a REC may be different than the buyer of the electricity. In your contract, [X]% of the RECs qualify for Maryland’s renewable portfolio standard. The remaining [Y]% of RECs are [the specific product being marketed]. 

By purchasing RECs that qualify for Maryland’s renewable portfolio standard, you are supporting renewable energy development in the region. Increased demand for, and generation of, renewable electricity can help reduce conventional electricity generation from fossil fuels in the region where the renewable electricity generator is located. It may also have other environmental benefits such as reducing regional air pollution.” {***} 

{***} “IT IS THEREFORE, this 30th day of December, in the year Two Thousand Twenty-Four, by the Public Service Commission of Maryland, ORDERED: 

(1) that Staff’s proposal for green product pricing under PUA § 7-707(d)(2) is approved; 

(2) that retail electric suppliers are directed to retire all RECs composing an approved green product, 51% and above, into a PJM tracking system accessible by the Commission; and 13 

(3) that in accordance with PUA § 7-707(f) and (g), all retail electric suppliers offering green products for sale are directed to include in its marketing materials the statement contained herein.” {***}

https://webpscxb.psc.state.md.us/DMS/commissionorders. Order 91464 on Setting Green Product Pricing (9757)
https://webpscxb.psc.state.md.us/DMS/commissionorders.
https://webpscxb.psc.state.md.us/DMS/commissionorders. Application Form