Bill Would Cap Retail Supplier Rates, Limit Contracts To 12 Months, No Auto Renewal -- EnergyChoiceMatters.com

Bill Would Cap Retail Supplier Rates, Limit Contracts To 12 Months, No Auto Renewal

Would Ban Purchase of Receivables (POR)

Would Ban Commissions To Energy Sales Agents

Would Require Individual Sales Agents To Be Licensed By PSC

Would Remove Market Price Language From SOS Statute

Would Allow Utilities To Market SOS To Customers

January 15, 2024

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Copyright 2010-23 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Companion bills (HB 267, SB0001) have been introduced in Maryland concerning retail energy market reforms

The bills are sponsored by Del. Brian M. Crosby, vice chair of the House Economic Matters Committee, and Senate President Pro Tem Malcolm Augustine

HB 267 would provide that an electricity supplier, "may offer electricity only at a price that does not exceed the trailing 12–month average of the electric company’s standard offer service rate in the electric company’s service territory as of the date of agreement with the customer."

Further, HB 267 provides that an electric supplier may offer electricity supply, "only: 1. for a term not to exceed 12 months at a time; 2. without automatic renewal."

Under the bill, aside from a time-of-use rate, an electric supplier, "may not offer a variable rate other than a rate that adjusts for seasonal variation not more than twice in a single year."

Concerning the new contract limits, the bill provides that such limits shall be construed to apply to all electricity supply agreements and gas supply agreements entered into or renewed on or after January 1, 2025.

Such limits, "may not be applied or interpreted to have any effect on or application to any electricity supply agreement or gas supply agreement that is in effect on or before December 31, 2024," the bill states

HB 267 provides that an electric supplier, "may not pay a commission or other incentive–based compensation to an energy salesperson for enrolling customers."

The current statutory definition of supplier includes brokers and marketers

HB 267 provides that, "an electricity supplier may not sell to an electric company [utility], and an electric company may not purchase from an electricity supplier, accounts receivable."

HB 267 provides that an electric supplier, "may not impose on a customer a fee for cancellation or early termination of an electricity supply agreement."

HB 267 would require creation of a switch block mechanism, known as a "do not transfer" list for those customers who wish to remain on SOS

HB 267 would require the utilities to report to the PSC, by specific supplier, various shadow-billed electric supplier price data versus SOS, including, "the third–party average residential rates broken out by supplier and the variance between each of these rates and the standard offer service average rate."

The bill would limit retail supplier licenses (including brokers) to 3 years and require renewal applications to be filed with the PSC, subject to a fee, for renewal terms of 3 years

HB 267 would require individual energy sales agents to be licensed by the PSC

The bill defines "energy salesperson" to mean, "an individual who is licensed by the commission to sell: (1) electricity or electricity supply services to retail electric customers on behalf of an electricity supplier as an employee or agent of the electricity supplier; or (2) gas or gas supply services to retail gas customers on behalf of a gas supplier as an employee or agent of the gas supplier."

HB 267 would provide that, "a person may not engage in the business of an energy salesperson in the state unless the person holds a license issued by the commission."

Furthermore, under the bill, each energy salesperson must be "associated" with a licensed supplier (the statutory definition of supplier includes brokers and marketers)

HB 267 states, "a licensed energy salesperson may offer or sell electricity supply agreements or gas supply agreements to customers in the state only if the energy salesperson is associated with a licensed electricity supplier or licensed gas supplier, respectively."

HB 267 provides that the term of an energy salesperson license would be 3 years, with salespersons required to formally file at the PSC for renewal, with a fee, for subsequent three year terms

HB 267 provides that the PSC shall, "require proof of financial integrity," for energy salespersons

The bill provides that the PSC may require an energy salesperson licensee to post a bond or other similar instrument if, in the commission’s judgment, the bond or similar instrument is necessary to insure an energy salesperson’s financial integrity

Energy salespersons would generally be subject to the same marketing regulations as suppliers (no slamming, provision of adequate information, etc.)

The bill would also revise the PSC's penalty authority to be $25,000 per violation (up from $10,000), and would confirm that each customer to whom energy is sold or offered in violation of applicable statute is a separate violation.

The bill also strikes current language under 7–510 which require SOS to be a "market price."

Specifically, the bill strikes language stating that, "on and after July 1, 2003, an electric company continues to have the obligation to provide standard offer service to residential and small commercial customers at a market price that permits recovery of the verifiable, prudently incurred costs to procure or produce the electricity plus a reasonable return."

The bill would also allow utilities to market SOS to customers

The bill states, "an investor–owned electric company may market standard offer service to customers in its service territory in compliance with appropriate consumer protections consistent with those that apply to electricity suppliers under § 7–507 of this subtitle."

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