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PSC Issues Order On Application Of Retail Energy Price Caps
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The Maryland PSC today issued an order on the application and related issues concerning the new residential retail energy price caps. All provisions in this story apply to residential service only.
SB1 establishes that, except from green power which is subject to other specific price limits, residential retail energy plans may not exceed the trailing 12-month average default service rate as of the date of the agreement with the customer (in other words, the supplier's rate must be below the SOS-based price cap in place at the time of contracting, but the supplier's rate does not need to be below any future trailing 12-month average default service rate).
Among other things, the PSC has established the months to be included in each 12-month average rate filing, the date by which the average rate shall be filed, and the period to which any specific average rate price cap will apply
The PSC ordered that the trailing 12-month average rate shall be filed by the electric and gas utilities by the fifth business day of each month, and shall include, in the calculation of the average rate, the actual rate that is charged to customers for the month in which the average is filed, as well as the charged rates for the 11 prior months
For example, the trailing 12-month average rate filed on April 5, 2025 shall include the average based upon the rates that were in effect for the period May 2024 through April 2025.
The 12-month average rate shall be posted by the utilities to their websites within one business day of the filing of such average rate with the PSC
The PSC ordered that the rate cap filed in a month will apply, "to all contracts entered into the following month."
Thus, the 12-month average rates filed in April 2025 shall serve as the price cap for contracts executed in May 2025
As further discussed below, the rate cap shall apply to renewals. WGL Energy had previously argued that, under the filing dates for the average rates ultimately adopted by the PSC today, retail suppliers will not be able to comply with the renewal notice deadlines, because the applicable 12-month average rate cap will not be known at the time the renewal notice is sent.
WGL Energy had said that, in order for suppliers to comply
with the 30 day auto-renewal notice requirement, suppliers will need to know the
applicable rates at least 45 days before the start date. For example, WGL Energy had said that, if suppliers have a
batch of auto-renewal customers with renewal dates in January 2025, the utilities would
need to post the applicable average rates by 11/15/2024.
WGL Energy had said that the additional time (as exists under a rate cap filed on Nov. 15 rather than on Dec. 5) is needed for suppliers to
determine if an offer can be made and prepare the appropriate correspondence (either a
drop letter or an auto-renewal notice).
But, under the PSC's order, the 12-month average rates will only be known about 30 days before they are applicable. Or, using the above example, the average rate cap applicable to a January 2025 renewal would not have been filed until approximately Dec. 5, 2024.
The PSC said, "The Commission
... directs that 12-month trailing data shall apply to all supply contracts entered into
during the following full month. For example, the data posted on the 5th of April shall
govern all supply contracts entered into for the entire month of May."
Regarding renewals, the PSC ordered that suppliers shall renew contracts at rates not exceeding the trailing
12-month average, as of the date of the renewed contract.
SB1 generally bans variable rates, but allows a retail supplier to offer a rate that adjusts seasonally, with such adjustment occurring no more than twice annually
Retail suppliers have argued that nothing in SB1 requires that suppliers must list the specific (numeric) future seasonal rates in the contract at the time of execution, noting that the seasonal rate adjustments must not exceed the 12-month price cap in place at the time of contracting (as opposed to the time that the adjustment occurs)
However, the PSC ordered that all rates and components, including future seasonal rates in numeric terms, must be listed in the customer's contract at the time of contract execution
The PSC, "directs the suppliers to include each component of the
bill, including seasonal rate adjustments, on customer contracts."
The PSC specifically, "agrees
with Staff's recommendations," on the seasonal rate issue, with PSC Staff having recommended that suppliers shall, "state all prices in explicit numeric terms for the
duration of the contract."
The PSC also directed that all utilities shall use BGE's presentation for reporting the 12-month average rate. For each applicable rate class, BGE presents a single, all-in 12-month average rate. In demonstrating the calculation, BGE also presents a single, all-in bypassable rate that was applicable in each month comprising the average.
Certain other utilities have instead listed the 12-month average rate for various bypassable components, namely, the combined SOS generation and transmission cost (or even those two components listed separately), and then a separate 12-month average for the bypassable procurement cost adjustment, without listing a single, all-in 12-month average rate
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March 13, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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