December 2022 – Maryland Policy Update

BPA tracks the latest policy updates and legislative issues in many states across the nation. See the latest policy information for Maryland as of December 2022.

Disclaimer: Inclusion of any bills/regulations in this state policy update does not equate to BPA’s endorsement.

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While the Maryland Legislature is out of session until January of 2023, the Maryland Public Service Commission has reconvened the Future Programming Working Group (FPWG) to develop recommendations for greenhouse gas reduction goals for the next cycle of Maryland EmPOWER Energy Efficiency Programs beginning in 2024 (more details on FPWG below). Meanwhile, the PSC also held a hearing on October 25 to review 2022 EmPOWER Maryland semi-annual reports from Maryland utilities and the Department of Housing and Community Development (DHCD), in addition to Working Group reports to support EmPOWER Maryland energy efficiency programs.

On December 1, the Maryland Energy Administration (MEA) closed applications for the Fiscal Year 2023 (FY23) Low-to-Moderate Income Energy Efficiency Grant Program (LMI Program) to support cost-effective energy efficiency upgrades to homes and buildings that serve Maryland’s low- and moderate-income residents. According to MEA’s announcement, the LMI Program will award a total of $16.5 million in grants in 2023 to local nonprofit organizations and governments across Maryland to administer financial assistance to home- and building-owners for the costs of HVAC upgrades and replacements, energy audits, weatherization services, and health and safety measures such as lead remediation, in addition to the costs of training and exam fees for energy efficiency workers serving in LMI Maryland communities. MEA has not made any further announcements on the implementation of this funding at the time of this writing.

Regulatory Monitor:

• The FPWG reconvened on December 1 and will continue to meet through the end of the year to formulate recommendations for specific greenhouse gas reduction goal values for the next cycle of EmPOWER Maryland programs. The reconvening of FPWG comes after the PSC released an order on June 15 which confirmed recommendations from the FPWG for a new goal structure for EmPOWER programs based on greenhouse gas reductions and updates to evaluation, measurement, and valuation (EM&V) and cost-effectiveness testing to better assess utility and state investments made through EmPOWER. At the first meeting on December 1, the FPWG discussed results from a third-party potential study to identify the level of greenhouse gas reductions which can feasibly be achieved through EmPOWER-related measures. An executive summary of the results from the potential study was filed with the PSC on November 14 highlighting that the majority of achievable energy efficiency potential is in single family homes and can be achieved through equipment upgrades measures (like high-efficiency HVAC). These results are expected to inform the FPWG recommendations for future EmPOWER Maryland goals which must file a recommendation report with the PSC by January 2023. Interested parties may also file comments on the potential study by December 30.
• On October 25, Maryland PSC held its semi-annual hearing to review reports from utilities and DHCD on the performance of EmPOWER Maryland energy efficiency programs. These reports are filed every six months with the PSC to report participation rates, energy savings, and budget status from EmPOWER energy efficiency programs. As part of the hearing, PSC also reviewed recommendations to improve participation in EmPOWER Maryland’s midstream HVAC programs, administered by utilities to provide rebates for distributors to stock and sell high-efficiency HVAC equipment. Following the hearing, PSC is considering further actions to educate consumers on rebates for electric heat pumps and high efficiency HVAC equipment through EmPOWER.
• In August, PSC ordered a new Electrification Study Work Group to conduct a study on “the capacity of each [utility’s] gas and electric distribution systems to successfully serve customers under a managed transition to a highly electrified building sector.” These actions follow new state law passed in April, the Climate Solutions Now Act, that requires PSC to file a report with results from the electrification study by September 30, 2023. PSC is anticipated to convene the new work group over the coming months to develop a detailed plan and schedule for the study.
• Separately, the PSC issued an Order on May 13 establishing a new Work Group to develop a Maryland-specific unified benefit-cost analysis (UBCA) framework. The Commission decision states that a UBCA will better align energy efficiency, demand response programs, and long-term infrastructure planning with State climate and equity efforts and encourage programs that fulfill the needs of the grid and the goals of the State, while helping to increase transparency and efficiency in the assessment of energy resources.
• In March, the Clean Energy Advantage (CEA) Loan Pilot Program officially launched, offering low-cost loan financing with no contractor fees for residential property owners to reduce energy bill costs and improve home comfort including through insulation upgrades, HVAC system replacements, and weatherization measures. The CEA Loan Pilot Program is administered by the Maryland Clean Energy Center and the Montgomery County Green Bank and authorized by the Maryland Public Service Commission (PSC) with $2.9 million in ratepayer funds through 2023. The program is open to residents across Maryland utility service territories including BGE, SMECO, Potomac Edison, Delmarva Power, Pepco, and Washington Gas. To submit an application for the CEA Loan Program or learn more about the program, contractors and customers may visit https://cealoan.org/.

Legislative Monitor:

2022 Regular Session Dates: January 12 until April 11

Enacted bills in 2022:

• SB 528 Climate Solutions Now Act of 2022 requires developing a plan to set the state on a path toward net-zero GHG emissions by 2045 and updating Maryland Department of Environment building emissions standards to achieve decarbonization in buildings. The law sets a target for state-owned, commercial, and multifamily buildings over 35,000 sq/ft to reduce emissions 20% by 2035 (manufacturing buildings, restaurants, and food service facilities are exempted). Newly constructed buildings must be “electric ready” beginning in January 2023. To meet these decarbonization targets, the Act establishes a Building Energy Transition Implementation Task Force to develop policy recommendations for funding building retrofits and reducing emissions from the building sector. The bill was passed on March 31 and enacted into law on April 9 without the Governor’s signature.
• SB 314 Mechanical Insulation Tax Credit allows an income tax credit for the purchase of commercial and industrial mechanical insulation installations that cost more than $10,000 including for HVAC systems. This bill was introduced last session but was not voted on. The General Assembly passed this bill on April 9.
• HB 706 / SB 630 Maryland Department of Emergency Management – Office of Resilience requires the Maryland Environmental Service to coordinate with a newly established Office of Resilience to “promote the use of electric heat, electric heat pumps, and electric appliances” to reduce gas and fossil fuel use. The General Assembly passed SB 630 on April 11.
• HB 772 / SB 494 Maryland Energy Administration – Energy and Water Efficiency Standards would update MEA efficiency standards for a range of appliances, including residential ventilating fans and air purifiers. Fixed indoor air quality systems do not qualify. It was introduced last year and passed in the Senate but did not advance in the House Committee on Economic Matters. The General Assembly passed HB 772 on April 8.

Bills vetoed by the Governor in 2022:

• HB 108 / SB 524 Energy Efficiency and Conservation Programs – Energy Performance Targets and Low-Income Housing would establish a low-income goal for the EmPOWER program, requiring the Department of Housing and Community Development (DHCD) to procure or provide energy efficiency and conservation programs and services for low-income households to achieve 0.4% gross annual energy savings starting in 2023 and reaching 1% by 2026. As passed, the bill does not prohibit the use of spray foam (“respiratory sensitizers”) for thermal insulating materials. The legislature voted to pass this bill on March 31 and send it to the Governor’s desk for signature.

Bills considered but not passed in 2022:

• HB 43 Maryland Sustainable Buildings Act of 2022 would require the Department of General Services to establish and periodically update energy performance standards to minimize energy consumption for all State buildings, and to construct or renovate all State buildings to meet those standards. This legislation was approved in the House of Delegates in 2021 but never received a vote in the Senate.
• HB 138 / SB 283 Electric Universal Service Program Eligibility would expand eligibility to include low-income residents that do not already qualify for the Federal Low Income Home Energy Assistance Program but meet another specified set of criteria. The program provides financial assistance for weatherization assistance as well as bill assistance.
• HB 88 / SB 525 Public Utilities – Energy Distribution Planning and Required Labor Standards orders the Public Service Council (PSC) to create a Distribution System Planning Work Group to make recommendations that would promote decarbonization efforts through distributed energy resources, peak load management, electric grid resiliency, and adaptation. The Work Group would publish their findings January 1, 2023, and annual reports thereafter to the Commission for Energy Distribution System Planning.
• HB 61 / SB 81 Charter Counties-Enforcement of Building Performance Laws (Building Performance Standards Act of 2022) would authorize charter counties to enforce local building energy performance laws for buildings greater than 25,000 feet. This legislation was proposed in 2021 and reintroduced this year.