Maryland Increases Its Renewable Energy Portfolio Standard

The energy industry is seeing a lot of change in the renewable energy landscape. In particular, changes to the rules and guidelines linked with the Renewable Energy Portfolio Standard (RPS) – which varies by state and renewable type – are impacting power costs. Changes in RPS policy often result in power cost increases. The recent program expansions in Maryland will likely be no exception.

Earlier this month, state lawmakers approved a bill (H.B. 1106) that increases Maryland’s RPS from 20 percent to 25 percent by 2020. This expands the state’s renewable energy target. Enacted in May 2004 and revised several times since, Maryland’s RPS requires power suppliers in the state to procure a minimum portion of their power sales from eligible renewable energy sources. These include Tier 1 and Tier 2 electricity generators:

• Tier 1 renewables include solar, wind, biomass and other sources.
• Tier 2 renewables include large hydroelectric power.

The new legislation also decreases, for certain years, the financial penalties—known as alternative compliance payments (ACPs)—for power suppliers that opt to pay an alternative compliance fee in lieu of purchasing renewable energy credits (RECs).

The legislation, known as the Clean Energy Jobs Act, was originally proposed in Maryland in 2016 and passed both the House and Senate but was vetoed by Governor Larry Hogan in May of 2016. In early February 2017, both chambers overrode the Governor’s veto and the bill became effective in early March 2017.

Last fall another new bill, the Renewable Portfolio Standard Expansion Amendment Act of 2016, became effective in the District of Columbia. Over the next 15 years, the bill requires substantial increases to the RPS targets—to 50 percent—and to solar carve-out targets—to 5 percent. It also increases ACPs for power suppliers that fail to comply with the RPS for the applicable year.

These and other regulatory changes could impact your power costs. Our team of energy experts continues to closely monitor new developments and share insights with you, so you can make informed decisions about your energy usage. For more information please contact your Constellation representative.