NOTE: In July 2015, the Public Service Commission (PSC) Order 87082 set post-2015 electric energy efficiency goal of 2% of annual retail sales beginning from 2018. The order initiates proceedings to establish energy efficiency goals for natural gas utilities in the State. This goal is separate from the EmPOWER Maryland Act, which is set to expire at the end of 2015.
In April 2008, Maryland enacted legislation setting a state goal of achieving a 15% reduction in per capita electricity consumption and 15% reduction in per capita peak demand by 2015, compared to 2007 levels. The act directed the Maryland Energy Administration (MEA), in consultation with the Public Service Commission (PSC) to determine whether electricity consumption and peak demand reduction targets should be modified beyond 2015. MEA has submitted its final report to the legislature with recommendations to extend the energy efficiency goals beyond 2015.
Electric Energy and Demand Reduction Savings
The legislation requires the PSC to direct the state’s electric utilities to implement programs designed to achieve a 5% reduction in per capita electricity consumption by 2011 and a 10% reduction by 2015. The remainder of the overall goal of 15% is to be accomplished independently through other means. Utility targets for per capita peak demand reduction are set at 5% by 2011, 10% by 2013, and 15% by 2015, thus utilities are responsible for the full portion of the peak demand reduction target. The 2015 energy and demand reduction targets set by the PSC for Maryland’s largest utilities are in the table below:
|Applicable Utility||2015 Energy Reduction Goal (MWh)||2015 Peak Demand Reduction Goal (MW)|
|Baltimore Gas & Electric (BGE)||3,593,750||1,267|
|Potomac Electric Power Company (Pepco)||1,239,108||672|
|Potomac Edison (PE)||385,708||16|
|Southern Maryland Electric Cooperative (SMECO)||165,106||23|
|Source: EmPOWER Maryland Standard Report for 2014|
The Maryland PSC issues annual reports on progress made towards meeting the standards. Most recent compliance reports are available in the Maryland Public Service Commission website, that can be accessed here. The Empower Maryland 2014 Compliance Report indicates that the utilities have made substantial progress towards meeting the EmPOWER Maryland targets. Collective program energy savings through the end of 2013 represented 61% of the 2015 goal, while demand savings achieved thus far represented 79% of the 2015 goal.
Program Administrator Type
Maryland’s utilities administer and implement the programs to meet their portion of the standard. However, the utilities are required to consult with the Maryland Energy Administration (MEA) on program design and implementation every three years. Utilities must also submit plans for achieving the specified energy consumption and peak demand reductions to the PSC every three years.
Cost-Effectiveness and Program Evaluation
To evaluate the cost effectiveness of its efficiency and demand reduction activities, in practice Maryland utilizes the Total Resource Cost test (TRC) and the Social Cost Test (SCT) (two of the five "California tests" from the California Standard Practice Manual) as its primary test for measuring the cost-effectiveness of energy efficiency programs. Maryland also uses all three of the other California tests on a secondary basis in evaluating energy efficiency and DSM programs. The EmPOWER Act required the cost assessment be done through the TRC. For the new state energy efficiency goal for post 2015, the PSC has emphasized the use of SCT as standard to access the cost effectiveness of the program.
The PSC is tasked with evaluating the plans based on cost-effectiveness, rate impacts for each ratepayer class, job impacts, and environmental impacts. Utilities filed their second set of plans for the 2012 - 2014 compliance period during the summer of 2011 and the plans were approved by the PSC in December 2011.
Utility Cost Recovery Provisions
Three of Maryland’s investor-owned electric utilities (DP&L, Pepco and BGE), as well as one gas utility (Washington Gas Light) have their revenue separated from their sales through the use of a full revenue decoupling mechanism.
Post-2015 energy efficiency goals
In addition to the Maryland EmPOWER Act, in July 2015, the Public Service Commission (PSC) in its Order 87082 established post 2015 energy efficiency goals for the State. This PSC determined energy efficiency goals are separate from the EmPOWER Maryland Act, and will take full effect starting 2018. The PSC electric energy efficiency goal is set at 2% of the utilities weather normalized gross retail sales. The utilities are required to file forecasted gross electric savings for 2015-2017 program year with 2013 baseline before September 2015. The order also provides framework to establish energy efficiency goal for natural gas utilities, and for programs targeting limited-income households. The working groups related to the natural gas and limited-income household programs are required to develop and recommend energy savings goals before February 2016.