Maryland Ends Multi-Year Rate Pilot After Finding Limited Customer Benefits

The Maryland Public Service Commission on Oct. 1 announced that it has concluded the state’s multi-year rate plan pilot after finding that the framework did not deliver measurable benefits for customers or advance the state’s energy policy goals. The regulator instead directed electric utilities and stakeholders to develop a substantially revised approach to forward-looking utility ratemaking, with the process focused on customer benefits, cost controls and regulatory flexibility.

The commission determined that the pilot largely failed to meet its original objectives. Although the framework shortened utility cost-recovery periods and provided greater visibility into planned capital and operating expenditures, the regulator found no clear evidence that these changes benefited ratepayers. The approach also increased the complexity, duration and resources required for rate proceedings.

The agency further found that advance regulatory review provided limited value when utilities subsequently made significant changes to approved work plans. The pilot also did not make customer rates more predictable or stable than traditional historic test-year ratemaking. In addition, the framework did not demonstrate measurable progress toward Maryland’s energy policy objectives or produce greater utility innovation.

The commission will now pursue a two-phase review through public conference. In the first phase, stakeholders will evaluate forecasted, historic and hybrid test years as required by the Utility Reducing Energy Load Inflation for Everyday Families Act. Electric utilities must submit recommendations, including potential legislative changes, by Feb. 1, 2027, with the commission required to report its findings to the Maryland General Assembly by April 1, 2027.

The second phase will examine whether a redesigned multi-year framework or another regulatory model can meet Maryland’s statutory requirements while maintaining safe and reliable utility service. The working group must submit its evaluation and proposed framework by June 30, 2027.

The review will consider measurable customer benefits, cost-sharing and reconciliation mechanisms, unexpected costs, prudency reviews, bill stabilization adjustments, utility returns, commission flexibility, transition arrangements and filing transparency. It also will examine changes to approved work plans and cost-control measures, potentially reshaping how Maryland utilities plan investments and recover costs from customers.