Utilities’ proposed energy storage programs risk undermining competition from non-utility storage developers, OPC tells regulators
BALTIMORE – Ratepayers should not be forced to cover the costs of utility proposals to acquire and own energy storage devices located on customer properties because it would impede the developing competitive market for storage and could expose all customers to high costs, the Office of People’s Counsel told the Public Service Commission in comments last week. OPC’s comments also stressed the need for robust cost-effectiveness testing and bill impact analysis for utility storage programs.
“Batteries and other forms of energy storage will be a critical part of the State’s energy resource mix,” People’s Counsel David S. Lapp said. “It’s critical that we get costs right and ensure that the involvement of utility monopolies in the market doesn’t stifle competition.”
OPC filed its comments following the Commission’s January 2025 order that required utilities to file proposals for the cost-effective procurement of 750 megawatts of storage to help meet Maryland’s ultimate energy storage goal of 3,000 MW by 2034. The General Assembly set the goal in 2023 legislation and directed the Commission to establish the Maryland Energy Storage Program to achieve it, mainly through “cost-effective” competitive procurements.
In response to the Commission’s procurement directive, Maryland’s Exelon utilities—Baltimore Gas and Electric, Pepco, and Delmarva Power & Light—filed a joint proposal for the utilities to own both large storage projects connected to the interstate electricity transmission system and smaller projects located on customer properties. OPC argued that for many projects, customers are more likely to benefit from procurements for storage that is owned by third parties.
For third-party-owned projects, OPC’s comments explained that both Exelon’s and Potomac Edison’s proposals lack important details—such as budgets and benefit-cost and bill impact analyses—that should be performed before Commission approval.
OPC also challenged the Exelon utilities’ proposal to keep for itself 30 percent of annual wholesale market revenues from third-party-owned storage when those revenues exceed the contract costs of obtaining the storage. The Exelon utilities propose to keep those revenues, even as they propose that ratepayers should bear all the risk for paying the costs of the storage contracts if revenues fall short of costs.
Battery energy storage capacity has grown rapidly in some parts of the country, such as Texas in recent years, as a result of market forces without being driven by state climate policy. Costs have fallen rapidly as well; for example, lithium-ion battery costs dropped 20 percent in 2024 from 2023.
“Energy storage can help reduce the need for large and costly infrastructure investments, saving customers money, and it can pair up with the vast amount of wind and solar waiting to be connected to the transmission system to provide power during times of high demand,” Lapp said. “But these outcomes can only be realized if Maryland obtains storage in a cost-effective way that supports competition among storage developers and avoids unnecessary impacts on residential customer bills.”
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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