§ 7-1102

(a) (1) (i) On or before October 1, 2024, each gas company that serves at least 75,000 customers in its distribution territory shall:

1. begin to develop a plan for a pilot system or systems; and

2. file notice with the Commission that the company has begun plan development.

(ii) On or before October 1, 2024, a gas company that serves fewer than 75,000 customers in its distribution territory may develop a plan for a pilot system or systems in accordance with the requirements of this section.

(2) In developing a plan for a pilot system, a gas company shall coordinate with community groups, local governments, any certified representatives of the employees of the gas company, the Commission, the Administration, and any other groups the gas company considers necessary to allow for diverse design among pilot systems.

(3) Each gas company shall include in the notice filed under paragraph (1) of this subsection:

(i) details of any coordination with community groups, local governments, certified representatives of the employees of the gas company, the Commission, the Administration, and any other groups the gas company considers necessary to allow for diverse design among pilot systems; and

(ii) any letters of support from interested groups.

(b) (1) (i) On or before July 1, 2025, each gas company that serves at least 75,000 customers in its distribution territory shall submit either one or two proposals for a pilot system to the Commission for approval.

(ii) A gas company that serves fewer than 75,000 customers in its distribution territory may submit a proposal for a pilot system to the Commission after providing at least 60 days’ notice to the Commission of the company’s intent to file a proposal.

(2) A proposal for a pilot system shall ensure that at least 80% of its customers are from low or moderate income housing.

(3) A customer may choose to opt out of a pilot system before the proposal for the pilot system is submitted.

(4) Each proposal for a pilot system shall demonstrate that the gas company has obtained, or is reasonably certain to obtain, any available federal funding in the form of a match, grant, loan, or tax credit, including those established under the Financing Program and the Greenhouse Gas Reduction Fund.

(5) Each gas company is responsible for ensuring that each proposal submitted by the gas company complies with all applicable federal statutes, regulations, and guidance relating to any federal funding.

(6) Each proposal shall address:

(i) how the pilot system will develop useful information for the adoption of regulations governing thermal energy network systems;

(ii) how the pilot system furthers greenhouse gas emissions reduction goals;

(iii) how the pilot system advances financial and technical approaches to equitable and affordable building electrification;

(iv) how the pilot system creates benefits to its customers, employees, and society at large, including public health benefits, quality job retention or creation, reliability, and increased affordability of renewable thermal energy options;

(v) how the pilot system contributes to avoiding costs to electric distribution and transmission systems that would otherwise be required for electrification by comparing the proposed system to the cost of electrification using the most widely commercially available air–source heat pumps;

(vi) how the pilot system contributes to avoiding costs related to gas pipe replacement;

(vii) the extent to which the proposal gives priority to underserved or overburdened communities as defined in § 1–701(a) of the Environment Article;

(viii) the pilot system’s ability to bid demand reduction into the PJM capacity market;

(ix) neighborhoods at the end point of a gas system where a full transition from gas systems to electrification could be facilitated within the pilot period or within 5 years after the pilot period concludes;

(x) safety;

(xi) reliability;

(xii) environmental acceptability of the fluid technology employed;

(xiii) operations;

(xiv) maintenance;

(xv) customer complaint resolution;

(xvi) emergency response;

(xvii) points of interconnection between the gas company and homeowner for any fluid transfer;

(xviii) technology to be used to shut off fluid flow to customers;

(xix) customer service termination in the event of bill nonpayment;

(xx) life expectancy of the geothermal system;

(xxi) the extent to which the proposal is cost–effective for ratepayers; and

(xxii) any other requirements as determined by the Commission.

(7) Each proposal shall include:

(i) a proposed rate structure for the pilot system that is projected to ensure that any customer participating in the pilot system does not pay more for utilities than if the customer had not participated; and

(ii) a proposed set of measurements of energy units and accounting standards.

(8) (i) A municipal corporation, county, or community organization may submit neighborhoods to gas companies for consideration as part of a pilot system.

(ii) A municipal corporation, county, or community organization that submits a neighborhood to a gas company for consideration as part of a pilot system under subparagraph (i) of this paragraph shall submit a copy of its proposal to the Commission.

(c) (1) On or before December 31, 2025, the Commission may approve, approve with modifications, or reject a proposal.

(2) Subject to paragraph (3) of this subsection, if the Commission determines that a proposal is in the public interest and is cost–effective, the Commission may approve, approve with modifications, or reject the proposal.

(3) (i) In determining whether to approve, approve with modifications, or reject a proposal, the Commission shall:

1. consider the projected costs and benefits of the projects proposed for inclusion in the pilot system by using a test that includes:

A. societal costs and benefits; and

B. avoided energy and infrastructure investments;

2. determine whether the pilot system is in the public interest and in the interest of ratepayers;

3. determine how each pilot system’s performance will be evaluated during the pilot system’s duration;

4. ensure that each pilot system:

A. has a provision for customers who may wish to opt out during the course of the pilot period; and

B. details ratepayer impacts for pilot system participants and all customers in the gas company’s service territory; and

5. determine whether the proposal is cost–effective in accordance with subparagraph (ii) of this paragraph.

(ii) A proposal under this section is cost–effective if the Commission determines that:

1. the projected benefits are greater than the projected costs for all ratepayers in the gas company’s service territory;

2. the gas company has obtained, or is reasonably certain to obtain, federal funding under the Financing Program or the Greenhouse Gas Reduction Fund to support the costs of a pilot system; and

3. the federal funding that the gas company has obtained, or is reasonably certain to obtain, to support the costs of a pilot system would not be more cost–effective in meeting other greenhouse gas reduction or electrification measures in the State.

(4) (i) Except as provided in subparagraph (ii) of this paragraph, each gas company shall complete construction of a pilot system within 1 year after the Commission approves the system.

(ii) The Commission may extend the deadline under subparagraph (i) of this paragraph for good cause shown.

(5) If the Commission approves a proposal with modifications, the Commission shall give the gas company a reasonable amount of time to make the necessary modifications.

(6) On completion of a pilot system, the gas company shall file with the Commission for evaluation any information relevant to the criteria established under paragraph (3) of this subsection.

(d) (1) Each pilot system shall meet the requirements for pilot systems under this subtitle for 2 years after the pilot system is initiated and operational.

(2) (i) Once the 2–year period under paragraph (1) of this subsection has passed, the Commission, in consultation with the Administration, the Office of People’s Counsel, the electric, gas, or water company that owns and manages the pilot system, a certified representative of the employees of the electric company, gas company, or water company that owns and manages the pilot system, and participating customers, shall determine whether to make the pilot system permanent.

(ii) A pilot system made permanent under subparagraph (i) of this paragraph shall continue to meet the requirements placed on pilot systems under this subtitle.

(iii) If a determination is made that a pilot system will not be made permanent under subparagraph (i) of this paragraph, the Commission may approve recovery of all prudently incurred costs necessary for a gas company to comply with the determination.

(3) The Commission shall adopt regulations addressing the decommissioning or discontinuance of a pilot system, including regulations ensuring that the customers who participated in the pilot system do not incur additional expenses for the decommissioning or installation of an appliance that is used in the pilot system and is decommissioned before the end of its useful life.

(e) (1) Each gas company implementing a pilot system shall participate in standardized data collection coordinated by the Commission.

(2) Any standardized data collected under paragraph (1) of this subsection shall:

(i) be filed with the Commission by the appropriate gas company; and

(ii) include data from the Learning From the Ground Up and any other national research project for the development of thermal energy network systems that the Commission considers appropriate.

(f) (1) The Administration shall provide funding in the form of grants to community–based organizations that perform outreach in neighborhoods to increase participation in a pilot system and coordinate the implementation of an approved pilot system.

(2) The Administration may provide up to $1,000,000 in funding to a community–based organization under paragraph (1) of this subsection.

(3) Funding under this subsection may be provided only before October 1, 2025.

(4) Funding under this subsection may be provided from the Strategic Energy Investment Fund established under § 9–20B–05 of the State Government Article or any other source of State or federal funding.

(g) (1) A gas company may request approval from the Commission to track the costs of developing a proposal under this section.

(2) A request under paragraph (1) of this subsection shall include a proposed development plan and budget.

(3) The Commission shall approve a request under paragraph (1) of this subsection on finding that the proposed plan and costs are necessary to meet the requirements under this section, reasonable, and in the public interest.

(4) At a gas company’s next rate case proceeding following the approval of a request under this subsection, the Commission may authorize recovery of prudently incurred costs associated with developing the proposal and any carrying costs that the Commission determines are appropriate.