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Large energy companies are suing the state in an attempt to block a new law that was designed to strengthen consumer protections in Maryland’s retail electricity marketplace.
The Retail Energy Advancement League and Green Mountain Energy Co. filed suit in U.S. District Court in Baltimore Tuesday, saying the state’s new guardrails on energy companies that compete with utilities violate the firms’ First Amendment rights and act as an impediment to Maryland’s clean energy mandates.
“For decades, retail energy providers have been able to lawfully market clean energy solutions to residential consumers in Maryland, explaining how their products are better for the environment than the service offered by the local incumbent utility, with benefits like combatting climate change,” the lawsuit says.
“But starting on January 1, 2025, a new Maryland law will prohibit these providers from truthfully and accurately describing these products, on pain of civil penalties, unless these providers agree with the government’s views on green energy,” it says.
The bill’s supporters said Tuesday that they are confident it can withstand this most-recent challenge.
The lawsuit is the latest chapter in the quarter-century saga over the state’s decision to deregulate its electricity marketplace.
When it passed in 1999, the deregulation measure was touted as a way to offer ratepayers more choice of electricity suppliers beyond the monopoly utilities that distribute the electrons — and potentially as a way to cut costs. About 300,000 customers buy electricity from competitive suppliers — though a vast majority of ratepayers opt for the default service supplied by local utilities.
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But fairly or not, the deregulated marketplace became defined over the years by bad actors that preyed on poor communities and elderly residents, with offers of bargain electric power that were usually too good to be true.
After years of discussion and debate, the legislature this year passed a bill placing new operational requirements and restrictions on energy companies that want to compete with established utilities that sell gas and electricity to Maryland consumers.
Large energy companies that competed in Maryland, like Constellation Energy, NRG Energy, Vistra and American Power & Gas, lobbied hard to defeat the bill, warning it could decimate competition in the marketplace and threatening to pull their business from the state. They also argued that large energy suppliers have more access to renewable fuels than utilities, which are bound by long-term supply contracts.
The measure passed largely along party lines — 33-14 in the Senate and 99-39 in the House. Despite the intense lobbying effort, Gov. Wes Moore (D) signed the bill.
The lawsuit is the industry’s latest gambit.
The 37-page suit asserts that the law’s constraints on energy companies’ ability to market themselves is a violation of their First Amendment rights — and impedes their ability to tout the clean energy they may be purchasing. Green Mountain Energy is a clean energy subsidiary of NRG, the Texas-based energy behemoth.
“If this law is allowed to take effect, it will drive renewable energy providers out of the Maryland market, leaving hundreds of thousands of consumers without access to clean energy and forcing them back into outdated, fossil fuel-dominated supply,” said a statement from Chris Ercoli, president and CEO of the Retail Energy Advancement League, which is funded by several energy companies.
“Our organization remains committed to protecting consumer choice and defending Maryland’s clean energy market. We must preserve the principles of competition and innovation in Maryland’s energy sector and urge lawmakers to revisit this harmful legislation,” his statement said.
While it opposed the legislation and is a contributor to the Retail Energy Advancement League, Constellation, which is based in Baltimore, is not a party to the lawsuit.
The suit lays out a complicated argument that under the previous deregulatory environment in Maryland, retail energy suppliers could market plans as “100% renewable” by obtaining certain clean energy credits from sources anywhere in the U.S. But the new law prohibits retail energy suppliers from calling these offerings “100% renewable” — which the suit argues runs counter to federal guidelines laid out by the U.S. Environmental Protection Agency and the Federal Trade Commission.
Maryland laws require requires the state to create a 100% clean energy standard by 2035, while reaching zero carbon emissions by 2045.
“If that law were to take effect, providers would either need to abandon green marketing altogether, while charging the same rate-capped price for service previously reserved for the utility, or else change their service offerings to conform to the government’s views of renewable energy,” the lawsuit says.
The suit names the state attorney general’s office and the Maryland Public Service Commission, which will implement parts of the new law on the electricity marketplace, as defendants. Among other things, it seeks a preliminary injunction before the new law’s marketing provisions become effective on Jan. 1.
Sen. Malcolm Augustine (D-Prince George’s), the Senate sponsor of the legislation, said he felt confident that the attorney general’s office can defend the law, which he said was drafted in consultation with the General Assembly’s lawyers with an eye toward ensuring it could withstand a legal challenge.
“I first and foremost feel really good about the legislation that we passed,” he said. “We go through a pretty rigorous process when we pass legislation.”
Del. Brian M. Crosby (D-St. Mary’s), the House sponsor, was on vacation Tuesday and declined to comment. But both he and Augustine have insisted that the bill was not designed to dismantle consumer choice in the electricity marketplace.
“I feel confident about our ability to offer a competitive market and take care of our consumers,” Augustine said Tuesday.