The EmPOWER Maryland Energy Efficiency Act of 2024

The General Assembly passed an update to the EmPOWER Maryland energy efficiency act, which Gov. Moore signed into law on May 9th, 2024. The new law is great news for Maryland energy consumers and will mean cleaner air and less pollution. 

EmPOWER Maryland 

The EmPOWER Maryland Energy Efficiency Act of 2008 created the EmPOWER program to incentivize energy efficiency and conservation efforts. EmPOWER includes a utility run program of rebates, weatherizations and other efficiency updates, as well as similar programs targeted at limited income consumers, which are run by the state’s Department of Housing and Community Development (DHCD). In 2023 Gov. Moore signed a new law to improve the DHCD run program through targetted goals and long term planning.

As outlined in our 2023 report, energy efficiency is one of the smartest investments the state can make.

Under the 2024 updates to the law, the EmPOWER Maryland Energy Efficiency program will:

• Help Marylanders switch from inefficient and polluting home heating and appliances to clean, efficient electric appliances and heating.
• Reduce utility profits, lowering ratepayer costs and tying any future profits to performance.
• Provide incentives and rebates for home energy audits, weatherization support, appliance tune ups and new appliances.
• Help low-income households take advantage of state and federal funds for energy efficiency, electrification  and whole-home retrofits, including benefits for families living in large multifamily buildings.
• Requiring Choptank electric cooperative to offer energy efficiency programs to its customers for the first time while the PSC considers permanently adding them to the program.

Through these strategic updates to EmPOWER Maryland we are building on a legacy of success to deliver even more savings for Marylanders.

EmPOWER Maryland: A history of success

According to the Maryland Public Service Commission, since 2008, EmPOWER Maryland has:

• Created lifetime savings of over $12.7 billion from an investment of $3.5 billion in efficiency. 
• Reduced greenhouse gas emissions by the equivalent of at least 9.6 million metric tons of carbon dioxide, equal to taking 2 million cars off the road for a year. 
• Provided Marylanders with free or discounted energy audits, weatherization, and efficient appliances and provided businesses with discounts and incentives for energy efficient upgrades.

A smart time for an update

The new law will help Marylanders switch from inefficient and polluting home heating and appliances to clean, efficient electric appliances and heating.

Space heating and cooling accounts for more than half of home energy use, yet most Marylanders are using old, inefficient technology to heat and cool their homes. Almost half of Marylanders still use fossil fuels for heating and 25% are using electric furnaces and highly inefficient baseboard heat.

Maryland  has made clear its intention to shift away from fossil fuels to power our homes and building to help reach ambitious goals to reduce greenhouse gas emissions 60% from 2006 levels by 2031. Yet, until now, the EmPOWER Maryland didn’t sufficiently provide incentives to support households switching from gas to highly efficient electric heat pumps and still subsidies inefficient gas-burning furnaces.

A heat pump is an all-in-one electric HVAC system that can both heat and cool a building. This equipment is highly efficient. The latest models use an average of 18% less electricity for cooling than central AC units in the Mid-Atlantic and are two to three times more efficient than gas furnaces even amid the depths of winter weather. They are now suitable for all Maryand climates and they can last 15 years or more.

According to a recent report from RMI, GHHI, CCAN and CASA, in Maryland, fossil fuel equipment in residential and commercial buildings emits more than three times as much health-harming NOx as all the state’s power plants put together. 

Rightsizing utility profits on energy efficiency

The new law will also reduce utility profits, lowering ratepayer costs and ensuring any future profits are tied to performance.

The financing model for EmPOWER in place through 2023 raised the costs for ratepayers over time without maximizing energy savings. Some utilities in Maryland have been making outrageous profits on the program while fighting to stop reforms to the funding model.

• In recent years Pepco has earned a return equivalent to about 16% of its budget while BGE and Potomac Edison earned returns equivalent to over 20% of their annual budgets.
• For reference, efficiency administrators in Massachusetts, Vermont and Rhode Island, all earn returns equivalent to 5% or less of their program budgets.
• Maryland utilities also earn a much higher return on EmPOWER spending than on their normal expenses: for example, the PSC set a 9.5% return on BGE’s costs of providing electricity service for the 2021-2023 cycle.

In 2022, the PSC rightfully decided to move away from this funding mechanism for the program, but it will take a number of years for ratepayers to pay off existing debt. Fortunately, new law will reduce the rate of the return on that remaining debt, saving ratepayers in a big way and give teh PSC added flexibility to extend the payback period on debt for a couple of years.

Now the law will ensure that profits, if any, are tied to performance. If ratepayers are funding incentives, utilities should also be penalized for substandard performance.

Saving more by polluting less with EmPOWER Maryland

The new EmPOWER law aligns the program with the state’s climate goals by setting goals for pollution reduction while maintaining the program’s focus on efficiency – because the cleanest energy of all is the energy we don’t use.

The law is also designed to encourage utilities to prioritize long lasting savings like insulation and good windows over quick fixes. 

Now is the time to do this work. There are billions of dollars in new federal funding to help people improve the efficiency of their homes and transition to clean, efficient electric power and home heating. 

We’re grateful to our robust coalition, the Moore Administration and his agencies, the Public Service Commission and our legislators in Annapolis for their work in securing these reforms.

Reducing energy use creates big savings—for our planet, our climate and our health. More efficient energy use will clean up our air and help combat climate change. And as an added bonus, reducing energy consumption also results in lower energy bills.

With your support, we’ll keep working for policies that promote energy efficiency and reduce energy waste.

EmPOWER and Energy Efficiency Resources:

EmPOWER  Reform Virtual Legislative Kick-Off (VIDEO)
Watch to learn more about our priorities for the campaign, hear about why so many organizations have chosen EmPOWER as a legislative priority for the 2024 session, and learn how you can get involved.

Clean Energy Home Toolkit
Guides & resources for weatherizing your home, cutting energy bills, buying an electric car, and information on the rebates & incentives in the Inflation Reduction Act.

Energy Efficiency: How to access your utility’s EmPOWER program
If you are interested in learning more about incentives and rebates under EmPOWER or getting an efficiency audit or checkup for your home, check out the EmPOWER progam website for your utility company.