Maryland Comptroller Brooke E. Lierman is calling on the state’s electric utilities to pass more than $250 million in tax refunds directly to their customers, following a July ruling by the Supreme Court of Maryland that reshapes how the state taxes the equipment that keeps the power grid running.
The case, Comptroller of Maryland v. The Potomac Edison Company, centered on whether transmission and distribution equipment — the poles, wires and substations utilities use to move electricity from power plants to homes — qualifies as a “production activity” under Maryland’s manufacturing sales tax exemption. In a majority opinion authored by Justice Steven Gould, the state’s highest court sided with Potomac Edison, finding that the equipment does qualify, entitling the company and other Maryland utilities to refunds of sales and use taxes paid on that equipment, plus interest.
The Office of the Comptroller expects to issue more than $250 million in refunds as a result, according to Maryland Matters, which reported the state’s total payout, including interest, at roughly $280 million. Of that, Exelon’s three Maryland utilities are expected to receive a combined $160 million: BGE ($110 million), Pepco ($30 million) and Delmarva Power ($20 million), with the remainder going to Potomac Edison and other affected utilities.
Speaking at Thursday’s Maryland Board of Revenue Estimates meeting, Lierman made clear she doesn’t agree with the court’s reasoning — but said the money doesn’t belong to the companies regardless.
“While I respectfully disagree with the Court’s interpretation of Maryland’s tax law, we will follow the law and issue the refunds required by the Court’s decision,” Lierman said. “This refund will create a windfall for the energy companies in Maryland, more than $250 million in overpayments on taxes and interest. This is ratepayer money. When utilities pay taxes, they recover those taxes through the rates that they charge their customers.”
“Therefore, this money that is a refund of taxes paid and interest paid on those taxes, belongs to ratepayers,” Lierman said. “I call on the energy companies to do the right thing here and act quickly to issue credits to all ratepayers in the full amount of the amount of taxes being refunded to each company and provide an accounting for that to the Public Service Commission.”
A Pepco spokesperson, Rob Leming, indicated the company intends to pass the savings on to customers, telling Maryland Matters the utility is aligned with returning the refund to ratepayers. Once the state issues the refunds, the Exelon utilities are expected to work with the Maryland Public Service Commission to determine exactly how customers will see the money — likely as bill credits, similar to how past refunds and relief programs have been distributed.
Lierman’s call is separate from an ongoing, unrelated dispute over roughly $32.2 million in alleged overcollections by BGE and Delmarva Power under their multi-year electric rate plans. In that case, the Office of People’s Counsel has asked the Public Service Commission to order BGE (about $28 million) and Delmarva ($4.27 million) to refund customers for revenue that exceeded what regulators authorized. BGE and Delmarva have argued the state’s Utility Relief Act limits the PSC’s authority to order retroactive refunds for 2025 results. Lierman referenced this separate dispute in her remarks, saying the $250 million-plus tax refund “should be in addition to” those overcollections being resolved.
Neither BGE, Pepco nor Delmarva Power directly serves Southern Maryland; Calvert, Charles and St. Mary’s counties are served primarily by the Southern Maryland Electric Cooperative (SMECO), which was not named as a party to the Potomac Edison case and is not mentioned in the utilities expected to issue refunds. Readers with BGE, Pepco or Delmarva accounts elsewhere in Maryland, or with family members served by those utilities, are the ones most directly affected by this particular refund.
