O'Malley's signing of the bill fulfills a commitment he made earlier in 2011 in response to what he called the unacceptable power outages that plauged parts of Montgomery and Prince George's county.
The governor was highly critical of Pepco's response time in the wake of several storms earlier in 2011 and late in 2010 that resulted in outages that lasted as long as five days.
The law establishes certain standards of reliability for Maryland utilities and imposes fines for the failure to provide service to Maryland customers.
In January, O'Malley asked the Public Service Commission to conduct an investigation into the failure of Pepco to adequately respond to widespread outages in its service area.
CORRECTION: The original text for this story stated that the governor made a commitment to sign the legislation in early 2010. He actually made that commitment earlier in 2011.