BGE’s Rate Hike – what does it mean?

On Thursday  the Maryland Public Service Commission (“PSC”) issued a ruling on Baltimore Gas and Electric’s (“BGE”) proposed multi year rate hike. The decision limited the proposed $602 million rate hike to $408 million and is expected to boost the average customer’s monthly distribution charges by about $21.83 after three years.

In response to the decision Emily Scarr said in a statement:

Utility spending is about more than dollars and cents; it’s about the health and safety of our families. 

Regulators appear to have avoided hundreds of millions in added costs, largely thanks to adjustments on BGE profits; however, we need the Commission to rightsize investments in the gas system and ensure customers are not paying for infrastructure investments that aren’t cost effective nor meeting critical public safety objectives.

Maryland PIRG paid close attention to three key components in the case:

1. First, The Commission granted BGE’s request for three consecutive years of rate increases. The company was first granted a multi-year hike in 2020 as part of a pilot program, which has yet to be evaluated. We, along with the Office of the People’s Counsel (OPC), have been critical of the program because it shifts financial risk from utilities to ratepayers, lacks accountability, and increases costs. In its ruling the PSC also granted the recuperation of additional funds to BGE from overspending from their last rate plan and suggested they would complete an evaluation of the pilot in 2024. 
2. Second, the Commission also approved many investments in gas infrastructure as part of BGE’s “Operation Pipeline” in accordance with a 2013 state law that has enabled the utilities to aggressively invest in a new gas system. Consumer and environmental advocates have argued that the program and law needs to be revised to prioritize safety, reduce costs, and to align with the state’s climate goals. According to the People’s Counsel the Commission authorized more than $1 billion of this spending on new gas infrastructure and leaving the door open for BGE to re-purpose additional spending.A report released this week from the Abell Foundation suggests that as designed, the gas infrastructure spending program has failed to reduce injuries and fatalities from gas incidents, is exacerbating pollution, and will lead to massive rate hikes and stranded costs. We think this is the wrong decision for gas spending, and hope the Commission will quickly move forward with their “Future of Gas‟ proceeding to strategically manage and plan for the transition away from gas for home heating and appliances.
3. And finally, as the order explains, the Commission already struck BGE’s so-called “Customer Electrification Program” from the case, which consumer and environmental groups applauded at the time.

For more information check out stories from the Baltimore Sun, The Baltimore Banner, the Baltimore Brew and a statement from the Office of the People’s Counsel.