STATEMENT: Gas and electric utility spending fueling rate hikes

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Consumer advocates call on regulators to reign in spending, increase transparency

BALTIMORE – A new report from the Office of People’s Counsel (OPC) shows that delivery rates for gas and electric utilities in Maryland have skyrocketed in the last decade, some at three times the rate of inflation, and encourages regulators and policymakers to move away from strategis that “place utility investor interests ahead of customer interests.”

The most dramatic rate increases have been from subsidiaries of the Exelon Corporation, which owns Baltimore Gas & Electric (BGE), Pepco and Delmarva Power and serves the majority of Maryland energy customers. Gas rates, in particular, have accelerated over the last decade. The report estimates that the average customer using BGE or Columbia Gas has seen their delivery charges double in the last 10 years, jumping from just under $500 to roughly $1,000 a year.

As state-granted monopolies, utilities’ rates are reviewed and approved by the Maryland Public Service Commission (PSC) and are intended to cover the cost of maintaining the safety and reliability of the electric grid and gas distribution network. The report; however, warns that a utility profit motive, combined with several public policy decisions, has enabled excessive utility spending on new infrastructure that is driving up shareholder profits and ratepayer charges.

The report cites the Strategic Infrastructure Development and Enhancement Plan (STRIDE) law of  2013 and the multi-year rate plan pilot program of 2020 as policies that have led to increased spending and skyrocketing bills. The STRIDE law was enacted to allow gas utilities to charge customers more every month so they could ensure the safety of our gas system, but the People’s Counsel and consumer advocates have warned that instead of prioritizing fixing the riskiest pipes, the gas utilities have used the program to spending wastefully on new gas infrastructure to boost profits. 

In response to the report, Maryland PIRG Foundation Director Emily Scarr and Maryland Energy Advocates Coalition Chair Laurel Peltier issued the following statements:

“Maryland utilities have schemed and maneuvered to increase their profits driving utility bills to unaffordable levels. When you find yourself in a hole, you stop digging. We’re counting on regulators and policymakers to put the shovel down, revise or repeal the STRIDE law, and exercise their authority to require utilities to serve the public interest by providing safe, reliable, and affordable energy,” said Emily Scarr, Maryland PIRG Foundation Director

“Our coalition works to ensure that Maryland’s 430,000 low-income families’ utility bills are affordable. Energy burdens for 340,000 Maryland families are already well-above 6% of income, the portion of income that’s considered affordable. This level of gas infrastructure spending is unsustainable financially and for our health and climate. If we want to avoid massive stranded costs and account terminations we have to end the STRIDE program,” said Laurel Peltier, Maryland Energy Advocates Coalition Chair.