Rising energy prices: elected leaders question utilities

Gas and electric delivery rate increases are making it increasingly unaffordable for customers and businesses to heat and cool their homes and buildings. As Maryland PIRG has argued, utility spending, especially capital spending, is the biggest factor driving up delivery rates and utility profits. 

On Wednesday, March 12th, the Maryland General Assembly’s Committees that deal with energy issues will be having a joint briefing on “Maryland’s rising energy prices.”

In anticipation of the conversation, here’s some background on a similar hearing held by the Baltimore City Council’s Committee on Legislative Investigations in February.

If you’ve got 4 hours, you can watch the full hearing on Youtube. If not, below are some highlights and time stamps for each Councilmember’s questions. The public comment period begins at 2:43.

Council President Zeke Cohen kicks off the questioning of BGE and the Office of the People’s Counsel (OPC), focusing his questions on the role of BGE’s Multi-Year Rate Plan and gas pipeline spending on the increased bills, asking, “While certainly this winter has been brutal… most of the rate increases that households are experiencing now trace back to the hundreds of millions of dollars in rate increases that BGE has been approved to implement. Is that right or inaccurate?”

Afters nearly 20 minutes of back and forth with BGE and OPC, Committee Chair Shcleifer picks up the questioning (at 39:50), focusing his questioning on the value customers are getting from BGE in exchange for the distribution rates they are paying, with concerns that BGE’s spending is driven more by a profit incentive than in serving ratepayers.

Councilman Schleifer highlights the profitability of BGE’s capital spending versus general operations and maintenance. The Chair questions BGE about “Operation Pipeline,” asking, “While the capital expenditures can certainly contribute to better safety and reliability, BGE does not prioritize the gas capital projects by the benefit to the ratepayers, is that correct?”

Schleifer finally concludes “We’re paying a lot more and getting a lot less.”

Here are the timestamps for the additional questions from City Councilmembers which ranged from highly personal to highly academic, all while illustrating the dynamics of utility regulation and its impact on our communities.

• At 1:03 Vice Chair Glover shared very personal testimony on the impact high rates has on constituents, especially low income families.
• 1:26 Councilwoman Middleton talks about the impacts on Baltimore City’s senior citizens, starting off by simply saying, “What a mess.”
• 1:34 Councilman Ryan Dorsey has a robust back and forth with BGE’s executives on steep increases in delivery rates over the last decade. Some of the most pointed aspects of the back and forth starting at the 1:44 mark. He explains, “If you were to compare 2008 to 2024, in terms of the distribution rate increases, people are paying more than 100% more over that time.”
• Councilman Gray highlights BGE’s escalating profits over the last decade and the role of investor profits on rising gas distribution rates (starts at  2:00:20). 
• At 2:06:20 Councilwoman Ramos talks about the impact of BGE’s work in the Baltimore City neighborhoods, and challenges her constituents have had with BGE’s contractors.
• Councilman Jones talks about the impact of utility bills (2:18)  as an essential service, on top of additional financial challenges facing Baltimore famalies.
• Councilman Conway (2:22) discusses how, as regulated monopolies, it is imperative  for utility spending and profits to be tightly regulated.
• Public testimony begins at 2:43

On Wednesday, March 12th, the General Assembly will host its own hearing with utilities and the PSC to discuss rising energy bills. You can tune in via Live Media on the Maryland General Assembly Website. The Baltimore County Council is also considering a resolution on energy prices at their meeting this week.

Utility regulation might seem complicated, but it’s pretty simple: the more a utility spends on its infrastructure, the larger its opportunity to profit. This creates a powerful incentive for wasteful spending and we rely on our legislators and utility regulators to keep a careful watch. 

Unfortunately, two public policy decisions (the STRIDE law of 2013 and BGE’s multi-year ratemaking pilot launched in 2019) have exacerbated this dynamic and weakened critical safeguards to prevent wasteful spending. Both policies were aggressively lobbied for by BGE and its parent company Exelon.

These delivery rate increases have been mounting for years, with consumer advocates and the Office of the People’s Counsel pushing back, but reached a boiling point in January as increases in gas supply rates compounded the existing affordability crisis. Looming increases in electric supply rates are also a cause for concern, but should not distract from the utilities’ starring role in the affordability crisis. 

Maryland PIRG’s reccomendations to address escalating BGE delivery rates are:

1. To ensure gas pipeline spending prioritizes safety and is cost effective;
2. To end multi-year ratemaking, and stop BGE’s 2026 rate hike from going into effect;
3. For the PSC to use its regulatory authority to lower BGE’s rate of return and not authorize recovery for excessive infrastructure spending, and reform termination regulations; and,
4. To support effective energy efficiency programs to reduce energy waste, strengthen the grid, and lower bills.