State Director, Maryland PIRG Foundation
State Director, Maryland PIRG Foundation
BALTIMORE – Utility regulators at the Maryland Public Service Commission (“PSC”) issued a ruling Thursday in regard to Baltimore Gas and Electric’s (“BGE”) proposed multi year rate hike. The decision limited the proposed $602 million rate hike to $408 million. Stakeholders are still reviewing the comprehensive ruling, but staff from the consumer group Maryland PIRG highlighted two aspects of the decision that they were looking at closely.
First, the PSC granted BGE’s request for three consecutive years of rate increases. The PSC granted the company a multi-year rate hike for the first time in 2020 as part of a pilot program, which has yet to be evaluated. Maryland PIRG says this is a loss for customers because it removes some of the cost-discipline of traditional regulation. Critics of the pilot program, including the Office of the People’s Counsel (OPC), argue that it shifts financial risk from utilities to ratepayers, lacks accountability, and increases costs. In its ruling the PSC suggested they would complete an evaluation of the pilot in 2024.
Second, the PSC 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. A report released this week from the Abell Foundation suggests that as designed, the program has failed to reduce injuries and fatalities from gas incidents, is exacerbating pollution, and will lead to massive rate hikes and stranded costs.
In addition to the BGE decision, the commission made massive cuts to Washington Gas Light’s rate proposal Thursday, citing, amongst a variety of issues, the need to have a larger discussion as part of the Commission’s “Future of Gas‟ proceeding (Case No. 9707) to strategically manage and plan for the transition away from gas for home heating and appliances.
As the order explains, the Commission also struck BGE’s so-called “Customer Electrification Program” from the case, which consumer and environmental groups applauded at the time.
In response to these decisions, Maryland PIRG Foundation Director Emily Scarr issued the following statement:
The PSC’s decision on BGE’s multi-year rate plan is a mixed bag for consumers and the environment. 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.
By authorizing the vast majority of proposed spending on “Operation Pipeline,” the commission missed an opportunity to lower bills and facilitate the transition to clean energy by reining in spending on new gas infrastructure.
Marylanders are all too familiar with the risks of gas leaks and explosions. We need BGE to focus on maintaining the safety of our existing system while we still need it, not building an entirely new gas system. We should be investing in the clean, renewable energy of our future, not extending the shelf life of a dangerous, polluting fossil fuel. We urge the PSC and policy makers to take a closer look at gas infrastructure spending and how to ensure it’s focused on promoting safety during a managed transition off of fossil fuels.
We hope the PSC will move quickly to issue a full evaluation of the multi-year rate plan pilot program to guide future rate cases.
Thanks to Governor Moore, there are new regulators running the PSC. We’re counting on them to take the long view when it comes to these decisions, and we look forward to working with them on the Future of Gas and other efforts to shift to clean, efficient renewable electricity. We need regulators that will hold utilities accountable and ensure rates are just and reasonable.