Bush: Why are BGE’s rates so high?
KAMAU: Your energy bill has two parts: the supply influenced by energy markets and the delivery or distribution which is what customers are really feeling. BGE doesn’t profit from the supply, but does from delivery.
According to BGE, rates are high because of higher usage. With the lower temperatures, people are using more gas to heat their homes. The utility also says it is upgrading aging infrastructure for safety. It has said they have 900 miles left of aging pipeline to replace:
“We're repairing and replacing the most at-risk infrastructure,” said Dawn White, vice president of Gas. “We have pipelines that are over 150 years old. The average infrastructure is 75 years old.”
The reps also stressed that even though they requested rate increases, all of that has been regulated and approved by the state, through the Public Service Commission.
Bush: That is the utility’s perspective. What is the other view?
KAMAU: David Lapp, from the Office of People’s Counsel, also testified. OPC is an independent Maryland agency that advocates for customers in utility matters.
He said BGE is being greedy. He argued that the utility doesn’t prioritize which pipes to fix and replace, based on safety or necessity but based on more profit for shareholders.
He called it the Lamborghini model:
“The utilities would have you believe that all these investments are necessary for safe and reliable service. The question is whether it's safe and reliable service at the lowest possible cost. Because, of course, you can be safe and reliable in a Lamborghini, but you can also be safe and reliable in a Ford,” said David Lapp.
And of course, BGE representatives did not appreciate that comparison.
Bush: Okay, so what does all this mean for customers?
KAMAU: Customers can expect to continue feeling the squeeze. Rates for electricity are set to increase in June.
BGE has waived late fees and suspended service disconnections this month, but consumer advocates want more. They’re urging BGE’s shareholders — who are making massive profits — to provide relief for customers.
They also point to Massachusetts. Just yesterday, their regulators ordered gas utilities to slash delivery fees, reducing the average customer bill by at least 5% over the next two months.
What’s interesting about Massachusetts is their governor sent a letter to regulators asking for immediate rate relief.
Given that Gov. Wes Moore ran on a platform of "work, wealth, and wages," and made a campaign promise to “leave no one behind,” I reached out to see if he would take a similar approach.
A spokesperson pointed me to a letter the governor wrote last month — not to regulators, but to the grid operator. In it, he asked the operator to safeguard ratepayers from unnecessary hikes.
Similarly, in Illinois, the state has forced Peoples Gas to prioritize replacing the highest-risk pipes, amid a long-delayed and over-budget program. These measures are seen as steps in the right direction, and advocates want to see similar action in Maryland.
But it may be a while before customers see similar measures.
A spokesperson for the PSC gave the following update:
The Commission is in the midst of 'lessons learned'/reconciliation proceedings regarding BGE's multi-year rate plan; after hearings this past fall (which included comments by members of the public).
Briefs were filed in December by parties (including the Office of People's Counsel and the Commission's Technical Staff) with their recommendations.
The Commission is reviewing those filings to determine the appropriate next steps regarding the future of the MYP pilot.
The Commission deeply appreciates the views of the Baltimore City Councilmembers and their continued advocacy on behalf of their constituents — theirs is an important and necessary voice in this process.
The Commission also has proceedings underway to address utility bill affordability, particularly for limited-income customers, and to reform service termination policies during periods of extreme weather, not just in winter, but also during the summer.
