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BGE Gets Less Than Half of Requested Rate Hike

June 7, 2016 By Cheryl Kaften

On June 3, the Maryland Public Service Commission (PSC) denied a substantial portion of the Baltimore Gas & Electric’s (BGE’s) request to boost its rates (Case No. 9406) for gas and electricity – first filed last November – by $224.5 million, granting instead a revenue increase of $89.5 million.

The commission authorized BGE to increase electric distribution rates by no more than $ 41.762 million and to increase gas distribution rates by no more than $47.776 million, for service rendered on or after June 4.

BGE originally had proposed increases to the average residential monthly bill of $7.05 (electric) and $8.01 (gas), plus an additional charge reflecting the increased Baltimore City conduit fee. Instead, the average residential monthly bill is expected to increase approximately $2.67 (electric) and $4.86 (gas), with no additional charge for the Baltimore City conduit fee.

The commission noted that the utility’s “unusually large request” included recovery of costs for:

  • Baltimore City’s decision to raise the conduit lease fee rates it charges BGE,
  • BGE’s smart meter deployment (the costs of which had been deferred until the system was proven to be cost-beneficial), and
  • Ongoing reliability and safety-related investments.

Regarding the Baltimore City conduit fee – the rates for distributing power underground – BGE had requested a bill surcharge to recover an increase of $30.7 million per year in conduit fees. The commission denied this request, noting that there are still many unresolved issues and a pending lawsuit between the city and BGE in the matter. The commission will allow BGE to continue to recover in rates approximately $10 million a year in conduit lease fees it has been paying.

“We urge BGE and Baltimore City to reach a resolution that ensures that BGE customers will pay a reasonable conduit fee that accurately reflects the necessary costs of maintaining a safe and reliable electric distribution system,” said PSC Chairman Kevin Hughes.

BGE’s request also had included recovery of $140.7 million related to its investment over the past six years in advanced metering infrastructure (AMI). The commission received testimony on the benefits of smart meters, including the technology’s ability to lower energy bills, improve customer service and relieve peak-time pressure on BGE’s transmission and distribution systems.

While the commission found “compelling evidence” that BGE’s AMI system is cost-beneficial to its customers, it disallowed $47.8 million of BGE’s request; and authorized BGE to recover the allowed portion of the costs over 10 years, instead of five, as the utility had requested. Ultimately, the PSC concluded that for every $1 invested in the AMI system, customers will receive at least $1.28 in benefits.

In its order, the commission acknowledges the burdens that increased rates place on ratepayers, particularly low-income customers. “We have strived to limit the rate impact in this case while allowing the company to invest in safety and reliability and continue to modernize its distributions systems for the benefit of its customers,” the order states.

Commissioners Harold Williams and Anne Hoskins filed a concurring statement and Commissioners Harold Williams and Michael Richard filed a dissent in part to the final order.

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