Regulators approve BGE gas surcharge

Maryland regulators said Wednesday that they will allow Baltimore Gas and Electric Co. to charge gas customers a monthly fee to pick up the pace of replacing aging pipes — the first such surcharge in the state.

The surcharge will start at about 32 cents a month for residential customers this year, increasing annually until it caps out at $2 a month in 2017 and 2018. Business customers would pay different amounts, with almost all starting at $1.58 a month and topping out at $9.75 monthly.

The fee comes on the heels of BGE's first-ever surcharge on electric customers to pay for infrastructure work aimed at greater reliability. That fee, plus an overall rate increase, was approved by the Maryland Public Service Commission in December.

Commissioners approved the full gas surcharge BGE asked for. They said in their order Wednesday that they want to "ensure public safety by expediting the replacement of obsolete gas distribution infrastructure, particularly cast iron and bare steel."

Founded in 1816, BGE is the nation's oldest gas utility. Some of its pipes — a small amount, BGE said — date back more than 100 years. Significantly more are over a half-century old.

The company said it is focusing on the one-fifth of its gas mains and other pipes that are made of cast iron and other leak-prone materials. They're no longer cost-effective to repair, BGE said.

"We've got roughly 20 percent of the system accounting for three-quarters of the leaks, so that's where we're going to focus our efforts," said Mark D. Case, BGE's vice president of strategy and regulatory affairs.

Consumer advocates nationwide have fought surcharges in state after state, contending that utilities should not be allowed to tack on fees for maintaining their infrastructure as they're supposed to do.

The Maryland Office of People's Counsel, which represents residential utility customers, said state regulators have long made utilities wait to charge for infrastructure until it is in place and benefiting ratepayers. A surcharge "upsets that apple cart, turns it upside down," said Theresa V. Czarski, the deputy people's counsel.

But state legislators signaled their support for gas surcharges when they approved a utility-backed bill last year outlining how the fees should work.

BGE expects its gas surcharge will begin this spring. The utility first must submit a project list for the year and get it approved.

Maryland's public service commissioners said they will require an annual audit of the work and expenses. If BGE collects more than the work eventually costs, customers would get refunds with interest, the commissioners said.

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