The main reason to vote against the new power company surcharge is the fact that it is not needed.
Power companies, like BGE and Washington Gas, already possess the authority to seek rate increases in order to repair and maintain their infrastructure. Actually, they have used the traditional system over the years to assess higher rates and more funding from consumers. The problem has been that the power companies have not engaged in an effective system of replacing their infrastructure and gas lines. In essence, the new surcharge rewards inefficiency and failure to act.
In 2011, Washington Gas presented a plan to fund a replacement program to the Public Service Commission (PSC). It was accepted, but the improved plan was never adequately pursued. This brings to question the real need for the potential confiscation of $36 million in new funds from the rate-payers while, at the same time, creating an unnecessary surcharge.
The major difference compared to the traditional rate system is the process by which the PSC under law allows only one request annually. The new surcharge system will allow power companies to request rate hikes from the PSC as often as they deem necessary. Language in the bill states that should the PSC fail to schedule a public hearing, the rate hike request will be automatic.
The surcharge system creates an entirely new and troubling process. Already coming down the pipeline will be a request for a wind turbine surcharge and, probably, other schemes such as an environmental compliance surcharge.
Financially speaking, the surcharge provides power companies the opportunity to amass out-front large debt obligations. Of course, the rate-payers will be responsible for retiring this debt with their money. The power companies would argue that the debt would be needed under the present system. However, the debt package would be long-term over a period of time with annual PSC hearings and be more prudent in regard to the rate-payers.
There are a number of disturbing aspects to the bill. Most importantly is to the business owners of Harford County, who will not have a clear cap on rate increases that they will receive under the surcharge legislation. Consumers who use only electricity may feel short-changed by the surcharge because the funds are not assigned to overhead electrical or other related structures. I guess that surcharge is on its way.
For over 100 years, Maryland power companies have utilized the current rate system to develop and maintain their infrastructure. The AARP with its 800,000 members in Maryland opposed House Bill 89 because the greatest burden will be placed on retirees, working people and small business owners.
I not only voted against the bill, but offered the only amendment against the proposal. My amendment would have removed the current authority of the PSC to create surcharges. The amendment would have, then, placed that authority and responsibility with the elected representatives of the people in the Maryland General Assembly. Although the amendment was unsuccessful and House Bill 89 passed, I believe time will prove that my effort on behalf of the consumers was the right course for Maryland's future.
Del. Pat McDonough
Leg. District 7, western Harford, eastern Baltimore counties