BGE sues city of Baltimore over conduit rate hike

BGE sued the city of Baltimore over a rate hike for its underground conduit system.

Baltimore Gas and Electric Co. sued the city of Baltimore on Friday over the city's decision last month to more than triple the fee it charges the utility to use its underground conduit system.

The city's spending panel approved in September increasing the rate BGE pays to $3.33 from 98 cents per foot each year to use the conduit system, a vast underground network of space for utility lines. City officials argued that the fee had to be raised because BGE received a "sweetheart deal" more than a decade ago.

In its lawsuit, filed in Baltimore Circuit Court, BGE alleged that the city was seeking to generate revenue with the rate increase, rather than use the money to maintain the 741-mile conduit system. Using the conduit system to make money to fund other city programs was against state law, BGE argued.

BGE asked the court to set guidelines to ensure that the city would charge a rate that reflected only what it costs to maintain the more than 100-year-old ducts, and not use the fee to raise revenue. BGE also asked the court to ensure that the fees only be used to maintain the improve the system.

"BGE continues to support efforts to improve the safety and reliability of the underground conduit system," BGE spokesman Aaron Koos said in a statement. "We are taking this step to make sure that the City fees for this work are governed by measures that protect consumers."

BGE believes the rate's tripling is excessive, according to Koos, though the utility did not specify an amount it believed would be reasonable to cover upkeep costs.

The utility said it would ask the Maryland Public Service Commission to let it pass on the added costs as an $8 fee to BGE residential customers in the city, something the city vowed to fight. Commercial electric consumers in the city could face surcharges of $15 to $3,350 a month, depending on their usage.

Baltimore Department of Transportation spokeswoman Adrienne Barnes said the city had not yet seen the lawsuit and declined to comment. Howard Libit, a spokesman for Mayor Stephanie Rawlings-Blake, referred questions to Barnes.

City Council President Bernard C. "Jack" Young also declined to comment, but his spokesman, Lester Davis, said Young stands behind his vote to raise the fee.

BGE offered to buy the city's conduit system earlier this year for $100 million, which city officials rejected. The utility uses about 80 percent of the conduit system, or 12 million linear feet.

The conduit system, which carries wires for electricity, telephone service, fiber optics, and street and traffic lights, was built in the 1890s and covers most of the city. It's accessible from more than 14,000 manholes. BGE and other utilities, such as Comcast, pay the city the annual fees per foot of powered cable run through the system.

Some city officials and outside analysts have thought the rates were set too low compared to those in other cities with conduit systems, though BGE successfully beat back prior attempts to raise the rates. More than a decade ago, the city struck a deal with BGE for a lower rate than other users of the system, which the city now says resulted in a loss of $36 million from 2003 to 2014.

In the lawsuit, BGE wrote that it "recognizes the value and importance of having a conduit system in good repair" and that it supported the city's efforts to maintain and upgrade it.

But the utility argued that Maryland law prohibited the city from using its power to force the utilities to bury their lines underground and then make money off of it.

Though city officials have said the money will only be used to upgrade the system, BGE said in the lawsuit that the city's "actions and statements over the past 15 years, and specifically in the year leading up to the recent Board of Estimates meeting, evidence the City's intent to collect and spend BGE's payments in a manner that violates limitations imposed by law."

The University of Maryland, Baltimore also objected to the rate increase, which it said would cost it an additional $100,000, and said the ducts were sometimes in poor repair or collapsed.

The new rate is expected to generate $52 million, up from $15 million, and will go into a separate fund. Much of that cost would be borne by BGE. Koos said BGE pays $12 million a year to use the system, which would jump to $41 million under the city's proposed increase.

The lawsuit also said BGE had gotten a recent bill that warned of a late payment fee, and asked the court to stop such attempts to collect late fees. It also asked the court to prohibit the city from removing any wires for nonpayment of disputed fees.

cwells@baltsun.com

lmirabella@baltsun.com

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