Baltimore Gas & Electric Co.’s proposal to boost rates 5% a year over the next three years has raised concerns among customers, consumer advocates and elected officials who worry about ratepayers’ ability to shoulder the burden.
The Baltimore-based utility’s request, filed a week ago with state regulators, would boost the gas and electric delivery portion of the average residential customer’s monthly bill by about $31 after three years to support BGE spending. The rates would take effect Jan. 1.
“Right now, we see more families that are struggling with finances than we’ve ever seen before,” said Sara Johnson, co-founder and chief operating officer of the CASH Campaign of Maryland, a nonprofit that helps low- and moderate-income people reach financial security. “This is just yet another wave of financial challenge and burden that could come to folks.”
BGE, which serves 1.3 million electric customers and 700,000 natural gas customers in Central Maryland, said the proposed rate increases would allow it to invest nearly $2.3 billion a year through 2026 to improve the reliability and safety of the electric grid and natural gas system and help the state reach a 2045 “net zero” emissions goal.
The proposal before the Maryland Public Service Commission will undergo public review before the commission approves, rejects or scales back BGE’s requested increase.
BGE’s proposal applies to the delivery portion of the utility bill only, covering the distribution of electricity and natural gas. Customers also are charged rates by various suppliers of electric and gas, which covers the cost of the energy. Those costs, separate from BGE’s delivery, have soared in the past few years.
BGE testimony filed with the Public Service Commission says the total bill for an average gas and electric home customer is expected to increase by $13.46 per month (about 6.8%) to about $210.95 in 2024. It would go up $9.41 per month (about 4.5%) to about $220.39 in 2025, then an additional $8.20 per month (about 3.7%) to $228.66 in 2026.
Electricity-only customers would face smaller increases, totaling about $12.99 a month after three years.
But according to a preliminary analysis by the Maryland Office of People’s Counsel, increases for the winter months in 2026 would be even higher than those outlined by BGE. An average gas and electric customer would see an increase in delivery charge of $77, not $31, in January and February of 2026, said People’s Counsel David S. Lapp.
Lapp said his office believes BGE’s figure understates the expected usage by electric and winter-heating gas customers and actual usage will result in bigger jumps. He said his findings are preliminary as the office has just begun a review of thousands of pages in BGE’s filing.
“We are still digesting all of it,” Lapp said. “The only one that really understands the full implications at this point is the utility. Unfortunately, we’re not getting a clear picture of what the proposal’s effects are on utility customers from the information that they’re sharing.”
BGE said its filing is the beginning of a 10-month process that gives the public service commission and interested parties a chance to review the plan, request information and hear about the plan’s merits.
The company calculated bill impacts based on actual usage data from customers, which shows declining electricity usage, said Richard Yost, a BGE spokesman. Additionally, he said forecasts show that electric usage will decrease slightly and gas usage will remain flat through 2026.
For Steve Renehan, a 69-year-old carpenter who retired for medical reasons, the proposed rate hike would be yet another necessity soaring out of control amid inflation.
“I’m a senior citizen on a fixed income, Social Security, and I can’t keep up with that kind of cost increase,” said Renehan, a homeowner in West Baltimore’s Irvington neighborhood. “The things that we need, the things that keep body and soul together, keep escalating at a crazy rate. And it’s certainly outpacing any increase I get from SSA.”
Energy bills eat up a large chunk of income for some Maryland residents, a study released Wednesday showed. About 400,000 households in the state and nearly 30% of Baltimore residents pay more than 6% of their income on energy bills, considered a high level, according to the Institute for Energy and Environmental Research and PSE Healthy Energy. And for 170,000 residents with incomes less than $26,500 for a family of four, energy costs accounted for about 20% of income, the study showed.
Jim Campbell, president of AARP Maryland, said he hears all too often about the struggles of members, in general people over age 50, especially those with low, fixed incomes. If their utility bills go up 5% each year, they’ll be faced with having to choose which necessity to pay for and which to cut, he said.
“Inflation is hitting everybody hard, especially Maryland families, especially low-income families,” Campbell said. “I just hope BGE does due diligence and really looks at the impact of this increase. The timing just couldn’t be worse with inflation what it is right now.”
Reginald Bost, 62, a construction worker from East Baltimore, has barely managed to cover rent, utilities and other bills since the first of several layoffs began at the end of 2021.
Though he’s once again working, and he’d paid rent with savings and eviction prevention assistance, he was denied a previous unemployment claim and evicted this month. As he looks to rent a room, the prospect of higher utility bills is alarming.
“For them to do that at this particular time is outrageous,” said Bost, who often sought extensions on gas and electric bills. “The poor people are going to be the ones that get hurt.”
City elected officials raised concerns as well.
Democratic Councilman Zeke Cohen called the proposed rate increase “excessive,” particularly at a time when many city residents are struggling to pay bills.
”They should focus on delivering better service and improving communication instead of jacking up their rates on hardworking Baltimoreans,” Cohen said of BGE.
The Baltimore City Council’s frustration with the utility company and its communication with city leaders and residents has been on display during the group’s recent meetings.
The council’s investigative committee held its second hearing Thursday to discuss the deal between Baltimore and BGE for maintaining the city’s conduit system, which Democratic Mayor Brandon Scott pushed through, saying it needed to be approved ahead of BGE’s rate filing.
The council also plans to hold an investigative hearing next week to discuss BGE’s “decision-making” on planned and emergency work in right-of-way areas.
Democratic Councilman Eric Costello said he’s still reviewing BGE’s lengthy rate proposal. It’s too early to know whether the conduit deal is driving the proposed rate increase, he said, but it “certainly contributed.”
Under the four-year deal, BGE agreed to invest $34.5 million a year to maintain the conduits, about $6.5 million more than it pays now to rent the space it uses in them.
Charles Washington, BGE’s vice president for government and external affairs, told council members at Thursday night’s meeting that designating the use of the conduit as a capital investment rather than rent allowed BGE to pass the cost on to customers over the life of the improvements it makes, rather than an immediate request.
Washington said BGE’s request to the Public Service Commission for compensation would have been $50 million larger over three years were it not for the Baltimore agreement.
Lapp said his office also will look into BGE’s proposed investments that prompted the requested rate increases.
For instance, he has said he has concerns about planned investment in gas infrastructure, which he says is at risk of not being useful in future years. He went so far as to file a petition earlier this month with the Public Service Commission calling for it to take action to scale back utilities’ investments in fossil fuel infrastructure as the state transitions to a more electric future.
Jim Doherty, a BGE customer from Columbia, also questioned gas infrastructure spending.
“It seems like we’re trying to move away from using natural gas,” said Doherty, an engineer. “Why would you invest that kind of capital into a project that you’re trying to get rid of?”
Rate increases now would be more palatable, he said, if ratepayers were able to share in any cost savings stemming from investments in energy efficiency and distribution upgrades.
Part of BGE’s plan calls for spending $400 million on programs and incentives to promote electric vehicle use and building efficiency, including never-before-offered incentives such as electrification rebates for home and water heating.
For example, the utility said in its filing that it plans significant rebates for air source heat pumps “to overcome the market barriers of those technologies, but which have significant benefits for customers and for society in emissions reductions.”
The rebates are necessary, BGE argued, because such changes can be expensive. They can involve replacing electrical panels and wiring, and sometimes upgrading service.
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Besides heat pumps, rebates also would be offered for replacing gas appliances with electric, such as cooktops, clothes dryers and fireplaces.
While that sounds good for customer savings and reduced emissions, Lapp said he’s concerned with how BGE is including such a program in its rate case for the first time. It would be a departure from typical practice to have rates pay for equipment inside a consumer’s home, rather than just for utility assets such as substations or equipment needed to deliver energy.
“How the state facilitates electrification should not be determined based on a utility’s rate case filing,” Lapp said.
He noted that the use of electric heat pumps has increased over the past decade, without incentives, and last year they even outsold gas furnaces nationwide.
While such rebates do not appear to make up a big part of the short-term rate increase, Lapp said his office is concerned such rebates also would have a substantial impact on rates longer term. By including rebates in rates, BGE is proposing to treat them as a capital investment, upon which it earns a return for investors.
“So a rebate for $10,000 for an electric heat pump or for upgrading your panel, by the time ratepayers pay off the cost of those rebates, the cost is multiples of that $10,000,” Lapp said. “We are greatly troubled by that proposal.”
Baltimore Sun reporter Emily Opilo contributed to this article.