This article has been corrected to reflect how much BGE’s requested rate increase would boost customers’ monthly bills. The increase averages about 5% annually, resulting in a total of about $31.07 per month at the end of three years for the average gas and electric customer. The Sun regrets the error.
Baltimore Gas & Electric Co. filed a request Friday with state regulators to increase the rate it charges customers for delivery of both gas and electricity over the next three years by an average of 5% a year.
The requested rate increase, if approved by the Maryland Public Service Commission, would boost the average customers’ monthly bill by about $31.07 after three years to support spending by the Baltimore-based utility. The rates would take effect Jan. 1.
For the utility, which serves 1.3 million electric customers and 700,000 natural gas customers in central Maryland, the filing is the first step in a monthslong public review process requiring commission approval. The commission can approve, reject or, as it often does, scale back BGE’s planned increase.
BGE 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. Another $400 million would go toward programs and incentives to promote electric vehicle use and building efficiency, the company said. That would include new incentives such as electrification rebates for home and water heating.
While energy demand has increased, “we are facing more and varied threats to the resiliency of our infrastructure, including cyber intrusions and more frequent severe weather brought by climate change,” BGE President and CEO Carim Khouzami said in an announcement of the filing. “The energy infrastructure investments we make now will ensure we can continue to meet our customers’ needs.”
He said investments also are needed to enable the state to reach a 2045 goal of achieving “net zero” emissions, which refers to balancing greenhouse gas production with the amount removed from the atmosphere.
Under the plan, the average residential customer whose electric and gas is delivered by BGE would see significant increases, according to BGE testimony filed with the Public Service Commission.
“The total bill for an average residential customer receiving both electric and gas service from BGE is expected to increase by $13.46 per month (about 6.8 percent) to a total bill of about $210.95 in Year 1, $9.41 per month (about 4.5 percent) to a total bill of about $220.39 in Year 2, and $8.20 per month (about 3.7 percent) to a total bill of about $228.66 in Year 3,” the testimony said.
Electricity-only customers would face smaller increases, totaling about $12.99 a month after three years.
Delivery rates are one part of a customer’s utility bill, covering the distribution of electricity and natural gas. Customers also are charged a rate by the various suppliers of electric and gas, which covers the cost of the energy. Those costs, separate from BGE’s delivery, have soared.
The price of electricity in the U.S. in January rose nearly 12% and the price of natural gas jumped 26.7%, compared with January 2022, according to the Bureau of Labor Statistics Consumer Price Index. In the Baltimore-Columbia-Towson district, the cost of electricity jumped 24.7%, while the cost of natural gas soared 25.2%, the index showed.
“BGE’s proposed spending would significantly impact utility customers who are only beginning to feel the full effects of rate increases from BGE’s last rate case,” People’s Counsel David S. Lapp said.
He said Maryland’s Office of People’s Counsel, which represents residential utility customers, plans to review BGE’s filing “to make sure that all new proposed spending is reasonable and appropriate, and that there are not lower cost alternatives.”
Lapp said BGE’s proposal furthers the interests of investors in BGE parent company Exelon.
“The utility has a responsibility to its investors to maximize its capital spending,” he said. “While some spending is certainly necessary to serve customers, the public’s interest is furthered only by spending that maintains and improves actual utility performance.”
BGE last requested a delivery rate increase in 2020, when it sought to freeze customers’ base rates for two years, then raise them by 8.3% in 2023, a $12.87 increase on an average customer’s annual bill. Instead, the public service commission in December 2020 approved parts of the proposal and ratified a one-year freeze on delivery rates to prevent the larger increase in 2023. The annual increase for the average residential electric and gas customer will end up at $3.30 per month, or 2.1%, from 2021 through the end of this year.
If the proposed rate increase is approved, BGE said, customer charges for the delivery rate will have increased at an average annual rate of 1.4% in the period from 2008 to 2020.
For the utility, the proposed rate increases would translate into a $313 million increase in electric service revenue and a $289 million increase in gas service revenue over the three years for capital expenses.
BGE said it plans to improve the reliability of its energy infrastructure and expand it to support economic development sites. It plans to install “smart” automation equipment that can reduce the frequency and duration of power outages and guard against damage to the grid.
And the company expects to replace outdated technologies and provide infrastructure to support solar energy and electric vehicle charging. Projects also include tree-trimming and vegetation management and enhancements to cybersecurity.
A potential threat to Baltimore’s energy infrastructure was foiled recently when federal officials discovered an alleged plot by a Catonsville woman and a Florida man who have been federally charged with conspiracy to attack Baltimore’s power grid. The pair, Sarah Beth Clendaniel of Catonsville and Brandon Clint Russell of Orlando, Florida, plotted to shoot and destroy multiple electrical substations in the Baltimore region to further their extremist, violent, racial and ethnic beliefs, U.S. Attorney Erek Barron said at a news conference last week.
In its request to the public service commission, BGE also said it plans to replace additional natural gas pipeline segments and install over-pressurization protection equipment, which would improve safety and reduce greenhouse gas emissions.
Gas companies’ continued spending on infrastructure came under fire recently from Lapp, who warned that such spending should take into account an anticipated limiting of fossil fuels in Maryland in the future. The People’s Counsel office filed a petition with the public service commission last week in which Lapp said ratepayers could get stuck shouldering the burden of costly improvements while gas sales are expected to eventually decline.
Lapp on Friday said BGE’s proposed “massive” gas infrastructure spending is inconsistent with customer interests and Maryland’s climate policy.
“These proposals could disproportionately impact lower income households and be contrary to the interests of all residential customers,” Lapp said.
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But BGE, in the announcement of its requested rate plan, argued that customers are benefiting from utility infrastructure investments.
“Hundreds of miles of natural gas pipes are being replaced at an accelerated pace, which results in a safer, more efficient gas system that will reduce greenhouse gas emissions by more than 210,000 metric tons annually — the equivalent of taking 45,000 gasoline-powered cars off the road,” the company said.
And electricity outages have decreased 40% since 2008 and power is restored 36% faster, BGE said.
BGE also noted that its amended conduit agreement with Baltimore City officials will allow BGE to increase improvements to the conduit system infrastructure, lowering city customers’ electric service costs and boosting reliability.
That agreement has been controversial, pitting supporter Mayor Brandon Scott against Comptroller Bill Henry and Council President Nick Mosby. The city’s Board of Estimates approved the contract this week after Henry and Mosby sat out in protest and questioned the votes legitimacy. The deal calls for BGE to pay for $134 million in capital improvements to the system over the next four years.
Public hearings on BGE’s rate and spending plan are expected to be held in September with the public service commission expected to decide in December.
BGE said its plan is expected to inject nearly $36 billion into local economy and support 72,000 jobs
This article has been updated to correct the size of BGE's proposed rate increase. The Sun regrets the error.