Office of People's Counsel seeks assurances for BGE's low-income customers

As the economy has faltered over the past three years, more BGE customers have been in danger of losing their electric service because of overdue bills.

Now, as BGE parent Constellation Energy Group seeks to sell itself to Exelon Corp., the state's advocate for residential customers fears that the proposed merger would hurt low-income customers' ability to receive payment assistance and other help.

The Maryland Office of People's Counsel says the deal would lead to a consolidation of customer services that could cause the utility to become less responsive to the concerns of Baltimore Gas and Electric Co. ratepayers.

Chicago-based Exelon rejects that argument, saying BGE would remain as a separate, locally managed company and would maintain its commitment to serving low-income customers.

People's Counsel Paula Carmody remains skeptical.

"Exelon is going to be looking to run BGE as part of its bigger business," Carmody said in an interview. "They're looking to standardize procedures, consistent with PECO and ComEd" — Exelon's utilities in Philadelphia and Chicago.

"This can have a detrimental impact for all of our customers," Carmody said, "but particularly low-income customers who are at the margin, most vulnerable and are most in need of personal attention."

The Office of People's Counsel fears that the consolidation of BGE's information systems would take away some of the discretion that the local utility's customer service representatives now have when dealing with past-due bills and initiating collection efforts.

"As you standardize these things and perhaps change the rules for how you determine, for example, who gets an alternative payment plan, this could translate into a negative impact for the low-income customers who are most in need of assistance," Carmody said.

Over the past three years, BGE has seen a growing number of customers in arrears — that is, three to five days' late on payments.

Last year, there were 339,310 low-income accounts in arrears, compared with 245,976 in 2008, according to BGE. The past-due amount on those accounts increased during the same period to $317 million, from $200 million.

More low-income BGE customers who received termination notices had their power disconnected last year than in 2008, according to an outside expert hired by the Office of People's Counsel to examine the merger's impact on low-income customers. The OPC contends that the proposed merger would exacerbate the problems and result in disconnection for more low-income customers.

Exelon spokeswoman Judith Rader said in a statement that the company's utilities in Chicago and Philadelphia are "strongly committed to supporting their low-income customers and seniors."

Rader pointed to assistance programs that PECO and ComEd provide for low-income customers. PECO, for example, offers discounted rates, energy-efficiency and weatherization assistance, and direct grants to low-income customers.

"In addition, both ComEd and PECO customer service representatives make payment arrangements with customers who are having trouble paying their bills, and that approach would continue at BGE as well," Rader said in the statement. "ComEd and PECO offer a variety of payment options, including deferred payments, installment payments and extended due dates, and do all they can to work with customers to avoid disconnection, which is always the last resort."

Among the recommendations the Office of People's Counsel has made to make the proposed merger more acceptable are several that it says would mitigate the risks to low-income customers.

The office has proposed that Exelon make a $34 million contribution over several years to programs that would provide financial help for low-income customers. It has suggested Exelon provide another $18 million over five years to help low-income families make their homes more energy efficient.

One of the programs the OPC wants to see bolstered is the BGE Heating System Fund, which began in 2009 with a $1 million contribution from Constellation to help fix or replace aging furnaces for low-income Baltimore homeowners over three years.

The OPC wants Exelon to make a five-year $4 million contribution to continue the heating system fund, which is held by the Baltimore Community Foundation.

The program has replaced furnaces at 28 homes. It was expanded recently to allow for the funding of other projects, such as roof repairs and replacement, said Ken Strong, assistant commissioner of the Baltimore Housing Department's division of green, healthy and sustainable homes.

As a result, nine homes have received roof repairs. Many more furnace and roof projects are in the pipeline, Strong said.

Baltimore homeowner Mamie Lewis received funding for a new roof in November. A furnace that was found to have a cracked heat exchanger was replaced with a new energy-efficient gas unit.

Lewis, 55, who lives in West Baltimore with her two daughters and four grandchildren, was grateful for the help to make her home greener — which she hopes will mean lower utility bills.

"I notice the difference. It's much warmer," said Lewis, who is also having her windows replaced through the city's other weatherization programs. "I feel very fortunate."

The People's Counsel also wants Exelon to provide an annual $4 million shareholder contribution to the Fuel Fund of Maryland, which helps low-income families pay their utility bills.

Fundraising for the Fuel Fund is about 25 percent behind this year compared with last year, executive director Mary Ellen Vanni said. The group typically raises about $1.7 million through a series of campaigns.

Vanni says demand for help has risen as the economy has struggled.

"When it's a cold winter, donations come in more quickly," she said. "Because it hasn't been so cold, people don't think about it."

The Fuel Fund is in the middle of its BGE fundraising campaign. Customers can donate to the Fuel Fund online using BGE's website or by using postage-paid envelopes included in their December and January bills.

The utility pays the administrative costs as well as the postage for the fundraiser, Vanni said. The annual drive typically raises about $250,000 from BGE customers, she said.

BGE also provides a 50-cent match for every dollar that the Fuel Fund pays toward a customer's bill.

That effort is funded by BGE customers, spokesman Rob Gould said, because "to the extent that the program lowers bad debt and collection costs, all customers benefit."

BGE provided about $1.9 million in bill credits in the fiscal year that ended in June, Vanni said.

Vanni said she has been reassured by BGE and Exelon that the utility will continue to provide administrative and marketing support as well as the bill credit.

"Everything is going to stay as it is," she said.

Responding to the Office of People's Counsel's requests for additional financial support, Exelon's Rader said the company has committed to providing $50 million for weatherization projects to help an estimated 12,500 low- to moderate-income households.

That new money was part of a $1 billion settlement the company reached with Gov. Martin O'Malley over the merger between Exelon and Constellation. The settlement also has the support of Baltimore City, which expects to see a big portion of the weatherization money.

In addition, Exelon has committed to providing $10 million to Maryland's Electric Universal Service Program, which helps families with their utility bills, and another $10 million to state's green energy efforts.

People's Counsel recommendations

•Five-year, $4 million commitment to the Baltimore Community Foundation to continue the BGE Heating System Fund.

•An annual $4 million shareholder commitment over five years to the Fuel Fund of Maryland.

•An annual $2 million commitment over five years to the Community Assistance Fund, which provides grants to nonprofit groups to help low-income customers with utility bills.

•An annual $3.6 million contribution over five years for low-income weatherization efforts.

Source: Maryland Office of People's Counsel