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BGE wants to freeze utility rates for 2 years, then increase them by 8% in 2023

Baltimore Gas & Electric Co. is proposing to freeze customers’ base rates for delivery for the next two years, then raise them by 8.3% in 2023 — what amounts to a $12.87 increase on the average customer’s monthly bill.

The three-year plan, filed Friday with the Maryland Public Service Commission, is designed to provide economic relief to utility customers during the coronavirus pandemic while allowing the utility company to invest $5 billion in its electric grid and natural gas system, BGE CEO Carim Khouzami said.

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“This will ensure we can make investments needed not only to provide safe, reliable and secure service, but also to provide the economic stimulus we know our customers need now more than ever," Khouzami said in an interview Friday.

With utility supply costs expected to drop nearly 3% beginning next month due to lower wholesale energy costs, most customers’ overall utility bills actually will go down in the near term, the company said. The rates utility customers pay are two-part, with separate rates to cover the cost of delivery infrastructure and the cost of the electricity and natural gas.

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BGE expects the rate freeze to cost more than $360 million, which it plans to pay for by advancing to customers long-term tax benefits the company will receive over a 30-year period.

Even after the increase in delivery rates in 2023, the average customer’s total utility bill will be 22% lower than in 2008, according to BGE’s projections.

Maryland People’s Counsel Paula M. Carmody, an independent state advocate who represents home utility customers, said she appreciated BGE’s plan to freeze customers’ rate increases, especially during a time of record unemployment.

But because the three-year proposal is the first of its kind — utilities previously filed their rate adjustment proposals annually with state regulators — the plan is “built on lots of forecasting and projections," she said.

“That adds a number of complicating factors, so it makes our review of their filing much more rigorous,” Carmody said. “The question is, does the forecast make sense? ... It’s still a rate increase, and it’s our job to make sure any increase is a reasonable one for our customers to pay.”

While advancing tax benefits to customers will help stave off increases in the short term, the Office of the People’s Counsel plans to scrutinize what front-loading the tax benefits could mean for customers’ bills beyond 2023, she said.

“There are implications for those outer years that are going to be built into rates going forward,” Carmody said.

BGE, which serves 1.3 million electric customers and more than 680,000 natural gas customers in Central Maryland, said its plan will allow it to continue more than 300 projects and maintenance programs over the next three years. The Baltimore-based subsidiary of energy giant Exelon has been spending hundreds of millions of dollars each year to strengthen its electricity infrastructure and update aged natural gas lines throughout the Baltimore region.

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The projects, which include enhancing infrastructure, installing smart automation equipment, replacing outdated technology, preparing the grid for extreme weather and replacing gas pipes, will have a collective $15 billion economic impact, according to an analysis by the Economic Alliance of Greater Baltimore.

BGE said the infrastructure upgrades have driven down the number of power outages by more than 38% over the past decade, and when customers do experience an outage, power is restored nearly 40% faster.

In addition to the rate freeze, the BGE is contributing $1.5 million in shareholder funds this year — in addition to its annual $2.6 million in customer funds — to the Fuel Fund of Maryland to assist low-income residents with their home energy bills.

The company also extended its moratorium on service terminations for nonpayment and fees for late payment, first implemented in March as the pandemic reached Maryland, until July 1 for all home customers and qualifying businesses. BGE also reconnected customers whose service had been cut off before the suspension period to encourage more people to comply with the stay-at-home order.

The company will provide $1 million to business pandemic relief funds administered by counties in Central Maryland to aid small businesses struggling due to the COVID-19 containment measures.

“BGE takes its role in the community very seriously,” Khouzami said. "We have been doing what we can to support customers and the community throughout this pandemic.”

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The Public Service Commission will spend the next seven months reviewing BGE’s proposal and is expected to issue a ruling in December.


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