State regulators hold public hearings on BGE rate increase

Baltimore Gas and Electric Co. has made its case before state regulators to raise gas and electricity delivery rates, arguing that the utility has contained costs for years despite rising expenses to maintain service and reliability.

Now the utility's customers can have their say at a series of public hearings starting Tuesday in Bel Air. Consumer advocates have opposed the rate hike and contend that BGE has been overcharging ratepayers for distribution.

BGE's request would add about $22 to electricity bills and $32 to gas bills annually for the average residential customer. The rate increase request for gas delivery is lower than BGE's initial proposal, filed in May with the Maryland Public Service Commission, the state's top energy regulator. And any proposed electricity distribution rate increase would be capped at 5 percent, a limit imposed under an agreement negotiated with Maryland officials two years ago.

Consumers could see the rate increase reflected in bills by the end of the year, if regulators approve BGE's request. Distribution rates, or what utilities charge to maintain the power delivery system, make up about a quarter of total electric bills.

Mark D. Case, BGE's senior vice president for regulatory affairs, noted that electricity distribution rates last rose in 1993 — "when the Ravens [team] wasn't in existence and DVDs weren't in existence." Since then expenses have risen 80 percent for tree trimming and more than 100 percent for purchases of electrical wire and cable, according to the utility.

"We're making a lot of investments in the business while we're doing our best to hold the line on the costs," Case said.

Falling commodity prices worldwide have led to lower BGE residential electric bills, which are projected to drop by $168 on average for the year starting in June. If BGE were to win approval to increase its electricity delivery rate, consumers would still see a 7 percent drop on average in their bills, Case said. And electricity prices are projected to fall another 10 percent to 15 percent next June, Case pointed out.

Consumer advocates question BGE's contention that it needs an estimated $47 million to offset rising expenses for electricity delivery and $30 million for gas delivery.

The Maryland Office of People's Counsel, which represents customers on utility matters, has hired experts who testified that BGE only needs an increase of about $21.5 million for electricity and no more than $8 million for gas.

Typically, utilities don't get the full rate increase requested after various stakeholders make their case. The Public Service Commission recently approved a $7.8 million increase in electricity distribution rates for Pepco, which serves electricity customers in Montgomery and Prince George's counties. That increase was one-fifth of Pepco's initial request.

Paula Carmody, who heads the Office of People's Counsel, contends that BGE has gone without an electricity distribution rate since 1993 because the utility has charged too much for distribution and agreed to settlements that set limits and timetables on when it could seek increases.

BGE agreed to reduce distribution rates by 6.5 percent and to maintain that rate for six years as part of its deregulation settlement in 2000.

And in approving a nuclear joint venture between BGE parent Constellation Energy Group and Electricite de France last year, the PSC ordered BGE to delay applying for a distribution rate increase until January 2010. The company also is barred from applying for another delivery rate increase until October 2011.

"Just because they didn't get an increase in 17 years doesn't mean the rates were wrong," Carmody said.

Public hearing schedule

•Tuesday, 7 p.m. Bel Air Town Hall

•Oct. 12, 7 p.m. Baltimore County Office Building in Towson

•Oct. 13, 7 p.m. War Memorial Building in Baltimore

•Oct. 14, 7 p.m. Circuit Court for Anne Arundel County in Annapolis

•Oct. 20, 7 p.m. Howard Community College in Columbia