BG&E; gets electricity rate increase


In a five-minute hearing, the Maryland Public Service Commission gave its stamp of approval yesterday to a 3.7 percent electricity rate increase by the Baltimore Gas and Electric Co.

The PSC action allows BG&E; to collect from its customers an additional $123.7 million annually for electricity, but reduces by $58 million the fuel cost adjustment rate -- a pass-through charge covering the utility's costs for fuel used to generate power.

The bottom line is a net increase of about $66 million that will raise the monthly bill to the average residential customer, using 600 kilowatts of electricity, by $2.98 -- from $53.95 to $56.93 -- according to BG&E; spokesman John Metzger.

Both the increase in the price for electricity and the reduction in the fuel cost adjustment rate are related to the official start-up Tuesday of the utility's coal-fired Brandon Shores 2 generating station in northern Anne Arundel County.

Through the rate increase, BG&E; will recover from its customers the costs of building, operating and maintaining the new unit.

The reduction in the fuel cost adjustment rate is based on the expected annual savings in fuel purchases after Brandon Shores 2 is running. It is the first reduction of the fuel cost formula in nearly a year.

BG&E; had originally sought a $198 million increase. In December, the PSC granted it $77 million -- the largest increase ever given to the utility -- but refused to allow even higher rates tied to the new Brandon Shores unit until it was officially in service, providing the electricity that customers were paying for.

Although the PSC planned only a brief hearing to rule on the Brandon Shores increase, the office of the people's counsel -- which represents the public -- objected to yesterday's quick decision.

The December decision increasing electric rates already has been appealed to the Baltimore Circuit Court. Deputy People's Counsel Paul S. Buckley said his office will appeal yesterday's decision as well and will seek to have the cases consolidated.

Mr. Buckley said the people's counsel will not seek court action to delay Tuesday's implementation of the higher rate for electricity. But if the rate increase is eventually overturned, he said, BG&E; likely would have to refund with interest the excess billed to customers.

Mr. Buckley said the PSC should have embarked on a full round of evidentiary hearings on BG&E;'s operating costs and rates to make sure the increase taking effect Tuesday was justified. He argued that it was "an unwise public policy decision to grant the increase without hearings, and it's also unlawful."

The deputy people's counsel said a rate case is "a very complex proceeding where all elements of the company's operation need review to assure they not overrecovering costs in one area while remedying a perceived defect in another."

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