The staff of the state's Public Service Commission (PSC) yesterday registered its opposition to Baltimore Gas and Electric Co.'s proposal to raise its natural gas rates by $28.6 million annually, according to testimony filed with the agency.
In disagreeing with BGE, the PSC recommended that BGE be allowed to raise just $352,000 more a year, a scant 1 percent of what BGE had requested and even less than what the Office of the People's Counsel, which represents consumer interests, had proposed.
In making its determination, the staff cited differences with BGE's assessment of the impact of the past mild winter, depreciation, and costs associated with operation of its new Perryman electricity plant.
BGE's first-quarter earnings fell 16 percent due to the unusually mild winter.
The vast discrepancy between the company's rate request and the PSC's recommendation sets the stage for what could be a bitter series of hearings beginning July 26. The PSC is expected to make a decision by the end of the year.
BGE requested the 7.6 percent overall gas rate increase in April, contending that it had spent $116 million in unrecovered capital improvements since 1992 and needed to recoup expenses associated with expansion of its 617-square mile system. Under its proposal, residential rates would rise an average 11.7 percent and commercial rates 4.7 percent.
Furthermore, the utility, which had $421 million in natural gas revenues last year, argued that while the PSC allows a 9.4 percent return on gas, its actual yield is about 6 percent.
"Obviously, we disagree with their findings," said Arthur J. Slusark, a BGE spokesman. "We outlined our reasons for the request, and we're standing by them. We intend now to evaluate and analyze the material, and prepare for the hearings."
BGE, which provides gas to 541,000 customers and anticipates it will add 16,000 new customers this year, projected the increase would raise the average residential gas bill by $4.74 per month.
The higher rate of increase for residential customers raised the ire of the People's Counsel, which figured that 90 percent of the increase would be borne by residential customers.
It recommended in its testimony that BGE be allowed to raise an additional $659,000 annually.
"Not only do we say that they're not entitled to a multimillion increase, but the counsel believes any increase shouldn't be shouldered by residential customers," said Theresa V. Czarski, an assistant people's counsel.