A Baltimore City Council committee investigating a management agreement between the city and Baltimore Gas and Electric Co. delved deeper into the deal following a controversial move by Mayor Brandon Scott to force a vote on the agreement during a city spending board meeting.
The committee, which was convened earlier this month, has the power to subpoena documents as it probes the deal, which calls for BGE to pay $134 million over four years for capital improvements to the conduit, as well as an annual $1.5 million “occupancy fee.”
Until now, Baltimore has paid to maintain the 700-mile subterranean utility system, which carries various utility lines beneath the city. BGE has been paying rent to occupy 75% of the conduit’s space.
Last week, the Democratic mayor took the unusual step of forcing a vote of the Board of Estimates on the agreement after board members Bill Henry and Nick Mosby sat out the meeting in an effort to prevent a quorum. Scott and his two appointees on the five-member board met without the pair and counted their absences as abstentions.
The move rankled members of the City Council who sit on the investigative committee, which just began its work of looking into the proposal. Two weeks ago, the committee met for the first time and voted to subpoena several documents from the administration, including figures on how much was spent on maintenance versus earned in rent.
City attorneys previously claimed Baltimore is losing $7 million annually on the conduit system, a figure city finance officials backed away from Thursday.
Deputy Finance Director Bob Cenname said there were some years when Baltimore spent more on the conduit than it brought in, but that the city wasn’t losing money overall. Typically, the city attempts to spend an amount equivalent to what it earns in revenue, he said.
The system was depreciating, however, because the city wasn’t putting enough money into maintenance, Cenname said after Thursday night’s meeting.
“I want to be very clear there was more money going out than what was coming in. The law department didn’t make that up,” City Solicitor Ebony Thompson told the council members. “It’s just that DOT [Department of Transportation] had a large balance in their checkbook.”
Mosby, the Democratic council president, said the $7 million figure was “used aggressively” by the administration and was repeated by media.
“That has been kind of the crux of the matter of the concern we’ve had about this really rushed deal,” Mosby said. “We are only four to five weeks into understanding what the administration has been doing this entire time.”
While conversations about the conduit began behind closed doors early in 2022, public discussion did not start until November, when Scott proposed hiring a consultant, FMI Capital Investors, to analyze potential options for the system. The Board of Estimates delayed a decision on the $50,000 contract until after the November election, when voters overwhelmingly approved a charter amendment barring the sale and lease of the system.
The proposed deal with BGE became public last month in media reports.
Mosby said the administration misrepresented the contract with FMI to the Board of Estimates and city residents. He noted the group has been unable to provide any “work product” to the council committee, despite a subpoena for the material.
The committee’s chairman, Democrat Eric Costello, said the administration supplied most of the documents subpoenaed by the committee by Thursday, but not all. A deadline to supply the documents expired Tuesday.
A representative from BGE appeared before council members Thursday for the first time since the controversy started to defend the company and the agreement. Charles Washington, vice president for government and external affairs, said designating the structure as a capital investment rather than rent allowed BGE to pass the cost on to customers over the life of the improvements it makes rather than an immediate request.
The company submitted its rate proposal to the Public Service Commission last week and requested an increase for delivery of both gas and electricity over the next three years by an average of 5% a year.
Washington said BGE’s request for compensation would have been $50 million larger over three years were it not for the Baltimore agreement.
The conduit deal and the manner in which it was approved have been the subject of public sparring among the city’s top officials since it was approved last week. Henry, the city’s Democratic comptroller, maintains that the city never approved the contract because a quorum of the Board of Estimates was not present.
On Wednesday, Henry, who controls the board’s agendas, placed the conduit deal on the agenda again, this time for the board’s meeting next week.
Costello questioned Thompson about how she will advise the mayor to proceed. The solicitor, who also sits on the board, said she is willing to vote again.
“This deal is done, but we can vote on it again,” she said. “We wanted everyone there. We didn’t want to have to pass it this way.”
The committee’s previous hearing was packed by employees and executives with Commercial Utilities, a company that has a city contract to perform maintenance on the conduit.
Thursday’s hearing was attended by members of the NAACP and attorney Tonya Baña who hosted a news conference outside City Hall beforehand. Baña represents several former BGE employees who are suing the company for racial discrimination.
The lawsuit, filed last year, alleges Black employees regularly endured racial slurs, discrimination and at least one instructor who tied nooses in front of them.
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“BGE is the last company that the city of Baltimore or council should trust to make a good-faith effort to equitably use minority contractors,” Baña told council members during a public comment period.
In a statement, BGE called Baña “opportunistic” and said the issue raised should be addressed in court.
“BGE condemns hatred, discrimination, and violence in any form and is committed to building a more diverse, equitable, safe, and inclusive culture, both in our company and in the communities we serve,” the company said. “Our solidarity and commitment to upholding these core values is unequivocal and expressed through our internal and external initiatives.”
Washington also addressed the comments.
“What was described today, that was not BGE,” he said. “That was not BGE at all.”
As he spoke, Baña and members of the Baltimore NAACP walked out of council chambers.
Council members requested several additional documents from the Scott administration during the hearing, but the committee did not issue any additional subpoenas. The group will reconvene Tuesday at 5 p.m.