Public Service Commission Hoping To Change Rate Process (BBJ Story)
The Maryland Public Service Commission took its first step toward changing the way utility companies such as Baltimore Gas and Electric Co. set rates — a move the regulator said will provide more certainty to customers.
An Aug. 9 order by the commission creates a working group of stakeholders to determine how best to implement what are known as multi-year rate plans. The method would set rates for a maximum of three years into the future. Maryland currently sets rates based on a historical test years, or costs incurred during a recent 12-month period, and allowing companies to get a certain rate of return. Utility companies including BGE and sister companies Potomac Electric Power Co. (Pepco) and Delmarva Power & Light Co. have been pushing for alternative forms of ratemaking. The companies argue the traditional method results in a "regulatory lag" that prevents them from achieving returns on investment allowed by the commission. As a result, the companies end up frequently filing rate requests, something both the companies and customers view unfavorably.