Maryland’s Public Service Commission, the state body that regulates public utilities, granted a motion on Monday that would make public an accounting memo that The Baltimore Gas and Electric Co. has tried to keep confidential.
The decision sides in favor with the Maryland Office of People’s Counsel (OPC), a state watchdog agency, who filed to make the document public in September.
According to the PSC, the memo contains testimony from the company’s chief financial officer about the company’s reasons for profiting off its investments into the Baltimore city-owned conduit system. The exact details are still unknown. Though currently confidential, the memo is part of the evidence in a multi-year rate hike proposal from BGE that is currently being considered before the PSC — the proposed hike would increase consumer utility rates by 5% each year over the next three years.
The commission found that there was no information that would be “commercially or financially sensitive, privileged, or otherwise entitled to blanket confidentiality protection.”
While BGE does have the opportunity to request redactions, that document will likely go into the public record.
“…the Commission has long endeavored to base its decisions on testimony and exhibits that are publicly available,” wrote the PSC in its decision. “The basis of a Commission decision, particularly a rate case, should not be evidence that is shielded from view by the public and that renders the decision a “black box.”
“We’re grateful that the commission recognized the importance of transparency in public utility cases that have a direct and significant impact on utility customers,” said David Lapp, the People’s Counsel at the OPC.
“While BGE disagrees with the factual and legal basis of the Public Service Commission’s ruling, BGE will comply with the ruling,” said the company in a statement through spokesperson Nick Alexopulos.
In its opposition to the OPC, the utility company argued that the memo should be protected under “accountant-client” privilege, however, the commission decided that that was not applicable in this situation. The memo is allegedly one between BGE and its parent company, Exelon.
“It is not in fact a communication made to the accountant by the client,” wrote the commission.
Furthermore, it noted that BGE’s arguments for keeping the memo confidential were based on procedural technicalities and not the substance of the memo’s contents.
“Although the memorandum in question contains confidential technical accounting information from accountants to their client, the memorandum clearly supports BGE’s position on the accounting treatment of certain investments in the conduit system that will be capitalized over the life of the assets, thus saving customers ~$57 million in costs over the 2024-2026 multi-year plan period,” said Alexopulos for BGE in a statement.
As part of its controversial conduit deal with Baltimore City, BGE must make $120 million in conduit improvement before 2029. The OPC has argued in the rate case that BGE is counting those improvements made on the conduit system as part of its rate base, despite the fact that BGE does not own the conduit. Lapp has argued that state law prohibits BGE from doing that and estimates that the accounting could cost ratepayers $860 million over 50 years.
That is an estimate that the utility company vehemently denies, noting that OPC was not party to the conduit deal negotiations.
"Their forecasts and estimates for what this is going to cost is complete conjecture. We plan three years out through our multi-year rate plans, so anything beyond that is pure speculation,” said Alexopulos in an interview earlier this month.
BGE, a subsidiary of Chicago-based Exelon Corporation, serves 1.3 million electric and 700,000 gas customers in Maryland.
The company has 10 days to respond to the commission’s decision and request that sections of the memo be redacted.
