Maryland’s Public Service Commission will hold a hearing Tuesday, to review lessons learned from Baltimore Gas and Electric’s (BGE) 2021-2023 multi-year rate plan. The hearing is part of the commission's evaluation process, where feedback will be gathered to assess how well the plan met the goals set by the PSC.
In a multi-year plan (MYP), a utility asks regulators for approval to raise rates gradually over several years, instead of implementing a large, one-time increase. BGE filed its first multi-year rate plan under a pilot program in 2020. The plan launched in 2021, after receiving approval from the PSC in December 2020. The utility claims that gradual rate increases provide financial stability, enabling it to invest in critical infrastructure.
However, a coalition of labor, consumer and climate activists strongly oppose the multi-year plan. Earlier this month, they rallied in opposition, saying this form of ratemaking allows the utility to spend wastefully. “End the pilot, shut it down!” they chanted. The groups are particularly opposed to BGE’s $152 million reconciliation request for 2023, which is a review of the utility's costs from the previous years.
Under the MYP process, reconciliation occurs to review whether BGE's spending in previous years was reasonable. If BGE under-recovers, — that is, if its actual costs were higher than what was previously authorized — the utility may recover those costs in rates. For 2023, BGE is requesting a reconciliation of $152 million due to external factors such as storms, new taxes and unforeseen business costs. This request is separate from the previously approved multi-year rate increase, approved by the Commission last year.
Members of the coalition argue the reconciliation costs are excessive and would add financial burden. “We have to eat, we have car payments,” said Nina Scroggins with SEIU 1199. “I don’t want any family to be forced to make hard decisions over their utility bills.” Further, they contend that the MYP process fails to prioritize clean energy and lacks sufficient accountability.
Since approval of the BGE pilot in 2020, BGE’s electric rates have increased by 26% and gas rates have increased by 43%, according to the Office of the People’s Counsel.
“Through this pilot, utilities have failed to measurably demonstrate increased spending has been in the best interest of customers,” said Emily Scarr, senior advisor for Maryland PIRG. “Instead they are spending wastefully and passing risk to consumers while reducing utility accountability and transparency.”
The hearing will begin at 10 a.m. and take place in the Frank O. Heintz Hearing Room, 6 St. Paul Street, Baltimore, MD.
This story contains corrections from an earlier version
