In an attempt to follow through on Maryland General Assembly leadership’s affordability agenda, both chambers are pushing through legislation aiming to lower energy bills for Maryland ratepayers.
The House of Delegates gave final approval to HB0001 on Friday that would limit how much investor-owned utilities can recover for employee bonuses and compensation.
The legislation would allow utility companies to use ratepayer dollars to pay for supervisor compensation up to $250,000 — any monies above that level would have to be pulled from the companies’ profits.
“We are not by any means saying that the utilities can’t pay more than that very generous $250,000,” said the bill’s sponsor Del. David Fraser-Hidalgo (D-Montgomery County) on the House floor. “What we’re saying is if you’re going to pay more than $250,000, the ratepayers shouldn’t pay for it.”
The bill does carve out an exception for compensation decided upon in a collective bargaining agreement for union workers.
However, lawmakers have not been able to produce a firm number on how many dollars in savings the changes would deliver to ratepayers.
Estimates range anywhere from pennies to a few dollars in cost cuts per energy bill, which House Democrats argue is a step in the right direction.
“It is a first step to reducing utility bills. I don’t care if it’s $1, $2, $40 — it will reduce utility bills for ratepayers because we are not passing those costs on to ratepayers,” said Del. Linda Foley (D-Montgomery County) during debate.
But House Republicans repeatedly accused the bill of “virtue signaling,” arguing the chamber’s landmark energy policy legislation should do more for ratepayers.
“I think dollars and cents return on this bill, giving to the people, is minimal at best,” said Del. Steven Arentz (R-Caroline, Cecil, Kent and Queen Anne’s Counties) “And we're taking Exelon, let's say, and we're villainizing one company… why don't we look at other things? Why don't we itemize so the people actually see what's being done?”
Del. Mark Fisher (R-Calvert County) introduced an amendment that would do just that, require utility bills to list out all surcharges, fees and other costs that are covered under a ratepayer’s bill.
While several Democratic lawmakers signaled they are in favor of transparency, they argued such a change should be introduced as a separate bill so it can be vetted and receive a proper committee hearing.
In all, Democrats rejected four Republican-led amendments during debate.
BGE and Pepco, subsidiaries of Exelon and Maryland’s primary utility providers, are both against the bill.
BGE argues the bill would limit the utility from attracting and retaining “highly skilled professionals” and argues employee compensation is already heavily regulated by the state-appointed Maryland Public Service Commission (PSC).
Several Democratic lawmakers have pushed back on the retention argument, including the sponsor of the Senate version of the bill, SB0002, Sen. Katie Fry Hester (D-Howard and Montgomery).
“You guys can pay the exact same rates, the exact same thing, and you’re just taking the excessive compensation — over $250,000 — and shifting it, like all the other Fortune 500 companies do, so that it comes out of your profits,” Hester told Exelon representatives during the bill’s Senate committee hearing.
In her opening remarks, Hester also pointed out investor-owned utilities have reported record profits in recent years and that if the top five Exelon executive salaries were taken out of shareholder dividends, it would be a reduction of around 2.9 cents per share.
“It’s really not going to hurt their standing with their shareholders because they’re already so darn near the top,” Hester said, referencing Exelon delivering the second highest dividend yields in the country for a utility company.
PSC Chair Kumar Barve submitted neutral, informational testimony on the bill, acknowledging the concerns around talent attraction and retention.
However, he affirmed Hester’s point that while the excess compensation would no longer be able to be recouped from ratepayers, it could be recovered from profits.
While Barve said the bill could reduce utility rates, he said it could also encourage utilities to simply shift incentive-based compensation into employee base salaries — paid by the ratepayer — which would ultimately negate the intent of the legislation.
The bill passed with some bipartisan support by a vote of 97 to 30, but lawmakers on both sides of the aisle stressed more legislation is on the way to try and curb rising energy costs before the legislative session concludes in April.
While Senate Bill 2 has not yet hit the Senate floor, Senate President Bill Ferguson (D-Baltimore City) agreed with the notion that the legislation should only be viewed as a starting point when it comes to saving ratepayers some money.
“I don't think it's enough. I mean, I think that it is a step. I think that as we see corporate profits skyrocket at the same time that utility bills are skyrocketing, there's a mismatch of incentives, and that has to shift,” Ferguson told members of the media on Friday. “That is not nearly close to what we have to deal with, which is the larger energy generation and supply problem that is really the core of the issue in Maryland.”
