Maryland Regulators Challenge BGE’s $634 Million Incentive Proposal Amid Rate Hike Concerns

The Maryland Office of People’s Counsel has called upon federal regulators to deny Baltimore Gas and Electric’s (BGE) request for additional financial incentives tied to $634 million in proposed transmission projects. This appeal comes amid concerns that such incentives would transfer costs unfairly onto Maryland ratepayers, benefiting the investors of its parent company, Exelon Corp., prior to the projects becoming operational. David S. Lapp of the Office of People’s Counsel articulated that the proposal would lead to financial obligations for Maryland customers prematurely, while the corporations benefiting from the data center constructions would incur charges only once the projects are completed. Lapp urged federal regulators to either reject BGE’s proposal or initiate a comprehensive process to assess its potential impact on customers in Maryland.

In response, BGE refuted the assertion made by the Office of People’s Counsel, suggesting a misinterpretation of the request. The utility company clarified that customers would not experience increased costs for the transmission project even if its request to expedite expense recovery receives regulatory approval.

In a broader scope of developments impacting BGE, the company is undergoing a strategic transformation under its new CEO, aiming to produce its own power. This new direction seeks to mitigate rising energy costs within Maryland’s dynamic energy climate. Despite the anticipated advantages, experts have pointed to potential risks linked with utility-owned power generation, citing the inherent complexities in the transition process.

BGE has been proactive in informing its customers about the availability of its Customer Relief Fund, established to aid those burdened by high energy bills. This initiative coincides with rate hikes affecting both electricity and gas for residents and enterprises throughout Baltimore City and several Maryland counties. The rate increases, in effect since June, were previously announced in January, forecasting an uptick of approximately $26.06 on the average monthly bill for a combined gas and electric customer. BGE attributed these increases to rising delivery costs, diminished supply due to the decommissioning of fossil fuel-powered facilities, and alterations in the EmPOWER Maryland program.

The EmPOWER Maryland program, supported by primary power companies in Maryland, including BGE, focuses on reducing greenhouse gas emissions and enhancing energy efficiency. As part of the program, BGE implements an electricity consumption fee, which saw an increment in January from $0.00899 to $0.01028 per kilowatt-hour, translating to an extra $1.16 monthly per typical consumer. This rise stems from the Maryland General Assembly's revisions to the program's objectives and an accounting directive impacting fund management.

The Office of People’s Counsel has expressed that these rate adjustments exceed the anticipated requirements necessary to counter inflation, supply limitations, and demand increments. Moreover, accrued interest on an outstanding balance for EmPOWER programs presents further financial strain for customers. Despite the General Assembly's decision to reduce the interest rate on this balance and mandate utilities to commence principal repayments, this resolution contributes to the heightened costs consumers currently endure.

Tensions have emerged between the Office of People’s Counsel and BGE regarding the Baltimore Peninsula project, a large-scale residential, office, and retail development requiring essential electrical infrastructure. Despite being inaugurated by Under Armour in 2016, it has faced hurdles, including Under Armour's withdrawal and a reduced office space demand resulting from the COVID-19 pandemic. In a public statement, David Lapp criticized BGE for attributing bill increases to misleading causes, asserting that the hikes result from BGE’s substantial infrastructure investments that ultimately benefit Exelon.

In legislative arenas, the passage of the Utility Transparency and Accountability Act by the General Assembly in May aims to tackle these growing costs, pending the governor's endorsement to become law. This legislation seeks to amplify oversight and accountability within the utility sector, although its prospects of alleviating expenses for Marylanders within BGE’s service area remain to be seen.