In approving rate increases for Washington Gas, the Public Service Commission failed to meet its statutory responsibilities, OPC tells court
BALTIMORE – The Public Service Commission acted unlawfully when it approved a rate increase earlier this year, the Office of People’s Counsel told the Baltimore City Circuit Court in a filing today. The Commission’s order approving Washington Gas’s proposed rate increase allows the utility to recover more than $8 million annually in costs that should not have been approved, OPC said.
“We are asking the court to require the Commission to fulfill its responsibilities to protect ratepayers from unreasonable utility costs,” said People’s Counsel David S. Lapp. “We are also asking the court to direct the Commission to enforce its own order approving AltaGas’s acquisition of Washington Gas—specifically, the key condition of approval that required customers to benefit from the merger,” Lapp said.
Washington Gas’s promise of lower rates came in 2018, when AltaGas was proposing to acquire Washington Gas. The utility promised to lower rates for Maryland customers by $800,000 for each of the following five years. This promise fulfilled a legal requirement that the merger “benefit” customers. The PSC conditioned its approval on that promise, declaring that “customer rates will decline or otherwise be lower than they would have been absent the merger.” But when Washington Gas filed a rate case earlier this year, the utility requested—and the PSC approved—a rate increase of about $7.8 million in new costs AltaGas charged to the utility.
“Washington Gas promised benefits to consumers from its merger,” Lapp said. “But it didn’t deliver, and the Commission has unlawfully let the utility off the hook.”
OPC’s legal filing also challenged the PSC’s failure to review the reasonableness of the costs of 14 Washington Gas projects. The PSC is solely responsible for making sure that unreasonable utility spending does not make its way into rates. OPC showed at a PSC hearing that Washington Gas was asking customers to pay for costs resulting from its own failure to properly plan for paving and other expenses. Customers should not pay more because of the utility’s poor planning, OPC said, and by failing to properly plan, Washington Gas had to spend more than $5 million more than it should have.
The PSC agreed with OPC that Washington Gas had a “systemic issue” with its cost estimations, but then approved the costs anyway, without ever explaining why it didn’t adopt OPC’s proposed disallowances or address the individual project costs. Further, the Commission stated that its statutory responsibility for ensuring the reasonableness of utility expenditures was “difficult, if not impossible.”
“The PSC abdicated its responsibility for ensuring rates are just and reasonable for customers,” Lapp said. “That abdication was unlawful. The PSC has a fundamental responsibility to ensure that customers of utility monopolies pay no more than they should. We need the courts to enforce that responsibility.”
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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